The main strip of downtown Los Gatos, complete with coffee shops, restaurants, and the obligatory Lululemon, hardly feels like Silicon Valley. There are no roaming packs of startup employees, no VCs in black Patagonia vests listening to nervous elevator pitches, and none of the lunch crowd you get in downtown San Francisco, Palo Alto, or Sunnyvale.
Instead, much of the populace feels like they’re somewhere between perpetual vacation and well-deserved retirement, particularly as the lush, green Santa Cruz Mountains are never far from view.
Los Gatos is not what you’d characterize as a hotbed of tech.
And yet it is home to Netflix — the company that killed Blockbuster, upended Hollywood, and built a streaming empire with 300 million subscribers in 190 countries. Location, convenience, and sheer happenstance made this sleepy town of 33,000 the unlikely birthplace of the streaming revolution and instrumental to the rise of Roku, Plex, and others. It’s as confounding a fact for the people who built the streaming industry as it is unknown to binge-watching civilians.
“It was mind-boggling,” says a tech worker who moved to the area to work at Netflix a decade ago. One of the most striking things the former employee remembers was the disconnect between the streamer’s world-changing ambitions and its podunk surroundings. “My initial impression was: How could this company be based here?”
To retrace this history and the role Los Gatos played in the birth of streaming, The Standard spoke to nearly a dozen current and former executives and employees of Netflix, Roku, and Plex. Some declined to be identified because they were not authorized to speak to the media.
An accidental headquarters
Netflix got its start in 1998 in Scotts Valley, just north of Santa Cruz, as a DVD-by-mail rental service. But founders Marc Randolph and Reed Hastings realized quickly they’d have to move the offices north to attract top tech talent. However, they lived in Santa Cruz and didn’t like the idea of a long commute, so they settled on Los Gatos as a compromise: close enough to the Valley’s tech hubs but not as far from home as Sunnyvale or Palo Alto.
“He didn’t care what the standard thing you did was,” Adrian Cockroft says of Hastings. Cockroft joined Netflix in 2007 and became its cloud architect before departing in 2013. “He wanted to do it his way, because he’d done the other ways.”
At its core, Los Gatos is a wealthy suburb for senior tech employees and executives looking for a respite from the hustle and bustle of Silicon Valley a short drive north. It’s a crowd that cherishes the town’s sleepy vibe, frequently (opens in new tab) resists (opens in new tab) new housing, and proudly embraces wealthy oddballs. Among Los Gatos’ high-profile residents is Apple cofounder Steve Wozniak, who is known to ride his Segway (opens in new tab) through downtown.
The median age of Los Gatos residents is 44.7, the median household income is close to $218,000, and 85% of residents are white or Asian. By comparison, in nearby San Jose, the median age is 38.2, the household income is $146,000, nearly 31% of residents identify as Latino, and 22% are white.
With more than 2,500 employees, Netflix is by far Los Gatos’ largest employer, accounting for 15.6% of the town’s workforce. Still, it doesn’t feel like a company town. “For a small town where the No. 1 employer was Netflix, you would think it would be more like Minneapolis and Best Buy, where everybody works there,” says the former employee. “I think Netflix did a really good job of not overstepping, not sponsoring everything, not Netflix-ifying the town.”
Netflix settled on University Avenue in Los Gatos in 1999 and seven years later moved to Winchester Circle on the outskirts of town, where it occupied two Spanish colonial buildings with castle-like arches and towers. It was there that the company expanded into streaming — and began building a secret weapon to conquer the living room: a box that would bring streaming video directly to the TV.
Have thoughts on this story?
“It was a secret organization within Netflix that started all this,” says Jojo Ong, who was part of the small team working on the box, led by Anthony Wood, who had developed one of the world’s first DVRs. In 2002, Wood started Roku to make internet-connected loudspeakers and photo frames.
Netflix hired Wood’s Roku team as its internal hardware development unit, with a plan to launch the streaming box in early 2008. Just months before the launch, Hastings abruptly changed course, deciding Netflix shouldn’t be in the hardware business. “They had the red-painted box all ready to go — and Reed yanked it,” says an early Roku employee. Wood and his team took their work back to Roku and moved out of the mother ship to a nondescript business park in Saratoga, three miles north.
