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June 24 - July 7, 2020
More importantly, the idea for Netflix didn’t appear in a moment of divine inspiration – it didn’t come to us in a flash, perfect and useful and obviously right.
The truth is that for every good idea, there are a thousand bad ones. And sometimes it can be hard to tell the difference.
Truths like: distrust epiphanies. The best ideas rarely come on a mountaintop in a flash of lightning. They don’t even come to you on the side of a mountain, when you’re stuck in traffic behind a sand truck. They make themselves apparent more slowly, gradually, over weeks and months. And in fact, when you finally have one, you might not realize it for a long time.
“Sure. But you want something that will scale,” he said. “You want to sell something where the effort it takes to sell a dozen is identical to the effort it takes to sell just one.
Most business plans – with their exhaustive go-to-market strategies, detailed projections of revenue and expenses, and optimistic forecasts of market share – are a complete waste of time. They become obsolete the minute the business starts and you realize how wildly off the mark you were with all your expectations.
For just this reason, I had already decided that no one would get a VP title – at least at first. Instead, they would all be directors, and their titles would reflect what they actually did, not what they wanted to do. But in Jim’s case, a little rule-breaking was unavoidable.
The most impactful of these exercises? Blindfolding us, driving us to a random intersection in Hartford, confiscating our wallets and watches, and telling us that we’d be picked up in three days. No food, no water, no prearranged place to sleep. Just a phone number written on our arm, in case we decided to give up.
Alexandre’s whole life had led up to the moment when movies and television would be able to be streamed over the internet. C-Cube, in many ways, was the enabler of what made all this possible. But like most pioneers, Alexandre was too early.
I don’t remember our move-in day. We might have ordered some pizzas and made a few Costco runs. But more likely, people just trickled in, bringing with them whatever they needed to do their work. If you stood in the first Netflix office sometime in the fall of 1997, you would have seen a room that resembled some unholy cross between a computer geek’s basement and a politician’s on-the-road campaign war center. And that’s just the way we liked it.
From that day on, not only did I adopt that philosophy, but I became one of its biggest advocates. I always told my employees to sell when they could.
“Bulls make money. Bears make money. Pigs get slaughtered.”
That’s one of the great pleasures of being at the helm of a startup in the planning stages. The company is small enough that everyone in it has to wear multiple hats, but big enough that you never have to wear one that doesn’t fit properly.
I firmly believe that a healthy startup culture arises from the values and choices made by the startup’s founders. Culture is a reflection of who you are and what you do – it doesn’t come from carefully worded mission statements and committee meetings.
Everybody in the early days took a pay cut to work for us. That wasn’t because we were cheap. It was because we didn’t know exactly how long we needed to make our money last – and because we’d need a lot of it to build up our stock of number four on this list.
In those days, I kept a jar of silver dollars on my desk, which I got in rolls of forty from the bank, and at every weekly meeting, I’d hand one out as a “bonus” to the employee who’d made that week’s largest contribution to the company’s success.
I felt like my father, working on one of his trains. I found satisfaction in lining up all the tasks, investigating all the problems, and then working to solve them. I was in the basement, building something, knowing that someday in the near future I’d have to invite everyone else in to have a look.
Handpick a dozen brilliant, creative people, give them a set of delicious problems to solve, then give them space to solve them.
Say you were on such a trip, and knew that your next campsite was eight miles ahead, on the other side of a steep ridge. Say you had a specialized team – a couple of people carrying pack rafts, a couple more people with all the food and equipment, as well as some incredibly quick trail runners with light packs who could act as scouts. One possible route goes straight up and over the ridge to the campsite; one is less arduous but longer, and involves several water crossings; and one is a measured, stately hike up a series of gradual switchbacks. Which do you choose for the group? The answer is
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So as a leader, the best way to ensure that everyone arrives at the campsite is to tell them where to go, not how to get there.
It’s the same at a startup. Real innovation comes not from top-down pronouncements and narrowly defined tasks. It comes from hiring innovators focused on the big picture who can orient themselves within a problem and solve it without having their hand held the whole time. We call it being loosely coupled but tightly aligned.
Or, more importantly, what does it take to get other people to sign on to help you with your dream – and be happy doing it? What we found was surprising. And surprisingly simple. People want to be treated like adults. They want to have a mission they believe in, a problem to solve, and space to solve it. They want to be surrounded by other adults whose abilities they respect.
people don’t want hot tubs – not really. They don’t want free snacks or ping-pong tables or kombucha on tap. What they really want is freedom and responsibility. They want to be loosely coupled but tightly aligned.
So yes, I sometimes slept on a couch in the office. And yes, I once saw one of our coders taking a bird bath in the men’s restroom. I won’t pretend that my diet in the fall of 1997 consisted of much more than takeout eggplant parm (a steal at $6.95) from the Italian place across the street. But when I needed a morning off, to mountain bike and clear my head, I took it. When Te wanted to chew over PR stunts during a manicure, she booked an appointment. Nowadays, they call that “self-care.” Back then, we just called it common sense.
But no matter how high I’d climbed, or how many steps I saw ahead of me, I always left the office at 5:00 p.m. sharp on Tuesdays. I didn’t want to be one of those successful entrepreneurs who are on their second or third startup but also on their second or third spouse.
You simply can’t know how things are going to behave until you’ve actually tried them. Go ahead and write up a plan, but don’t put too much faith in it. The only real way to find something out is to do it.
“Kinda puts all our eggs in one basket,” he said. “That’s the only way to make sure you don’t break any,” I replied.
One of the key lessons I learned at Netflix was the necessity not only of creative ideation, or of having the right people around you, but of focus. At a startup, it’s hard enough to get a single thing right, much less a whole bunch of things.
