Netflix's Founder on Building an Iconic Company

Most start-ups would be happy if they were responsible for one major industry disruption. But Netflix, under the leadership of Reed Hastings, can count already two to its name — how we watch movies and TV shows and how content is produced — and it’s not done yet. In a conversation with John Doerr at our recent CEO Workshop, Hastings discussed some of the things that make for great companies — and great leaders. Below are some takeaways we thought might be useful.

Don’t Preserve Your Culture: Improve It. (04:14)

New employees often ask about preserving the Netflix culture. Reed tells them that “to preserve the culture — to pickle it — is the wrong solution.” Netflix doesn’t see its culture as something static, but something to be always worked on. “It’s only when you struggle to get better that you really keep it vital and alive,” he said.

After a Mistake, Forgive Yourself and Move On. (13:20)

Founders and executives often have a hard time forgiving themselves after they’ve made a mistake. “For the sake of the enterprise, you just feel terrible,” Reed said. But if you’ve given it your best shot, and tried to do what was right for your company in an ethical way, then you should acknowledge as much and not torment yourself about the outcome.

References are a Key Hiring Tool; Don’t Ignore Them. (14:08)

Interviews may be over-rated in the hiring process; a savvy candidate “can buffalo you,” Reed said. What he finds more valuable is references, though he works hard to get them to be candid about the applicant, since people often don’t want to make negative comments. One way he does this is by using Skype wherever possible, since, he said, people “have a much harder time lying to me” when face-to-face.

The Classic Business Books Are Still Worth Reading. (18:09)

Reed said that “Beyond Entrepreneurship” by Jim Collins is “one of the best books I ever read.” While most entrepreneurs are aware of Collins’ other books, such as ""Good to Great" and “Built to Last,” Reed said “Beyond Entrepreneurship” is so valuable that entrepreneurs should memorize its first 65 pages.

Don’t Try to be Someone You’re Not. (18:49)

Entrepreneurs need to be themselves, and not pretend they are Reed Hastings or Mark Zuckerberg or Bill Gates. That means they need to be comfortable with themselves, both their strengths and weaknesses. Leaders get respect when everyone recognizes that you are being authentic and doing what is best for the company. “It’s when you hide things, it’s when you pretend, that you lose trust very quickly,” Reed said.

Think of Your Competition in the Broadest Possible Terms. (22:00)

Reed has an extremely expansive view of Netflix’s competition. “We compete with everything you do to relax.” That includes, he said, activities far removed from just watching TV. “Think of any night you did not watch Netflix,” he said. “We compete with drinking a bottle of wine. That’s a particularly tough one.”

Don’t Hoard Your Capital; Use It. (23:23)

In discussing the tens and even hundreds of billions of dollars some tech companies have in the bank, Reed said it’s “horrible how mismanaged most Silicon Valley companies are in capital.” Board members, he said, are overly concerned about not going bankrupt, and as a result, they want to keep as much cash on hand as possible. “They say they want a safety buffer,” Reed said, but warned, “it’s inefficient to have too much insurance.”