Jan 2, 2019 · 42m · a16z
a16z Podcast | The Internet of Taste, Streaming Content to Culture
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In an interview recorded at the Andreessen Horowitz annual summit, Netflix Chief Content Officer Ted Sarandos and venture capitalist Mark Andreessen discuss Netflix's evolution, corporate culture, algorithmic recommendation systems, greenlighting strategies, and global content expansion.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The host holds 1.6% of the talking time here. How this is scored →
The host as informed peer 4.6 Guest teaching 5.8 Guest disagreement 1.7 The host pushing back 2.9
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 29:29 Rejecting sports rights as a lethal competitive move
Ted firmly rejects Marc's thesis that acquiring live sports rights would allow Netflix to dismantle cable competitors, arguing that sports rights pricing power remains exclusively with the leagues.
Hardest push from the host ▶ 25:33 Calling out cherry-picked examples and demanding operational realitiesMarc refuses Ted's smooth narrative about granting total creative freedom by pointing out that David Fincher is a cherry-picked top talent and directly asking when Netflix has to jerk the leash on less experienced showrunners.
Biggest teaching moment ▶ 29:29 Masterclass on sports broadcasting economicsTed educates Marc on the flawed loss-leader economics of network sports deals, explaining how Amazon paid 10x for non-exclusive games and why major leagues will ultimately bypass distributors to sell direct to consumers.
The host holds their own ▶ 22:24 Structural synthesis of film, TV, and startup founder dynamicsMarc demonstrates high domain knowledge by articulating a multi-layered comparison between traditional film studio mechanics, TV showrunner setups, and Silicon Valley founder-led startup structures.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The host as informed peer | Guest teaching | Guest disagreement | The host pushing back | Why |
|---|---|---|---|---|---|---|
| Ted Sarandos Early Career and Entry into Entertainment | 2 | 4 | 1 | 1 | Marc sets the stage with humor about how Silicon Valley once considered tech-led entertainment unthinkable. Ted shares his non-traditional background from working in a Phoenix video store to managing physical tape distribution. | |
| Joining Netflix and the Early Vision for Streaming | 2 | 5 | 1 | 1 | Ted details joining Netflix when it was purely domestic DVD-by-mail. He recounts how Reed Hastings convinced him of an all-digital future using Moore's Law despite early video clip downloads taking a week to open. | |
| Bridging Silicon Valley Tech and Hollywood Entertainment Cultures | 5 | 5 | 2 | 4 | Marc asks how Netflix avoided internal corporate civil war given the strong cultural split between Silicon Valley efficiency and Hollywood relationship-driven quality. Ted explains how mutual trust and Reed's culture of candid debate bridge the divide. | |
| The Content Greenlighting Process and Venture Capital Parallels | 6 | 5 | 2 | 3 | Marc draws explicit parallels between Netflix greenlighting 1% of pitches and venture capital selection ratios. Ted briefly flips the interview by asking how VCs cope with false negatives before detailing what makes a creative vision greenlight-worthy. | |
| Betting on Creative Talent Stranger Things and Viral Success | 3 | 6 | 2 | 4 | Marc asks if Netflix ever uses its recommendation algorithm to force-feed mediocre content to users. Ted rejects this framing, emphasizing that supporting a creator's unadulterated vision yields better results than algorithmic jamming. | |
| Addressing Diverse Tastes and Content Efficiency Metrics | 3 | 6 | 1 | 2 | Ted explains Netflix's content efficiency score, measuring viewership relative to cost rather than aiming for universal hits. He cites Crouching Tiger Hidden Dragon II as a film that found its niche audience but failed its broad commercial expectation. | |
| Cultural Homogenization versus Global Local Authenticity | 6 | 6 | 3 | 4 | Marc articulates a detailed cultural critique arguing that internet technology homogenizes global tastes. Ted counters by explaining that local-language shows travel globally best when they are authentically local rather than artificially generic. | |
| The Internet of Taste and Micro-Segmentation Algorithms | 4 | 7 | 1 | 2 | Ted explains how removing physical trade radius constraints allows micro-segmented audiences around the world to support niche content. He notes subscribers exist across ~600 taste clusters influenced by mood and viewing context. | |
