Tyler Perry and Netflix's Ted Sarandos: Amplify the untapped audience

Tyler Perry saw the need for better representation of people of color on TV and film. He wanted to make sure that children grow up seeing people who look like them doing well, and he used universal themes like faith, family, and tragedy to connect with his audience. Perry learned a lot from his mistakes and understood that everyone is one unit, one system, and one culture dealing with common issues. Ted Sarandos learned everything he uses today at Netflix from working in a video store, and he was fortunate that the second video store in Arizona opened near his home. They both had humble beginnings but used their experiences to shape their careers and make a positive impact.

The success of niche businesses like video stores depends on the trade radius and population density of the area they serve. While small niches may struggle due to lack of customer base, larger trade areas can make them big businesses. This is evident from the fact that foreign language films and art films work well in New York and LA due to population density. However, businesses like Netflix have solved this problem by offering a centralized inventory that can be mailed nationwide, thereby catering to every taste. The success of such businesses depends on serving a broad public, putting obscure yet great movies in front of people who want them but previously did not have access to them.

The video store experience taught Tyler Perry the importance of understanding consumer taste and scaling for a potential audience. He learned that conventional wisdom about certain demographics not selling internationally was often wrong. Netflix's data-driven approach helped him pivot and release successful films with Black stars in many countries. The wind at his back allowed him to release A Jazzman's Blues, a special project that had a long birth process. This experience highlights the importance of challenging conventional wisdom and using data to make informed decisions about audience targeting and scaling for success.

Tyler Perry wrote A Jazzmans Blues in 1995 after being inspired by August Wilson, and it finally got made after 27 years thanks to Netflix's support. Conventional wisdom can often be wrong and it takes someone to challenge it. Netflix's data algorithms were helpful in determining the audience for the movie. Perry faced challenges in getting his movies played in theaters due to trade radius and attracting certain audiences. Streaming services like Netflix give filmmakers the opportunity to reach audiences directly and overcome traditional barriers to success.

Netflix's pivot toward original content was a surprising move for a tech company but its founders' vision of fast, cheap internet made it possible. The company honed in on streaming at the right moment and had to license content little by little at first. Then, it made a deal with Starz to get Disney and Sony movies. When they discovered a loophole in paid TV licensing, Netflix started buying foreign language films and documentaries often passed on by studios. This pivot provided inspiration for building a new ecosystem with deep cultural impact and helped Netflix become a major player in the entertainment industry.

Netflix's success in the streaming industry lies in their ability to pivot and adapt to the changing market. They recognized the need for original content to stay competitive and took risks, such as offering an attractive deal for House of Cards. Another key to their success is the ability to scale, which is achieved through distributed decision-making and having teams with knowledge and expertise in local markets. The biggest show in Netflix's history, Squid Game, is a prime example of this. Recognizing the potential for a TV show rather than a movie, their Korean team redeveloped the scripts and brought the show to the world. Netflix's cautionary tale is Blockbuster, who failed to pivot and adapt, leading to their downfall.

Ownership is key to success; Tyler Perry's aim was to build his own studio and have ownership of his work rather than fighting for a seat at someone else's table. His experience watching his father work as a subcontractor and the disparity in earnings between what his father made and what the homeowner earned motivated him to strive for ownership. He believed that giving people opportunities who never had chances to be in the business was important. Through building his own ecosystem and introducing diversity, Perry was able to attract attention and make an impact. This same mindset can be applied to any entrepreneurial journey - when you see a gap in needs, find a different way to play the game and deliver transformative change.