Insight
Hastings: Andy Grove's 'only the paranoid survive' maxim breeds delusion and distraction
“Only the paranoid survive. That was Andy Grove's quote. And the problem with that is it over, it encodes the truth in a way, but it oversimplifies, because the paranoid are delusional. They see crazy things all the time, ok? And business isn't that easy. You d…”
Prediction Open · timeframe Feb 2037
Hastings: Linear TV will disappear completely in 10 to 20 years
“Linear TV, 1020 years from now, will disappear. It will be, once in a while, you'll see it in a hotel, like where you see a fixed-line phone, but other than that, you know, you're not gonna see it, and everyone around the world will be doing internet video as …”
Insight
Hastings: Managing creative teams like semiconductor yield kills innovation
“You know, at Pure, I was a product guy, and I didn't think much about management, and it didn't turn out very well, so as the company grew, it got more bureaucratic we were obsessed with putting processes in place, because every time there was a mistake, we wa…”
Prediction Not checkable as stated
Hastings: Netflix will operate with fewer rules as it grows
“And so that's when I vowed that in starting another company, that at least we wouldn't make that mistake. That as we grew, we would try to have less rules, not more rules.”
Assertion Partly supported
Hastings: Software tools companies get acquired; media companies scale independently
“So that company, Pure, was a software tools company. They always get acquired. Media companies can grow to be quite large and independent.”
Disclosure
Hastings: Netflix kicked DVD executives out of management meetings to focus on streaming
“We were hybridizing it with streaming, and we were getting more streaming attention and executives, but the discussion was still a lot around DVDs, and then we realized that we had to kick out the DVD executives of the main management meeting.”
Insight
Hastings: Netflix went vertical because legacy studios would stop licensing content
“By 2011, 20 12, we were realizing that many of the firms that we were buying from were eventually going to want to run their own streaming service, and that we had, we did not have a reliable supply, and so there's a bit of the burn your boats Cortez model, wh…”
Assertion Partly supported
Hastings: Netflix spent $5 billion on content and $1 billion on tech in 2017
“Now, for this calendar year, we're spending about five billion on content and one billion on tech.”
Insight
Hastings: Leaders miss threats by judging current technology instead of potential
“Jeff Bucus, who runs Time Warner, who's, you know, Stanford MBA, he's been in the business, ran HBO for 20 years, you know, a very thoughtful guy, and yet he missed the Netflix thing. And what happens to people is they associate you as you are, not as what you…”
Insight
Hastings: Comcast bought NBC Universal for tax efficiency, not vertical integration
“So it's a tax law thing. So if Comcast is very profitable, if you return all that money to your shareholders, it gets taxed. So the shareholders would like you to invest it smartly if you can, if you're trusted to invest it, rather than return it to them and k…”
Insight
Hastings: Non-tech companies cannot succeed in tech by dabbling on the side
“For a non-tech company to do a little bit of tech on the side, that will never work out. But if they must get good at that area, and they're a good management team, and they put, say, a third of the company to it, they can figure it out, including on the creat…”
Opinion
Hastings: HBO excels at content but lacks strong technology capabilities
“And if we can combine the two of them better, that protects us against HBO, which is very good at content, but not so good at tech.”
Insight
Hastings: Netflix competes for broad leisure time, not just Amazon or HBO
“It's not just competing against Amazon or HBO, it's really this open competition for time.”
Assertion Not checkable as stated
Hastings: House of Cards and Orange Is the New Black proved original content model
“Yeah, the first weekend, well, it was all the press leading up to House of Cards, and then the first weekend, and then there was the White House Correspondent Center that year spoofed it, and we had clearly hit a meme that we thought, wow, if we can do more of…”
Insight
Hastings: Business strategy requires pruning decision trees like grandmaster chess
“And really, to be great at business, it's like being great at chess, and you have to anticipate which series of things, seven, eight moves down, are likely to happen, And by the time in chess you go seven or eight moves, the tree of possibilities, you know, is…”
Prediction Not checkable as stated
Hastings: Netflix will not buy a telecom company
“So do we need to buy a telco? No, because we're not trying to, you know, we work with over 500 ISPs around the world. Ok, so just like Facebook, or Google, or anyone, or an internet company, the last thing, I mean, you know, how well is Google Fiber worked out…”
Insight
Hastings: Differentiate by exploiting what incumbent systems misunderstand
“And so if you think about you guys and the modern venture firms differentiating from the prior generation in terms of being founder friendly, it was the same thing for us with creative freedom, right? You're looking for a differentiator because the existing sy…”
Assertion Supported
Hastings: Cable networks run at 50 percent gross margins, rivaling software monopolies
“So cable networks have been running at 50% gross margins, and, you know, like it is unheard of in U.S. Business, right? You have to be up at, you know, Windows monopoly levels to get to there.”
Disclosure
Hastings: Netflix Replaced All Linear TV Ads With Targeted Online Marketing
“We stopped advertising on linear TV a couple years ago, and all of our advertising is online, because we want to target the show to the person”
Assertion Not checkable as stated
Hastings: Video streaming timelines were predictable from bandwidth growth trends
“If you look at median residential bandwidth from 1980 forward, it's completely smooth. And so we've gone through multiple technologies, first different types of dial-up, and then the beginnings of DSL and cable and fiber. And so interestingly, the speeds at wh…”
Disclosure
Hastings: Netflix was named for streaming because DVD-by-mail was temporary
“So we always viewed the DVD by mail as a digital distribution network, And then we knew eventually, and that's why we called the company Netflix and not DVD by mail or, you know, that kind of thing. So we had the slight advantage that the thing that we, our fi…”
Insight
Hastings: Disruption requires turning new businesses into profit drivers, not just dabbling
“The key thing is not getting into the new business. Lots of companies do that. They just don't get in and make money. They don't create it as a profit driver, They get in and dabble with it and lose money in it, essentially”
Assertion Not checkable as stated
Hastings: Netflix Canada streaming launch hit three-month subscriber goal in three days
“Then we did our first test in Canada, our first test of streaming only, so we picked a new country that wasn't used to our DVD service to see with the content that we can get, can you build a service that there's word of mouth and grows in a, in another countr…”
Disclosure
Hastings: Amazon has invested far more in video content than expected
“In Amazon's case, I would say they've exceeded the amount of investment that I would have thought they'd, ah, put in. They spend a tremendous amount of money in the area, and some of the shows, as you said, are working out.”
Reed Hastings