Netflix - Career, Personality and Skills - Research Paper Example

?Running head: NETFLIX Netflix Insert Insert Insert 07 October Outline 0: Introduction 2.0: Hastings background and education 3.0: Career, personality and skills 4.0: Idea for that led to establishment of Netflix and it improvement 5.0: Challenges 6.0: Conclusion 7.0: Reference list Netflix Introduction Netflix (NASDAQ: NFLX), is one of the most successful online movie rental company that began its subscription based digital distribution in 1999 and by 2006 it had more than 6.5 million subscribers and revenue of $997 million (Dalal, N.d). It was founded in 1998 and is based Los Gatos, California. The company offers on-demand internet streaming media in the U.S., Canada, and Latin America and has announced that it will expand it operations into the European market starting with Spain by 2012 (Whitehouse, 2011). It also offers flat rate DVD rental-by-mail in the U.S. Recently, the company has announced its plans for rebranding and restructuring of its DVD home media rental service into an independent subsidiary company called Qwikster, there by completely separating DVD rentals and streaming media (Murph, 2011). Hastings background and education Reed Hastings, the founder and the CEO of Netflix has been the company’s chairperson from the time it was established. Hasting was born October 8, 1960 in Boston, Massachusetts, and is a prominent entrepreneur and education philanthropist. He is married with two children and lives in the San Francisco Bay Area (Hamilton, 2011). He graduated from high school in 1978 from the Buckingham Browne & Nichols School in Cambridge, Massachusetts and for one year, he was a sales person for Rainbow Vacuum Cleaners (BB&N, 2011). Hastings studied mathematics at Bowdoin College in Brunswick, Maine where he was awarded the Smyth Prize in 1981and Hammond Prize in 1983, before graduating with BA in 1983 (Hamilton, 2011). After a short stint with US Marine Corps in 1981, he joined the Peace Corps and taught high school maths in Swaziland from 1983 to 1985, and from his tour of duty, he joined Stanford graduate school, earning a masters degree in computer science in 1988 (Zipkin, 2006). Career, personality and skills After graduation, his first job was at Adaptive Technology, where through his creativity, invented a tool for debugging software. He left Adaptive Technology in 1991 to form his first company, Pure Software that specialized on products for troubleshooting software, and grew rapidly to the extent that he found it challenging to run the company (Zipkin, 2006). The experience from teaching in Swaziland, working at Adaptive Technology, and managing Pure Software made Hastings more determined, focused, and this transformed him from an engineering background to a CEO material. Following its success, Pure Software merged with Atria Software in 1996 forming Pure Atria that was acquired by Rationale Software in 1997 prompting Hastings to leave company shortly after the acquisition (Clark, 1997). To sum his personality and skills, Hastings is considered as being intelligent, creative, determined, understanding, analytical and a very charismatic leader, which is a scarce combination (Hitt, Ireland & Hoskisson, p.276). Idea for that led to establishment of Netflix and it improvement For two years after acquisition of his company, he became more engrossed in philanthropic education reform efforts and other sociopolitical reforms. It was during this time that the idea of forming Netflix Inc cropped. One day in 1997, he got late to return a Blockbuster video tape and was fined $40 for the Apollo 13, something that embarrassed him, triggering him to think about the huge market that was available if only a company did not impose huge fine on customers on lateness fees (Abkowitz, 2009). It was then when he began investigating on how to establish a movie rental business by mail. In his study, he realized that customers did not like long queues that were found in rental stores, poor selections, process of returning the movie, and the lateness fines. Based on improved ideas of unlimited due dates, no late fees, and capitalizing on arrival of DVDs that were durable, convenient, and cheaper to mail, Hastings and Marc Randolph co-founded Netflix to offer a flat rate rental-by-mail service in1998, in the United States (Hamilton, 2011). Though people liked the rental-by-mail idea, the company was not an instant hit, so they introduced the concept of online subscription. Hastings thought that the internet would allow clients to order and download movies while at home, thus they launched this idea in September 23, 1999 (Abkowitz, 2009). This development completely revolutionized the movie rental industry and propelled Netflix to its success. Challenges Hastings faced several challenges in implementing his ideas at Netflix including, first, the idea to form Netflix was aimed at transforming the movie rental stores business that relied on customers selecting and picking their orders in the stores into a sophisticated