Netflix’s Mistake

“I don’t know if it’s the usual track for businesses and I’m sure I’m oversimplifying, but I seem to see this a lot over and over again:

1. Let’s start a business in sector Y. We will differentiate ourselves by doing X!
2. Wow, things are going really great! People seem to really respond to X. Let’s expand!
3. We’re wildly profitable, but we’re not expanding at the rate we used to or posting increasing quarterly profits anymore. Isn’t there some way we could cut some costs? I know: we could get rid of X!
4. I don’t understand why our business is failing.”

Commenter on┬áMetaFilter┬áthread about Netflix’s Flixster disaster