In a pitch, perfection isn’t always the goal: projection is.
And that’s how startups typically run in the early days: you hire a bunch of brilliant people to be jacks-of-all-trades. Everyone does a little bit of everything. You’re hiring a team, not a set of positions.
We’d built a company where freewheeling discussions sometimes turned heated – and it was okay. Where ideas were more important than chain of command. Where it didn’t matter who solved a problem – only that it got solved. Where dedication and creativity mattered a lot more than dress codes or meeting times.
But as the company grew past its founders and initial small team, I didn’t know if traditions like that would survive. Our hires from India seemed totally bewildered by the practice. The whole thing had “hazing” and “possible HR violation” written all over it. But that’s how small we were: we didn’t even have HR guidelines to violate yet.
Sometimes chasing a dream is like that: a singular pursuit of something nearly impossible.
Funny thing about those cartoons – they never end in capture. They’re about evasion, disappointment, near misses. You get the feeling that if Wile E. Coyote ever actually caught the Road Runner, he wouldn’t know what to do. But that’s not the point. The point is the pursuit of the impossible.
There’s a speaking tactic in business, useful for breaking bad news. It’s called a shit sandwich. You open up with a string of compliments, praise for work well done. That’s your first piece of bread. Once that’s done, you pile on the shit: the bad news, the less than glowing report, the things your audience doesn’t particularly enjoy hearing.
“You don’t appear tough and candid enough to hold strong people’s respect,” he said. “On the good side, no one good has quit, and your people like you.” I had to smile at that. Forget radical honesty. This was brutal honesty. Ruthless honesty. “Gee, thanks,” I said. “Put that one on my tombstone: He may have run his business into the ground, but no one good quit, and his people liked him.”
And in retrospect, of course, Reed was right. Netflix might have survived with me continuing as sole CEO. But you don’t write a book about a company that survives. There is no doubt in my mind that without him assuming more of a leadership role, Netflix would not have become the company it is today.
I’ve written in this book about how Netflix’s culture, at least originally, wasn’t the result of careful planning – of aspirational principles or cultural manifestos. How it was a reflection of the shared values and behaviors of the founders. How we trusted each other, worked hard, and had zero patience for traditional corporate bullshit.
apparent, really quickly. Our early culture at Netflix was born completely out of how Reed and I treated each other. We didn’t give each other a list of tasks we expected the other to be doing and then “check in” frequently to make sure everything got done. We just made sure that each of us understood the company’s objectives, and which aspects each of us was responsible for. It was up to us to figure out what needed to be done to accomplish those objectives. And it was up to us to be honest with each other – radically honest.
Raised voices, argumentative meetings, blunt statements about how an idea was stupid or wouldn’t work. Sometimes it was hard for people to understand that Reed and I really liked each other – that we’d found that we were most productive when we dropped all the bullshit and just said what we meant.
Radical honesty. Freedom and Responsibility.
We gave our receptionist a clear responsibility and near-total freedom to figure out how to accomplish it. It was entirely up to him what hours during the day someone needed to be there; up to him to figure out how to cover when he was away, or sick, or needed a day off. It was up to him to figure out which behaviors didn’t put the best face forward for the company (like eating lunch at his desk), and which helped. (I have a strong suspicion that he bought the popcorn machine.) And you know what? We had a damn good receptionist as a result.
People who have the judgment to make decisions responsibly love having the freedom to do so.
Most companies end up building a system to protect themselves from people who lack judgment. And that only ends up frustrating the people who have it. Remember the engineers in the hot tub? If you treat people like children, it doesn’t matter how many beanbag chairs and beer parties you throw at them. They will resent you.
For example: if you were traveling for work, common sense said there had to be some mechanism for expense reimbursement. But none of us wanted lengthy, time-consuming, and ultimately pointless approval processes for it. If we were trusting them to make decisions on the company’s behalf that could make or lose millions of dollars, we could certainly trust them to make decisions about what type of plane tickets they should book for themselves.
No longer was HR just a lonely cubicle filled with employee handbooks, sexual harassment claims, and benefits summaries. Instead, she envisioned the department as a proactive agent for culture.
This is one of the facts of startup life: change. When you’re building something from nothing, you rely on talented, passionate generalists: people who can do a little bit of everything, who buy into the mission, and whom you trust with your time, money, and ideas. But once you’ve gone from 0 to 1, and the seed you’ve planted is starting to grow, some shuffling happens.
Often the person who was right for the job at the beginning is not right for the middle. Sometimes bringing in people with decades of experience and institutional know-how is the necessary thing to do.
There was one idea I couldn’t shake. On one of my last trips to our warehouse in San Jose, I noticed that we had thousands – no, tens of thousands – of discs just sitting unused and unwatched on the warehouse shelves. When I came back to the office and shared my observation with Reed, it sparked another interesting Reed and Marc conversation: why were we storing all those DVDs in a warehouse? Maybe we could figure out a way to let our customers store the discs. At their houses. On their shelves. Just keep the DVDs as long as they wanted.
We’d learned, before launch, how to test efficiently. It didn’t matter, in the end, how great a test looked – there could be broken links, missing pictures, misspelled words, you name it. What mattered was the idea. If it was a bad idea, even more attention to detail in our test wasn’t going to make it a good one. And if it was a good idea, people would immediately fight to take advantage of it, despite obstacles or sloppiness on our end. Faced with a problem on our website, they would try again and again to make it work. They would reboot the site. Try to find a way to work around the
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If people want what you have, they will break down your door, leap over broken links, and beg you for more. If they don’t want what you’ve got, changing the color palette won’t make a damned bit of difference.
