Mitch Lowe: Leaps and Bounds Ahead of the Curve
Mitch Lowe, co-founder of Netflix and former Redbox president, has shifted gears from building his own multi-billion dollar business empire to utilizing his innovative strengths to help young entrepreneurs successfully establish theirs.
Lowe's current role as an Entrepreneurial Adviser befits him, as his track record at Netflix proves that he has the knowledge required to take a company from inception to millions. Lowe was a Keynote Speaker at Credit Suisse's February 5 and 6 Entrepreneurs Summit, which focused on the theme of "Beyond Innovation" and imparted wisdom on numerous aspects of entrepreneurship.
An Unconventional Path
Unique is an adjective that suits Lowe, who has been distinctive since adolescence. Born in California, he dropped out of high school during his final year to tour Europe. This early impulse to march to the beat of his own drum was indicative of how he would continue as an entrepreneur – as a leader, not a follower.
In 1982, with $25,000 in capital, Lowe invested in a video chain, which led to his development of a video rental machine he named Video Droid. Unfortunately, customers, who had an overabundance of video stores to choose from, didn't see the need for Video Droid, and the company fared poorly. "It was one of those things that looked good on paper," Lowe says.
Keep Moving Ahead
Although Video Droid had low sales, it drew the interest of a Japanese trading company. Four years after launching, Lowe sold Video Droid's 69 retail machines to the company and opened several Video Droid video rental stores in California. Not one to be deterred, he spent the next decade behind the video rental counter, where he learned about the needs and expectations of his customers.
After working more than 13,000 hours in his stores, Lowe was well-acquainted with where the video rental industry was headed, what renters wanted, and which market he could tap next.
The Meeting That Changed Entertainment
At a trade show in 1997, Lowe met Marc Randolph, a co-founder of a computer mail order company named MicroWarehouse. Lowe and Randolph spoke about the possibility of introducing mailing to the video rental industry. Shortly thereafter, Reed Hastings, who Randolph had worked with at Hastings's company Pure Software, entered the picture. Hastings would finance Netflix using proceeds from the subsequent sale of Pure Software.
Netflix was launched in 1997 with 30 employees and 925 DVDs available to rent by Internet. Two years later, the company introduced a monthly subscription model. Ten years after the company launched, online streaming of TV shows, movies, and documentaries became available. To date, Netflix has delivered nearly two billion DVDs and has 50 million customers worldwide.
"What we really were trying to do was take advantage of the amazing Silicon Valley dot-com boom," Lowe says of the company's early days. But Netflix's success turned the video rental industry on its head. Mega video rental stores, with their late fees and membership cards, soon began to flounder.
Identifying and Then Fixing the Problem
Not only has Lowe progressed with the times, but he also has predicted future demands of video rental customers while creating demand for media products. His acumen has been twofold: understanding customers and adjusting to their needs in fast-paced times.
When customers requested faster DVD delivery times, Lowe and the Netflix team made streaming video rentals available to those who could afford Internet access. For economically strained customers, Netflix offered deals shortening delivery times from one to three days.
"We got really good at understanding where to allocate resources in order to drive consumers' love of Netflix," Lowe explains. When he and Hastings realized that they had an abundance of stock in the Netflix warehouse, they diversified their offerings to include video rental by mail, online streaming, and subscriptions that offered both options. In other words, Lowe says, the company frequently "fine-tuned the product."
At Netflix, Redbox, and Quarterly.Co, an online magazine he later ran, Lowe would utilize surveys to get feedback from customers on what the company could do better. Redbox, for example, received 40,000 completed surveys every other week. Upon receiving this feedback, the biggest question for the company became, "What's the number one thing we should do to improve?"
Life After Netflix
Lowe left Netflix in 2003 to help Redbox, a McDonald's-funded DVD rental company, get off the ground. In Lowe's tenure as COO and then President, Redbox grew from eleven kiosks to over 2,000 and garnered $1.5 billion in annual revenue. When he left Redbox in 2011, both Quarterly.Co, an innovative online publication, and Medbox, a medicine dispenser company, asked for his help as an adviser and appointed him as CEO and Director, respectively.
"I love working with young entrepreneurs starting new businesses," Lowe says. His top advice to the next generation of young entrepreneurs: "First and foremost, have a product or a service that's easy to understand."
Prioritizing for Success
"Any idea can succeed if you just identify the one or two things that are most important to do at a time," Lowe says. In addition to prioritization, he emphasizes focus, analytics, and resources. Because today's markets are highly competitive, he stresses the importance of creating a product that customers will love and speak highly of.
With countless new startups emerging, innovation is increasingly difficult. Yet Lowe believes that the steps to success are not complicated. The way to determine what the market wants is simple, he says. All you need to do is "dig in deeper with the customer."