Alec Hogg: Netflix cracks ‘think local, act global’ code

In "That Will Never Work", his book about the formative years of Netflix, co-founder Marc Randolph dedicates chapter 10 to the story of when the company almost sold to Jeff Bezos's Amazon in mid-1998..The opening page describes how Randolph and his now iconic partner Reed Hastings, got lost in an area of Seattle which "looked like a movie set of skid row", before eventually finding the rundown building where Bezos and his crew were headquartered..___STEADY_PAYWALL___.Bezos was sitting on $54m in fresh capital after taking Amazon public in 1997. He was hunting for promising smaller companies to help the then 600-employee business expand outside its core market of selling books..Randolph describes how Bezos's desk, and those of two colleagues he shared an office with, were doors mounted on triangular legs. "A deliberate message," Bezos explained, "It's a way of saying that we spend money on things that affect our customers, not on things that don't.".The proposed deal broke down on price – Bezos was looking to buy the fledgling Netflix for $15m; Hastings (who owned 70%) wanted close to $100m. For Hastings, however, the key outcome of the meeting was being told Amazon was going to start selling DVDs, which was what Netflix's business focused on..To steer clear of the Bezos Bulldozer, Hastings took Netflix away from its only profitable arm and bet the farm on rentals-by-mail. That decision to switch horses mid-stream created the foundation for today's global enterprise..It is this global reach which is now putting the Netflix share price on rocket fuel..Since mid-August the Netflix share price has risen by $100 to a new peak over $600. As the graph below from our partners at the Wall Street Journal shows, in those six weeks Netflix (black line) has outperformed a soggy Nasdaq (blue line) by 16%..Reason: investors have realised Netflix is one of the best examples of profiting from intercultural marketing by thinking locally, acting globally. The potency of its model is now being reflected in the way its locally-produced and focused content is being accepted by global audiences..Last year's UK period drama Bridgerton, the most watched Netflix series ever, is about to be surpassed by just-released Korean-made Squid Game. Current number two on Netflix's all-time list is the dubbed French series Lupin. That's followed by The Witcher, which is based on a Polish series of books..The Squid Game news focused investors' minds on the power of the evolving Netflix model..The stock's share price has now more than doubled since being added to the BizNews Share portfolio two years ago. Pandemic-inspired lockdowns helped, but the real booster is likely to be the way it has cracked the "think local, act global" code. That's a powerful support for the sustainability of a business whose J-curve only recently broke into profit..Our portfolio's top performer, Amazon, delivered a return of almost 1 000% (from $328 to $3 200- ie a near ten-bagger) since purchased at the portfolio's creation in December 2014. Now that the global Netflix model is starting to kick in, it would be no surprise to see Reed Hastings' business delivering a similar reward..More for you to read today (click on linked headline to access) –.* Empty buildings in China's provincial cities testify to Evergrande debacle. The property giant borrowed heavily to develop in out-of-the way places like Lu'an..* The ACLU decides 'Woman' is a bad word. The group bowdlerises a Ruth Bader Ginsberg quote to refer to a 'person's' pregnancy..* A sober cautious movement builds online, targeting 'grey area' drinking. After a pandemic surge in alcohol consumption, new services promise to help drinkers cut back..NB FOR YOUR WALL STREET JOURNAL ACCESS….As a Premium subscriber you are entitled to full membership of wsj.com (normal price $29 a month). Be sure to action your access through the Premium link on the BizNews website. Because of The Wall Street Journal's credential requirements, be sure to create a password which has at least 8 characters and includes at least one letter and one number – NB it MAY NOT contain any special characters (ie #, !, @ etc). To maintain access to WSJ.com, you MUST enter our partner's website via BizNews Premium at least once a month. A final PS, if you had previously signed up for WSJ you'll need to clear the cookies from your device. Our help desk can assist – support@biznews.com.If you'd like to help sustain our independent voice, why not share the love by making a gift that keeps giving? Click here to access the BizNews Premium subscription signup form, and be sure tick the relevant box (see below). At R100 a month and inclusive of full membership of The Wall Street Journal, it's a mind-expanding gift at an incredibly modest price.

Alec Hogg: Netflix cracks ‘think local, act global’ code

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