Roku: Anthony Wood

It's amazing the number of media company executives that didn't think streaming would be popular. They just thought there's nothing wrong with cable and satellite, the world is not gonna change. When it was so clear that of course it's gonna change. The internet has disrupted every industry and it's gonna disrupt video as well. In fact I see it as a pretty big competitive advantage that people underestimate us and so They're always surprised when they lose.

Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements. They built. I'm Guy Roz and on the show today, how Anthony Wood helped transform the way we watch television. First with the D VR. And then with Roku.

A massive streaming platform with a remote that's simple enough. for your grandparents to figure out. Big impact on how we live our lives. So Starbucks is an obvious one.

Because even if you don't drink their espresso drinks It's because of Starbucks' influence that you can get great espresso drinks almost anywhere in the United States. You might not use PayPal to send money, but the PayPal model has changed how we pay for stuff. Same with AOL or DoorDash or Instagram or many of the other brands that have been on the show in the past. In some way, large or small,

They change the way that you and me and most people we know live. And this is basically what Anthony Wood wanted to do. He wanted to change how we watch television. And he managed to succeed. Twice.

Even though the first attempt ended in defeat. That defeat happened in the early 2000s with a product Anthony created called Replay TV. Replay TV was a digital video recorder very similar to TV. And Antony Wood?

Keep Basically invented the D VR. Except Right when he launched his product TiVo did the same.

and manage to outmaneuver him. Yeah. And that could have been Antony's story, invent the D VR, but lose out to another company. Except. As it turns out.

Anthony was just getting started. His experience with replay TV triggered this idea that a single product could have a major impact. In this case A single device could change a relationship to TV. It could give us a lot more control over what we watched, and

When? So in two thousand two Antony set out to start something that would wind up having even more of a cultural impact than the DVR. Roku. Roku was a device that let people stream content directly from the internet.

And screaming. Changed everything. Along with Apple TV and Chromecast and Fire. Roku helped usher in an entirely new way of interacting with television. And what set it apart was its simplicity. Roku was made to be so easy to use, so intuitive,

that your 90 year old grandmother could figure it out within minutes. Today, the company has more than sixty five million active users, which means It's a giant, perhaps the biggest giant when it comes to home streaming products. And the man who came up with the idea, Anthony Wood, has also pushed the company into the production business.

Recently, Roku produced a biopic parody of Weird Al Yankovic called Weird. Anyway, Antony grew up in the nineteen seventies, mostly in Houston. His dad was an aircraft engineer and by middle school. Antony discovered computers and was soon writing his own software, and eventually Trying to sell it.

But when he started college at Texas AM He didn't major in computer science. I didn't want to do computers'cause I was a little arrogant I think looking back on it and thinking that I kind of knew everything there was to know about computers or programming. If anything, I used to think a lot about how to I was more interested in like And would starting a company be a good way to make money?

Yeah. And um I'm not sure why I wanted money, except that I remember I wanted a better modem and I could only afford a certain kind of modem. I could only afford a three hundred bod modem instead of a twelve hundred bod. modem, so it wasn't clear why

I was motivated to have money, but other than Uh just earning money. you know, was sort of a characteristic of our family, basically. Like go out there and make some money. When you were in college, one of those ways to make money was I mean, of course you knew how to write

software, basic software. And I guess you decided to start Like a little company. Making software. Commodore.

Uh, what was the software that you You were making. The first product we made I was into kinda digital audio stuff back then, which was a new thing.

And so I made a something called a sound digitizer that would record stereo. I mean back then computers didn't do that. It would basically let you hook up your C D player or your microphone to your com your personal computer and record it. Record it. And then software for editing it. And that was call I called that perfect sound.

And that was f fairly successful, actually. That was the first product I sold. So you call this company Sunrise. Uh and and the idea was to sell this um Who I mean, you're a junior in college.

making the software and hardware and who who who are you selling it to? How are you selling it to people? Well I Would have my friends build it. And then There was a computer store in Houston called MicroSearch.

And uh The guy that ran it. It was pretty entrepreneurial. And he would distribute it, basically, and sell it. Yeah, then I figured out how you

sold stuff to stores and so then I started we started doing it ourselves. And then we start adding other products besides the sound digitizer. This became like uh real business. Like you started to make money. I mean I think uh read s almost a hundred thousand dollars in profits at a certain point. Yeah.

would make about a hundred thousand dollars a year, which for a college student Was was good money. It wasn't like, you know, Mark Zuckerberg or Bill Gates kinda money. But but and then the other thing I learned a lot You know, I learned a lot about business, obviously doing it. One of the things I learned about business is One of my big lessons was the amount of money you have to report on your tax return is unrelated to how much cash you have in the bank.

In the hardware business. You know, you gotta buy parts, you assemble them. So you gotta buy the parts, you gotta pay for the parts in advance. You assemble them into the things you're gonna sell. And then you sell those things and then those people that buy them the stores they take thirty days or ninety days to pay you. So you don't get paid.

for a long time after you buy the parts. And so it's a cash You have a cash flow issue and so But you pay taxes on The sales no matter what. And so I remember being sort of outraged that I had to pay

Taxes on money I didn't have. Um, I guess while you were running this business,'cause it was so successful, your grade started to suffer like you couldn't you were not going to class because you were focused on this Yep, so we got up I think we got up to about fourteen employees at a little office, and I would sign up. For classes.

And um they sent me a letter saying that I was on probation at one semester. And so I decided well, I would regret Not finishing my. So I'm I decided that I would

Basically stopped doing what I was doing. Go back to school full time. get my degree and then kinda restart it. So that that's what I did. So I think you were twenty five, or about twenty five when you when you got your degree. And uh and one of the people that who had worked for you at Sunrise was uh it's not your wife, Susan, right? Yes, that's where I met my wife Susan. I hired her. Uh very controversial at the time that I started dating someone I had hired.

Yeah. Printer circuit board assembly. And um then after college when we moved out to Silicon Valley, she was the office manager for for the new version of the company.

Mm. And I remember it was f kinda funny because I didn't really know where Silicon Valley was. I mean I knew it was in Northern California, but I remember we had our map out. Driving around trying to find out where is this Silicon Valley thing. And uh it's not on the maps. So you came out to Silicon Valley not with the intention of getting a job at a bigger company. But to reconstitute sunrise and to to basically just build it up there. And that was what you were building. Yeah, but this time more focused on audio and more specifically focused on professional audio.

Um, you ran that you would run that business for five years. And I guess you you c you ran it until Commodore kinda went out of business because it was really designed for Commodore computers, um Tell me about that decision. I mean, was it like you just kinda wound the company down and It had been going well or it was not going well or or or what happened?

It was going really well. But To be honest, I was getting a little tired of doing audio stuff. Like in the audio for video business, which is was our market

Audio was always a second class citizen compared to the video. And then the Uh And then the Internet was just getting big at that point. This is this is like ninety five, so I guess Mosaic or Netscape was out already. Netscape had just come out, Yahoo was like a couple kids.

