Chapter 303： good chance

From the earliest idea of ​​Netflix, Ronan hired an economic research company to watch Netflix. Two years later, he spent hundreds of thousands of dollars in this area.

I have also gained a lot. Not only did I get a file cabinet full of relevant information, but two investigators from this company also joined Netflix during Netflix’s recruitment process. They became employees with a not-so-low position and could clearly understand this company. Every move of the company.

After meeting Reed Hastings at the party, Ronan also asked Robert Lee to contact him a few times. He wanted to invest in Netflix, but Reed Hastings refused. What is needed is more than funds, but also a platform.

Netflix’s initial equity was almost entirely in the hands of the two co-founders Reed Hastings and Mark Randolph. Just like Relativity Entertainment, as long as the other party is unwilling, there is almost no good way to acquire it.

Ronan also considered starting a new website company. After all, the last job in his previous life was the Internet video business, and his profession was the equivalent. However, after seeing several reports sent by the survey company, he thought about it and finally gave up. idea.

Times are different, and businesses are also different. Netflix's entrepreneurship is more than difficult to describe.

Seeing that Netflix has burned money over the past few years to build an online leasing and picking system, straighten out postal channels, build a warehousing platform, etc. in the survey report, Ronan knew that he couldn't take care of both at the same time.

The money burned by Netflix in the past few years absolutely exceeds the value of the company at this stage.

Ronan is not afraid of difficulties, but lack of funds and energy. It is almost impossible for him to quickly develop film production and distribution companies, to fool people everywhere to invest in films, and to complete another version of Netflix. Task completed.

He has always had a clear-headed mind, knowing that his energy is limited, his funds are also limited, and the stalls at the start-up stage are too large, and he is likely to end up in hatred eventually.

In contrast, it is more in line with Ronan's reality to complete the start-up at Netflix, set up the basic structure, and wait until it wants to further expand the business and face an extremely difficult situation.

After several years of painstaking efforts, Relativity Entertainment has been on the right track, integrating production and distribution, and has accumulated a certain amount of funds through several big-selling movies.

Ronan can now not only spare his energy to take care of other aspects, but he also holds the most critical funds to achieve his goals.

Since March 2000, the Internet industry has been wailing, and Netflix is ​​no exception. Since then, the situation has been bad.

Sitting in the office, Ronan looked at Netflix's investigation reports for more than a year. From the analysis sent by these Netflix insiders, he could undoubtedly see clearly the situation of Netflix.

Netflix’s main business, Internet rental and sales of movie DVDs, has grown extremely slowly in the past year, and its losses have doubled every year. Reed Hastings is also constantly adjusting its internal management. Like most startups, Netflix's startup team will inevitably be marginalized when the startup stage is completed.

It was Mark Randolph who really led Netflix to complete the business. His initial entrepreneurial team has fallen apart, and most of them have left Netflix.

However, Mark Randolph had a close friendship with Reed Hastings, and his own desire for power was relatively weak. He still stayed at Netflix as president to assist Reed Hastings.

After reading these investigation reports carefully again, Ronan clearly realized that the best opportunity to start with Netflix had arrived.

The two entrepreneurs of Netflix, especially Reed Hastings, not only had the idea of ​​shooting Netflix, but were also looking for suitable candidates.

Ronan in his previous life, because of the industry he was engaged in, had studied Netflix a lot, and he clearly remembered that after the dot-com bubble burst, Ronan didn’t just want to sell Netflix, but no one cares about it. Under the circumstances, even begged to the head of the rival Blockbuster.

According to news reports, Reed Hastings was dissatisfied with Blockbuster leasing late fees and founded Netflix with Mark Randolph after his software company was acquired.

Ronan collected these materials, leaving only two copies, and then read them carefully.

One is the financing situation of Netflix in the past two years.

Reed Hastings has not found any funds. As a former executive and shareholder of a software company, he has considerable assets himself. In the early stage of his business, he also raised a lot of funds through mortgage loans, which also made Netflix. It lasted until the end of 1999.

During this time period, when Internet stocks became popular, Netflix also had nearly six-figure registered members. With Reed Hastings’ efforts, it finally caused the ideal big company and big fund company Attention, has obtained venture capital and large platform promotion opportunities.

In early 2000, the French giant Arnault Group, after several rounds of field visits to Netflix and two months of negotiations with Reed Hastings, prepared to invest in Netflix.

