Hi there! I go by KG, and I love studying the history of business and investing. I’ll be sharing some notes from one Investor/Shareholder letter per weekday (mostly from my compilations) here.
In a slight detour from my normal letters/annotations, sharing some of my favorite slides/takeaways from this amazing deck (similar to my Stan Druckenmiller notes).
For more on Reed, check out my Reed Hastings compilation under Creative CEOs.
Pretty graphs — great numbers
For reference — Netflix was founded at the end of 1997. Broke even in 6th year
Hastings saw the limits of the DVD market — while competitors sold a dual-pronged approach of DVD+streaming, he shifted focus entirely to streaming (good move)
This was very gutsy at the time — DVDs were the main format, a decent cash cow, growing solidly — the fact that he pivoted to pure streaming took guts
Look for markets that can sustain growth for at least 5-10 years
37% growth, compared to 14% the previous year — TY streaming
Still licenses a lot of content — but now the primary focus is on creating its own
Multi-platform — distribution matters, partners matter, compatibility matters
Democratize Innovation — don’t depend on a single genius (Buffett: “invest in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.”)
A/B test — let your team members compete. Don’t let monopolies exist within — leads to complacency. Apple is famous for pitting internal teams against each other. They’re doing pretty well.
Don’t ship features unless it’s a noticeable improvement — results in steady satisfaction commitment. Lowkey reminds of Steve Jobs’ We Don’t Ship Junk
Take care of your customers — happy customers = return customers = happy company
Andy Gove — “Only the paranoid survive”
Pay attention to your competitors — Innovation is key, but don’t let it cloud your vision of the field. Know your industry and how you fit in and stand out
“Stay Focused and Run Fast”
Push streaming and increase content
Focus on UI — especially on TV (as of 2020 should be more focused on laptop and soon phone)
Recommendation system <3
Still mostly avoids PPV, ads, sports, news, user-gen: HOWEVER, they have chosen to focus in on niche communities who become extremely loyal
Golden Rule: Happy customers = Happy company
If you’ve got any thoughts, questions, or feedback, please drop me a line - I would love to chat! You can find me on twitter at @kgao1412 or my email at email@example.com.
Please DM or email me any time — to share non-obvious intel, views and correct or solicit mine. I appreciate your continued support and partnership :D.
All compilations here.
As many of you know, making compilations and this newsletter is a (very time consuming) passion project for me. Multiple people have reached out about how they can support me so that I continue, so I set up with a few ways: