Why Netflix’s co-founder said ‘no’ to selling to Amazon

·Supervising Producer

Netflix (NFLX) has become one of the world’s powerhouse technology and media companies.

But in the summer of 1998, it almost never came to pass.

That Will Never Work” — a new book out by Netflix’s co-founder and first CEO Marc Randolph — details how close the streaming giant came to being gobbled up by Amazon (AMZN) during its infancy. Randolph and current CEO Reed Hastings founded Netflix in 1997.

“We had been launched for maybe two months and we got that call that [Amazon founder and CEO] Jeff Bezos wants to see us. How exciting is that?” Randolph told Yahoo Finance’s YFi PM.

‘We’re going to give this a shot’

“We were just starting out and everyone was telling us ‘that will never work,’” Randolph says about Netflix’s origins as a DVD-by-mail delivery service.

“And here was this guy who was the pioneer of e-commerce thinking he might want to buy us. What a validation!” the former CEO marveled.

A team of early Netflix employees, including co-founder and first CEO Marc Randolph.
A team of early Netflix employees, including co-founder and first CEO Marc Randolph.

Bezos offered to make Randolph and Hastings millionaires during that fateful meeting at Amazon’s old Seattle, WA headquarters.

“It was couched in fairly vague terms,” Randolph explained about Amazon’s potential buyout. “I think [Bezos] referred to it as ‘it’ll be somewhere in the low eight-figures.’ So we thought that meant probably in the $14 million to $16 million range.”

Randolph and Hastings found themselves at the crossroad nearly every entrepreneur dreams about.

“What this really was for Reed and I was a commitment ceremony,” according to Randolph. “On the way home we were looking at each other and saying ‘we could get out now if we want. But do we?’”

Their answer would eventually alter the very course of technology and media as we know it.

“It was that chance to say ‘no, I think we’re going to give this a shot,’” Randolph said. “Boy, I’m glad we did.”

Nick Robertson is a senior producer at Yahoo Finance.


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