I was thinking about Netflix, you know, with all the pandemic binge watching and everything. Yeah, everybody is there. David Rubinstein had a chance to talk with co-CEO Read Hastings on the David Rubinstein show, Peer to Peer Conversations.
我在想Netflix,你知道,因为疫情大量观看而且什么都有。是的,每个人都在用。David Rubinstein有机会和共同CEO Reed Hastings在David Rubinstein秀的Peer to Peer Conversations上谈话。
You know, and Netflix went public in 2002, right? And the market cap is up more than 80,000 percent. And I check the math and that's definitely the case. And the stock is up more than 40,000 percent since then. Oh, boy.
Yeah. And David had a chance to ask Hastings if he ever expected this kind of success. Why don't we listen in?
是的,David有机会问Hastings是否曾预料到这样的成功。我们为什么不来听听呢?
"The company now, which went public in 2002, the market cap is up about 86,000 percent. Stock is up about 41,000 percent since then. Did you ever think that it would become that big and that's successful?"
Blockbuster could have wiped us out many times. When Viacom spun off Blockbuster in 2004, they saddled them with a billion dollars of debt as they're good by kiss. And the covenants on that debt severely limited Blockbuster when they attacked us. So that was one.
Another one is Blockbuster had us on the ropes. And then Carl Icon got elected to the board of directors by the shareholders of Blockbuster. And he fired the CEO over some silly bonus issue. And then they completely changed strategies. And so all these things have been incredibly lucky strokes. And so you need both skill and luck, which I'm sure you've experienced, too.
So let me ask you, though, for those who may not be familiar with a new book you're coming out with called No Rules Rules, in that book, you describe that you actually, at one point, one of the go to Blockbuster and sell them the company for, I think, some modest amount today, $50 million.
Absolutely. And, you know, in the early days, we were like Blockbuster is going to wreck us as soon as we get big. And we were almost right about that. And so we went to see them. And, you know, they were very polite, but they were not interested. And had they bought the company, where do you think Blockbuster would be today, and where do you think Netflix would be today?
Yeah, it's always hard to tell. But I think we could have made Blockbuster a modern brand.
嗯,很难说。但我觉得我们本可以把Blockbuster打造成一个现代品牌。
You have a culture you describe in your book, which is very unique. And let me just go through a couple of things you say that I found stunning as somebody who's helped to run a company myself that's publicly traded.
你在书中描述的文化非常独特。让我来分享一些让我吃惊的话语,因为我自己曾经帮助运营过一家上市公司。
For example, you have a system where people can take whatever vacation they want to take. There's no limit. People can take any time off they want, no limit. Where did you get that idea from?
Well, in the industrial economy, like factories, we measured people by how many hours they did on the job, 9 to 5, 8 to 6, whatever that is. And we really want people to focus on ideas, on generating important work. And so we don't measure them during the day. We don't clock our people in.
And if we're not going to tell whether someone is working 5 to 9, or 9 to 5, which is a two to one difference an hour, why are we tracking whether they do 50 weeks or 48 weeks a year of work that's in the noise? And so unlimited vacation is sort of like saying, dress how you want. And then people still don't come to work naked. There's some cultural assumptions about appropriate clothing for work. And we don't need to specify that. And in the same way, with vacation, people understand getting work done. And they get to live more flexibly.
Okay. Well, you also say in your book, you don't have to please at your company, your boss. Otherwise, you can go ahead and do what you think is best. And your boss doesn't agree that's okay. Is that easy to run a company that way?
You know, again, we're really focused on inspiration over supervision. So the traditional paradigm is that good management is close management, sets objectives, manages tightly. And all of that's appropriate in safety, critical environments, airlines, producing vaccines, et cetera. But in a creative business, you don't care so much about what goes wrong. You care about enough of the right things get done. And so we really focus on inspiring, inspiring our people and having it be very open and collaborative. And from that, you get amazing technical innovation and you get amazing content innovation.
You're pointing out in the book that if people do a reasonably good job, they still might lose their job if they haven't done a spectacular job. And therefore, they get a very good severance, but not a continued job. Can you explain that theory?
