When I finally reached him, it was 4:30. In the background I could hear the clatter of machinery. “Almost there,” he shouted, sounding almost upbeat. “I’m just about to get the first 2,000 copies. I just need to bring them over to the labeler and then we’re ready. You should have them by late this afternoon.”
“Mitch!” I hollered. “Just come home. We’ll send them out without disc labels.”
There was a long pause. The machinery was still humming.
“Okay. I’ll be there soon.”
The press release was out, the news sites had already picked it up, and Reed and I were in the middle of a company meeting when, at 5:30, the door opened and Mitch walked in. His shirt was stained and wrinkled. He had a three-day growth of beard. His hair sprung in every direction. I’d say it looked like he’d just woken up, but the truth was just the opposite: he hadn’t slept in almost seventy-two hours.
But he did have something in his hand I had never seen before. It looked like a roll of crackers, wrapped in foil—but supersized. It was two feet long and five inches in diameter. Only when I looked more carefully could I see that it was actually fifty DVDs threaded together on a long, narrow tube of plastic. A spindle: the first one I’d ever seen.
Mitch looked like shit, but he had enough energy left to smile broadly as the entire company erupted in applause. He’d managed to bring Bill Clinton home.
I wish the story ended there. With good news: nearly 5,000 new customers (all of whom owned DVD players) had been obtained at a total cost of less than $5,000. With press exposure in the New York Times, the Wall Street Journal, the Washington Post, and USA Today. With the kind of attention even Jessica Simpson would have been hard-pressed to drum up.
Instead, the following Monday, I was just walking into the office when Corey grabbed me.
“Hey, there’s some funny comments that have been running across the board this weekend.” He spun around to his computer, where one of his DVD forums was on-screen, and scrolled furiously with his mouse. “See? Here. And here. And here. They’re saying we sent them some kind of porno?”
I sat down to look. Immediately I had a sinking feeling in my stomach.
People were certainly talking about the Clinton DVD. But when they said that their DVDs were pornographic, they didn’t mean that Clinton’s testimony was occasionally X-rated. They were saying that we had sent them real, honest-to-God pornography.
“See if you can figure out how widespread this is,” I shouted at Corey, then jumped up and ran back to the safe, where Jim and his guys were just starting to make sense of the orders that had come in overnight.
“Jim,” I gasped, trying to catch my breath, “hold up on sending out any more Clintons.”
“What’s up?” He gave me that smile. “We’ve got about forty of them packed up from yesterday afternoon ready to go out today. Want to hold them up, too, or can they go out?”
“Hold everything,” I said, then gave him a quick rundown before heading to Christina and Te.
“Here’s your problem, boss,” Jim said about half an hour later, walking over to where I sat with Christina. “See these?” He held out two DVDs. They looked identical to me. “They came off two different spindles, and they both should be the same, but if you look closely, you can see where this one”—he handed me one of the two DVDS—“is slightly different. This is the porn one. Looks like we got two spindles of these. One of them has been completely sent out. The other still has a dozen or so discs left.”
“Have you”—I didn’t know how to ask this—“watched it yet?”
There was that smile again. “Yep. Let’s just say we watched enough to know that this is the culprit.”
That night when I got home, the house was already dark. Thank goodness. I didn’t want to have to explain to Lorraine what I needed to do. I turned on our TV, powered up the DVD player, and slid the DVD into the slot. As it spun up and the image started, I knew in a second that what I was watching didn’t star Bill Clinton, Monica Lewinsky, or even Ken Starr. It was porn, all right. And nasty stuff, too. I didn’t need to watch anymore. (I promise.)
It was a big swing. And a big miss. But if you’re trying to make a dream into reality, you have to be willing to swing at a lot of pitches.
The next day we did the only thing we could. Like Bill, we came clean. We sent out a letter to every one of the nearly 5,000 people who had put in their two cents. We explained what had happened, and we apologized for the confusion and any possible offense. And if they had received the porn version, we asked that they return it to us, at our expense, after which we would gladly send them out the proper DVD.