delivery system with online orders. To change customers’ behavior was quite an uphill task considering the convectional behavior that already had been set by Blockbuster and other companies. Secondly, during the launch of Netflix, very few households had DVD players, thus a small market existed. Thirdly, the online platform required enormous storage capabilities and bandwidths that did not exist at the time of inception of the idea. Additionally, contract negotiations between studios, broadcasters, and cable channels continued to stall television rights to most films (Hamilton, 2011). More so, threat from major competitors such as Blockbuster that revamped its operations and offered large monthly subscription price-cut seemed to reduce Netflix customer base significantly in 2005 (Dalal, N.d). Thus, Hastings had to be on his toes in order to withstand and outsmart the competitors. Lastly, there have been allegations of Netflix deliberately slowing its access to films to extent that some customers sued the company in 2005. Financing of Netflix Before co- founding Netflix, Hastings had sold his first company, Pure Software, for $750 million, and out of his share, he used $2.5 million to fund start up of Netflix (Hamilton, 2011). This capital enabled the company to roll out its operation in 1998, with 30 employees and around 900 movie titles for rent. In September 1998 the company secured a lucrative promotional boost by making “10,000 copies of a DVD of President Bill Clinton’s Grand Jury testimony in the Monica Lewinsky affair at 2 cents each and $ 2 for shipping and handling” (Anon, 2004). In July 1999, Hastings secured $30 million in new financing for the company from Group Arnault, a French luxury good investment firm (Anon, 2004). These funds were used for building the company’s new building and promotional activities. In mid 2000, the company announced plans for an IPO worth $86.5 million but called it off due to poor performance during that period (Whitehouse, 2011). The same year in December, Hastings secured a revenue sharing agreement with Warner Home Video and Columbia Tri-Star that enabled the company to meet demand for new releases (Anon, 2004). This set the stage for similar deals with several studios. In 2002, the company staged an IPO that sold 5.5 million shares raising $82.5 million, and doubled its sales to $153 million and cut its losses by 43% to $22 million (Helman, 2003). Conclusion The company still faces huge competition from its major competitors, thus, it is up to Hastings and his team to formulate strategies that can sustain the company competitively. Additionally, Hastings is under huge responsibility to lead his company to adopt ever-advancing entertainment technologies for future sustainability and growth of the company. Reference List Abkowitz, A 2009, ‘How Netflix got started: Netflix founder and CEO Reed Hastings tells Fortune how he got the idea for the DVD-by-mail service that now has more than eight million customers’, CNN Money, viewed 07 October 2011, http://money.cnn.com/2009/01/27/news/newsmakers/hastings_netflix.fortune/ Anon 2004, ’Company Histories & Profiles: Netflix, Inc’, International Directory of Company Histories, Vol. 58, St. James Press. Buckingham Browne & Nichols (BB&N) 2011, Life after BB&N Cambridge, Massachusetts, viewed 07 October 2011, http://www.bbns.org/admission/life-after Clark, D 1997, ‘Investors Pan Rational's Plan To Buy Pure Atria for Stock’, Wall Street Journal. Dalal, S N.d, Creativity And Innovation in Business - 212-page collection of 55 best practices, case studies, and insights on the current state of Innovation in Business at Top Innovators including Apple, Google, Netflix, 3M, Proctor & Gamble, Johnson & Johnson, GE,..., Creativity Innovation eBook, viewed 7 October 2011, http://books.google.com/books?id=QmdU7PcfxcEC&pg=PT111&dq=Netflix&hl=en&ei=Y7OOToSuIubY4QSJ8NyuAQ&sa=X&oi=book_result&ct=result&resnum=2&ved=0CDkQ6AEwAQ#v=onepage&q&f=false Hamilton, JOC 2006, ’Home Movies: Now that he's put Hollywood in your mailbox, Reed Hastings is watching out for the future of entertainment’, Stanford Magazine, viewed 07 October 2011, http://www.stanfordalumni.org/news/magazine/2006/janfeb/features/netflix.html Helman, C 2003, ’Shorts Nix Netflix’, Forbes, Vol. 171, Issue 13. Hitt, MA, Ireland, DR & Hoskisson, RE 2009, Strategic management: competitiveness and globalization: cases, Cengage Learning, OH. Murph, D 2011, ‘Editorial: Reed Hastings' Netflix spinoff isn't about DVD success, it's about hedging the stream’, engadget, viewed 07 October 2011, http://www.engadget.com/2011/09/19/editorial-reed-hastings-netflix-spinoff-isnt-about-dvd-succes/ Whitehouse, D 2011, Netflix to Expand in Europe, Starting With Spain, Figaro Says’, Bloomberg, viewed 07 October 2011, http://www.bloomberg.com/news/2011-06-03/netflix-to-expand-in-europe-starting-with-spain-figaro-says.html Zipkin, A 2006, ‘The Boss: Out of Africa, Onto the Web’, New York Times, viewed 07 October 2011, http://www.nytimes.com/2006/12/17/jobs/17boss.html Read More