Netflix Co-Founder Defends Qwikster Spin Off

Paul Lilly

Marc Randolph is one the visionaries behind Netflix, the company he co-founded along with Reed Hastings back in 1997. Randolph spent some time as Netflix's CEO, as an executive producer of the company's website, and served as a member on its board of directors up until 2004. Now he's on the outside looking in, just like the rest of us, but his perception is different than most everyone else sitting on the sidelines.

"Last time I checked [Netflix's] blog post on the subject [of Qwikster], there were 27,183 comments. Approximately 27,181 of them were negative," Randolph wrote in a blog post of his own. "Wall Street didn't approve of the move either, and the stock is now trading at less than half the price it was two months ago.

"Even my own friends are sending me puzzled notes, wondering if the 'wheels are coming off the cart.' What can I say? They are all wrong. Not only am I completely in support of what Netflix is doing, but I think it is one of the smartest, most disciplined and bravest moves I've ever seen."

For the sake of appearing unbiased, Randolph points out he hasn't worked for Netflix for years and has no inside knowledge of what led to the decision to spin off DVD rentals into a separate business, nor has he talked to anyone at Netflix about it. So why does he support the move?

"Plain and simple, this move was all about focus. Relentless focus," Randolph says. "A focus that has been deeply embedded in the Netflix DNA since day one."

Randolph explains that when Netflix first launched, about 95 percent (he's guessing here) of revenue came from selling DVDs, not from renting. It was a business that did two things. forcing Netflix to make compromises on both fronts. Can you see the parallel shaping up? It was a tough decision to stop selling DVDs at a time when it was making so much money, but on hindsight, it was the right one. Now he thinks Reed Hastings, who he views as "the best entrepreneur on the planet," is again making the right move, even if it's hugely unpopular among subscribers and investors alike.

You can read more -- lots more -- of what he has to say on the topic right here .

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