Netflix is known for its cutthroat culture and willingness to pay top dollar for superstar talent.
The approach -- first outlined in a famous 2009 slide deck -- is about managing people in creative industries (eg. media, tech) while scaling fast.
These 7 slides explain it 🧵
1/ Netflix competes in media + tech (knowledge work that often requires creativity).
High-performers in these fields can be 10x better than the average.
In a "procedural" field (manufacturing), the best may only be 2x better (industries that deal w/ atoms are naturally capped).
2/ Most businesses get more complex as they grow.
To deal with this, companies introduce processes (and bureaucracy), which has the adverse effect of driving out creative talent.
3/ In "procedural" industries (e.g., manufacturing), good processes will often make up for a lack of "high-performing" creative talent.
4/ But during market shifts, process-driven companies are ill-prepared to change or adapt.
Netflix competes in fast-moving industries (tech, media) that require creativity, innovation and quick adaption. It needs the right talent to manage the market shifts.
5/ Netflix's ongoing challenge is to scale its business and deal with complexity WITHOUT bringing in more processes.
To do that, Netflix needed to staff with lots of A+ creative talent.
It does so by offering:
◻️ Top-of-market comp
◻️ Tons of freedom
6/ The flipside of the coin is that if an employee doesn't fit, they'll quickly be dropped...as famously highlighted in this slide:
7/ Netflix explicitly states that its culture is not for everyone:
8/ And the streaming giant has faced its fair share of criticism for how it operates.
9/ Whatever you think of the strategy, it produces results (and your prob a customer):
◻️ successful transition from DVD to streaming
◻️ creation of original IP
◻️ from 2k to ~10k employees
◻️ subscribers 20m --> 200m+
◻️ market cap $2B --> $200B+
10/ Here's a final stat of note: Netflix’s revenue per employee is $2.6m.
More than:
◻️ Apple ($2m)
◻️ Alphabet ($1.4m)
◻️ Microsoft ($877k)
(Apple obvi crushes profits and FCF, though)
11/ If you enjoyed that, I write threads breaking down tech and business 1-2x a week.
Def follow @TrungTPhan to catch them in your feed.
Here's one you might like:
12/ PS. I also write a weekly Saturday email with insightful insights and really dank memes: trungphan.substack.com
13/ Link to the 120-slide doc on SlideShare.
Looks like it was actually posted by Reed Hasting in August 2009 under the title "Minimize Complexity Growth":
slideshare.net/reed2001/cultu…
14/ And here’s the funniest Netflix meme ever
15/ Here’s one more Netflix thread for ya
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