Imagine turning down a $50 million offer for a company that's worth hundreds of billions today. That's exactly what Blockbuster did to Netflix, back in 2000.
Back then, Blockbuster ruled the world. Thousands of stores. Billions in revenue. Netflix was a tiny startup mailing DVDs in red envelopes.
Reed Hastings flew to Dallas and pitched the deal himself. Blockbuster's executives didn't even take him seriously. They laughed him out of the room.
But here's the mistake nobody talks about. Blockbuster didn't realize how much people hated their business model.
See, late fees weren't some side hustle for Blockbuster. In 2000 alone, they pulled in $800 million from late fees. That's 16% of their entire revenue. They were making money off punishing you for being late.
Netflix saw that pain point and flipped it. No late fees. No driving to a store. Just movies straight to your mailbox.
By the time Blockbuster figured out the internet was the future, it was too late. They were drowning in debt. Netflix pivoted into streaming and never looked back.
Today, Netflix is worth over $200 billion. Blockbuster? One store left, in Oregon, and it's a tourist trap.
"The lesson is simple: if your business model runs on annoying your customers, somebody else is going to win by making them happy."
Think you could've explained this better? Prove it.
Stitch my latest TikTok and let's let the internet decide who's more obnoxious — @kirkpadmore. Same handle on YouTube and IG.
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