It was just the very beginning. Yeah. And I guess I guess you decide at this point to start a new company that that could capitalize on on this burgeon internet. I think that this company's called IBand and I I guess it was sort of made like software that that people could use to build websites and and that kind of thing. And and I'm I'm assuming you You use some of the money from sunrise to uh Uh to get this new company going. Yeah. So I you know it

Built up a pretty good bank account balance. But So I figured well my new company, I will fund it. But then we'll raise venture capital and kinda go bigger. Yeah. And uh so I brought my friend in as a partner.

Because he he knew all the venture capitalists and then Hired a few engineers. Start going out and trying to raise venture capital. And then at the same time we'd got the software up to the point where we could demo it. It was not for sale yet. It was just to demo it. Yep. And there was a conference called demo. It was a conference where you could literally demo your prototype. And then after that, we had lots of interest. Um in investing. In buying the company. In buy the company.

Yeah. No. That's right. And in fact you did you got an offer from Macromedia like a few weeks later to to buy you out. Yep. You sold it for th uh reportedly for thirty six million dollars. Right. Some a pretty amazing exit. Yeah. That's when I guess Silicon Valley became like a real place to me. Yeah. I mean so and you presumably own

Most of the company. Maybe some of your employees had some equity, but you you own most of it. So Once you did that deal you d you become and this is common, we've heard this in the on the show before, you become an employee of Macromedia. It's part of the contract usually. And uh and and so now you are working your th in your early thirties Um how was that how did that go for you? It was a learning experience. It was very painful actually. I mean I was excited. Like oh I'm gonna work for a real company. I'd never had you gotta remember I'd never had a job before. I'd only

I mean I had jobs like a Burger King, but I never had a job you know, at a real company.'Cause I just run my own companies. Yeah. And so I thought oh this is cool, I can I can learn about how companies are And um Yeah, I learned lots of stuff. I didn't learn what I thought I was gonna learn. I didn't really learn about the mechanics of running a company. I learned about the politics of

Not necessarily bad politics, but just how things work inside you know a company with lots of people and um Politics in the term of the humans that are in a big Team together how they work and how they interact. You you managed to negotiate a way to leave a little bit early, um, before the end of your contract. You I mean, you had millions of dollars. You were set.

You had more money than you could have imagined your parents ever had, I mean, um But it sounds like you were Determined to start. something new, like

Was that already a top of mind even even once you had sold IBand that you were gonna start something new, once you got through this contractual obligation to Macromedia. Yeah, like I'm not sure what what motivated me or drove me, but I wanted to start a successful like quote successful Silicon Valley company. Looking back on it

Selling a company for thirty Whatever million dollars is quite successful. But that's not the way it felt. Like I wanted to build the real company. I didn't want to just Make the money. Yeah. It felt like I had sold out.

And The way I justified it to myself was I like, Well, okay, I'm gonna take this money that I get from selling this company and then after my employment contract is up, I'm gonna use it to start another company. I mean the company that you would start uh you started in ninety seven, so really soon after you exited that that obligation with Macromedia was replay T V Right essentially uh an the first version of a D V R uh digital video recorder. How did you How did you think of and this is ninety seven, um, I guess like

DVDs are just starting to kind of come out, but most people are still using VHS tapes. Most people are still going to Blockbuster at that time. And you're thinking of of digital video recorder. How did how did that idea come to you? The idea came to me I mean you have to remember I was in I was in the digital video and digital audio

industry, right? That was the Internet was kind of a sidetrack, but Um And I so I used to you know, I used to watch T V, I watched there was a show I used to watch called Star Trek The Next Generation. I would it would come on when I was working or busy and so I would record it on video tape and it was just It's hard to do. I mean not only programming your V CR, but even if you know how to do that.

You know, you'd have multiple things on a tape. You know what's on the tape you forget. I mean there's all kinds of problems. Alright, so the company was called Replay T V. The idea was you were gonna build a digital video recorder thinking that this was and this is ninety seven, you d thinking this was gonna be the way You could store a lot more content. It wouldn't be one tape, but

it would be better quality'cause when you re re record over a a V VHS cassette. Uh the quality degrades. And you were thinking This is actually where we're heading, we're heading to digital video.

That's close, but not quite. I mean definitely I felt like we were heading towards digital video. The benefits I thought were actually a lot better than what you just described. It wasn't really about digital quality. It was about The user interface will be simple. That you could have features like, you know I wanna record

anything that has Harrison Ford in it automatically, for example. I just felt like it would be a lot easier to use. It would have features like Pausing live T V And that Yeah. I mean this is a pretty simple idea, but it was it was novel back then, like oh I wanna record every episode of Star Trek, not just the one this next Thursday, but I wanna w just record each episode. And if it moves around

in the schedule because they adjusted the time because the football game went long or something, still recorded'cause that was one of the problems with video tapes back then was that you would miss the beginning or end because they would move the Broadcast time slightly. Right. So Anyway so I figured well certainly we could solve this problem.

You know, by using Digital video and digital audio and hard drives. Yeah, using a computer hard drive. Right. But it was too expensive. Like you just think about okay, I could build this, but it costs way too much money to build it'd be very expensive. Yeah. Uh it wouldn't be a consumer price point. So I used to just sort of watch the prices of you know, I um

used to go back then the fries was popular in in uh Yeah, sure. Friday electronic store, yeah. Big, big consumer electronics. It was like a giant Best Buy, but kind of more radio shacky. type place. Giant. Yeah. Giant radio shack for geeks, basically. And um They would put a ad on the back page of San Jose Mercury News every weekend.

prices of hard drives, you know, would be one of the things. And so I'd kinda watch the And I think I decided that okay, the hard drive is still gonna be kind of expensive, but it's possible now to Maybe sell something for five hundred dollars. kind of uh which is sort of the starting consumer price point.

Uh So I decided it was possible to do it. And and ultimately I wanted one. Like I figured, you know, I'd I'd had enough experience with Silicon Valley Venture Capitalist to figure out the hardware was really hard to get funded.

Yeah, consumer hardware especially, it was super hard to get funded. So it wasn't necessarily the best Business choice, but I I figured at least I would get a D V R out of it. So you you yourself You were gonna physically build a prototype.

No, and um not personally, I mean at this point you know, I had enough money where I when I decided to do the D V R I started a company and I started hiring people. And how how quickly did it take for you to have a working model? I think we probably had something to demo to investors after about a year. We um

I mean we launched Uh C E S nineteen ninety nine. So that would have been January nineteen ninety nine. Where we won Dest of Show. Right. I know you got Mark Andreessen as an investor, the founder of Netscape, who at the time was not yet

the famous Mark Anderson of today. of Andrews and Horowitz, but he was um certainly An important investor at the time. Did you have an easy time getting others to invest?

It was hard. Um I got Some angel investors without A tremendous amount of difficulty. But no major institutional investors.

Well we were pitching them but they They were not interested. It was amazing how many people thought it was a bad idea. People will say things like No one wants to pause live TV. Why would you want to do that? To get a bag of Cheetos.