Yeah. And again, in the traditional industrial paradigm, you know, you have to do something wrong to get let go. You can think of a job as sort of a property right, you know, until you lose it by abusing your position.
But if you think about professional sports, you know, if that team is going to win a championship, it has to have a mix of the right players that work well together that are the absolute best in the world.. And so we try to model ourselves like a professional sports team.
So highly paid, but you got to earn your position every year. And it's about performance. And you know, that's not right for everybody. Some people care mostly about job security.
Other people care mostly about excellent colleagues and, you know, playing great team ball to achieving something important for the consumers. And you know, we're attracting, you know, that group of people who care about team excellence.
So I've no doubt your book will be a best seller because it's a very interesting book, but I couldn't understand exactly whether you were saying that your culture is one that if other companies adopted, they would do better. Or it's just that you're explaining what is so unique about your company and why it's successful. So which is it or is it both?
I think a certain type of company, a company in a creative industry where there's a lot of change will do better by optimizing for flexibility, then efficiency. And other companies like a airline or a factory wants to optimize either for safety or for manufacturing yield. So again, highly consistent results. And that's not for this Netflix culture, but for again, a company that wants to be inventive and create new things. I think this offers a lot of fresh ideas for people to rethink the traditional industrial paradigm.
So let's go back a little bit to your background. So you grew up in the Boston areas, right? Boston and DC. And you went to college at Bowdoin, which is a great school.
I went in the USP score and I was a high school math teacher in a very rural part of Southern Africa. And after that, you decided that you would go to business school at Stanford.
What led you to decide to go to business school and at Stanford?
是什么导致你决定去商学院并选择斯坦福?
So I actually went in a computer science. And I tried to take a business class, but they rejected me. So in any case, being at Stanford in the mid 80s was an incredible experience because you learned so much entrepreneurial work from all your colleagues, everyone's bubbling with ideas. And that's still happening today 40 years later.
So when you graduated from Stanford, you decided to get into the computer industry and you were a programmer for a while. Is that right?
那么当你从斯坦福大学毕业后,你决定进入电脑行业,做了一段时间的程序员。是这样的吗?
Yeah, I was a programmer at a couple of different companies. And then I was fortunate and had an idea of something that I really wanted to do. That was in 1990. So I took a year off and consulted on the side part time and then wrote a program that ultimately turned into a company, which was a reasonable success. Morgan Stanley took us public in 1995. It doubled every year. And that ultimately is the company that was so much process that it got to rigid. So it was a great learning lesson.
All right, so when you ultimately left that company after taking a public and ultimately merging with somebody else, you had the idea of starting what is now Netflix. Is that right?
好的,所以当你最终离开那家公司,在与其他人合并后,你有了启动现在的 Netflix 的想法。对吗?
Yeah, I mean, the timing was shortly thereafter that a colleague of mine from a pure Mark Randolph and I were brainstorming on different ideas. And then, like many people at that point, I had had this terrific latency. And so was thinking there has to be a better way. And then it's when this friend told me about DVD that I realized, oh, you could mail those cheaply and that you could potentially build a business there that was not in Amazon's direct interest because of the return loop that you constantly return these DVDs, which was unlike Amazon's core. So it was e-commerce, but a smaller market than what Amazon was going after.
The story is that you took out some DVDs, I guess, from Blockbuster. You found out that you had kept them too long. You didn't like paying the late fee and that prompted you to think of something like this. Is that fair or is that just apocryphal?
No, that's accurate. But it sort of says every time something goes wrong, the idea didn't pop into my head right then. It was later when I was debating ideas that the sting of that stock, because it was a $40 late fee. And it was all my fault of just not breaking it back.
So originally you're mailing DVDs back and forth, but the idea of streaming, who came up with the idea that that would be better and was streaming that prevalent then or that comment or people knew what it was?
