THE INC. LIFE

At TED, Why Reed Hastings Calls Netflix the Anti-Apple

In his first TED Talk, Reed Hastings shares how an open book approach and constant evolution made Netflix into a billion-dollar media empire

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BY Damon Brown - 16 Apr 2018

PHOTO CREDIT: Getty Images

TED Conference 2018 closed with Netflix' Reed Hastings. Interviewed by TED head Chris Anderson, Hastings revealed why he is often the last to know about big company decisions, why it stopped listening to customers and how it succeeded by becoming the anti-Apple.

You are the bottleneck

I can sometimes go an entire quarter without making any decisions!

In his TED Talk, Hastings described Netflix as "the anti-Apple". It is a cheeky description in contrast to siloed, secretive organizations. Netflix culture is extremely open: Information is aggressively shared and opinions are encouraged ("To us, to disagree silently is being disloyal.").

As a result, employees are empowered to make big, agile decisions. Why take the risk? Hastings learned it from his previous startup, which focused on processes versus empowerment. "Before, we wanted to avoid mistakes," he said about his old company. "We dummy-proofed the system, so eventually only dummies wanted to work for us."

Know your current plan will be obsolete

We were born on DVD and we knew that would be temporary. No one thought we'd be mailing discs for the next 100 years.

Hastings attributes Netflix's success to healthy paranoia - and it goes right to the beginning in 1997 when it shipped DVDs to customers. Even 21 years ago, the founders knew that their business model was temporarily sustainable. It requires a level of honesty founders are rarely able to muster.

The planned obsolescence meant Netflix began not by creating security, but continually growing into a better model, from DVD to streaming to content creation. And, ironically, makes it the pro-Apple, too.

Customers aren't honest, but aspirational

We realized there was a difference between our aspirational status versus our actual choices.

Long-time Netflix users remember it asking to rate different movies. Based on those ratings, Netflix would give recommendations. About a decade ago, Hastings and his company realized that people weren't honest. "Schindler's List would always get five stars, but an Adam Sandler movie... would only get three." However, when Netflix looked at the watching stats of the same users, the former wouldn't get watched, but the latter would be enjoyed over and over again.

The lesson? Get to know your customers better than they know themselves.

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