| Creative Autonomy and the Writer-Driven Showrunner Model | 7 | 6 | 1 | 3 | Marc presents a sharp structural breakdown comparing traditional Hollywood movie productions to TV showrunner models and tech startups. Ted explains Netflix's policy of giving top talent creative freedom without studio notes, using House of Cards as an example. | |
| Managing Production Challenges and Showrunner Transitions | 5 | 6 | 3 | 6 | Marc pushes back on Ted's David Fincher example, calling it cherry-picked high-end talent and asking when Netflix 'jerks the leash' on struggling creators. Ted reframes showrunner changes as organic television evolution rather than sudden failures. | |
| Strategic Focus and Avoiding Live Broadcast Sports Rights | 6 | 7 | 3 | 5 | Marc suggests buying live sports rights could deal a fatal blow to cable competitors. Ted counters with a sharp economic analysis showing why live sports rights pricing power sits entirely with leagues, making it a poor capital allocation choice for Netflix. | |
| The Marvel Partnership and Critic-Audience Disconnects | 5 | 6 | 1 | 2 | Marc highlights the precedent-setting Marvel five-show deal. Ted discusses the risk-reward matrix of interconnected series and points out the gap between critics and viewers using Iron Fist, which was universally panned by critics but became a major hit. | |
| Overrated or Underrated Speed Round on Industry Trends | 7 | 6 | 3 | 4 | In a rapid-fire session, Marc challenges Ted on industry trends like binge-watching killing weekly social momentum. Ted pushes back with data showing binge launches generate higher cumulative buzz than weekly broadcasts. | |
| Evaluating Reed Hastings Leadership and Podcast Conclusion | 3 | 6 | 0 | 0 | Marc asks whether CEO Reed Hastings is overrated or underrated. Ted gives a tribute highlighting Reed's clarity of vision, lack of personal hubris, and selfless leadership style. |
Statements from this episode (27)
Netflix's investment in original programming reached over $7 billion
“Today's episode features a Q&A with Ted Sarandos, chief content officer at Netflix, which evolved from a company that sold DVDs by mail to streaming to including original programming, which is now an over seven billion dollar investment for them.”
Andreessen: Netflix driving biggest TV revolution since color television
“I also think Netflix, even beyond that, it's catalyzing the most dramatic period of revolution and change in the television video industry. You know, certainly since the arrival of color TV and maybe, maybe even before that.”
Sarandos: Silicon Valley prioritizes efficiency while Hollywood prioritizes content quality
“The whole efficiency-driven thing is very Silicon Valley, and the whole quality-driven thing is very Hollywood. And rarely do those things meet.”
Netflix employs 1,000 LA content staff and 4,000 Silicon Valley tech staff
“There's about a thousand people who work in LA that, on all the aspects of content, they all think they work at the greatest entertainment company in the world. And there's about 4000 people in Silicon Valley who think they work for the best tech company in th…”
Andreessen: Operating two distinct corporate cultures typically causes internal civil war
“So, a lot of Silicon Valley companies, if they heard this, would just say flat out, like, that can't work, or it certainly would not work for us, another company, and the reason is because, like, consistency of culture is viewed as so important, and right, and…”
Sarandos: Netflix greenlights roughly 1% of pitches across its content slate
“This year we'll have 30 original series, 80 original films, 35 original kids series, 19 local language original series being produced all over the world 65 documentary projects, so I would say it's about one in a hundred.”
Ted Sarandos greenlit Stranger Things immediately upon hearing the pitch
“I knew as soon as we heard the Stranger Things pitch that we were doing this show. And I knew it every step of the way as the episodes, as the scripts were coming in, as the episodes were coming in, That it was something special. Not at the scale that it is. I…”
Netflix spent almost no marketing money on Making a Murderer
“We didn't, we spent almost no marketing money on the show at all, and it just exploded on its own. Nobody inside of Netflix foresaw that was going to be, you know, an overnight sensation like that, like it was.”
