I was reading about the early days of Netflix – specifically how Marc Randolph and Reed Hastings built the company from a DVD-by-mail experiment into a streaming giant – when I kept running into a name that most Netflix histories barely mention. Mitch Lowe. He was not a co-founder. He was not a celebrity CEO. But I would argue that without Mitch Lowe, Netflix as we know it would not exist.

Who was this person, and why has his contribution been so thoroughly overshadowed?

The Video Rental Veteran

Before Netflix, before DVDs, before streaming, there was the video rental store. And Mitch Lowe was one of the people who understood that business better than almost anyone in America.

By the time Lowe crossed paths with Netflix, he had spent more than fifteen years in the video rental industry. He had owned and operated his own video rental stores. He had served as chairman of the Video Software Dealers Association (VSDA), the trade organization that represented video rental retailers across the country. He knew the suppliers, the distributors, the studio licensing deals, the customer behavior patterns, and the margins. He knew what worked and what didn’t.

This was not the profile of a typical Silicon Valley hire. Lowe was not a software engineer or a product manager or a Stanford MBA. He was an industry veteran – the kind of person who had spent years in the trenches of a specific business and understood its mechanics at a granular level.

“I knew the video rental business inside out,” Lowe later recalled. “I knew every studio’s release schedule, every distributor’s pricing model, every customer complaint. When Netflix came along, I saw it as the future of everything I’d been doing.”

Meeting Marc Randolph in Las Vegas

The connection between Lowe and Netflix happened at a VSDA convention in Las Vegas. Marc Randolph, Netflix’s co-founder, was attending the convention to learn about the video industry and make contacts. At the time, Netflix was a tiny startup that had just launched its DVD-by-mail service. Randolph was still figuring out the business model, still trying to convince studios to give Netflix access to their catalogs.

Randolph met Lowe at the convention, and the two hit it off. Lowe had something that Netflix desperately needed: deep relationships with the studios and distributors who controlled the supply of DVDs. He also had something equally valuable: an intuitive understanding of what video customers actually wanted.

In November 1997, Lowe joined Netflix as Vice President of Business Development. It was a pivotal hire, and it came at exactly the right moment.

Building the Catalog

When Lowe arrived at Netflix, the company’s DVD catalog was thin. DVDs were still a new format – the first DVD players had only reached American consumers in March 1997. The selection of titles available on DVD was limited, and Netflix needed to build its catalog aggressively to give customers a reason to subscribe.

This is where Lowe’s industry experience proved invaluable. He knew which studios to call, which distributors to negotiate with, and how to structure licensing deals that would give Netflix access to the broadest possible selection of titles. He worked the relationships he had built over fifteen years in video rental and turned them into Netflix’s competitive advantage.

But Lowe’s most lasting contribution to Netflix was not the deals he struck. It was the recommendation system he helped create.

The 72,000 Characteristics

Lowe oversaw a project that has become one of the most fascinating footnotes in Netflix history. He hired approximately 500 people to watch films and categorize them across an astonishing 72,000 characteristics. These characteristics included everything from the obvious – genre, director, cast – to the deeply specific: the mood of the lighting, the pacing of the plot, the resolution of the ending, the cultural setting, the moral complexity of the characters.

This categorization system became the foundation of Netflix’s recommendation algorithm. When Netflix suggests a film to you today, it is drawing on a system whose roots trace back to Lowe’s team of 500 viewers, painstakingly cataloging tens of thousands of films across tens of thousands of dimensions.

The Netflix recommendation engine, which the company estimates drives roughly 80% of the content watched on the platform, was born not from machine learning algorithms alone but from the deeply human work of watching films and describing what made each one unique.

Think about that. The most sophisticated content recommendation system in the world started with people sitting in rooms, watching movies, and filling out forms. It was brute-force human intelligence applied at scale, and it worked because Lowe understood that the way to match a customer with a film was not just genre or star rating but the subtle characteristics that make one thriller different from another.

This is something that Reed Hastings would later build upon with his philosophy of talent density – the idea that having the right people, doing the right work, at the right level of intensity, produces results that no amount of average effort can replicate.

Netflix Express: The Vending Machine Experiment

Lowe was also the person behind Netflix Express, a prototype DVD vending machine that Netflix developed in the early 2000s. The idea was to place DVD kiosks in high-traffic locations – grocery stores, gas stations, convenience stores – where customers could rent and return DVDs without visiting a store or waiting for mail delivery.

