Economy · Business
Nobody wanted to buy Netflix, and they had their reasons
Blockbuster could have bought it for $50 million. Yahoo negotiated for Google and walked away from the table. Kodak invented the digital camera and never pushed it. Microsoft laughed at the iPhone. Not one of them was an idiot.
In 2000, Netflix put itself up for sale for $50 million. It mailed DVDs in red envelopes, had been running for three years and was losing money. Its founder, Reed Hastings, was forty and had sold his previous software company for hundreds of millions.
He flew to Dallas to offer the company to John Antioco, Blockbuster’s chief executive, and the proposal went further than a sale: the Netflix team would build and run Blockbuster.com as the online rental division.
Marc Randolph, Netflix co-founder, described years later in his book what he saw on Antioco’s face when he heard the fifty million: his lip twitched for an instant.
As soon as I saw it, I knew what was happening: John Antioco was struggling not to laugh.
Marc Randolph, Netflix co-founder, in That Will Never Work
Barry McCarthy, then Netflix’s chief financial officer, put it more bluntly afterwards: they were laughed out of the office.
Antioco denies it. He maintains he wasn’t at that meeting, that he only stopped by to say hello, and that it didn’t happen the way it’s told. It’s his version against Randolph’s and McCarthy’s, and it’s worth knowing that before going on.
Ten years later, Blockbuster filed for bankruptcy. Netflix no longer rents films: it produces them, wins film awards and, at the end of August 2026, is worth around $333 billion on the stock market. Some 6,600 times what it was asking that afternoon in Dallas.
It’s tempting to read these stories as a parade of bad businessmen. They aren’t. Almost all of those who said no were competent managers and sovereign owners of their markets, deciding with the information they had at the time.
What’s interesting isn’t their clumsiness. It’s something considerably more uncomfortable: why disruption is almost impossible to see from inside the company that has already won, and why judging it twenty years later, knowing the ending, is the easiest and most dishonest way to tell it.
Who’s telling this
The framework comes from Uri Levine, who founded Waze and sold it to Google, and later Moovit, which Intel ended up buying. In Fall in Love with the Problem, Not the Solution he devotes a chapter to disruption and defines it in a way worth holding on to: it isn’t about technology, it’s about changing the market’s behaviour. And he adds a line about the road travelled by whoever arrives to break something:
First they laugh at us, then they ignore us, and then we win.
Uri Levine, founder of Waze and Moovit
Levine has an unusual authority here: he’s one of the few who has sat on both sides of the table.
The four noes
The four noes, card by card
Each card carries the quote, the year and the figures detailed further down in the text.
“Netflix is a very small niche business”
On Netflixoffer
“There’s no chance the iPhone is going to get any significant market share”
Steve Ballmer · on the iPhone“It’s very pretty, but don’t tell anyone about it”
Line attributed to management · attribution not settledNegotiated to buy Google and walked away from the table
On GoogleQuotes and data cited in the text · Netflix’s market value verified on 25.08.2026.
Why each “no” made sense
Here is what almost nobody tells, and it’s the only thing that makes this story interesting.
Blockbuster
In 2000, Netflix had fewer than 300,000 subscribers, was burning cash and was on course to lose tens of millions that same year. Broadband was still a minority luxury and the business consisted of mailing envelopes. Blockbuster, meanwhile, had stores on every corner — more outlets than Starbucks at the time — and a scale that’s hard to picture today: Viacom had bought it in 1994 for around $8 billion.
Buying a loss-making company in a mail-order niche for $50 million wasn’t obvious: it was a bet.
The figures in circulation for Blockbuster’s value in 2000 vary widely by source and method — from $5 billion to $8.4 billion — so they’re treated as an order of magnitude, not as data.
Microsoft
Ballmer’s reasoning, which is almost never quoted in full, was this: he would rather have Microsoft software on 60, 70 or 80% of the 1.3 billion phones sold each year than the 2 or 3% market share Apple might scrape together, by his estimate. Seen that way, it isn’t foolish. It’s a correct calculation about a market he defined differently. Ballmer was measuring phone share.
Apple wasn’t coming to compete for phone share: it was coming to change what a phone was.
Kodak
The most unfair of the four. Kodak didn’t hide the invention in a drawer: it patented it, and for years made money from that patent, which expired in 2007. What it did was not accelerate, and the company itself kept repeating the reason: “We’re in the paper and chemicals business.” No executive in 1975 was going to cannibalise the product holding up the company for a heavy, slow, low-resolution device. The decision that looks suicidal today was, back then, protecting what already worked.
A camera without film wasn’t an opportunity for that business: it was the end of the company as they knew it.
Yahoo
The reason it gave is the most revealing: it didn’t want a search engine that sent traffic away, out to third-party sites, the way PageRank did. It wanted the user to stay on its page. And that was consistent with its model, because Yahoo was a portal and its business was retention.
That more money could be made by letting the user leave and charging for third-party ads.
By the time they understood it, it was late. They bought Inktomi to react, executed badly, and in 2017 the business ended up sold to Verizon for $4.48 billion — cut down from the $4.83 billion agreed, after two massive data breaches came to light.
