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Marc Randolph and Reed Hastings played pivotal roles in the early stages of Netflix. They came up with the idea of video rentals through the internet, capitalizing on the emergence of DVDs as a smaller, more convenient medium than VHS tapes. They tested the viability of mailing DVDs in standard business envelopes, which proved successful. Hastings made a seed investment of $1.9 million, while Randolph committed his time to build the company. Hastings owned 70% of the company and Randolph owned 30%.
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Eventually, they came upon the idea of video rentals through the internet. This was at a time when DVD was emerging as a smaller, slimmer medium that would replace bulky VHS tapes. A DVD could fit into a standard business envelope that costed only 32 cents to mail. If it arrived unscratched, renting DVDs through the mail could work. Randolph tested this by mailing Hastings a CD in an envelope, which was delivered unscratched the next day. Hastings and Randolph agreed to start a company that would allow customers to rent DVDs by mail. Hastings made a seed investment of $1.9 million, and Randolph decided to commit his time to build the company. Hastings would own 70% of the company and Randolph 30%.
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Get the insider’s take on how Netflix went from just one in a million ideas to one that revolutionized the entertainment industry. Learn first-hand in...
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