Reed Hastings Had Us All Staying Home Before We Had To
Netflix started with sending DVDs — remember them? — through the mail, but now the streaming pioneer sits atop a Hollywood it has thoroughly upended.
Does it feel good to be the man who killed Hollywood?
“No,” said Reed Hastings, who nurtured Netflix into the Godzilla of the entertainment world. “But, of course, we haven’t killed Hollywood.”
At 59, the slender, gray-haired Mr. Hastings remains a mystery in the industry he dominates. “He’s a complete cipher here,” one Hollywood macher said.
You won’t find Mr. Hastings hanging with the stars at the San Vicente Bungalows. He doesn’t bellow at the pool at the Hotel du Cap or swan around at premieres. He may show up in line at Sundance, but he’s not cutting the line.
He started a delivery system for movies, and now his company is one of the most powerful forces in movies. In the capital of drama, Mr. Hastings is, without drama, ripping out the infrastructure and replacing it with his own.
Studio bosses are toppling, agents are scrambling, golden parachutes are disappearing, Covid is wreaking havoc on theme parks and movie theaters and #MeToo is still reverberating.
Amid these tectonic plate shifts, Netflix has blotted out the sun. Streaming, resisted for so long by the old clubby powers, is now absolute king. R.I.P., Louis B. Mayer.
Ben Smith, the New York Times media columnist, wrote an obit recently for old Hollywood. And Janice Min, the former co-president of The Hollywood Reporter, agrees that Netflix is “winning the pandemic,” siphoning viewers from broadcast and cable.
“They were all asleep to it during the early ascendance of Netflix,” Barry Diller said of his fellow Hollywood moguls. “Now they’ve woken up to it, and it has slipped away from them and is never to be regained. They lost hegemony over an entire industry.”
As Mr. Diller notes, businesspeople ordinarily gravitate to Hollywood for status and glamour, but Mr. Hastings is that rarest of creatures “who will never be seduced” even though he is “playing the game there like a pitch-perfect violin virtuoso.”
So how did a self-described “math wonk” whose favorite pastimes are walking and thinking, a man who trained for a time with the Marine Corps before switching to the Peace Corps, teaching math in Swaziland [1983-85], render old Hollywood irrelevant?
Mr. Hastings said that his mother was a Boston debutante from a Social Register family who married a lawyer who later worked in the Nixon administration. She was repulsed by the world of high society and taught her children to disdain it. So young Reed grew up thinking that it was a good thing to distance yourself from elites and avoid pretensions.
The new overlord of the land of artifice and playacting hates artifice and playacting.
“Probably it all comes down to, you know, your mother or your father,” he murmured.
The height of his flashiness was posing on a Porsche in 1995 on the cover of USA Today, when he was a tech executive. He said he put aside that kind of “superfun” immaturity and sold the Porsche in favor of a Toyota Avalon. (Now he drives a Tesla.)
But for all the low-key charm, there’s no doubt that Mr. Hastings — along with his more wheeling-dealing Hollywood-based partner, Ted Sarandos — is running the show.
“The heart and soul of our content,” is how Mr. Hastings describes Mr. Sarandos, who grew up glued to the TV and dropped out of community college in Arizona to work in a video store. Mr. Hastings, who recently moved over to share his C.E.O. role with Mr. Sarandos, describes their partnership as “a positive, low-ego thing.”
Ms. Min notes that “there are all sorts of ways people have tried to hate the company,” for not getting their calls returned or not being able to schmooze their way into a big production deal with a friend or not getting cushy back-end deals. People whisper about the Netflix culture being arrogant and cultlike, a culture of fear.
“But now,” Ms. Min said, “they’re too big to hate.”
The Stream That Became a Flood
Netflix is like the British Empire at its height, expanding across the globe. Indeed, in addition to all the royals in “The Crown,” Netflix now has its very own prince. The company this week signed Harry and Meghan to a multiyear deal.
They join the Obamas; Ryan Murphy; Shonda Rhimes; Kenya Barris; Ava DuVernay, who is teaming up with Colin Kaepernick for a Netflix series; and the erstwhile lords of HBO, the “Game of Thrones” showrunners David Benioff and D.B. Weiss, who are adapting a Chinese sci-fi epic by Liu Cixin called “The Three-Body Problem,” about humanity’s first contact with alien civilization.
After a long period when the club of mostly white, supposedly liberal men running Hollywood secured the power in a lockbox, keeping a death grip on the Academy of Motion Picture Arts and Sciences and acting shocked anew every time a movie with Asian or Black or female leads did great box office, Netflix is swiftly democratizing things.
Its offerings include a show about a Japanese underwear store, a Belgian crime drama, a Spanish period piece about phone operators, a Portuguese bull-riding show. Netflix has also invested heavily in Black programming.
But operating a global empire is not without its hazards. Mr. Hastings took heat last year for bowing to Saudi censors and pulling an episode of the comedy show “Patriot Act,” starring Hasan Minhaj, which was critical of Crown Prince Mohammed bin Salman. Challenged, the Netflix chief spurred more criticism when he said, “We’re not trying to do truth to power. We’re trying to entertain.”