But you know? Funny thing. Not a single person did.
12.
“I’m Losing Faith in You”
(fall 1998)
BACK IN THE STONE Age, when I was a kid, there were no video games. There was no Instagram, no Facebook, no Snapchat. There was no way to watch movies at home, unless you wanted to set up the old reel-to-reel and watch yourself as a baby. There wasn’t—in the Randolph household at least—even cable TV. The only way to rot your brain back then was by watching whatever was on the major networks. And on Saturday mornings and after school, that meant cartoons.
Back then, I’d watch anything: superhero cartoons, cartoon sitcoms like The Flintstones or The Jetsons, anything by Hanna-Barbera. But now, when I think of cartoons, I mostly remember the old stuff: Bugs Bunny and Elmer Fudd, Wile E. Coyote and the Road Runner, Tom and Jerry and Tweety and Sylvester. All of those cartoons, it strikes me now, are about pursuit—about one character chasing another, often to his doom. Elmer Fudd wants the wascally wabbit. Wile E. Coyote pants after the Road Runner. Tom and Sylvester, cats to the core, spend their lives stalking Tweety and Jerry.
Sometimes chasing a dream is like that: a singular pursuit of something nearly impossible. In the startup world, where the money is perilous and the timeline is unbelievably compressed, the day-to-day pursuit of your dream can appear frenzied—even manic—to outsiders. To your friends and family you’ll sometimes look more like Yosemite Sam than, say, Marc Randolph, successful CEO of a young e-commerce company. You’ll lose sleep, you’ll mutter to yourself while driving. When you try to explain your dream to other people, they won’t understand that it isn’t just about raising funds or customer conversion or daily monitors. It’s a surreal chase, a pursuit that gives your life meaning.
Funny thing about those cartoons—they never end in capture. They’re about evasion, disappointment, near misses. You get the feeling that if Wile E. Coyote ever actually caught the Road Runner, he wouldn’t know what to do. But that’s not the point. The point is the pursuit of the impossible.
Pursuing the impossible is a setup for pratfalls and comedy, drama and tension. Also absurdity. Because despite all the best-laid traps of Elmer Fudd or the most elaborate snares of Tom or Sylvester, a lot of those cartoons end suddenly, with anvils and pianos falling out of the sky.
Follow your dream, spend a year chasing it, and one day you might find yourself sitting dazed in a wreckage of black and white keys, bluebirds chirping around your head, with no idea of how you got there.
It was mid-September. We’d had an Indian summer in Scotts Valley, and even though it was early, I could already feel the heat coming off the pavement as I pulled the Volvo into the parking lot. The gardener must have gotten an early start to beat the heat: a hundred feet of freshly planted flowers already filled the beds lining either side of the driveway to our offices. I wasn’t sure what they were—tulips, maybe—but I couldn’t help but admire the neat rows and bright colors, every plant healthy and vibrant and new. I parked next to his wheelbarrow and noticed it was loaded high with last week’s flowers: uprooted daffodils, browned and wilted, dirt clinging to their shredded roots.
The circle of life.
A few parking spots over, Eric was struggling to load four new PCs onto an office chair, which he was using as a makeshift handcart. With the injection of money f
rom IVP, as well as Tim Haley’s recruiting expertise, we’d been on a hiring spree. Each week brought a few new faces to the office. We were only at forty employees, so I still knew everybody—but I was starting to realize that there would soon be a day I didn’t.
“Let me give you a hand,” I said, picking up one of the boxes and balancing it between my briefcase and my hip.
“We really should invest in a real handcart,” Eric said as we squeaked up the ramp and into the offices.
Christina looked up from her computer when we passed, then went back to typing. “Reed stopped by this morning,” she said, tilting her head toward me but keeping her eyes angled at her screen. “Super-early, like six a.m. Said he was going to stop by again on his way back from the Valley tonight. He wants you to stick around until then.”
“That it?”
