FORBES.COM OCTOBER 20 20

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Fair enough. But for Amazon, streaming has al-

most surely been a loss leader that can generate Prime

shopping memberships. For Jeff Bezos, entertainment

will always be a side hustle. The Hollywood establish-

ment, meanwhile, can leverage its content libraries and

know-how all it wants, but what makes Netflix tick is

something nearly impossible for companies built on

ego and image to replicate: a culture of Vulcan-like dis-

passion and transparency, combined with perpetual,

rapid reinvention.

All this has come to a head amid the most disruptive

moment for entertainment in at least a generation. In

some ways, Hastings, who clocks in at number 132 on

The Forbes 400 with a net worth of $5 billion, has been

preparing for this moment for the past two decades.

What the 59-year-old does right now, and how he lever-

ages this culture—an unusual one even by tech-industry

standards—will determine what you will watch, laugh

along with and cry over for the next two decades.

f Hastings seems unnaturally comfortable

amid the train wreck that is 2020, per-

haps it’s because his company’s culture

was forged in crisis. A nascent business

in 2001, Netflix saw its funding dry up in

the aftermath of the original dot-com bust. Then came

9/11. As the end of that terrible year approached, Hast-

ings needed to cut one-third of his employees.

To do so, he and Patty McCord, Netflix’s chief talent

officer, diligently tried to identify the highest perform-

ers, terming them the “keepers.” As the day of the pain-

ful bloodletting drew near, he was on edge, worried that

morale would plummet, with those who remained grow-

ing bitter under the increased workload.

The opposite occurred. With the merely competent

employees cleared out, the office was energized, “buzz-

ing with passion, energy and ideas.” Hastings describes

the painful layoffs as his “road to Damascus experience,”

a clarifying moment that changed his understanding of

employee motivation and leadership. It would lay the

foundation for what might be called the Netflix Way, the

web-era successor to the HP Way, Bill Hewlett and David

Packard’s pioneering management approach that created

one of Silicon Valley’s earliest garage-to-greatness stories.

The Netflix Way starts with building a roster of elite

talent. In Hastings’ new book, No Rules Rules, he likens

his company’s culture to that of a championship profes-

sional sports team—one that works and pulls for one an-

other, but sheds no tears when a teammate is jettisoned

in favor of an upgrade. Perennial trophies require per-

petual hiring of top performers.

So what does this really mean in terms of how Net-

flix operates? First, it pays top dollar to secure the right

talent. That practice began in 2003, when Netflix began

competing with Google, Apple and, soon, Facebook for

the “rock stars” whose highly refined coding, debugging

and programming skills dramatically outperformed their

The man responsible for keeping the world

entertained does so, at least this day, alone in front of a

computer screen, in his son’s largely unadorned child-

hood bedroom. In some ways, it’s the perfect setting

for Reed Hastings, the unpretentious cofounder and

co-CEO of Netflix, whose global army of innovators has

revolutionized entertainment in the home. While Holly-

wood measures people’s offices by their totems and gran-

deur, the analytical Hastings, a Silicon Valley interloper,

values functionality over trappings.

Netflix currently functions, by any measure, at a world-

class level. As the year of the pandemic upends entertain-

ment companies—Disney’s crippled theme parks, Warner

Bros.’ furloughed blockbusters, AMC’s shuttered the-

aters—Netflix is having a moment. A moment of prestige,

with a record 160 Emmy Award nominations, eclipsing

the long-dominant HBO, and more Oscar nods than any

other media company. A moment of influence, adding

almost as many customers in the first six months of the

year as in all of 2019, extending its reach to nearly 200

million subscribers in 190 countries. And a moment of

profits, with sales up 25% year over year, earnings more

than doubled and its stock up 50 percent, as most of the

market gyrates wildly just to scratch back to even. Recent

market cap: $213.3 billion.

All these data points stem from data points, and a per-

fect synthesis of Hollywood and Silicon Valley, serving

up content informed by a deep understanding of their

users’ tastes. “We fundamentally want to be better at cre-

ating stories people want to talk about and watch than

any of our competitors,” Hastings tells Forbes.

Those competitors have gotten the memo, spending

billions to confront Netflix, whether via Disney’s fast-

growing Disney+, WarnerMedia’s lurching HBO Max

or NBCUniversal’s brand-new Peacock. Says Hastings

with a shrug: “What people forget is, it’s always been

intense competition. I mean, Amazon did streaming at

the same time we did in 2007. So we’ve been competing

with Amazon for 13 years.”

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