The Exchanges

Q For them, like a streaming video box for Netflix?

A Yep, so the, so the Soundbridge sold in, I would say, the hundreds of thousands, which was good, but not a huge hit. And basically, at that same time, I, it's not that I re-met 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 want to make it for you. 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 going to transition from DVDs to streaming. He just didn't know when, you know, nobody did. 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.

AI assessment note: “are you guys ready to do a streaming video player yet? Because when you are, I want to make it for you.”

Q 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 carriers that Pay you a certain amount of money per subscriber. With you guys, it's almost inverted, which is the, the channels, the content providers pay you a small fee from their revenue, right? Explain how that works.

A 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 bill. 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 TV 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.

AI assessment note: “if we sign up a subscriber or we do billing, then we get a”

Q So, so in other words, why would Apple TV 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 started to hear pushback, he was coming to the conclusion that maybe this was a bad idea.

A I don't think he was getting worried. I think he came to the conclusion that Reed Reed's one of Reed's characteristics is he's very focused. So he'll pick a direction and he is maniacally focused on that direction. And so when I came in, the direction was, we're going to build a box and distribute to all our customers. He then, 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 that's 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, you know, many boxes that we can license.

AI assessment note: “I think he then decided that a better strategy is to just license our service widely”

Q the first version of a DVR, uh, digital video recorder. How did you, how did you think about, this is 97, 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. Um, And you're thinking of a digital video recorder. How did, how did that idea come to you?

A The idea came to me, I mean, you just 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 so I used to, you know, I used to watch TV. 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 videotape, and it was just, it's hard to do. I mean, not only programming your VCR, 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.

AI assessment note: “I was in the digital video and digital audio industry, right? That was”

Q 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?

A Definitely. That's always been 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 going to watch. And so that has always been a, a big focus for us. Even kind of a correlate 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 it got to the point where, you know, a TV remote has, like, a lot of buttons, and no one knows what they do, and so we put a lot of effort into our remote control to reduce the number of buttons, yet still being powerful and simple to use.

AI assessment note: “Definitely. That's always been a huge part of our strategy.”

Q 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?

A The original concept was just the category that there's going to be a lot of devices. So I know that's kind of vague, but that was, that was the idea and specific product ideas. A streaming player was on my list, a video streaming player, but it wasn't time yet. You know, that's why Netflix was still mailing out DVDs back then. And that's why I met with Reed Hastings. I was like, obviously at some point this is going to be a 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.

AI assessment note: “The original concept was just the category that there's going to be a lot of devices.”

Q 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 going to end up giving away a lot of that money, but you do have that wealth, lots of it, more money than you could ever use, your family could ever use. What do you, what do you think you would do with it?

A 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. And 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 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, hired a 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 it's easy for them to waste it. I'm not saying that they all do obviously, cause 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 nonprofit versus a company that we…

AI assessment note: “if I had a choice between putting money in a nonprofit versus a company... the company”