Yeah, people knew what it was. And I had had the good fortune. The year I came back from the Peace Corps, so that's mid-80s now. I got a job serving coffee at a company and it turned out that that company, a computer lab, was the very first..com. So there were no.coms at all and then there was the first one and that was this company Symbolics.com. And so this was a company out of MIT that was like the hotbed of the internet, but nobody knew the internet. And so there I was serving coffee soaking up the culture and how they thought. And so when I eventually went on to Stanford, I was in the internet thing. And then had been part of that and tracking that for a decade, it was a decade when Netscape went public and everyone else tuned into it. So I mean, some of that again is just incredible serendipity of what's the company that I got a job serving coffee in the computer lab.
Originally you would take programming that's a Disney or NBC or ABC or somebody had and you would or movies and you would put it up and people would pay for it and you would pay the people who produced it. I assume some royalty. When did the light bulb go off and you said no, we need to have original programming?
Well Ted was intimately familiar with the history of cable television and right from the beginning he educated us on HBO's path, which their first 20 years in the 80s and 90s, they just had recycled programming. And then with shows like sopranos and the wire, they moved into original programming and what a difference it made for them. So we were very aware of that history and then it was just a matter of biting time to be got big enough.
So today the original programming that you have is that more popular than the non-original that you're infect renting from somebody else?
所以今天你拥有的原创节目比从其他人那租赁的非原创节目更受欢迎吗?
Yeah, that's right. The original programming driving the old guard our newest movie, Kissing Booth 2, an amazing movie, our series like India Matchmaking or umbrella academy are all driving both the viewing and the membership growth. So we're fundamentally an original content business that supplements with licensed content around the world.
Well, those are great areas but they're well covered by other companies and we have so much more we want to do on series and films and we're breaking into animated films in series now. We've done really well with unscripted reality programming like India Matchmaking that I mentioned, love is blind, tiger king. So our hands are just full and again there's other companies doing other things. We just want to focus on entertainment.
And when House of Cards was on Netflix, did you suggest themes for it or plot lines or did you ever get involved in that or you stay away from what they're actually going to do on the show?
Our book really talks about don't please the boss, do what's right for Netflix and because of that Ted Sarandos when he was negotiating with House of Cards with Kevin Spacey and David Fincher. He was willing to do very bold things because he was convinced it was right and so he paid a fortune and guaranteed two seasons which at that point no one had done and he only told me about it later. And so his willingness to make big independent decisions, it's what led to us getting House of Cards. And of course he could have been wrong and it could have been the disaster but it was a great series put us on the map. And that's again somewhat testament to Ted's personal skill but also to the culture that allowed him to make those decisions.
我们的书真正谈论的是不要讨好老板,而是要为 Netflix 做正确的事情,正是因为这一点,Ted Sarandos在与 Kevin Spacey 和 David Fincher 谈判《纸牌屋》时愿意做出非常大胆的决策,因为他坚信这是正确的,所以他付出了巨资,并保证了两季,而此时还没有其他人这样做,后来他才告诉了我。因此,他作出大胆的独立决策的意愿,正是导致我们得到《纸牌屋》的原因。当然,他可能错了,这可能会成为灾难,但它是一部伟大的系列剧,让我们获得了名声。这在一定程度上证明了Ted的个人技能,也证明了允许他做出这些决定的文化。
And so when you started winning Academy Awards and Emmy Awards and other things like that was that a surprise to you that you were getting that kind of recognition?
当你开始赢得奥斯卡奖、艾美奖和其他类似的荣誉时,你感到惊讶吗?你意识到自己得到了这样的认可吗?
No, we've always wanted to work with great talent and right from the beginning we knew that like with House of Cards that the talent that was involved in that Robin Wright and Kevin Spacey were potential to win Emmy nominations for that. So if you back great talent they will win awards and it's very life changing for them. For consumers it doesn't matter as much they're not as visible but in the talent ecosystem it's very significant.
Recently you made an announcement that stunned a number of people which was that you were bringing in your chief content officer Ted Sarendos who has been with you for 20 plus years almost from the beginning and making him the co-CEO. Usually people who are CEOs and founders don't all of a sudden give up a lot of power. So why did you decide to do that and were you surprised that the reaction was a bit of a surprise?