Christina nodded. “That’s it.”
I didn’t have much time to dwell on what Reed wanted, but I could guess. Most likely it was the Sony deal. Scammer aside, we were starting to see real returns from it—people were redeeming their coupons. It was by far the biggest bet we’d ever made, and considering all the chips we’d pushed into the middle, we needed it to pay off.
Or it could be an agreement with Amazon we’d been finessing ever since meeting with Bezos in June. We hadn’t been ready to sell then, but Reed had been ready to partner with Amazon in a different capacity. Reed agreed with me that if we were going to make it as a company, we’d have to focus on renting DVDs, not selling them. So he’d engineered a soft exit: Once Amazon moved into DVD, we’d push our users who wanted to buy DVDs there. They could rent through us, and buy through Amazon, via a link. In exchange, Amazon would direct traffic our way.
Nothing about this deal was official yet. In fact, in September, I think I was the only one who knew about it. Reed and I had been going back and forth on the subject for weeks. Even though halting DVD sales had been my idea, the thought of jettisoning the only profitable part of our business still made me nervous. But Reed and I were both convinced that we had to choose what we were going to focus on, and partnering with Amazon would not only reinvigorate our rentals, it would be a real feather in our cap. It would validate us.
We were thinking a lot about validation in those days. That’s how Tim Haley saw the Sony deal: if they were willing to work with us, we were worth investing in. Sony made us credible—even at an incredible cost. A partnership with Amazon, in Reed’s view, could do the same thing.
I was dying to find out what had happened over the weekend. How many new Sony customers had ripped open their new players, noted down their product serial numbers, and headed to Netflix to redeem their offers? I knew Reed was equally curious. Maybe he thought we would have new numbers to go over at the end of the day. I made a note to myself to make sure I had up-to-date reports before he came back. But for now, there were plenty of other things to worry about. Like the morning monitors.
It was nearly six when Reed finally swept in. I was writing copy, but I could hear his progress through the office, from the front to the back. First, I heard the beach chair creaking in front of Eric’s desk as Reed pulled it around to Eric’s side so he could point something out on the screen. Then, a few minutes later, I heard him asking our controller, Greg Julien, for an update on cash. Soon he made his way back to my office.
“Got a minute,” he said, with no upward inflection, like it wasn’t a question, like he almost hoped I didn’t.
Reed looked serious. And he was dressed the part, in the formal (for him) outfit he wore only for important meetings: black linen pants and a gray turtleneck, with black dress shoes. I pointed to his neck and tried to make a joke of it—“Reed, it’s almost ninety outside”—but he didn’t seem to hear me.
“We need to talk,” he said. He was carrying his notebook computer open in his hand, holding it by the corner of the screen with the keyboard hanging below. I could see that it was open to a PowerPoint slideshow, and I could just make out the first slide. ACCOMPLISHMENTS, it read, in bold 36-point type.
Reed stepped into the room, grabbed the chair in front of my desk, and in one motion swung it around to my side, with the seat facing out. He straddled it, leaning his chest across the back, then spun the laptop so I could see the screen. It was exactly what he did when he wanted to show Eric how badly he’d bungled a piece of code.
Where is this going, I thought.
“Marc,” Reed started slowly, “I’ve been thinking a lot about the future. And I’m worried.”
He paused, trying to read my face. Then he pursed his lips, looking down at the screen like it was a set of cue cards, and continued. “I’m worried about us. Actually, I’m worried about you. About your judgment.”
“What?” My mouth, I’m sure, dropped open.
Reed directed my attention to the screen, then hit the space bar. One by one, “accomplishments” animated their way onto the screen.
Hired original team.
Established coherent culture.
Launched site.
It was like a slideshow at a funeral. I could tell it wasn’t going to get better from here.
“What the fuck, Reed,” I finally managed to blurt out. “You’re concerned about where we’re going, and you’re going to lay it out for me in fucking PowerPoint?”
My voice had started to rise, but then, noticing my office door was still open, I dropped it to a whisper.