The pattern
Four cases, three mechanisms that repeat:
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1
Fear of cannibalising the business that feeds you today. The film roll, the stores, the portal.
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2
Underrating the worse but cheaper or more convenient option. Disruption almost always comes in that way, with a product that is objectively inferior at first.
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3
Measuring the wrong market. Ballmer counted phones. Yahoo counted visits. Kodak counted film rolls. They all measured correctly; they measured the thing that was about to stop mattering.
The market each one was measuring
The unit each company counted, against the unit that ended up deciding the market.
None of them measured badly. They measured correctly the thing that was about to stop mattering.
Diagram · own work, based on the cases documented in this piece.
The question almost nobody asks
And now the uncomfortable part, which Levine frames better than anyone because he had to live it.
He’s constantly asked whether selling Waze to Google in 2013 was a mistake. The company had $1 million in revenue at the time and some 55 million users. Today there’s no comparable figure to set beside it: Alphabet doesn’t break out Waze’s revenue, and the user numbers in circulation are third-party estimates, not company figures. Would it have been worth more if he’d waited?
There are right decisions, and then there are the NON-decisions. When we make a decision and choose one road, nobody knows what would have happened had we chosen a different one.
Uri Levine
And then the turn that changes everything. Instead of asking what would have happened if Yahoo had bought Google, the better question is another one: would Google have become what it is today under Yahoo’s leadership and vision?
Probably not. Google is what it is partly because Yahoo said no. The same goes for Netflix: it might never have become Netflix inside Blockbuster, run as one more division. It’s the idea Levine closes that chapter with, in paraphrase: any claim about whether those decisions were right or wrong is irrelevant, because we can’t know what would have happened on the road not taken.
The theory, and its critics
The mechanism was described by Clayton Christensen in The Innovator’s Dilemma: leading companies fail not because they manage badly, but because they manage well according to the criteria that made them leaders.
It’s worth not buying it as dogma, though. The very concept of disruption has been sharply contested; the historian Jill Lepore criticised it in The New Yorker for its poor predictive value: it works very well for explaining the past and rather badly for anticipating the future, which is exactly what it promises. It’s a tool for understanding, not a crystal ball.
None of these companies died of stupidity. They died — or shrank — from carrying on doing well what had always worked for them, a little longer than they should have.
The lesson isn’t “look how foolish they were back then”. It’s much harder than that: learning to recognise, when your turn comes, that worse, cheaper, more awkward product everyone is laughing at.
How we checked these figures
These stories circulate in distorted form almost everywhere. It’s nobody’s fault in particular: it’s what happens to a story told a thousand times. It gets rounded off, simplified, and given whichever figure sounds best. These are the four most often repeated wrongly, and what the sources actually say:
You’ll often read that Kodak invented the digital camera in 1973. It was in 1975: Steve Sasson, a twenty-four-year-old engineer, took the first digital photograph on 12 December 1975.
You’ll often read that Google offered itself to Yahoo for $2 million. It offered itself to Excite, which was a different company. In 1999 Page and Brin asked their chief executive, George Bell, for $1 million; they later came down to $750,000. Bell didn’t want it either.
You’ll often read that Yahoo refused to pay $5 billion for Google. There are two versions and they don’t match. The most widely circulated says that in 2002 Terry Semel offered $3 billion and Google asked for $5 billion. Semel himself, interviewed by Ken Auletta in 2006, tells the opposite: that it was Google that first asked for $1 billion and then $3 billion, and he mentions no $5 billion at all. In both versions the negotiation breaks down over price, so it wasn’t a “no” to Google; the exact number remains in dispute and this piece does not settle it.
You’ll often read that Google paid $1.15 billion for Waze. That was the press figure. Google itself later declared $966 million.
That these discrepancies turn up even in books written by the protagonists of the story says a good deal about how hard it is to hold on to an exact figure once a case becomes legend.
Sources
- Uri Levine, Fall in Love with the Problem, Not the Solution — chapter on disruption; definition of the concept and reflection on “non-decisions”.
- Clayton Christensen, The Innovator’s Dilemma — the mechanism by which leading companies fail while managing well.
- Jill Lepore, The New Yorker — critique of the predictive value of the concept of disruption.
- Marc Randolph, That Will Never Work — first-person account of the 2000 meeting in Dallas. The pull quote at the top comes from there.
- Statements by Barry McCarthy, then Netflix’s chief financial officer, about the same meeting, in a 2008 interview reported by Variety in 2013.
- John Antioco’s denial regarding that meeting: he maintains he wasn’t there and that it didn’t happen as told. Version against version, not a proven refutation.
- Declared gap. The two “today” figures for Waze (over $300 million in revenue and close to a billion users) have been withdrawn: neither holds up. Alphabet does not break out Waze’s revenue within its advertising line, and the user estimates in circulation are an order of magnitude below the figure that was being published. The 2013 figures do come from Levine’s account.
- Ken Auletta, interview with Terry Semel (2006) — Semel’s version of the negotiation with Google, without the $5 billion.
- Netflix market value as of 25 August 2026.
- Kodak dates and figures (12 December 1975), Yahoo–Google (2002) and Yahoo–Verizon (2017), detailed in “How we checked these figures”.