Who We Ignore May Put us Out of Business

It’s easy to become so confident in one’s own business model and momentum that we forget to look around and see what new companies are doing in our scope of business.  While we can’t afford to become mired in worry every time a new player enters the fray, it does pay to keep your finger on the pulse of the industry.

A recent article details a meeting between Netflix and Blockbuster back in 2000 when Blockbuster was still a video rental giant and Netflix was a startup.  According to Barry McCarthy, who attended the meeting, Blockbuster CEO John Antioco scoffed at the idea proposed by Netflix CEO and co-founder Reed Hastings that the two companies partner to build a brick and mortar and online subscription business. Now Netflix was already earning over $5 Million in revenue by this point, so they weren’t just a nice idea – but they didn’t seem to be a threat quite yet and the subscription model for video rental was not yet widely accepted.

Within a few years, Netflix was raking in over $1 Billion in revenue from their unique online subscription model while Blockbuster was watching profits tank in the brick and mortar model while scrambling to add an online service that would never really take off.  Had Blockbuster seen the opportunity presented, this story could have ended far differently.

But what I like to focus on is Netflix.  They saw an opportunity to partner with a larger company and grow the business faster and wider than they could alone.  They weren’t afraid to reach out in an effort to strike a partnership.  And when they were laughed at for doing so, it didn’t change the momentum or focus of their own vision for the industry.

It’s a good lesson to learn – strike up partnerships when it makes both of you stronger, especially in an emerging technology that regularly changes the business landscape.  But don’t ever let the disdain or rebuffs of larger businesses change your focus.  It may turn out they needed you a lot worse than you really need them.


About APPCityLife

APPCityLife connects people with cities through a complete end-to-end mobile and cloud platform where cities, developers, civic hackers, nonprofits, schools and enterprise can publish robust mobile apps with seamless Open Data integration. Our platform is powerful enough to support rapid prototyping for experienced coders and developers, but it is also easily accessible to those without any previous coding experience; we empower individuals to create solutions and build mobile apps which address challenges they see within their own community.
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2 Responses to Who We Ignore May Put us Out of Business

  1. Amanda says:

    Great perspective. I had no idea that Netflix approached Blockbuster at one point, talk about ironic. Thanks for sharing this useful case study!

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