This is session 16 of the Stanford University course "Technology-enabled Blitzscaling," instructed by Reid Hoffman, John Lilly, Allen Blue, and Chris Yeh. In this session, Reed Hoffman conducts an interview with Reed Hastings, who is the Co-Founder and CEO of Netflix.
Netflix, the world's leading streaming entertainment service, was founded in 1997 by Reed Hastings and Marc Randolph. They had the novel idea to combine two emerging technologies - DVDs and a website - to offer online movie rentals delivered by mail.
A key to Netflix's success has been its strong company culture, exemplified by their famous culture deck. Hastings created the deck to onboard new employees and openly share their cultural values, including giving employees freedom and responsibility within the context set by leadership. As Netflix scaled, Hastings focused on maintaining a healthy culture by avoiding excessive rules and processes.
Lessons from Scaling Netflix
As Netflix dealt with early competition from Blockbuster, Hastings learned an important lesson - to stay focused on improving the core product rather than expanding too quickly into non-core areas. He also realized the immense value of having a high talent density on the team. As CEO, Hastings had to make tough decisions like letting go of employees for the good of the company.
Some of Netflix's innovative strategies include crowdsourcing a better recommendation algorithm through the Netflix Prize competition, pioneering original content when conventional wisdom said it was foolish, and adapting their stock options to reduce volatility for employees.
Role of the CEO
Hastings evolved from doing everything as CEO to being more strategic and visionary as the company grew. He learned to invest time in his own growth, while maintaining self-doubt and gathering input from others.
Netflix focused on taking advantage of scale economies for steady growth, in contrast to the blitzscaling "winner takes all" approach of some network effect companies.
In conclusion, Hastings provides invaluable lessons for startups on building culture, smart scaling, leadership evolution and pushing the boundaries of innovation. Founders would be wise to learn from experienced leaders like him.