Netflix shipped 60,000 unique DVD titles daily out of 100,000 catalog
“That we had a 100,000 titles on DVD, and every day, 60,000 of them shipped.”
Sarandos: Content failure is failing dollar efficiency versus alternative investments
“Where we see we have a failure is that relative to what it costs, did enough people watch it that it was a good use of content dollars. So there is an efficiency measure in that way, which is, is it an efficient use of dollars relative to any other way you wou…”
Sarandos: Crouching Tiger II was Netflix's first major commercial movie flop
“The ones that don't ultimately realize those audience, or that, that audience, and one of those was Crouching Tiger, Hidden Dragon II, our first big movie we put out. We thought it was going to be, The second coming.”
Sarandos: Brazilian show '3%' achieved U.S. viewership rivaling cable hits
“You show a show like the three percent, which is a show we make in Brazil, in all in Portuguese, with an all Brazilian cast, and the watching on Netflix in the U.S. Would be equivalent to a pretty good sized cable hit.”
Sarandos: Authentically local foreign shows travel globally better than English-language ones
“What we're trying to do is tell these stories that are authentically local, and the win for us is that they actually travel more the more authentic they are. Because there's something inorganic about the English language European television show that forces it…”
Sarandos: Netflix categorizes users into roughly 600 taste clusters
“There's probably 600 meaningful ones, yeah.”
Sarandos: Viewing preferences are highly mood-dependent across genres and context
“So much about choosing is mood-based. So, you know, I know you love drama, but the hard thing about the machine, even why the machine learning really is helpful in this, is you can watch 25 comedies, and I can tell you a lot about your comedy taste, but I know…”
Netflix committed to two seasons of House of Cards without a pilot
“House of Cards was our first original show on Netflix, and the deal we made with David Fincher was, I'm going to give you two seasons of the show, no pilot.”
Peter Morgan writes every word of The Crown without a writers' room
“Peter Morgan writes every word of the crown. No, no writer's room. He has some research team that helps him, but every word of that show is written by him”
Sarandos notes Amazon paid 10x Twitter's price for non-exclusive NFL rights
“The cost of that Amazon NFL deal for basically games that are on two other networks at the same time, so completely non-exclusive programming, went up 10 times from Twitter to Amazon.”
Sarandos predicts sports leagues like the NFL will go direct-to-consumer
“I think the winner will be NFL.com. That they'll just go direct to consumer, and there's plenty of people who pay an outrageous amount of money for a subscription for NFL, or NBA, or MLB, and ultimately the winners will be the league anyway, so.”
Sarandos asserts major TV networks lose money on sports broadcasting deals
“No, and I think not only that, I think that, that loss leader model that made them great is the thing that's making, that really cripples them now.”
Sarandos: Luke Cage defied conventional wisdom and performed globally on Netflix
“African-American superhero, and on and on and on, and it was hugely popular for us all over the world.”
Sarandos: Iron Fist is Netflix's worst-reviewed show
“Iron Fist is literally the worst reviewed show on Netflix.”
Sarandos: Iron Fist had the biggest launch among Netflix's Marvel series
“And it was the biggest launch of all four.”
Sarandos: Content producers do not need to own telecom pipes
“I don't think so. I get the emotional desire to, and I also think it's more a result of kind of winner-take-all cutthroat negotiating that you end up in a place where I have to own it because I can't make a deal that we could both live in where I think you sho…”
Sarandos: Cumulative buzz for top Netflix shows exceeds Game of Thrones
“The cumulative buzz of Orange is the New Black, the cumulative buzz of 13 Reasons Why, the cumulative buzz of Stranger Things is actually much bigger than Game of Thrones.”
Sarandos: Adam Sandler movies are among Netflix's top-watched films
“I think it's underrated relative to watching, and some of our top watched movies have been these Sandler movies, which tells you, again, what people's tastes are.”
Sarandos: Reed Hastings originally pledged Netflix would never make original programming
“When we've made a move into original programming, We were so convinced as a company that we would never do original programming that Reed had said, we'll never do original programming, yet I knew that I was in a safe place to do it.”