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When they heard about DVDs, first introduced in the United States in early 1997, they tested the concept of selling or renting DVDs by mail by mailing a compact disc to Hastings's house in Santa Cruz. Hastings and Randolph considered and rejected selling and renting VHS as too expensive to stock and too delicate to ship. Randolph admired Amazon and wanted to find a large category of portable items to sell over the Internet using a similar model. Patty McCord, later head of human resources at Netflix, was also in the carpool group. Hastings and Randolph came up with the idea for Netflix while carpooling between their homes in Santa Cruz, California, and Pure Atria's headquarters in Sunnyvale. He was previously a co-founder of MicroWarehouse, a computer mail-order company, as well as vice president of marketing for Borland. Randolph had worked as a marketing director for Pure Software after Pure Atria acquired a company where Randolph worked. Hastings, a computer scientist and mathematician, was a co-founder of Pure Software, which was acquired by Rational Software that year for $750 million, the then biggest acquisition in Silicon Valley history.

Netflix was founded by Marc Randolph and Reed Hastings on August 29, 1997, in Scotts Valley, California. Fourth and current logo, used since 2014 Launch as a mail-based rental business (1997–2006) Marc Randolph, co-founder of Netflix and the first CEO of the company Reed Hastings, co-founder and Executive Chairman

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