Um It was it was kind of eye opening how How hard it is to explain a new idea. Fi eventually we did. I mean we Did get institutional investors, so

I mean we did Angels at first. And then Vulcan which was Paul Allen's Venture Fund, and Kleiner Perkins Will Hurst. How much did you end up raising? It was over.

I don't remember the exact amount, but it was like two hundred million dollars. Like that. And it was a lot of money back then. That's what I was saying, after we did the CES we got a lot more attention and then we then we managed to raise money from every major media company. Yeah, you d you debut this you debut this at the consumer electronic show in Las Vegas in nineteen ninety nine. Um Which was a big deal'cause D VRs were not yet.

Yeah. But at that same exact show TiVo also debuted. Which was your which would be your main rival. I think you You're like your booths were side by side.

Yeah. That's right. When you I mean, you must have known about Tivo as you were developing replay TV. You must have known about your competitor, they must have known about you. But you guys win best in show at CS, so clearly it's like replay TV is gonna win this this war. This is beta versus v versus VHS all over again.

And here we go. And and you must have thought We're gonna win this. Well, I was it was definitely heady times. Like, you know, we were on Good Morning America and like on T V and all kinds of stuff. But I didn't feel like I felt like There was still a battle in front of us. Um

But yeah, as far as TiVo When we start raising money Then we started hearing about them, they were called Teleworld. And Well we really learned about them.

when it became s serious problem for us was we were pitching early on we s Phillips was a consumer electronics brand that was bigger back then and they had an office actually in Silicon Valley. And I gotten introduced to them and was pitching them. Right. And Phillips is is a Dutch based multinational, right? That's that that company. The light bulbs and yeah, they make company control electronics. Yeah. Okay. And back then they made T Vs and V CRs. Yep.

Um So we were pitching them, we were close to having a deal, so the idea was that they would build and sell the we'd license the technology to them and Yeah. And then what happened is Teleworld got an article placed in the newspaper about what they were working on. So then Phillips was like, Oh we gotta go talk to these guys if before we do this deal with replay. An n

Tell World essentially bought the deal, which was a new concept to me. Like I had never thought of doing a deal that was not gonna be profitable. Teleworld got the deal with With Phillips? Philip's basically abandoned you guys and said we're gonna go with Teleworld. Yeah, because Teleworld paid them. Teleworld paid Phillips to do the deal. I see, instead of Phillips paying you to l to partner with you, they got paid.

to make these boxes, these these D V R boxes, I gotcha. So Already right then they had a massive advantage because they had a huge You know, they had a manufacturer behind them that could mass produce these products. Right. It was a big moment. Our business plan was we we'll sell these things at five hundred dollars, we'll make money. You know, the price will come down over time, eventually they'll be very cheap, but we'll start, you know, very traditional like the way every prior consumer electronics product's ever been launched.

Yeah. T V. then Teleworld decided the they would take advantage that this was like in the dot com boom. They would take advantage of the fact that they Could raise a lot of money.

They raise a lot of money. And then they started subsidizing uh the D V R's. Selling them for what? For like a cut rate price at a loss. Yeah. So they sell them for ninety nine dollars instead of

Five hundred dollars. Wow. And and you guys There was no way you could sell your box for ninety nine dollars. Correct. So the big thing was they were gonna subsidize the hardware Yeah. We lost that deal. That was like okay, this is now I understand we've got a competitor and they're buying the business.

Like they've just changed the game. We're gonna have to raise a lot of money. Uh and it turned out actually them getting Phillips was was good. Because We We're both, like you said, at C E S they launched with Phillips, we didn't have a partner.

We won best of show. the whole consumer electronics industry realized this was gonna be a big deal. Yeah. And um Tevo has signed an exclusive with Phillips to get that deal, so we were the open

an available partner. Yeah. And we had won best of show and so Every consumer electronics company started talking to us. And so we ended up signing a deal with Panasonic, which was a bigger brand than Phillips. And you I mean, you had like Walt Mossberg who at the time at a column in the Wall Street Journal, he like Tested both yours and TiVo's, and he said the replay TV was more user friendly, the interface was better, like you were very well positioned.

To become the dominant D VR. company. Um, I remember t I was overseas at the time, but I remember coming back to the US from time to time in like two thousand two, two thousand three, and just seeing everybody get have T Vos.

Everyone all of a sudden had T Vos. Mm-hmm. Um But what happened? I mean why Why was it TeVo and not replay TV if by all accounts it was a better product at that time? And we ship first. I mean we're just ship first, okay. Yeah.

So what happened? The dot com crash, basically is what happened. So they had turned it into a business where you have to have lots of money to be successful. They had raised a lot of money. We raised a lot of money as well, but not as much. As they did. Right.

Yeah, even though we raised two hundred million dollars plus the burn rate had cranked up and we were spending You know, I remember some months it would be twenty million dollars a month. Wow. The thing that changed the the dynamic is they went public Before us.

We were just about six months behind them. But then the dot Com crash happened and it suddenly became impossible to go public. This is Aug like around August of two thousand one. Or maybe a little earlier than that. Uh

Two thousand, I think. I can't I don't remember. Yeah, late two thousand maybe December two thousand. And that basically When the market crashed that That meant Yeah, bankers. They withdrew.

Yeah, they said. We can't go public. And then at that point You know, because of the burn rate. It was we were gonna be out of business and

Several months. So you knew that you had to sell the business in order to be unl otherwise you'd collapse. Yeah. And so you did in August of two thousand one. Uh it was announced that

that uh replay T V was gonna be purchased by A company called Sonic Blue. Yeah. for replay T V, which would be less than what you raised. Um ta I this I'm sure this is painful to talk about now. Um but but I'm sure much more painful at the time. Right. So when that happened, when the company sold

Um You're not broke. You still ha ha had the money from the sale from your previous company, but This was not a great outcome for you and you you kinda lost that war. I mean, TiVo had just outraised you and they they survived the dot com. Crash. Did you feel like um'cause that was a that was the first kind of

was a not I wouldn't say it was a failure, but it was the closest kind of thing to failure that you had experienced that. I didn't I don't know, I don't people say Ask questions like you just asked it. I I don't

I don't think much about whether something was a failure or success. First of all, I Financially it wasn't a It wasn't a huge failure. I I did make money on the sale. And I invented the D V R and like I learned I learned a huge amount of stuff and it was just a great

It's just a great experience, so I felt like Yeah. There were times when it was very painful, but overall it was just an incredible experience and You know, lots of people come to Silicon Valley and they don't all have experiences like that.

Yeah. And we didn't I mean we didn't discuss all the all the uh sordid details, but there was a lot of politics as well. around the investors. And the LA versus Silicon Valley culture. What's the LA versus Silicon Valley culture? What was the LA part of it?

Well so so replay was sort of this hybrid of Silicon Valley and LA right because we had venture capital investors like Kleiner Perkins. And then we had all the major media companies as investors and they're I'll call them the LA culture.

And and you needed an LA office because you needed to have buy in from the big media companies in order for replay TV to be successful. Yeah, and we and I and it was basically the business was a merger of Silicon Valley to distribute the platform and then a service business, you know, to monetize it afterwards. Got it.

