Netflix's Marc Randolph on how an idea became a household name

Netflix co-founder: Building something great takes two
Netflix co-founder: Building something great takes two

From an idea to success:

To be successful, just having a great idea is not enough, according to one Silicon Valley entrepreneur.

"There's nothing worse than the guy who at the party goes, 'Oh, I had that idea two years ago.' Well, then, why didn't you do something two years ago?" Marc Randolph, co-founder of Netflix, told CNBC.

"If you have an idea and you don't take action, you're done."

The good news, according to Randolph, is that the idea does not have to be perfect. Like other business owners, when the founders started Netflix, they tried to perfect their idea and only share with the world what they perceived was a flawless product, he said during the interview.

"Your idea is a bad one, your idea is wrong. You don't know how or why yet, but until you put the idea out there and see it collide with the real world, you won't know what direction to go," he said.

A messy success

"It's an iterative process: 'I have an idea; I find out why it's bad; I pivot it to something else; I find out why that's bad, and I keep doing that,' until if you're lucky and persistent, eventually you find something which other people want," he added.

Randolph noted that after spending weeks trying to perfect a strategy or product, the duo learned that it was best to turn things out fast and work based off of public feedback.

"We realized that it was a good idea to immediately show them through, and it worked," he said. "It was a bad idea that all the time we spent polishing was wasting time."

Netflix's big hit, which most likely was the foundation for becoming a popular household name and inspiring the idiom "Netflix and chill" (being able to watch movies and ... relax?), came as a result of something that started as a mess but turned into a breakthrough.

"[It] was the no-due-dates and the no-late-fees program," Randolph said in the recent interview.

"We're still doing things like classical rentals. So this was a very kludge together thing that we said, 'You can keep them.' We didn't have a way to bill you properly; we didn't have the communication set up to tell you what's going on."

Three tips for success:

To make an idea a success, entrepreneurs need to take action, let an idea go if it isn't working and remain driven, Randolph said.

"The first thing is that you got to do something. Most people who have ideas, those ideas sit in their head forever until they eventually die," he said.

Similarly, the investor considers falling in love with an idea as a potential cause for failure.

"Not only do you have to do something, take the first step with your idea, you can't be wedded to your idea," he said.

Finally, he encourages entrepreneurs to be persistent. He told CNBC that when the duo first started Netflix, they were very persistent.

"You can knock us down over and over and over again, and we'd just keep getting up and coming at the problem again," he said. "It's trying one thing after another."