Lessons from the Rise of Netflix and the Fall of Blockbuster

The year is 1997. It's movie night! You hop in the car and drive to Blockbuster. When you open the door, new movies flash out from the shelves: Independence Day, Space Jam, and Baz Luhrmann's Romeo + Juliet. Having picked out your movie--Quentin Tarantino's Reservoir Dogs--you finally make your way to the front of the line. As the teenager working the counter hits you with a $40 late fee for Apollo 13, you can't help but wonder if there's a better, more convenient way to rent movies, without late fees. A version of this story was Netflix co-founder Reed Hastings's elevator pitch when explaining the genesis of Netflix and the problem it aimed to solve. Hastings now admits he did not actually pay $40 in late fees for Apollo 13. Yet the true story of Netflix is much messier than a packaged anecdote.