What if a video rental business were run like a health club?

by | Origin Story

The rise of a number of today’s top tech firms can be traced to a “Why doesn’t somebody …” or “What if we were to…” question, in some cases inspired by the founder’s personal experience.

One such example, which has become a modern classic business story, is the origin of the Netflix video rental service. The man who would go on to start the company, Reed Hastings, was reacting to one of those frustrating everyday experiences we’ve all had. Hastings had been lax in returning some movies rented from a Blockbuster Video store and by the time he got around to it, the late charges were exorbitant. A frustrated Hastings wondered, Why should I have to pay these fees? (he has admitted that another question on his mind at the time was, How am I going explain this charge to my wife?).

Surely, others have been similarly outraged by late fees. But Hastings decided to do something about it, which led to a subsequent question: What if a video rental business were run like a health club? He then set about figuring out how to design a video rental model that had monthly membership, like a health club, with no late fees. (Years later, Hastings would question whether Netflix could and should expand its model: Why are we only renting the films and shows? What if we made them, too?)

Print Friendly, PDF & Email

You May Also Like: