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Investment Thesis

The VC firm Redpoint is considering investing in Netflix because its founders have a clear vision and exceptional track records of success. Netflix aims to disrupt the $16 billion television industry by delivering DVDs directly to customers' doors, saving them both time and money compared to renting from stores. The founders have diverse business experience and understand what it takes to build a successful startup. Investing in Netflix has the potential for significant financial returns if the company can gain even a small portion of the large market it aims to disrupt.

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Eshan Rasul
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300 views

Investment Thesis

The VC firm Redpoint is considering investing in Netflix because its founders have a clear vision and exceptional track records of success. Netflix aims to disrupt the $16 billion television industry by delivering DVDs directly to customers' doors, saving them both time and money compared to renting from stores. The founders have diverse business experience and understand what it takes to build a successful startup. Investing in Netflix has the potential for significant financial returns if the company can gain even a small portion of the large market it aims to disrupt.

Uploaded by

Eshan Rasul
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Investment Thesis 

 
Redpoint is a VC that prides itself on partnering with innovative companies that have not only a clear vision for the 
future but have founders that are exceptional in their own ways. Netflix is creating an online service that delivers 
DVDs to an individual’s doorstep. Its founders; Reed Hastings and Marc Randolph have been successful in the past 
and will stay successful in the future and for these reasons and the fact that it has the potential to majorly disrupt the 
television industry, I believe that it will provide a ton of value to our portfolio. 

Diagnostic on the Problem (Including the Market) 


 
According to the A.C. Nielsen Co., the average American watches more than 4 hours of TV each day, but for many, it’s 
inconvenient to watch their favorite movies, as they have to go out and purchase that specific DVD to use. This is a 
ripe opportunity, in a market whose valuation is around 16 billion dollars. If Netflix is able to disrupt this and take just 
a small portion of the market it would make us a significant amount of money. 
 
Diagnostic on the Solution 
 
Netflix is an online rent-by-mail service that delivers consumers favorite DVDs to their doorstep. The model entails a 
4$ cost to the DVD along with a 2$ postal charge. (Pay-per-rental) Alternatively, a consumer would have to spend 
$10+ buying the DVD from their local store. Once they are done watching, it is posted back on the site for another 
person to rent. This is a very attractive and financially sustainable model as it saves both time and money. 
 
Diagnostic on the Founders 
 
Reed Hastings was the founder of Integrity QA, a company that was acquired by Pure Atria and was previously 
employed at Adaptive Technologies. His co-founder Marc Randolph is also very experienced working for companies 
such as Cherry Lane Music, Integrity QA, MicroWarehouse, and Borland International. He has experience in both 
founding and leadership roles along with heading marketing sectors of big companies, meaning that he and his 
partner have a lot of value to bring to the table. 
 
Diagnostic on Competitors or Alternatives 
 
The market potential for consumer-based online services is growing exponentially by the month. Companies that 
pioneer in this space have the potential to massively disrupt the industry, toppling current retail giants like 
Blockbuster, Movie Gallery, and Hollywood Video. Currently, the companies listed are Netflix’s direct competitors but 
they are operating in a completely different offline space. With the everyday expansion of the internet, Netflix has the 
potential to take advantage of a market that its competitors are blind to. 
 

General Thoughts around Success and Failure 


 
With their very diverse and experienced backgrounds, founders Reed Hastings and March Randolph have a high 
potential to take this startup to the next level and become massively successful. Not only do they understand what it 
means to work hard and build a company, but they are operating in a space that is ripe for disruption. One that is 
virtually untouched by their distant retail giant competitors. And for these reasons, I believe that investing in this 
company will add a plethora of benefits to redpoint’s portfolio as the financial benefit is evident in a 16 billion dollar 
market along with experienced founders looking to disrupt the DVD industry as we know it. 
 
 
 
 
 

 
 
 
 
 
 

 
 

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