And the cultures are increas Incredibly different. And what they respect is different as well. And so f you know, for example, this is a small one, but I remember like We had a

LA executive. And he told me once, like, you need to comb your hair more. And I'm like, My hair's fine. And so it was like for him, you know like the way your hair looks is incredibly important.

Yeah. Even in just internal meetings. So that's the that's just a small example. And and what about like You're kind of a low key guy. Like you don't come across as being overly charismatic. From first impressions.

Yeah. Well that's true. But I get along well with Silicon Valley engineers. Like they that's what I am. You don't need you don't need to be not everybody needs to be Steve Jobs to be successful in Silicon Valley. In fact You really don't need to be Steve Jobs to be a successful leader. You can be low key and quiet. Yeah, and I think actually many Silicon Valley executives are like that. Yeah.

But they're very political and they didn't respect we didn't respect each other and so there was a lot of backstabbing that started happening. So it just became a very unhealthy situation. So once you left, this is um you know two thousand one. You're you're done. Uh where where was your head at that point? Were you thinking about the next business that you were gonna start?

Or what do you remember about that time? I I remember thinking I should take a break. We had a vacation house in Oregon. So I thought okay, well let's go Let's spend the summer.

And just relax. And uh So I did that. And I I quickly became very impatient. So I realized I'm I wasn't good at just sitting around. I mean it was fun. I went biking and

mountain biking and all kinds of stuff. But I was ready to do something. After that. what were you starting to think about? I mean Your greatest idea of of all time. The the digital video recorder.

You know, and and for and for most of us we have maybe one Great idea in our life. And and that was it. You had that idea. So what were you possibly gonna do to To top that.

Well I would say I w I I would quibble a little bit and not say it wasn't necessarily my best idea, but it was the was the one that had the most mass market. Potential. Yeah.

You know, ability to change. The way Billions of people acted. And that and that actually I think was a a lesson that I took away, which was

That You can spend your time on different things and some of them just have much bigger potential than other things. And uh So maybe I should factor that in. Like maybe it shouldn't just be things that I'm interested in, but it should be things I'm interested in that also have the potential to impact a lot of people.

But it was up until that point your best idea. You could record anything that Harrison Ford was in, you could skip commercials, you could em completely change television viewing. I mean is that Were you thinking that way at all? I was

Definitely not thinking that way. I mean m you could say that the D V R was my best idea. That's not at all what I thought. I thought that I got lots of good ideas. Well we come back in just a moment. Anthony joins forces with the head of Netflix, Reed Hastings, to build his next big idea.

That is, until Reed decides to pull the plug on it. Stay with us. I'm Guy Raz, and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Raz. So

It's around 2002 and after the sale of Replay TV, Anthony is already thinking about his next business. Something at the intersection of hardware, software, television. And the internet. You know, I went around, I talked to a few people, I think I introduced myself to

Reed Hastings, you know, of Netflix fame and had lunch with him. Back then Netflix was around, they were just doing D V Ds by mail. Yeah. Alright, so you would eventually land on a concept for what would become Roku, which was a

A device to help television stream. video from the internet, but this is 2002. There isn't a whole lot of stuff to stream it. This is not this is pre YouTube. Most people still had dial up connections, maybe there was a you know, some people were transitioning to to DSL, but it was still early days.

What was your concept that you had come up with? It w the ri original concept was just a category, that there's gonna be a lot of devices. So I know that's kinda vague, but that was that was the idea and specific product ideas. A streaming player was on my list. video shooting player, but

It wasn't time yet. You know, that's why Netflix was still mailing out D V Ds back then. And that's why I met with Reed Hastings. I was like Obviously at some point this is gonna be uh internet delivered video. Company.

And he's like, Yep. You know, so I was sort of like, Well maybe there's something we could do together So but when I first started the company, the timing wasn't right for that. So I figured we'll just build a product, kind of start building my team and get into the market. And I'm a big believer in um You know, getting into a

Big market area. And adjusting. Even if you don't know what the product is yet. Even if you don't know exactly what it's I mean, you have to have something to start with, but it might not be where you want to end up eventually. 'Cause the thing you started with was very far away from what Roku is. It was I think it was just like a

A box that connected to your T V that showed that would display paintings on your T V? Yeah, so it's the same technology the Sinneroku, but it was a m but it had a different position in the market. Or different purpose, I guess. Yeah. So it was yeah, so so we made this first product was basically a high definition photo

Video and audio player. And then we made These little uh compact Flashcards that had what we called live art on them. So this was like

a a nature picture with a stream. Where the stream was kinda moving, you know, the water was flowing. Yeah. And we had clocks, we had some cool clocks, uh like a robot that would fly around, you know, like a cuckoo clock. On the on the television screen. Yeah, so it would be the clo it would show the time and then on the hour, you know, robot it was like this giant sort of steampunk room and then on the hour the robot would take off and fly around and fix the pipe and things like that.

H by the way, how long d how long did it take'cause I know you started the you founded the company in October of two thousand two, how long did it take you before you had a product to sell? Think it was about a year. It takes it takes about a year to build Hardware, software product. And what was it what was it called? Was it called Roku? It's called the photo bridge.

And w was the company called Roku at that point? The company was called Roku. Roku, by the way. It means six in Japanese. Yeah, it's my sixth company. I thought you know, kind of an Asian sounding name would be cool for a consumer electronics company and we

Me and Susan and my wife were having dinner at the sushi restaurant. So I started talking to the to the waitress about different words in Japanese. And I said, Uh it was actually depending on how you count, it's either my fifth or sixth company.

Yeah. I Asked her what the Japanese word for five is, and she said go. And Go was kind of a failed tech company.

So I thought. No, can't use go. I said what is What is six? And she said Roku. And I said, Oh that sounds cool. Okay, so sixth six in Japanese or you go you got Roku. Right.

So then we start our second product. Which was streaming audio, we called it Sound Bridge. I remember this. Used public radio content. Yep, so it would stream public radio, it would stream internet radio stations, it would stream all music from your local library.

So it was like a yeah, it was like an audio streaming device. Okay. So cool, it's good product. But I think around this time, two thousand two, two thousand three, You kinda reconnected with Reed Hastings. um the co founder of Netflix at a conference and you what you pitched him on this on making a box For them like a streaming video box for Netflix.

Yeah, so the So the sandbridge. sold in I would say the the hundreds of thousands, which was good, but not a huge hit. And Basically At that same time I it's not that I remat Reed, I maintained our relationship.

And I would check in every once in a while and say, you know, some version of Are you guys ready to do a Streaming. video player yet because when you are, I wanna make it for you. Hm. I remember one meeting with Reed.

Where he said I mean Reed is very strategic. And he knew that many companies had missed transitions in their industry. he knew his industry was gonna transition from D V D to streaming. He just didn't know when.

You know, nobody did. Yeah. And So he actually told me once that he You know, I I've allocated I'll call it three percent. Of our revenue.

to keep working on. This idea of streaming. in the background so that we don't miss the transition. How did you convince him? Two.

