Does the Kid Stay in the Picture? – The story of building Netflix

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.

"If I didn’t get that money, we were toast," Mr. Hastings said.


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