By the time Hollywood started to get wise, Netflix had begun financing its own original series—starting with Sarandos’ $100 million bet in 2011 on the political thriller House of Cards, from director David Fincher. “What some people called overpaying for that content at that time, Netflix knew very well what it was worth and what they were building toward,’’ says Tinder CEO Jim Lanzone, a longtime internet entrepreneur who was CBS’ chief digital officer at the time. “Changing course involves investment and risk that may reduce this year’s profit margin,” Hastings writes in No Rules Rules. “The stock price might go down with it.
For the first time, Hastings had to understand people’s tastes and offer them a compelling proposition. “When someone sits in front of a TV to watch Netflix, we have a moment of truth—a couple of minutes, maybe as little as 30 seconds, [in which] we need to catch their attention with something interesting,” says former chief product officer Neil Hunt, who deployed his 2,000-member team to solve this riddle—most working independently, in keeping with the company’s culture.
Even before the misstep, some studio executives scoffed at Netflix as a competitive threat. “It’s a little bit like, is the Albanian army going to take over the world? ” Time Warner chief executive Jeff Bewkes said in a 2010 interview. “I don’t think so. “During all the critical years, 2010 to 2015, [Bewkes] just thought the internet was foolish, and the prices were foolishness,” Hastings says, noting that he still has the Albanian army dog tags he wore around his neck for motivation. “And so it caused him to ignore it until it was too late.
Changing The Channel
Walt Disney remains the world’s largest entertainment company but Netflix is the company to beat when it comes to return on investment. “It’s a good story,” says Netflix cofounder Marc Randolph, who worked with Hastings at Pure. “And in many ways, Netflix is about telling good stories.
The company’s pay packages come fully as salary, with as much or as little compensation as you wish in stock options; Netflix doesn’t believe in bonuses, which Hastings thinks can reward the wrong things. “It’s the specifics of trying to hold someone accountable that trips you up,” he says, adding, “we do evaluate people, but we don’t micromanage the goals.
Netflix co-founder Reed Hastings built the streaming giant on a foundation of 14 million U. S. subscribers who once rented DVDs from catalog of about 100,000 titles that were shipped by mail in the company’s iconic red envelopes.
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