Opinion
Hastings: Modeling a company on a family is an inferior organizational approach
“Well families are dysfunctional in many ways. And so, yes, I think it's a inferior model.”
Insight
Hastings: Firing decisions are driven by instinct via the 'keeper test'
“No. There's, it's not rational when you let someone go. I mean, you want to think it through, but it's an instinct that you could get someone better for that role. So that the test we use is called the keeper test. Would you fight to keep that employee if they…”
Insight
Hastings: High talent density eliminates the need for corporate process and rules
“The core of it was if you had incredibly talented people, you didn't need a lot of process and rules. Netflix was anti-process and rules and pro-talent density.”
Opinion
Hastings: Generous severance packages save money by accelerating exits and preventing lawsuits
“So I don't think it actually cost us money because it got managers to act more quickly. And it made it easier on the person who was let go because they got, you know what they perceived as a generous severance package. So then, you know, we could be letting go…”
Insight
Hastings: Netflix uses an 'informed captain' leadership model, not consensus democracy
“We talked about it as the informed captain. The leadership model is to be the informed captain. So the captain of a ship is the absolute ruler of that ship and makes decisions. We want our leaders to feel like they're the captain. It's not a democracy, but the…”
Prediction Not checkable as stated
Hastings: Films will keep human actors because audiences demand human drama
“And I think in the same way you know films will have human actors, not because it can't be something else but because other humans won't be that interested.”
What-if
Hastings: Netflix probably would have accepted any Blockbuster offer in 2000
“And I don't remember them actually making an offer or, but I think we probably would have taken any offer, but it was not, it didn't result in any deal transaction.”
Insight
Hastings: Entrepreneurs shouldn't rush going public because it reveals competitive information
“In hindsight, I tell other entrepreneurs that don't be in a hurry to go public because it gives your competitors a lot of information.”
Insight
Hastings: Taking 20% of store revenue guaranteed Blockbuster's retail collapse
“You take away 20% of the revenue from every store, and that takes away the profit, right? And our customer base was highly distributed, you know, across the U.S., So, we knew that if we got to a certain size that it was like, you know, a billion, it was very p…”
Disclosure
Hastings: Netflix uses -10 to +10 executive polls for major decisions
“So the thing we instituted on big decisions
Is everybody publicly weighing in, you know, on a 10 to -10?
Is this a wise decision?
So that would affect, like, going into Europe, going into original content, pricing changes, so that everyone knows where everyone…”
Assertion Supported
Hastings: Netflix accounts for under 10% of U.S. TV viewing
“Well, if you look today at TV viewing in the United States, as an example Disney's ahead of us. YouTube is, this is combining linear and on demand. YouTube's ahead of us. They're the largest. Disney's ahead of us. Even Paramount's ahead of us, because they all…”
Assertion Supported
Hastings: YouTube doubled its TV viewing share over four years
“And I would say the big challenger is YouTube because they have doubled in the last four years. Their share of television viewing somewhat in the U S but dramatically around the world”
Insight
Hastings: Late-1990s e-commerce mania resembled today's AI rush
“E-commerce was like AI as today which is everyone's doing.”
What-if
Hastings: Netflix launched too early in 1998 and should have waited
“In hindsight, we were too early. Okay. We should have waited a couple of years to launch.”
Opinion
Hastings: Blockbuster’s 'late fee' branding was a major marketing failure
“And their marketing was poor, so it got named as a late fee, like you're supposed to, that's, you know, like it's a moral issue. And it should have been, if they had just gotten to be called a double rental or an extended rental.”
What-if
Hastings: Netflix would have moved slower on Qwikster if executives spoke up
“And if they had known that they would have spoken up more forcefully, and we probably would have taken a slower, more cautious approach.”
Assertion Supported
Hastings: Netflix outbid HBO for House of Cards without financial justification
“We had to bid against HBO. This was not Kind of junior content. This was first, you know, lead content. HBO was thinking of it. And we came in with a higher financial bid, even though we couldn't justify it at the time.”
Insight
Hastings: Streaming success relies on improving 1-in-40 hit ratios
“So it's an artistic execution business. And, you know, if we can improve those ratios to from one in 40 to one in 20 to one in 10 to one in five, we'll be a monster. But it's hard.”
Assertion Not publicly verifiable
Hastings: Pure Software doubled sales annually for five years despite executive turnover
“And so we had a new head of sales every year, five years in a row, which is chaos in enterprise software. And yet, despite that we doubled sales every year in that time.”
Assertion Supported
Hastings: Eight-dollar shipping costs made VHS mail rental economically impossible
“VHS cassettes, which was the way movies were distributed weighed about a pound and cost about four dollars to ship. So if you got shipped a VHS cassette, And then shipped it back. That was eight dollars on top of the three or four dollar rental. So that didn't…”
Disclosure
Hastings: Invested initial $2 million to launch Netflix in 1998
“I put in the initial two million dollars and was chairman, and then the site launched in, like, May of 98, roughly”
Assertion Contradicted
Hastings: Netflix raised $50 million from LVMH in February 2000
“So we closed that round of them investing fifty million. I don't remember the valuation, but it was a good valuation. And that was February of 2000, and then March of 2000 is when the bubble broke.”
Assertion Contradicted
Hastings: Netflix reached $50 million in revenue at 2002 IPO
“So when we went public two years later, we were at fifty million.”
Insight
Hastings: Subscription networks historically start on licensed content before producing originals
“Every cable network, which is a subscription business, had started on other people's content, build some audience, and then start to add their own content. HBO was built on other people's content, and then got good at original programming. So Again, it was a v…”
Reed Hastings