Netflix: a beautiful castle on quicksand

Photo of Reed Hastings speaking at the Facebook f8 2011 conference.

It seems almost everyonehas hadtheir say on Netflix and the stock swoon that followed companys decision to separateits DVD and streaming operations. Peter Fenton, a well known venture capitalist who sits on the board of Twitter and is a general partner with Benchmark Capital shared his thoughts on Netflix, its recent troubles and lessons for othersin a coupleof tweets. They caught my eye and I thought I should share them with you.

Reed Hastingss exceptional leadership, team, and execution created a sprawling, beautiful castle..on quicksand. Setting up a perfect shortwhich underscores my belief that truly enduring consumer internet businesses dont buy the bulk of their users. [Fenton on Twitter]

In a blog post, Fentons colleague at Benchmark Capital, Bill Gurley wrote:

Netflix is an amazing company, and Reed Hastings is one of the best CEOs Silicon Valley has ever seen. That said, at age fourteen, the digital world is forcing Netflix to execute a pivot. And the world they are entering is radically different from the world they are leaving. There is no longer a first-sale doctrine to keep things neat and tidy.

Benchmark has been an investor in online video companies such as Metacafe, Clicker (acquired by CBS Interactive) ! and Vudu (acquired by WalMart.)

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