The True Story of How Netflix Got Started (No, It Had Nothing to Do with a Late Fee)




You have likely heard that Netflix got its start because of a Blockbuster late fee. Well it turns out that is an urban myth.

Recently the cofounder of Netflix, Marc Randolph, sat down and explained how Netflix really got started and the true story is even more interesting.

The story goes back to when Randolph and Reed Hastings  ended up being fired from a software company after it was acquired by a larger company. It turned out after the merger his job was redundant and he was left with what he called a “in that wonderful Silicon Valley, golden handcuffs way,” Randolph said.

The company that fired him first asked him to stay for 6 months during the transition in case the company had questions. Both Randolph and Reed Hastings didn’t have any official duties, so they just used the company’s time to start his next company.

“We’d look at car trends, new technologies, new business models. I’d take all these ideas and bring them into the office, and I’d research them all day. At the end of the day, I would get back in the car. We’d drive home, and I would debrief Reed about everything that I had learned,” Randolph said.

At first they rejected the idea of a movie rental by mail idea. VHS tapes at the time were still the number one way people rented movies; however, about six weeks later Hastings heard about a new technology called the DVD. This small, flat, lightweight disk that would easily fit into an envelope could change everything. To make sure that it could work Randolph put a CD in a stamped envelope and dropped it into a mailbox slot.

“The very next day when Reed came to pick me up, he didn’t even say anything. He just held up this envelope with an unbroken CD in it that had gotten to his house in less than 24 hours. That’s when we said this thing actually has some promise,” Randolph said.

“Ideas do not spring out of thin air at some mythical eureka moment. You have to look for ideas,” Randolph said.

“You’ve got to train yourself to see them when they appear. The idea for Netflix, for example, did not come from some moment of anguish over a late fee on a movie. We were looking for that idea. We looked for a long time, and it was buried in this big pile of bad ideas. We didn’t even find it in a video store. We actually had the idea for Netflix while we were carpooling,” he said.

If you want to learn more about Netflix, head over to to see the full interview with Randolph.

Please follow us on Facebook and Twitter for more news, tips, and reviews.

Need cord cutting tech support? Join our new Cord Cutting Tech Support Facebook Group for help. 

Disclaimer: To address the growing use of ad blockers we now use affiliate links to sites like, streaming services, and others. Affiliate links help sites like Cord Cutters News, stay open. Affiliate links cost you nothing but help me support my family. We do not allow paid reviews on this site. As an Amazon Associate I earn from qualifying purchases.

Subscribe to Our Newsletter

* indicates required

Please select all the ways you would like to hear from :

You can unsubscribe at any time by clicking the link in the footer of our emails. For information about our privacy practices, please visit our website.

We use Mailchimp as our marketing platform. By clicking below to subscribe, you acknowledge that your information will be transferred to Mailchimp for processing. Learn more about Mailchimp’s privacy practices here.