Cooperate with you. and Roku to build a device for Netflix. Well it was a long process. Mm-hmm. He would go back and forth between like when I s email I'd be like, Yes, we n we need your help to that we're gonna do this ourselves.

And then at at some point I got a call from a recruiter. Saying we're looking for a VP of internet TV for Netflix. And I was like, hmm. Well, it sounds like they're really gonna do it themselves.

Yeah. And um I called up Reed and said, Hey, I hear you're looking for head of Internet T V I'd be willing to do that for you if you let me keep running Roku at the same time. Like I can do it as a side project. Mm.

And he's like Okay. That sounds good. 'Cause oftentimes when you get hired, like if Google hires you And you've got a company, they usually there's a package and they just buy all your stuff and then they own

Whatever you built. You basically said, look, I've got Roku, I want to keep running that But let me come work for you and see if I can develop something in house. So he essentially said Netflix said, Okay, yeah You still own your IP, you still own this company? Yep, that's right. And and it is very unusual and Yeah, very And I didn't really think he would do it, but he did. And

Read as very out of the box thinking that way. Like he's he's fine doing things that aren't the norm as long as it gets him where he wants to go. And so I think he had a lot of respect for my ability and he had bought all the Roke products, he loved them. And he figured I would

Be perfect. Uh build this product for him, so Right, because the way I think this this was gonna work is

uh instead of like building the Roku device at at Roku at the the company, you were going to uh sort of like move it into Netflix and and develop it there, right? Well, yeah, I capitulated. When you say you capitulated you m in the sense that you figured Well I wanted a deal where Roku would make the hardware.

Yeah. But that you know, that wasn't gonna happen. So I I basically decided, well If he's not gonna let Roku do it, then Maybe I should just go do it at Netflix. Do you remember when you became an employee at Netflix? Like do you remember what year it was? Was it like Yeah.

It was two thousand seven, I'm pretty sure. Okay, so basically the product you were building, which was the Roku product, w was going to be The Netflix. streaming device. Yeah, so they had at this time they had had a beta version of their streaming service, but you know, you have to have a P on a PC, on a web browser.

So I was Higher to build their hardware box. They they wanted a a little box that they could give to customers so they could connect it to their TV and stream Netflix so they didn't have to use their You didn't have to use your PC. And just to clarify, you didn't need that box for a computer, obviously, because a computer's connected to the internet. But televisions in two thousand five were not

m the vast majority of them were not internet ready or internet connected. So you would need a box that did connect to the internet, that did connect to your television to make this work. That's right. And I would talk to Reed and I would have conversations like You know, we shouldn't build just a Netflix player. We should build like an operating system for T V, we should run apps, we should

you know, it's gonna be a lot more stuff besides just Netflix and people aren't gonna want a separate box for every every streaming service. He's like, Yeah, that's a good idea. And I guess but that's in conflict. Now th they they would be competitors to Netflix, is that okay? And he's like, Uh, I think that's okay. Yeah.

And there was a lot of work going on the ne on the sort of non hardware part of Netflix, there was a lot of work going on to well, how are we gonna get access to this content? Because back then it wasn't just a technical problem, it was a bus it was a huge business model problem. It was a business model problem because I believe If you physically That's a different proposition. It's like when a radio station plays a song and that's it, they just play a song.

versus when you stream something, then it's different because That means that people can You know, I don't know, watch it again and again or whatever. It's it's is that W was that the challenge for them? Yeah, so

large existing business they were more interested in protecting. then they weren't opening up this new front. So building the hardware for this thing wasn't wasn't the biggest challenge. It was getting

the rights to get the content to stream through that hardware. I think so. Yeah, I think that was the the bigger challenge. And they didn't get rights for a long time. Yeah.

So all right, so I read that in two thousand seven. Internally at Netflix, you were working on this project, it was called Project Griffin, I think. That was the the the codename for it. Right. That was our code name. And you had been able to Uh like

demo it for Reed many times, he gave feedback. You even demoed it for the entire staff. Um, there was like a lot of excitement. Right. But um I think by the end of two thousand seven This thing was ready to be launched. It was ready to be debut as a consumer product and, you know, start shipping to and start being manufactured and shipping to Consumers.

And One day Reed Hastings announces. He's pulling the plug. Uh yeah. That's true.

This is done. We're not doing this product. Just one day comes out and says this. He we talked about it b obviously before he announced it. I mean what happened the sequence of events were that Um We real in the hardware.

I hired this guy to go license to try and sign up Xbox and some T V companies. That we were having good success there. Xbox would be available through or the Netflix how w how would it work?

The idea is that If you had an Xbox There would be a An app on your Xbox that would let you watch stream let you stream Netflix. Gotcha. Okay. So you had signed up you would sign Xbox up and Play Station up.

I think even Apple TV, right? Right, so Apple T V existed back then as well. Um And actually I w I think App I think, if I remember correctly, Apple T V was the turning point. We were working on these other deals. It was becoming clear that

we were gonna get them, that you were gonna be able to at some point get an Xbox and watch Netflix's service on it, that it would be built into T Vs. Yeah. And then we approached I approached Apple about Same kind of thing on Apple T V, you know? Yeah. Let let's let let's let Apple T V stream Netflix. Yeah.

And um I think Reed sent an email to Steve Jobs Thing. And Steve Jobs replied. No, we're not interested because we hear you're building

hardware that competes with Apple T V. And uh so why would we ever do business with you? You know, s something along those lines. So so in other words, why would Apple T V make Netflix available through its box if you yourself were making your own box? That was what they were. And

And so Reed started to get worried about this, that that as he h started to hear pushback, he was coming to the conclusion that maybe this was a bad idea. I don't think he was getting worried. I think he came to the conclusion that Reed's one of Reed's characteristics is he's very focused. So he'll pick a direction then he is maniacally focused on that direction. And so

When I came in The direction was we're gonna build a box and distribute to all our customers. He then r I think he then decided that A better

strategy is to just license our service widely to other hardware makers. And We're clouding the picture by making our own hardware. And if so if I take this team This working on this hardware and I Spin it out and put it in Roku.

Then Roku can still finish. The box. But it'll just be one of the You know, many boxes that we can license. the streaming device back into Roku, basically the the company Roku, which you were still running. And so instead of Netflix making the device Roku would make it and from his perspective, from what I understand, it was because he wanted Netflix to be a a neutral platform, that he wanted it to be

Available everywhere. All the time he didn't want to compete. He he wanted to be something where all of these other content providers would would want to be and As controversial as it was at the time, it proved to be very pressured. And a very good decision, ultimately, that Netflix did not go into that direction.

Right. And The decision was way was good for me. Like it was a great great decision for us. But I was like, Yes, that sounds great. That's what I wanted, you know, from the beginning. So

You take these employees from Netflix who've been working on it. They'll go to Roku and then you worked at a deal where Netflix would get some some of Roku's equity. Basically. Yeah, that's right. So they invested. Not a lot. I think it was six million dollars, something like that. That sounds right. Six million dollars. Netflix put six million into Roku at the time.