Netflix ultimately decided not to pursue the vending machine business. The company was shifting its focus toward its subscription model and, eventually, toward streaming. But the Netflix Express concept did not die. It was reborn, under a different name, with Lowe at the helm.

Retail Integration

Before the vending machine experiment, Lowe pioneered another strategy that helped Netflix grow during its critical early years. He integrated Netflix promotional coupons into the point-of-sale systems at Best Buy and into the packaging of DVD player boxes. Every time someone bought a DVD player at Best Buy, they received a Netflix trial offer. Every time someone opened a new DVD player at home, there was a Netflix coupon inside the box.

This was brilliant distribution strategy. The people buying DVD players were, by definition, the exact customers Netflix needed. Lowe understood that the hardest problem in the early DVD-by-mail business was not the product itself – it was getting people to try it for the first time. By embedding Netflix into the DVD player purchase experience, he removed the friction of discovery.

Leaving Netflix, Co-Founding Redbox

Lowe left Netflix in 2003. By that point, the company had established itself as the dominant DVD-by-mail service, and the strategic direction was increasingly focused on the streaming future that Hastings envisioned. Lowe’s expertise was in the physical world – DVDs, kiosks, retail partnerships – and the company was moving digital.

After leaving Netflix, Lowe became a co-founder of Redbox, the DVD vending machine company that would eventually place kiosks in more than 40,000 locations across the United States. Redbox was, in many ways, the realization of the Netflix Express concept that Netflix had abandoned. Lowe took the idea, refined it, and built it into a business that at its peak was renting 2 million DVDs per day.

The irony is rich. Netflix shelved the vending machine concept, and one of its own executives turned that concept into a company that would become one of Netflix’s biggest competitors in the physical rental space.

MoviePass: The Final Act

Lowe’s career did not end with Redbox. In a move that would prove both visionary and cautionary, he became the CEO of MoviePass, a subscription service that offered unlimited movie theater tickets for a flat monthly fee. The concept was bold: for $9.95 per month, subscribers could see one movie per day at any participating theater.

MoviePass attracted millions of subscribers almost overnight. The problem was the economics. MoviePass was paying full price for each ticket its subscribers used, which meant it was losing money on virtually every transaction. The company burned through cash at an alarming rate and eventually collapsed.

But even in failure, Lowe had identified something real. The idea of a subscription model for movie theater access was sound – AMC later launched its own version, AMC Stubs A-List, which has been commercially successful. Lowe was right about the concept. He was wrong about the execution.

The Unsung Hero

I keep returning to a question that I think matters more than most people realize: why do we remember certain founders and forget others? Marc Randolph co-founded Netflix, but most people only know Reed Hastings. Mitch Lowe built the catalog, the recommendation system, the retail partnerships, and the vending machine prototype, but his name appears in almost no popular account of Netflix’s success.

“Success has many parents,” Lowe wrote in his book Watch and Learn. “But the people who build the foundations rarely get the credit. The foundations are invisible by the time the building is famous.”

Part of the answer is that Lowe was not a CEO. He was not the face of the company. He was the person who did the work that made the face of the company possible. In Silicon Valley’s mythology, the founder-CEO is the hero. Everyone else is a supporting character. But companies are not built by one person. They are built by teams, and the people who understand the industry, who bring the relationships, who build the systems that make the product work – those people are often the difference between a company that survives and one that doesn’t.

Mitch Lowe’s career is a reminder that the most important contributions are not always the most visible ones. He brought fifteen years of industry knowledge to a startup that needed exactly that knowledge at exactly that moment. He built a recommendation system that Netflix still uses in evolved form today. He pioneered a vending machine concept that became Redbox. And even with MoviePass, he identified a consumer desire that the industry eventually validated.

Not every career needs a headline to have mattered. Some of the most important careers are the ones that make the headlines possible for everyone else.

Sources

• Mitch Lowe, Watch and Learn: How I Turned Hollywood Upside Down with Netflix, Redbox, and MoviePass, Custom House, 2022
• Marc Randolph, That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea, Little, Brown, 2019
• Gina Keating, Netflixed: The Epic Battle for America’s Eyeballs, Portfolio/Penguin, 2012
• Netflix Corporation, Company History and Early Press Releases
• Variety, “MoviePass and the Economics of Disruption,” 2018
• The Wall Street Journal, “Redbox’s Rise and the Death of the Video Store,” 2012
• Video Software Dealers Association, Historical Records

Cover photo by Ajeet Mestry on Unsplash