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Reed Hastings - Building Netflix - [Invest Like the Best, EP.453]

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Reed Hastings - Building Netflix - [Invest Like the Best, EP.453]

Invest Like the Best with Patrick O'Shaughnessy

Jan 06
Invest Like the Best with Patrick O'Shaughnessy

Invest Like the Best with Patrick O'Shaughnessy

Jan 06
OverviewShownoteHighlightsTranscriptChaptersPins

Shownote

My guest today is Reed Hastings, the co-founder and former longtime CEO of Netflix. Netflix is an example of two ideas that everyone talks about, but are extremely hard to do in practice. The first is finding a simple idea and taking it extraordinarily se...

Highlights

In this episode, Reed Hastings, co-founder and former CEO of Netflix, shares insights from his journey building one of the most transformative companies in entertainment. He discusses the foundational principles that guided Netflix’s evolution—from its early days mailing DVDs to becoming a global streaming leader—and reflects on leadership, innovation, and the cultural dynamics that enable sustained success in fast-changing industries.
07:16
Software should be managed creatively, not like a manufacturing plant.
13:00
High performers tolerate job insecurity for the chance to solve hard problems with great people
13:48
Overmanagement reduces performance and creativity; a looser approach enables innovation.
14:52
Offer 4-9 months' salary in severance to ease the emotional burden on both employee and manager.
16:37
If an employee was quitting, would you try to keep them? That's the core of the Keeper's Test.
17:08
Executives doubted Qwikster internally but did not voice concerns.
19:16
Being an informed captain means gathering input but making independent decisions.
20:40
Netflix’s DVD-by-mail concept was inspired by the ease of mailing CDs and early internet distribution experiments.
22:32
Streaming was in Reed Hastings' mind from the start.
25:50
Mark's commitment to the metaverse aims to create a new computing platform beyond phones.
29:02
Board members must have an extreme duty of care and attend management meetings to stay informed
30:17
Open compensation at Netflix created more rivalry than trust.
32:05
Netflix views content investment like a venture capital portfolio.
37:53
YouTube is a substitution threat due to AI-enhanced content capturing user time
39:24
There's no set formula for creating big hits; it's like venture capital where a few outliers generate massive returns.
41:25
TV is a passive medium like kids asking to be told a story, while video gaming is an active one like kids wanting to play.
45:00
AI recommendations are Netflix's key innovation area today
45:32
Gaming is another form of entertainment with potential for interactive experiences using phones as remotes.
46:06
TikTok is like old cable, constantly offering new things and is creative and effective
47:30
Netflix has little long-term capital allocation, with extreme non-concentration in show budgets.
50:30
Netflix stock tripled under new co-CEOs Greg and Ted.
54:20
Outdoor land art is becoming the core of the summer-fall experience at Powder Mountain
59:04
Humans must remain the beneficiaries of AI advancements

Chapters

Sponsors
00:00
Welcome to Invest Like The Best
03:33
Intro
04:29
Sponsors
05:43
The Concept of Talent Density
07:16
Evaluating Talent
11:19
Managing on the Edge of Chaos
13:47
Why Netflix Gave Large Severance Packages
14:51
The Keeper’s Test
16:37
The Qwikster Mistake
17:07
The Informed Captain
19:15
How to Come Up with Good Ideas
20:39
Transitioning to Streaming
22:32
Being on the Board of Facebook, Microsoft, Anthropic & Bloomberg
23:05
The Role of a Board Member
26:25
Sponsors
29:37
Why Netflix Had Open Compensation
30:15
Netflix’s Content Strategy
32:04
Competing with YouTube and Traditional TV
37:52
Creating Hit Content
39:23
Impact of AI on Netflix
40:02
Innovations in Show Formats
41:24
Sponsors
43:23
Netflix's Technology Backbone
43:44
Expanding into Gaming
45:29
Lessons from Failed Projects
46:06
Financial Strategy and Capital Allocation
47:30
Stepping Down as CEO
50:27
Powder Mountain
50:52
Focus on Education and AI
56:08
Risks and Benefits of AI
59:00
The Kindest Thing
1:00:56
Sponsors
1:02:56

Transcript

Patrick O'Shaughnessy: Here's an interesting question to think about. If your finance team suddenly had an extra week every month, what would you have them work on? Most CFOs don't know because their finance teams are grinding it out on lost expense report...