Letter #38: Reed Hastings (2010)
Netflix Founder | 2010 Netflix Strategy Deck
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.
Everybody knows about the infamous 2009 120+ page Netflix Culture Deck (now the Culture Memo). But did you know that Netflix CEO Reed Hastings also previously published a Strategy Deck in 2010?
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.
Slides
Financials
Pretty graphs — great numbers
For reference — Netflix was founded at the end of 1997. Broke even in 6th year
Market
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
Distribution
Multi-platform — distribution matters, partners matter, compatibility matters
Strategy
Great playbook
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
Vision
Dream big
Wrap-up
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 @kevg1412 or my email at kevin@12mv2.com.
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All compilations here.
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