“This is bullshit,” I hissed, pointing at the laptop. “There is no way I’m sitting here while you pitch me on why I suck.”
Reed blinked and sat still. I could tell he hadn’t expected this reaction. He pursed his lips again. I knew he was analyzing pros and cons, evaluating his next steps, his mind whirring just like the cooling fan in the Dell in front of us, still displaying its list of my accomplishments. After about ten seconds he nodded, then reached over and shut the computer.
“Okay,” he said. “This isn’t about how you suck, though.”
“Good,” I stammered. “Okay.” I could feel my anger subsiding, replaced now by a sense of dread. I stood up and closed the office door.
“Marc,” Reed started in as I settled back into my seat, “you’ve done some amazing things here.”
He paused.
“But I’m losing faith in your ability to lead the company alone. Your strategic sense is erratic—sometimes right on, and sometime way off. I’ve seen issues with judgment, hiring, financial instincts. And I’m concerned that I’m seeing these kinds of issues at our small size. Next year’s problems and the year after’s will be much harder, and the consequences for missteps much more severe. Things are only going to get worse as the company grows.”
There’s a speaking tactic in business, useful for breaking bad news. It’s called a shit sandwich. You open up with a string of compliments, praise for work well done. That’s your first piece of bread. Once that’s done, you pile on the shit: the bad news, the less than glowing report, the things your audience doesn’t particularly enjoy hearing. You close with more bread: a blueprint for moving forward, a plan for dealing with all the shit.
I’m quite familiar with the shit sandwich. Hell, I’d taught Reed how to make one. So it was with a peculiar mix of bewilderment and a teacher’s pride that I watched him serve one up to me on a silver platter.
“You don’t think I’m a good CEO,” I said, cutting him off.
“I don’t think you’re a complete CEO,” Reed said. “A complete CEO wouldn’t have to rely on the guidance of the board as much as you do.”
He put his fingertips together and touched them to his chin, as though praying that he could get through what he was trying to say to me. “I think we both know that IVP was only willing to invest in us because I promised that I would be actively involved as chairman. That’s a problem. And it’s not just fund-raising. One of the reasons I’ve been so active is because I’m scared about what would happen to the business if I weren’t. I don’t mind the time, but the results to date hav
e not been sufficient. No one can add enough value from the outside. Especially as the pace picks up.”
For the next five minutes, Reed laid out a meticulous argument for why the company was in trouble, if I were to continue leading it alone. He put forth a clear-eyed assessment of my first year in charge, my accomplishments and my failures. It was like watching a computer play chess, ruthlessly and quickly. His analysis was both detailed and general—it veered from individual hires I’d made to errors in accounting to corporate communications. It all went by in a blur, but one thing he said really stuck out.
“You don’t appear tough and candid enough to hold strong people’s respect,” he said. “On the good side, no one good has quit, and your people like you.”
I had to smile at that. Forget radical honesty. This was brutal honesty. Ruthless honesty.
“Gee, thanks,” I said. “Put that one on my tombstone: He may have run his business into the ground, but no one good quit, and his people liked him.”
Reed didn’t react to this bit of gallows humor at all. He just kept going, like he was reciting something he’d memorized. I’d taken away his slides, but this was a speech he’d definitely rehearsed. He was nervous about delivering it.
“Marc,” Reed said, “we’re headed for trouble, and I want you to recognize as a shareholder that there is enough smoke at this small business size that fire at a larger size is likely. Ours is an execution play. We have to move fast and almost flawlessly. The competition will be direct and strong. Yahoo! went from a grad school project to a six-billion-dollar company on awesome execution. We have to do the same thing. I’m not sure we can if you’re the only one in charge.”
He paused, then looked down, as if trying to gain the strength to do something difficult. He looked up again, right at me. I remember thinking: He’s looking me in the eye.
“So I think the best possible outcome would be if I joined the company full-time and we ran it together. Me as CEO, you as president.”
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