"Yet beyond the shaky facts, the underlying assumption of the fable-that Blockbuster's fate rested solely, or even mostly, on a strategic decision made in a conference room in 2000, ten years before it went bankrupt in 2010-is absurd. A business's fate rarely depends on a single decision made at the top, but rather on how stakeholders are aligned around change."
"Looking back now, with Netflix worth more than $400 billion, it seems incredible that Blockbuster had the opportunity to buy it for less than pennies on the dollar and passed up the chance. You can imagine them kicking themselves for having blown the opportunity. Yet Netflix in 2000 was not the business we know today."
"First, the reason Hastings and Randolph had flown to Dallas in the first place was that the company was hemorrhaging money-more than $50 million that year. They still had not cracked the code on their subscription model, their algorithm to match customers with movies, or how to turn a profit. The only real asset they had was themselves, and given that they had just exited a startup recently, no one would expect them to stay on for long."
In early 2000, Netflix founders traveled to meet Blockbuster executives, but the popular “David vs. Goliath” version of events is likely inaccurate. The narrative that a $50 million offer was rejected in a conference room oversimplifies how business outcomes occur. Netflix in 2000 was not the mature company valued at over $400 billion today. At that time, Netflix was losing more than $50 million, had not solved its subscription model, movie-matching algorithm, or profitability. The founders’ main asset was their own capacity to continue, and they were unlikely to remain long. Their goal was to pursue a deal to make Netflix work with Blockbuster rather than simply sell it.
Read at Fast Company
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