Right. And so they I think they got twenty percent of the company So after Netflix invested and we started shipping the the Netflix player. We then decided to raise

Venture money. And so we raise money from a venture capitalist called Menlo Ventures. Mm-hmm. And then Netflix decided. They didn't want to appear to be favoring any one hardware manufacturer, so they sold their shares to Menlo Ventures.

Right. So okay, so you've got now This standalone company now. really doing what you initially hoped it would be doing, which was a

A box that could interface between the internet and your television. Um, help me understand what the business model was gonna be. Was it gonna be Because at that time, presumably the way to make money was just selling the hardware, selling the box. And I think the box that initially was like ninety nine bucks, right? Uh yeah. It was ninety nine dollars.

Which was a big milestone back then but because that was very inexpensive compared to other set top boxes. Yeah. Uh so yeah, the way I was thinking about it was the Netflix would be, you know, the killer app. That

would allow us to launch A new television platform. You know, and that was my goal. My goal was always to be the platform for T V that you know just like phones have Android and

P Cs have Windows and I felt like T Vs needed Roku. Right. But we needed We needed a way. to launch that and get scale and that's what Netflix was for me. So although we we launched the first product as the Netflix player, the we Yeah, we quickly

started adding other services. We added an app store. We added building systems. I mean we added all the pieces to build a a television platform and that was the that was the goal. Alright, there was the Apple TV.

out at that time. It was more expensive. It was about three hundred bucks. And um and you could watch television through that. And you can watch Netflix through that. There was the Roku product, which was ninety nine dollars. What I would have asked you at the time was well. What happens when televisions are are just in it was inevitable when televisions have uh you know an Ethernet port and you can directly connect to the internet or their wife wireless and you can go Wi Fi, and you can just like load up Google Chrome on your T V and then just like log into Netflix. Like why would you

When that happens, what isn't that gonna make Roku irrelevant? Like what what what did you say when people asked you that question? Last one. Reed thought would happen. Mm-hmm. That was his sort of vision of the way things would play out. That's what lots of people thought. But I

You know, my experience in the TV industry was that price was incredibly important. in the T V business and that web browsers were A very inefficient way. to distribute software, like they required lots of memory and lots of processing power, and that it was not the way to make a There'll be ways to do it a lot cheaper and manufacturers always pick the less expensive way.

Yeah. And so That's why we focused on cost. And that's why we were successful in web browsers were not,'cause it it just it just adds quite a bit uh to the cost to build a T V

If you try and use a web browser. The TV becomes more expensive, you're saying. Yeah. That's right. And what what in in at that time, in two thousand eight?

Two thousand nine, what could you watch through the Roku box besides Netflix? Well when I first started shipping it was just Netflix. And then I think we added um Amazon Prime. After that, prime video. Mm-hmm. Yeah.

And then after that We added the app store. So So there was HBO. Hulu, I think.

came out around that time. And then because of the app store, you started getting lots of little companies publishing publishing stuff. Was it hard for you to convince other media companies to to jump on board or was it more like everyone felt like they would miss out if they didn't jump on board? It was not hard to convince uh you know, initially it was more like the internet companies like Amazon or YouTube or

You know, Hulu was sort of the Internet Experimental branch of Those companies that had made the decision to do streaming they wanted to be on Roku because we were a leading streaming platform.

Yeah. But if you went to traditional media companies that had traditional businesses, they had no interest in streaming. They viewed it as a threat to their business. So they did not take their services and put them on streaming for a long time. So the the the initially the strategy was just to get as many Roku in the hands of consumers because you were not making any money off of people watching Netflix through the Roku device, right?

So The strategy was we will make some money on the hardware enough to basically finance the business. But we're not gonna try and make Makeup.

profitable business on it. We're just gonna use it to build scale. And once you build scale you can figure out how to once people have these devices or have the Roku Platform. in their house, then you can figure out how to monetize it. Right.

Alright, so you've got these devices and I think by t tw two thousand eleven you sold like a a million and a half of these devices. So it's still it's successful, but still You know. You're still building it building it out. Um I read it and

an interview you gave in twenty twelve and um This article, I think it was in Forbes, it said at the time most people who streamed video were doing it through game consoles. through um Xboxes in twenty twelve. Only one percent of US homes at that time used a device like a Roku or an Apple TV.

And you had said at the time Look. We're were essentially not our our market isn't the eighteen to twenty five year old first adopter, we're going for their parents actually. That's who we want to attract.

Uh yeah. So our goal was to Offer a solution that was very inexpensive. That was super easy to use. You didn't have to be a a gamer to use it. And just had a and had a lot of content.

Yeah, I want to ask you about the simplicity side, because You know, anybody buying a television today. And and I'm just saying, if you're gonna buy television, just don't. because it's annoying. There's too many buttons on the remote, there's too much stuff, you know, it's just too many options. Your pr your products are simple. The remote is simple. It looks like a looks like a kid like a

Like a remote for a preschooler. And I'm not trying to say that in a disparaging way. I like that. It's very simple. There's like simple buttons. Easy to use. Um, even the website very simple explanation of what Roku does. That was part of the Strategy from the beginning, I think, right?

Definitely. That's always been a a huge part of our strategy and I think Our competition continually underestimates how simple consumers want their TV experience to be. Like television they want to sit down. Maybe drink a beer and they want to watch something as quickly as they can.

And they don't want to get confused trying to figure out what they're gonna watch. And so that has always been a a big focus for us, even kind of a correlary to that is that consumer electronics Especially the when dominated by Japanese companies they started um competing by adding more options. And so that just started adding more and more buttons to the remote and they got to the point where You know, T V remote has like a lot of buttons and no one knows what they do. And so

We put a lot of effort into our mote control to reduce the number of buttons. Yet still being powerful and simple to use. There was no off button on the Roku box. Yeah, that was a very controversial decision, but it was

To make it easier to use, we didn't put a power button on the remote control because what if you go back to sort of what are the things that m is confusing the people about different devices on their TV is you know you have a source button on your TV and you Change the source. And a source might be an Xbox or a D V D player or a a Roku player. And

What one of the things that made it hard was You didn't know if you're not going to be able to do it. DVD player was turned on or off. Yeah. If it was off then you didn't know if you were looking at your D V D player or not. So if you just keep them on all the time then It's easy to find. So it just makes it easier and it doesn't actually change the power consumption. It just wasn't what people were used to. So we had a lot of resistance to it.

But It made it a lot easier to use and now it's the standard. twenty twelve, ten years after you officially launched the company, but really You know. part of that time you've been in Netflix.

You get an an acquisition offer. From Intel. They apparently are looking we're looking to buy you out for about Close to half a billion. You were reportedly looking for one point five billion

But that deal fell through because It was just too much for them. Is that is that true? Is that what happened? I remember that there was some interest in them buying us, we never You know, never got to the paper stage.

Why were you willing to entertain the possibility of selling? Was it was it because it's they tried to s they tried to buy us. Or they didn't even try to buy I mean, it depends what you mean by try to buy. They were interested in acquiring us we We're not really interested in selling. But I mean uh you know, even if you're not interested in selling at some point. Th there's a price. Sure.

