In the preceding Ted Talk, Chris Anderson interviewed Reed Hastings, co-founder, CEO, and chairman of Netflix, to find out more about the evolution of Netflix and its influence on entertainment.
In the beginning, Netflix only sent DVDs to customers, but with the introduction of streaming, the company made a radical shift in its offerings. Netflix risked its growing popularity by deciding to create its own content and by introducing the idea of binge-viewing. Unlike regular television shows where episodes were released one at a time to build excitement, Netflix released all episodes at once. Even though this consumer mode had not been tested yet, Netflix chose to take the risk. Since linear TV did not have this capability, it made users feel powerful to have access to all the episodes at once.
Netflix is a company dependent upon subscriptions. If they had placed too much weight on just increasing subscribers or increasing viewership, their company would have been unlikely to grow and become great. Instead, Netflix focused on making the brand stronger, so that more people would want to subscribe to it. The risk paid off: Netflix’s revenue in 2018 is expected to be eight billion dollars.
Here are four leadership points I took away from watching this interview:
1. Don’t be satisfied
Anderson asked Hastings if there was something about Netflix’s culture that allowed such bold decisions to be made. The answer was, “Yes, absolutely.” Netflix was born on DVD, something the company knew would be temporary. Hence, they constantly worried about what would and could come next. This constant state of preemptive forward thinking worked to their advantage.
2. Employee Retention
Netflix employees are the highest paid for their jobs in this field and the least likely to leave. Hasting focuses on how to run the company with no processes and no chaos. Netflix executes this through various mechanisms: highly talented people, alignment in core strategies, open talks, and an internal sharing of information. Hasting describes Netflix as the “anti-Apple” because instead of compartmentalizing, Netflix shares all of its information. The company tries to build a sense of ownership in their employees and helps them to focus on their own abilities to do things.
Netflix is open to debate among its employees. Their policy is, “To disagree silently is disloyal.” It is against their policy to make a decision without people voicing their opinions. This allows for good decisions to be made because they will be the result from curiosity and healthy debates.
Netflix has its own secret weapon: algorithms. In 2007, Netflix released their algorithm in hopes of finding a better one. Netflix invests a lot in its algorithms in order to feature the right content for each person. Netflix’s algorithms focus on the revealed values of its consumers, rather than their aspirational values.
4. Continued Learning
Education is a passion of his and he spends a lot of time and money on it. Right out of college, he became a high school math teacher. When Hastings later went into business and became a philanthropist, he gravitated towards education and trying to make a difference within that realm. He noticed that educators wanted to work with other great educators to help create unique environments for kids. He believes that more various, educator-centric organizations are needed within the system that we currently have. Charter schools are important to Hastings because they are public schools run by nonprofit organizations. This means the schools are more mission-focused and more supportive of the educators. Charter schools also serve low-income kids. The difference they make for these kids is the reason Hasting donates millions to this route of education.