Netflix. The company has boasted both innovation and success. Still, it is beginning to look like this has not come without a price. With Walmart and Blockbuster hot on their heels, Netflix will have to pull out some really amazing things from their bag of tricks to weather this coming storm.
LONG before his company celebrated its 2002 stock-market debut, and long before he learned that millions of customers also meant head-to-head competition with the likes of Blockbuster and Wal-Mart Stores, Reed Hastings was just another small-business man fretting his way through the 1998 holiday season, wondering if his 14-month-old start-up would survive the winter.
At the time, his company, Netflix, an online movie rental site, had few customers but plenty of skeptics convinced that a service that dispatches DVD’s by mail was quaintly absurd.
Mr. Hastings, who had previously co-founded a company that went public, had access to venture capitalists, but “basically that meant I got to hear a lot of people say no,” he said. An investment firm agreed to provide him a line of credit to help him the first year, but when the company tried to draw down money, the partners told him “they didn’t think we had a workable model.” So two days before Christmas, he crammed himself into an airplane seat to fly east from Silicon Valley for a meeting with Lighthouse Capital Partners, a California venture firm with a branch in Cambridge, Mass.