And so you basically, from what I understand, you basically said sure, we'll take a billion and a half for it. I I don't remember exactly. I do remember that there was I probably gave them a price that was unreal unreasonable and they probably said no. But I think that's uh if we back if we just go at a higher level, I think if you're an entrepreneur and you start a company And you've already been successful.

like I have in terms of financially successful then you don't really in it for the money anymore. And so So it just becomes hard. to do a transaction just based on money. My my attitude for Roku has always been look, as long as I see a path to us continuing to grow and

Then there's no reason to sell. The reason they s sell is if You know you think. the competitive dynamics or the market have have gotten to the point where It's difficult to be standalone and successful. That you need that you need the leverage of being

part of something else. And then that would be a legitimate reason. Like you don't want to run the company into the ground. But but absent that, why would you sell it it's just getting more valuable every year. Right, true, but acquisition could also be a good thing, right? I mean there are plenty of examples where a company is acqu I mean Audible acquired by Amazon became a much bigger company. So there are lots of a twitch, right? Bec they become bigger. So there are and this is a strategy. You've got to give your investors a return. I know that l that the a year later Amazon approached Roku with an acquisition offer and that that also didn't didn't work out.

But at the time. Uh there's a quote, there's an article at the time. that was written about this and and one of your main investors and you said this too in this article. You said you know Uh we've had less acquisition offers than a n is normal for a company as successful as ours. Um and you said I think it's because people don't understand the company

Y one of your b main investors, um, who said on your board, Daniel Left, said Um I I'm you know more or less saying I'm was shocked there wasn't a single media executive who believed Roku would be successful. It wasn't getting

almost any acquisition offer. So Clearly there was Whether you were interested in entertaining them or not, you were surprised at the lack of acquisition offers at the time. I mean I am surprised at how few serious acquisition discussions Roku has had. Because you were underestimated, do you think?

continually underestimated and still are, I think. In fact I see it as a pretty big competitive advantage that people underestimate us and so They're always surprised when they lose. So for example It's amazing the number of media company executives that didn't think streaming would be popular. They just thought there's nothing wrong with cable and satellite, the world is not gonna change. When it was so clear that of course it's gonna change. The internet has disrupted every industry and it's gonna disrupt video as well.

And then uh then I can think at the point when Roku became like well maybe actually maybe we should think about buying Roku. We had finally become so valuable. that it was too expensive for them. When we come back in just a moment. We hear about some of the other ways that the industry continues to underestimate Roku.

Stay with us. I'm Guy Raz and you're listening to how I built this. Hey, welcome back to How I Built This. I'm Guy Roz. So By 2014, Roku sold around eight million streaming devices in the US, but

At this point. Smart TVs are also rolling out into the market. Which means Roku. has to expand its reach. You actually

with manufacturers in twenty fourteen to build the Roku. platform inside the television. So now of course you sell the the Roku televisions and you work with a bunch of different companies. Um how how much of a of a sort of a game changer was that. Did that

Uh had you not done that? Would Roku be where it is today? It was an important decision. And very key. to our success and it's a hugely successful program for us, the Roku TV program.

I mean we w for a long time We debated should we actually make our own TVs? Uh and it was clear that that's a tough business to be in. So We decided licensing would be by far the best approach. Yeah.

Yeah. Once you reached a a level of scale. You are able to start thinking more specifically about you know, your revenue model because you're not gonna make it

So so From what I understand, it really it okay, you had the the hardware, the streaming sticks. We'll start out with the boxes, and now there's you know, got the sticks. That sells. That's not a huge part of your revenue. But then it was like licensing the

platform the the software to these television Manufacturers. Then there's a part of it that I don't understand which I think is Amazing, which is there's a revenue sharing agreement with the content provider. So it's like cable channels, right? Like cable TV

If you're CNN. Or let's just talk about a channel for example. If you're CNN You get money from advertisers and you get money from cable uh carriers that pay you

per subscriber. With you guys it's a it's almost inverted, which is the channels, the content providers, pay you a small fee. From there. revenue, right? How explain how that works.

So yeah, so it's um I mean our model is not a traditional cable model like as you just pointed out. We get paid. for distributing content. But we don't build

We don't have a monthly subscription like a cable operator has, but we do have a billing platform You know, part of our purpose built platform for T V is building in tools for the industry to help them Help them sign up subscribers. We can promote them. We can do one click billing. So we have a lot of influence on signing up subscribers. And so our model is basically if we sign up a subscriber or we do billing.

Then we get a You know we get a piece of that. subscription revenue. Right. So that's you know, go back to the underestimated part of it. Yeah. that also comes into play in that most media executives when they start getting into streaming

They underestimate Roku because They all have Samsung TVs or and or Apple and Apple TVs. And so They're always surprised when they find out that we're their number one source of customers. Right. If your service has ads in it.

Then we get we don't get money from you directly, but we get a some of the ad inventory. Just just the same way like you can sell some of the ad inventory as directly. Right. We can sell sales. You have an ad b you have an ad sales a division, essentially in house. Right. And that's actually our biggest business is selling selling video ads. And it's pretty clear that advertising is a huge opportunity. You know, it's there's I don't know, seventy, eighty billion dollars a year spent on T V advertising in the US alone and it's all moving to streaming. So Um

You know, one of the things that we did that people didn't appreciate at the time, but now they do is we started something called the Roku channel. Which is f essentially free ad supported movies and TV shows. And when we started it, everyone was trying to copy Netflix. But we were like most countries in the world T V is free and it's supported by ads. The U S is sort of unique in that the the industry evolved to the point where you pretty much have to have a paid T V subscription, but you don't

That doesn't need to be that way. Like we can With streaming we can offer people free content and just s have it supported by ads. So that's what we did with the Roky Channel and so it was the first time really there was a lot of mainstream content that was available for free. That you would license or that you would outright buy? Both. I mean we started out just licensing, but now we're actually producing originals and You know, it's very popular. People love free free T V so that's become a big Part of our business in in that it generates a lot of ad inventory, so it drives a lot of our ad business. Um

As the device became more and more popular, Some of your Partners. started become competitors too. Amazon.

developed a a competing product, Google. W they're giants. They were and they are. Did that Were you at all?

Well Of course, giant competitors Yeah. But I was pretty confident

In our strategy. I mean, of course it was risk, but I felt like we had a path to winning, which we have taken and continue to take, which is basically to build a platform that's custom built for T Vs as opposed to Taking something that exist for say a phone and porting it to T V.

And so it's not just the technology, of course that's part of it. Like one of the you know, one of the advantages of our operating system is that it costs less to build the hardware. But it's also just the focus. You know incredibly focused on on that one problem as opposed to other problems. only streaming company streaming platform company that that's all we do, that we come to work every day. trying to build the simplest, best, cheapest streaming player possible.

Our competitors don't do that. They come into work every day trying to figure out how to build a better search engine generally or how to sell more stuff online. Yeah. And there's still a lot of innovation in the business to happen and we're you know, we're good at innovation. So You know I'm confident. that will continue to compete. Successfully.