This venture investment is divided into two rounds, which are 30 million US dollars in mid-2000 and 100 million US dollars in early 2001.

At the same time, Arnault Group will be responsible for vigorously promoting Netflix.

Big group, big platform, big investment, if this deal can be concluded, Netflix is ​​definitely not the current situation.

Ronan had already received the relevant report at that time, but he just kept a close eye on it and didn't do much, because the first investment will be made in mid-2000.

Unsurprisingly, after the Internet stocks crash in March, Arnault Group cancelled all investment plans for Netflix.

This is not the situation faced by Netflix.

The bursting of the Internet company bubble was the Silicon Valley version of the sandstorm. Young software engineers took worthless stock options as compensation, haunted abandoned office parks, searched for jobs in vain, and many people had to return to campus. , Seeking to become a lawyer or an accountant.

It is very difficult for Reed Hastings to prove that Netflix still has a bright future in the wave of the collapse of Internet companies.

After more than a year of persistence, there was a corresponding second report.

This is an incident that just happened last week.

Reed Hastings flew to Texas specifically, went to Dallas to meet with Ed Steed, the president of Blockbuster,

Ronan judged based on the situation passed by the investigator that this should be what Reed Hastings remembered to sell Netflix to Blockbuster.

In my memory, the two sides did not reach a deal. Even if they did reach an agreement, Ronan had time to make a move. Reed Hastings was a businessman after all.

The report obtained also proved Ronan's guess.

Reed Hastings did not attract any attention from Blockbuster. After Ed Steed met with him, he threw it to his agent, John Antiok.

This actually shows the attitude of Blockbuster.

But Reed Hastings did not give up and explained his proposal to the Blockbuster staff headed by John Antioch: Blockbuster acquires Netflix and turns Netflix into Blockbuster's right-hand man on the Internet.

In his view, this is a win-win result. It can save Blockbuster’s huge cost of converting its vast inventory of video tapes into DVDs, and open up Blockbuster’s presence on the Internet, while Netflix can effectively use Blockbuster’s store accumulation. Of more than 20 million active users.

Netflix, which has become a subsidiary of Blockbuster, will focus its main business on old films and niche films, while leaving the new film business, which accounts for 80% of its business volume, to Blockbuster.

At the same time, Netflix can put promotional materials and registered computers in every Blockbuster chain store.

In order to sell Netflix, Reed Hastings developed a strategy that seemed quite good.

Moreover, his asking price is not high, $50 million.

This figure is far inferior to the money Netflix has burned in recent years.

If you look at this transaction from the future perspective, it is simply too cost-effective. Blockbuster will not only get the opportunity to enter the Internet, but also realize its transformation.

But in the current environment, some things look completely different.

The Blockbuster staff led by John Antioch had no interest in Netflix at all. They expressed serious doubts about the viability of Internet companies and said the market had overestimated the untested business model.

This is not just the opinion of Blockbuster. In the report Ronan received, when John Antioch mocked Reed Hastings's proposal, Netflix's entourage was not surprised at all.

Even Netflix executives do not believe that Blockbuster will buy Netflix at a high price of $50 million.

At the subsequent Netflix meeting, Reed Hastings vowed to say that Blockbuster made a mistake and they would soon regret it.

Ronan believes that this statement is very likely to become reality, but Reed Hastings is actually bluffing, because since Dallas ended his meeting with the top executives of Blockbuster, Reed Hastings has not given up selling Netflix. Thoughts.

Judging from the exact analysis of the investigators, Reed Hastings is currently hesitant.

On the one hand, companies that don’t want to let go of starting a business are looking for ways to put Netflix on the right track On the other hand, Netflix lacks funds for sustainable development, and Reed Hastings is debt-ridden. Want to sell Netflix to get out of its predicament.

Just like Ronan runs Relativity Entertainment, it is not easy for any startup company to develop.

Today Netflix has a complete platform architecture, and the funds burned to complete these architectures far exceed the actual value of the company at this stage.

From this perspective alone, Ronan’s acquisition is very cost-effective.

In the past few days, Ronan has gathered senior executives of Relativity Entertainment, especially Mary, Robert Lee, George Clint and Garcia Rodriguez, to discuss the feasibility of acquiring Relativity Entertainment to acquire Netflix.

But Ronan was a little surprised that before Relativity Entertainment contacted Netflix, Reed Hastings took the initiative to find Embassy Pictures.

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