The Netflix Effect

AppSumo has been struggling with the innovator’s dilemma for the last 2 years. We knew AI was going to help us with more tools to promote but we also saw the challenges of Lifetime Deals (LTD), where AI costs make software more expensive to run. And today, we are still working through solving and evolving our business.

Most people think of famous companies like Blockbuster who failed to breach the innovator’s dilemma. But what’s interesting is that they tried. Do you remember when they tried renting DVDs? They tried.

It got me thinking how did Netflix actually solve their own innovator’s dilemma when they were faced with the same problem of going from DVD to online… It shocked me!

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Check out the timeline of Netflix:

1998: Netflix DVD rental launch
2007: Netflix launches online streaming (9 years later)
2023: Netflix ENDS DVD rental business (25 years later)

Whoa. I thought they got rid of the DVD service way earlier. The reality is they tried many things, found the product-market-fit and then still took another 16 years before they killed off their initial business model.

The Netflix Effect: cracking the code on next PMF and transitioning over time.

It reminds me of a famous Zuck quote about if you don’t cannibalize your own business then someone will do it to you.

I feel and see how easy it is to stick with what has been working. It works but it’s a slippery slope, especially in the tech world where things move insanely quickly.

At AppSumo we haven’t had a “great” plan, haven’t moved decisively enough and haven’t found what’s next, yet!

We realize LTD has to evolve and the biggest thing is action. We love promoting cool sh*t for entrepreneurs, always have, always will.

So it’s testing violently new things that can help our partners and customers, iterating based on feedback and then transitioning to the next product-market-fit.

The opportunity is letting go of one branch to swing to the next. It’s time.

Originally published as an article on X on 2026-01-27.

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