Joined the Peace Corps after Grad School
Founded Pure Software in 1991 as an engineer, a
company based on a debugging tool for engineers
Became CEO of Pure Software in 1995
Pure Software purchased in 1997 by Rational
Software for $750 million
Money from selling Pure Software used to found
How Netflix Began
1997- Hastings receives a $40 late fee
for Apollo 13, embarrassed
DVDs not yet on the market, still the
age of VHS tapes
Idea begins with rental by mail, not
subscription based, minimal success
Decision to move on to subscription
based plan- people sign up to pay a
fixed amount per month for DVD
Remarkable success, subscription
renewal rate after free Netflix trial at
80% by 1999
Renewal rate up to 90% as of
How It Works
Users create a queue of the movies they want to watch
Users receive a movie in an envelope via mail that doubles as their return envelope
Users send back a movie to receive the next one on their queue
Several plans available after free trial period:
1 DVD at-a-time for $8.99 per month
2 DVDs at-a-time for $13.99 per month
All the way up to 8 DVDs at-a-time for $47.99 a month!
Advancements and Plans for the Future
Almost every subscription includes
unlimited online streaming of
An additional device, such as a Roku
(shown to the left), can be used to
stream select movies from Netflix to a
“We named the company Netflix
(NFLX), not DVDs by Mail because we
knew that eventually we would deliver
movies directly over the Internet.
DVDs will be around a long time, but
we’re building for the day when they’re
I’ll Tell You!
Caters to “Americans’ love of But I don’t wanna.
movies [and] their love of not
getting off the sofa even to go to
the video store” (Patrick J. Sauer)
But perhaps more importantly…
(or perhaps not):
Dealt with the late fee issue- When
VHS tapes cost $70, or DVDs were
new, late fees were necessary
Now that DVDs sell for under $20 In short…
brand new, late fee is a needless
Made our lives easier!
Pushed competing video stores
to work harder and make customers’
lives easier- beneficial for the
Abkowitz, Alyssa, comp. "How Netflix Got Started." Fortune 28 Jan. 2009. Fortune Magazine. CNN.
Web. 21 Sept. 2009.
Andrews, Paul. "Videos Without Late Fees Reed Hastings, Digital Entrepreneur." US News & World
Report 29 Dec. 2003: 64. Proquest LLC. Web. 21 Sept. 2009. <http://proquest.umi.com>.
Graham, Adam. "Video Stores Getting Squeezed by Internet, On-Demand." Detroit News [Detroit] 28
Feb. 2005. Proquest LLC. Web. 28 Sept. 2009. <http://proquest.umi.com>.
Netflix. Web. 27 Sept. 2009. <http://www.netflix.com>.
Sauer, Patrick J., comp. "How I Did It: Reed Hastings, Netflix." Inc. 1 Dec. 2005. Inc. Mansueto
Ventures LLC. Web. 21 Sept. 2009. <http://www.inc.com/magazine/20051201/qa-hastings.html>.
Schlosser, Julie. "Netflix Makes It Big In Hollywood." Fortune 13 June 2005: 34. Proquest LLC. Web.
21 Sept. 2009. <http://http://proquest.umi.com/>.
Svennson, Peter. "Netflix Delivers Internet Films to TV." Pittsburgh Post-Gazette [Pittsburgh] 24 May
2008: A.9. Proquest LLC. Web. 21 Sept. 2009. <http://sks.sirs.com/>.