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jerryking : overextended   4

Netflix vs. Naysayers - WSJ.com
March 27, 2007 | WSJ | By NICK WINGFIELD

CEO Hastings Keeps Growth Strong; Plans for Future After Death of DVDs. In the decade since Netflix Inc. NFLX +3.07% began renting DVDs online, CEO Reed Hastings has faced down a murderers' row of rivals.

Wal-Mart Stores Inc., WMT -0.59% Amazon.com Inc. AMZN +0.72% and Blockbuster Inc. have all piled into the market with services that mail DVDs to consumers who've ordered them over the Web.

...WSJ: You've started letting some of your subscribers watch movies from your Web site. How seriously are you pushing into Internet-delivery of movies?

Hastings: We're taking it pretty aggressively. We're investing about $40 million into it this year. We feel that that's the appropriate size investment, given the size of the market. If you overinvest in a market, of course, a lot of the money is wasted.

If you underinvest, then someone else can get ahead of you. We'll be up to 5,000 films by the end of the year, open to all of our subscribers....

WSJ: Blockbuster was once dismissive of Netflix, but now they're taking you very seriously. Did their initial attitude affect the way you view potential threats to Netflix?

Hastings: Absolutely. We have to recognize that now there are tens and maybe hundreds of start-ups who think that they're going to eat Netflix's lunch. The challenge for a management team is to figure out which are real threats and which aren't.... It's conventional to say, "only the paranoid survive" but that's not true. The paranoid die because the paranoid take all threats as serious and get very distracted.(jk....which threats are worthy of my attention?==> distinguish between illusory and legitimate threats and fears.)

...WSJ: What are some examples of how you were choosy in reacting to potential threats to Netflix?

Hastings: There are markets that aren't going to get very big, and then there are markets that are going to get big, but they're not directly in our path. In the first camp we have small companies like Movielink -- a well-run company but not an attractive model for consumers, sort of a $4-download to watch a movie. We correctly guessed when it launched four years ago that this was not a threat and didn't react to it.

The other case I brought up is markets that are going to be very large markets, but we're just not the natural leader. Advertising supported online video, whether that's at CBS.com or YouTube -- great market, kind of next door to us. But we don't do advertising-supported video, we do subscription, so it would be a huge competence expansion for us. And it's not a threat to movies.
Netflix  Reed_Hastings  CEOs  DVDs  downloads  streaming  subscriptions  threats  large_markets  discernment  paranoia  distractions  overextended 
june 2012 by jerryking
Sales Spurt, Growing Pains Leave Karaoke Maker Singing the Blues - WSJ.com
July 29, 2003 | WSJ | By JEFF BAILEY - Staff Reporter of THE WALL STREET JOURNAL.

Singing Machine Co., a Coconut Creek, Fla., maker of karaoke machines. But rather than celebrating its success, these days the executives at Singing Machine are scrambling to avoid insolvency. The company's experience is a warning to all entrepreneurs about the dangers of rapid growth. Outside auditors last month noted that a default on a borrowing agreement "raises substantial doubt about the company's ability to continue as a going concern."

"It's a classic business-school case of growing pains," says Y.P. Chan, 39 years old and recently named Singing Machine's chief operating officer.

Every year, thousands of smaller companies go belly up because entrepreneurs aren't prepared to manage rapid growth. Accustomed to scratching for every sale, when the throttle is finally thrown wide open, too many assume it is clear sailing and fail to ask some important questions.
[chart]

Are your finances solid enough to support a bigger company, or are you counting on lush profits to do it? If you load up on inventory to satisfy demand, how will you survive if prices plunge? Look around -- does management have experience running a bigger enterprise? Look at your competitors -- are they bigger and likely to weather tough times better? Or are they also small companies that might get overextended and slash prices to stay afloat?
small_business  growth  bankruptcies  warning_signs  insolvency  contingency_planning  hard_times  high-growth  inventories  risk-management  overextended 
may 2012 by jerryking
Why boards fail
Spring 1995 | Business Quarterly Vol. 59, Iss. 3; pg. 71, 7
pgs | by Thain, Donald H, Leighton, David S R. Highly leveraged
companies have become overextended, exposed, and riddled with bloated
bureaucracies. These things are not supposed to happen in well-managed
companies, and directors are the shareholders' first line of defense to
make sure they do not. Six key, interrelated factors determine the
success or failure of boards of directors: 1. legitimacy and power, 2.
job definition, 3. board culture, 4. competence, 5. board management,
and 6. board leadership.
boards_&_directors_&_governance  overextended  failure  CEOs  executive_management  Ivey  bureaucracies  legitimacy 
february 2010 by jerryking

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