The Saratoga complex consisted of a handful of low-slung office buildings whose other tenants included a real estate agent, a sleep center, and no other cool startups. “We moved from this nice-looking, castle-like building in Los Gatos into this small office,” says Ong, who still works at Roku as a program manager. “Definitely a downgrade.”
Dive bars and hidden trails
Roku’s new digs may have been a demotion, but they were only one freeway exit from Netflix. “We were going back and forth heavily to attend meetings with them,” Ong says. With streaming still in its infancy, the two companies cooperated closely to bring Netflix’s video catalog to the TV.
That required lots of focused work — and Los Gatos, with its small-town charm and lack of distractions, proved to be the perfect backdrop. “We were heads down in the work,” recalls an early Netflix employee. “We were eating lunch in the office, not going anywhere unless it was a special occasion.”
On those special occasions, Netflix executives dined at Nick’s on Main, a lauded (opens in new tab) downtown eatery that has since closed. Other popular stops included the Los Gatos bocce courts and Black Watch, the city’s oldest dive bar, known for its stained-glass storefront, dartboards, and kamikazes.
Both Netflix and Roku kept such low profiles that even local historians draw a blank when asked about their impact on Los Gatos. “We don’t have any information on either company,” says Jamie Donofrio from the New Museum of Los Gatos (opens in new tab). “If you learn anything, we’d love to hear about it.”
That lack of visibility has at times been a point of contention. Mayor Rob Moore lamented during a 2023 City Council meeting that Apple and Google were donating more than the streamer to local causes. “We don’t get that from Netflix,” he told the Los Gatan (opens in new tab). “That’s just not their culture. That’s not the company they are.”
For those in the know, there was one place where you’d always find someone from Netflix: the Los Gatos Creek Trail, a paved walking path right behind the office. “We would take our one-on-one [meetings] by just walking out of the building, down to the river, up to the reservoir and back, chatting,” remembers Cockroft.
Among the people frequently seen on the trail, discussing the future of streaming, was Hastings himself.
That walk-and-talk tradition is still alive: On a recent spring day, it took just a few minutes after arriving for two people to emerge from Netflix’s office complex to stroll alongside the water, deep in discussion.
An industry connected to its roots
As streaming grew, so did the industry’s ecosystem around Los Gatos. Netflix outgrew its two office buildings on Winchester Circle and built a campus with four modern-looking glass buildings one block away, still with easy access to the creek trail.
Roku quickly outgrew its Saratoga offices and began leasing space in Netflix’s old headquarters. The move back was awkward. Netflix didn’t want to be seen as picking favorites among its hardware partners. But keeping its relationship with Roku at arm’s length was complicated not just by the two companies’ shared history but because Netflix continued to occupy part of the buildings before completing its move. At one point, Netflix’s red logo and Roku’s purple sign hung next to each other on the parking-lot gate.
“It was really weird,” remembers the former Netflix employee. “It was like we had roommates.”
“It was a déjà vu,” says Roku’s Ong.
Around the same time, another streaming company set up shop just down the street. Plex, which specializes in personal media tools and free, ad-supported online TV, opened its first office in a small home in 2014 and relocated to a former bank building in downtown Los Gatos soon after.
Plex’s choice to set up camp in Los Gatos was more or less happenstance, but the company ended up benefiting from the Roku and Netflix spillover. Content partners and others who were visiting the companies often squeezed in an additional meeting with the much smaller startup. “We benefited from that, for sure,” says Plex Chief Product Officer Scott Olechowski.
As they were building the company, Plex’s executives and employees quickly learned to appreciate the town’s sleepy vibes.
“If you just want to put your head down and get shit done, then Los Gatos is kind of your town,” Olechowski says.
Buoyed by explosive growth, Roku moved to San Jose in 2019; Plex went fully virtual during the pandemic. But last year, Netflix signed a 10-year lease extension.
The dive bar Carry Nations, which gives out plaques to anyone who buys a round for the whole bar, still has one reading “Plex yeah” on its wall.
Just as streaming has left its mark on Los Gatos, so has the town shaped the industry it helped create. Netflix, Roku, and Plex employees and alums alike speak fondly of it. In fact, setting up the lounge area on the rooftop of their new San Jose office, Roku’s staff paid tribute to the dark, wood-paneled Los Gatos dive where they had one too many kamikazes.
They named it Purple Watch.