Reed Hastings: Netflix and super-chill
For the eagle-eyed among you, you may have noticed Netflix’s CEO Reed Hastings has been doing the media rounds over the past week promoting his Netflix-based book, ‘No Rules Rules’ (as in, not having rules, rules, okay?).
While these promo pieces obviously cover Netflix, its rise, culture and extraordinary success, what they miss or skim over is the man at the centre of it all - Hastings - being a brilliant human being.
This is the guy who’s the co-CEO of a $196 billion (as of April 2020) enterprise in a ridiculously fast-changing and competitive market and yet if he goes a business quarter without making a decision he’s really pleased with that. Talk about Netflix and chill. I think such a prospect would give most other CEOs the heebie jeebies.
Just on the culture point before we press on, building a great culture at Netflix was Hastings’ intention all along - he purposely built Netflix to have a culture of open information sharing, emphasising freedom and responsibility among employees. And as a result, Netflix's open culture fosters freedom, courage and honesty among its people. “We want people to speak the truth, and we say, ‘To disagree silently is disloyal,’” Hastings says. “It’s not ok to let a decision go through without saying your piece. We’re very focused on trying to get to good decisions with a good debate.”
Added to Netflix’s unique culture is the fact that, compared to its competitors, surveys show Netflix’s employees are the highest paid and least likely to want to leave. Maybe the unlimited maternity and paternity leave for its employees, along with the unlimited vacation helps too.
Back to the man of the moment, though.
Standing in the untroubled, sunlit uplands of 2020 (right?!) it can be easy to look at Netflix as the entertainment behemoth it is and think to yourself, “It was always going to be that way.” Well, dear reader, I’m here to tell you that it most certainly wasn’t - but it most certainly was Hastings that made it so.
Once upon a time in the not too distant past, Blockbuster ruled the video rental roost. And, who knows?, we could all be saying ‘Blockbuster and chill’ but that sounds clunky and, alas, while Blockbuster clung to its business model of being a video rental company, Netflix constantly disrupted itself, going from a DVD subscription rental service, to a streaming of movies and TV series model, to being a creator of content. Meanwhile, the once mighty Blockbuster has gone from 9,000 stores globally with revenues of $5.9 billion to, er, one store in one small town. Whoopsy.
The difference between the two businesses was that Netflix was run by someone who was willing to disrupt his own business in order to stay ahead of the curve, even though it definitely hurt profitability for some time, and was willing to fail (eg, Qwikster), and have his team experience failure, to ensure his organisation continued to innovate.
It might be easy to read but can you actually imagine doing that? Telling your colleagues and investors - who are all depending on you - not to worry about falling revenues and all those members cancelling DVD rental subscriptions in their droves as the prices on those packages are hiked up while you build your nascent streaming business for the next few years because, fingers and toes crossed, we’ll come out of it stronger than our competitors. No siree.
As the Financial Times has noted, Netflix could easily have been snuffed out by Blockbuster or lost in the dotcom crash. Indeed, the FT continues, ‘some basic foresight from big media might have also thwarted Netflix’s streaming ambitions; instead rivals licensed its shows, taking money for old rope. Most of them are now flailing in its wake.’
Clearly, though, taking that massive bet paid off and then some. ‘With a market capitalisation of around $230bn, Netflix has been vying with Walt Disney since March for the title of the world’s most valuable entertainment group,’ the FT says.
Hastings also did well to spot and act upon several micro and macro trends: in 1997, Netflix launched online rather than having physical stores; the removal of late fees (which Blockbuster desperately clung on to for five more years to remain profitable); improving internet connectivity that makes streaming whole series possible; internet-connected TVs; consumer taste for binge-watching; and the value in creating your own content, as opposed to renting or licensing 100% of it.
Aside from the bravery in business side, Hastings has donated $120 million to historically black colleges in the US with some of the funds also going to the United Negro College Fund, which Hastings said he has been donating to for years. That welcome news came a day after it was reported that Hastings has spent at least $20 million on building a retreat in Colorado for training public school teachers.
As well as Hastings’ own donations, Netflix as a company has highlighted the broad array of programming led by Black actors or from creators like Shonda Rimes and Kenya Barris and pledged to shift a portion of its cash to Black-owned banks. It’s committed 2% of its cash to institutions owned by Black people and serve the community - good news for the banks, which make money from deposits, and it reflects the socially conscious ethos Netflix has been promoting for some time.
Finally, earlier this summer Netflix hired Bozoma Saint John as its Chief Marketing Officer, making her the first Black executive in the company’s senior team. Though it must be said that while Netflix and Hastings have very publicly made moves in support of the Black community recently, it has very few Black executives within the company’s upper ranks.