You know, Ted and I have worked together for 20 years and we've been virtual co-CEO for the last several years. So we've been paid the same. We don't do really do anything material without checking in with each other. So this was just acknowledging and formalizing what has been. And so externally it's a change and that helps on Ted's stature and ability to do big deals.. But internally it's really no change at all from how we've been operating.
At the time of the announcement you said you were good for another decade. So in October, if I got it right, you'll turn the big 6.0 and that'll mean by 70 you might be ready to slow down. Is that a fair assessment? Will you tell me what's your experience in that of 60 to 70?
Right. I would say workaholics don't really pay much attention to age and so as long as your health is good, I don't think you'll change that much. But when you get 70 you might look around and say maybe I'll do something else but you got along 10 years ahead of you, I'd suspect. I'm sure you'll be in great health to do it.
Well, I'm super excited about it. There's so much that we can do in terms of bringing the world together, sharing stories from around the world. And there's just as the internet grows to every human being, I think there's just an amazing opportunity ahead.
You and your wife recently made a contribution to United Negro College Fund and to Morehouse College and to Spelman College. Why did you decide to do that? Is that not your largest philanthropic contribution, anyone gift?
No, it's not the largest but it's the loudest or sort of the most public. We tend to mostly be very quiet about these things but we wanted to show solidarity for black education and black education is so critical to economic mobility, political mobility and the sense of belonging. The challenge for us as a culture is really the legacy of slavery and it continues to be a tremendous scar across the soul of America. And it's awful and it's so bad that it's hard to look at and talk about and it's so hard to look away. We really haven't come to terms with the legacy of slavery in our country. Of this modest donation again relative to the needs is really about black economic gains and education.
So the story that I read was that you were originally considering a gift of maybe one tenth that size and then the last minute you increased it when you called the head of the United Negro College Fund was he surprised or what made you change your mind?
Well I've known the head of UNCF for a decade and he's taught me a lot about race in America and we've been a donor for a number of years but it was really the current time that got us to make such a substantial and frankly public donation to again bring attention to the role of the HBCU's the historic with black colleges and universities like Morehouse and Spellman and to support their work because they do develop you know thousands and thousands of black leaders throughout this country and they're a really positive part of our education system and because white capital tends to flow to white organizations you know there's relative capital isolation in the same way that we have social isolation and so you know we wanted to be part of building those bridges.
Now the industry that I've been in the financial service industry is not replete with as much success as it would like in terms of minority hiring and the technology industry is probably somewhat that way as well as there's something that you can do at Netflix to enhance your minority hiring among the executives and your other employees.
So we published the data and we've made every quarter and we made great progress and we've doubled our number of African-American employees over the last three years and you know that's throughout the business but in particular in the media side our tech side is still underrepresented you know as is in the field. So we had a long way to go but we're you know trying to make those efforts not only again for African-Americans but for many underrepresented groups both in America and frankly around the world.
So people who are watching this will say okay I want to be like Reed Hastings I want to build a great company I want to be successful have a great family philanthropically active. What would you say is the key to leadership that enabled you to be what you are today?
It's about achievement of the company as opposed to personal achievement.
这与个人成就不同,关乎公司的成就。
So I assume you hear from your high school classmates your college classmates your Stanford classmates telling you they always knew you're going to be successful and they weren't surprised and by the way they have a script for you or something like that. Do you hear from a lot of people like that?
Yeah, I stay in touch with a lot of friends that way. And you know, I was definitely a late bloomer. I don't think I was one of those people that was marked at an early age, and you know, were you read about how at age 16 they were like unbelievable. You know, I was very average run of the mill kid, and you know I've been super fortunate with a series of events in terms of my first company doing well, having that idea which then laddered into being able to do Netflix.
So, I feel incredibly fortunate which is part of why my wife Patty and I were so dedicated on philanthropy. It sort of seems to us miraculous that we have this money and of course, we live a very comfortable life but it's really the excitement of using that money to then help others.
So let's suppose ten years from now when you say you might hang up your spurs at Netflix, you might - you're not committed to it. What might you do? Would you run for office? You want to be president of the United States? You want to be a senator, governor, philanthropy, teaching? What do you think you might want to do when you turn the right old age of seventy?