And the streaming wars has also benefited you because the more that Disney and Amazon and Netflix and Hulu and all these Um, peacock and and Paramount like It's better for you because mo most or all of them wanna be on your platform.

Yeah, so the reason it's benefited us is'cause we 'cause it benefits the streaming companies. When they want to build an audience You know they they start spending money on marketing. How do they want to spend money on marketing? They could buy

Billboards. Or they could buy ads on Roku where with one click from the ad you can sign up for their service. And so those ads actually are just way more effective. And in terms of of go going in different directions, I mean you have a bunch of things that you're you know, in advertising and obviously the hardware and the software.

But what about um content. I mean I know you've acquired content or license content from Quibi, the short lived Quibi. You gotta you you you sort of bought out a bunch of their um content and I think you bought this old house That show on PBS, you own that show. Is there a future where you're gonna be a studio and you're gonna make your own stuff too? Uh we are producing originals now. Uh not not a huge number like n a Netflix or an Amazon, but you know, still many millions of dollars worth. We have a show coming out right called um

Weird Al, you know, a biopic starring Daniel Ratcliffe. Oh that's that's a that's a uh that's a rook that's a Roku original. Yeah. Wow. Okay, I didn't know that. Yeah. Um This business has become he went public in um I think in twenty seventeen

And of course. Like many tech companies, you've had an incredible ride. And twenty twenty twenty twenty one huge Growth for Roku.

Twenty twenty two is different. There's been a downturn across the board in the markets. You know. most tech companies their stock prices are down fifty, sixty percent. What do you think about that? I mean you you you are the head of a public company, so you do quarterly earnings calls and so on.

Are we talking about a temporary I don't know. Slow down or is this something is are are you sort of Girting yourself for a Long. Winter of of

Well, I mean that the way I think about it is the world is moving to streaming. It's a huge trend. Yeah. The

Economy is cyclical. That's just the way it is. And One shouldn't confuse the cyclical economy with the fact that everyone is switching to streaming. You know, our business fundamentally has got a lot of room to grow. So

We're still seeing good growth. I mean we haven't given out look for the next few quarters but You know. We haven't announced layoffs or Anything like that.

Um, this is a a question that very few people like, but it's it's an important question to ask because we're we're living in a time of incredible wealth and I don't hold it against anybody who makes incre I think it's a g it's a great it's great. I mean if you make incredible wealth it's good for you. You usually employ lots of people and you probably are gonna end up giving away a lot of that money, but you do have that wealth, lots of it, um more money than you could ever use, your family could ever use. What do you what what do you think you would do with it? That's an excellent question and it's hard to answer.

Um If you think about money and the fact that successful entrepreneurs accumulate it. You're right, they can't spend it all. That's right. In fact almost a very tiny part of it is what they spend. The rest gets invested.

So the question I think is well who should be investing that money? Should it be the someone like me or should it be someone else? And so I think actually. People that are success earn money successfully through business are good at investing it as well. And so it's actually quite efficient for them to invest it versus someone else. In terms of how you could actually use the money, you know, I have a big philanthropy effort. I um

You know hire the director of philanthropy. But it's actually very difficult. to give away money effectively. because there's less accountability versus a company. Like if you imagine putting money in a nonprofit versus putting money in a company Well the company is measured and is very motivated on being efficient.

And you know, makes hard decisions When it's a nonprofit, they don't have those difficult decisions. They're less efficient and and it's easy for them to waste it. I'm not saying that they all do, obviously, because I give a lot of money to nonprofits that I think are being Helpful. But But actually if I had a choice between putting money in a non profit versus a company that were both

kind of addressing the same area the company would be my choice because it's it's gonna be more accountable and it's gonna do a better job. But if you that's your strategy then you end up making more money. From the money that you're investing. So Uh so I think it's an interesting problem. How do you

How do you use your money most effectively for the world? Yeah. What's your main philanthropic Like Focus.

Well our Our mission is basically Advancing human progress. And there's probably a few different areas where I give money to in that

medical and scientific research. So research around diseases, but also research around interesting kind of science things that I don't think are well funded. Like for example I'm kind of interested in what causes ice ages. So I give money to a researcher in the UK that

the research his team researches the fundamental causes of ice ages. People don't know what causes ice ages. And for all we know, we're about to have another one. So Scientific research, um, mental health. you know, mental health and homelessness, which are very closely related, I give lots of money to that. But the focus is mostly on

Not just giving people money, but trying to alleviate like the root causes. So there's there's a couple other areas, but those are some of the areas I give money to. Um When you think about You know.

Where you been, where you've come from? Where you are today. Uh, I mean you were clearly motivated to make money early on in your life. You talked about this when you were in college. You wanted money, you didn't come from a family with money and uh well you wanted to feel secure and stable. Um and you did. I mean by the age of thirty one you had you know, thirty million bucks. Um, here you are today.

forget about the money, but you built a culturally relevant product. A product that There are plenty of of people who have made a lot of money, but not all of them have had uh have had a cultural impact. their lives are affected by the thing that That you made.

Right. And that happened. Um it's changed the way people consume media. Do you think that that your path to success is because of your hard work and your intelligence and and and the grind, or do you think more of it has to do with with with getting lucky and having lucky breaks, meeting Reed Hastings or

You know, or or or the fact that that that Netflix didn't make the box and spun it out, or I don't know. How much do you think luck played a factor in how much How much do you think just your Hard work. Play the factor.

It's obviously a combination, right? Like it's a combination of I'm I think some of the key characteristics t to at least the way I've been successful are Passion like being very like I'm I love technical stuff and it turns out technical stuff can make you a lot of money. So

You know, having an interest in that Being good at it. But I don't really know why I'm good at it. growing up with a culture that valued hard work and You know, being persistent.

And and where the luck comes in is just how long it takes. I think. And maybe the timing a little bit. So You know, I didn't I didn't just happen to be pastings, I sent him an email and I tried to get myself introduced, uh

For example. So you had to make the luck happen. Yeah. I think so. That's Anthony Wood, the founder and CEO

A Roku? By the way, that new Roku original film that Anthony was talking about For sure their most ambitious one to date. It's called Weird and it's a fake Biopic about the life of Weird Al Yankickets. Absolutely hilarious. And

If you want to find out more about the making of the film and how Weird Al conceived of the idea, You can hear my brand new interview with Weird Al on my other show. It's called The Great Creators, and it's available wherever you get your podcasts. Hey, thanks so much for listening to the show this week. If you enjoyed it, please do spread the word, tell someone about how I built this, or post about it on social media. If you want to contact the team, our email address is hibt at id.wondery.com. If you want to follow us on Twitter, our account is at HowI BuiltThis and mine is at GuyRoz.

And on Instagram, I'm at guy.ros. This episode was produced by JC Howard with music composed by Ramtina Rablui. It was edited by Neva Grant with research help from Sam Paulson. Our production staff also includes Casey Herman, Elaine Coates, John Isabella, Liz Metzger, Katherine Cypher. Carrie Thompson, Alex Chung.

Chris Masini, Carla Estevez. And Josh Lash. Our intern is Susanna Brown. I'm Guy Roz, and you've been listening. to how I built this.

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