Disruption is good for business, including cannabis firms: Q&A with Netflix co-founder Marc Randolph

(Editor’s note: Marc Randolph will provide the keynote presentation, “Thinking Like a Startup and Overcoming ‘That Will Never Work,'” at MJBizCon, which is set for Dec. 11-13 in Las Vegas.)

While he may be best known for starting online movie and TV streaming service Netflix, Marc Randolph’s career as an entrepreneur spans more than four decades.

As co-founder and original CEO of Netflix, he was instrumental in building the foundation of the service, which has grown to more than 150 million subscribers.

Randolph has started more than a half dozen other successful startups, mentored hundreds of early stage entrepreneurs and invested in scores of successful technology ventures.

Most recently, he was the co-founder of Looker Data Sciences, an analytics software company, and is acting as an adviser to several other startups.

In this Q&A, Randolph shares insights with Marijuana Business Daily about why disruption is fundamental to business success and why cannabis companies should strive to remain disruptors.

Netflix has been considered a Hollywood disruptor. What might the marijuana industry learn from other business sectors’ experiences around disruption?

Unless you’re constantly willing to disrupt yourself, you leave yourself open to being disrupted by others.

And that largely means you need to ensure you are always acting and thinking like a startup: moving quickly, trying new things, pushing decisionmaking low in the organization and, most importantly, never letting your current business prevent you from doing what is needed to ensure you stay relevant in the future.

Is disruption good for business?

Disruption is great for business, since disruption suggests that new technologies, new products, new approaches and new ways of thinking are creating entirely new ways to bring goods and services to customers.

The opportunity for disruption comes about when established players are unwilling or unable to take the steps necessary to embrace these new ways – which leaves it wide open for someone new to do so.

Are there any clues to help predict when disruption is about to happen and where it’s coming from?

The moment you begin losing customers, you should make sure you understand exactly why it’s happening.

All too often what seem like trivial threats … are the ones that eventually take you down.

Can customers be more disruptive than competitors?

Yes. In fact, it’s almost always the customers who are the disruptors, not the competitors. A competitor cannot invent a new way of doing something without a customer who is pressing them to do so.

Most disruption comes from companies that are unwilling or unable to adapt to the new ways that customers demand.

How would you recommend companies develop a strategy to deal with disruption?

It’s not a strategy. It’s largely bravery. Most people clearly recognize a competitor has come up with a better way to do things, but they have many, many reasons to not respond, including:

  • Why would I allocate resources to something that is (now) only 1% of my business?
  • I can’t sell that way. My distributors will leave me.
  • I can’t price it so low. It will disrupt my entire margin structure.
  • I can’t organize like that. My best people will leave.

But I’ll let you in on a secret: Your customers don’t care about those things. They will flock to competitors who are doing the thing you are unwilling or unable to do.

And by the time you realize you really have no choice, you won’t be competing against a small upstart. You’ll be competing against someone who has become established and now has more strength, experience and power than you do.

How can cannabis entrepreneurs disrupt the marijuana industry as we know it and give consumers something they never knew they wanted?

The trick is to try things. I promise you: Nobody knows what is going to work, so the winners are going to be the companies that build a process, a system and a culture for trying hundreds of bad ideas.

That’s how you stumble on the things that people don’t know they want.

Did you encounter any of the state-by-state bureaucracy or challenges the cannabis industry faces?

I don’t know what the state-by-state challenges are that the cannabis industry faces, but early on at Netflix, we did have to deal with the fact that we did business in virtually every single political jurisdiction in the country, where we had to wrestle with taxation and obscenity laws.

Eventually, this was the reason that Netflix stopped renting and selling “adult” content. Although there was certainly no value judgment, we didn’t want to leave ourselves at the mercy of every possible local district attorney that may have been behind in the polls and needed to make an example of us.

This interview has been edited for length and clarity.

Margaret Jackson can be reached at [email protected]

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