He told me that he used “an awkward phrase” and that the company sometimes has to make “hard choices” and compromises where “it definitely gets squirmy and makes us feel unsettled.” But he said Netflix kept that episode on YouTube and that “Queer Eye” is available in Saudi Arabia, so “real positive stuff comes out of that.”
When I asked him where Hollywood will be in 15 years, Mr. Hastings said: “I see producing stories and sharing them as bigger than ever. But those stories will be produced in Atlanta, in Vancouver, in London, all over the world as opposed to strictly in Hollywood.”
Could the new Hollywood, which often feels ruled by algorithms, not capricious tastemakers, ever create a star like Grace Kelly?
Yes, he replied, but she would need a social media component in addition to being a performer.
I told Mr. Hastings that, while some may be weirded out by the Netflix algorithm that figures out what you want to watch next, I love it.
I simply type in “betrayal,” “revenge,” “lives ruined,” and it brings up everything I want to see. He said his taste runs to independent films, “dark, difficult things.”
Mr. Hastings, who was, he said, “a pretty average kid with no particular talent,” has a master’s degree in computer science from Stanford.
He founded a software company, Pure Software, before pioneering DVDs by mail with Marc Randolph. (There is a split about the company’s origin story, with Mr. Randolph saying the two founders came up with the idea while driving, and Mr. Hastings saying it was a light-bulb moment after he had to pay a $40 late fee on a VHS rental.)
In our interview, Mr. Hastings was uncommonly self-effacing for a billionaire.
He told me that Elon Musk is “100 times more interesting a person” than he is. “I’ll, like, do the basic core, traditional stuff very well,” Mr. Hastings said. “And he is a maverick in every dimension. He’s just, like, amazing.”
Mr. Hastings noted: “I’ll never be Steve Jobs, the creative, brilliant person.” And he praised the Disney chairman of the board. “I’m an Iger wannabe. He’s such a statesman.”
I told Mr. Hastings that, given all the poaching that the big-spending Netflix does, I’m surprised that some Disney executive hasn’t thrown a drink in his face at a chichi restaurant, “Appointment in Samarra” style.
“Sounds like a good storytelling device,” he said dryly, though he conceded that Disney bosses do get mad when he steals executives and talent.
For our Zoom interview, the Netflix mogul looked comfy in a checked shirt, khakis and bare feet in his “Covid hide-out”: his son’s old bedroom, in the house in Santa Cruz, Calif., he shares with Patty Quillin, his wife of 29 years.
“It was great sport making fun of this bedroom on our earnings call four months ago,” he said, smiling. “I don’t want to really set up a home office because I want to believe that the pandemic is going to end soon. So, month by month, I stay here without fixing it up out of kind of stubborn hope.”
Because he believes “any locked area is symbolic of hidden things,” he does not have an office or even a cubicle with drawers that close, even at his headquarters. He writes that he might grab a conference room if he needs it but prefers walking meetings.
“He makes his own cappuccino at machines, and we have no private dining rooms in our Hollywood office,” said a Netflix colleague. “He and Ted get food in the cafeteria like everyone else.”
Has the pandemic altered Mr. Hastings’s perception of the competition?
It’s the “sideways threats” that bite companies, he said. “If you think of Kodak and Fuji, competing in film for 100 years, but then ultimately it turns out to be Instagram.”
Speaking of which, I wondered if he thinks that Mark Zuckerberg, Sheryl Sandberg and Jack Dorsey have done enough as far as election meddling and disinformation threats?
“Every new technology has real issues that have to be thought through and, you know, we’re in that phase for social media,” he said, adding: “The car, many people think is a great invention for human freedom, but it also has killed a lot of people over time. Film got used by Hitler for terrible purposes.”
He continued: “So I find Mark and Sheryl to be sincere in trying to think these things through.”
In 2016, he was vocal about his fear that Donald Trump “would destroy much of what is great about America,” even telling one of Facebook’s original investors, Peter Thiel, that he had to give him a negative evaluation of his performance on the Facebook board because of his “bad judgment” after Mr. Thiel spoke at the Republican convention.
After the Muslim ban in 2017, Mr. Hastings called President Trump’s actions “un-American” in a post on Facebook.
He thinks if Mr. Trump wins re-election, “it would not be good but I’m not worried that it’s the end of America. I mean, America is super-resilient, and I feel great about our civic institutions, whether that’s the military or the Civil Service. It won’t be as traumatic as the Civil War or the Great Depression.”
He is supporting Joe Biden, but he is not as outspoken as he was last time and didn’t watch either convention.
“You know, C.E.O. announcements about politics don’t carry much weight with most people,” he said.
I asked if he would ever give Mr. Trump a Netflix deal like the Obamas.
“I haven’t thought about that,” he said, noting that he doesn’t try to tailor the company to his own political views.
‘Farm for Dissent’
The Netflix psyche is dissected in Mr. Hastings’s new book, written with Erin Meyer, “No Rules Rules: Netflix and the Culture of Reinvention.”
The book was born from the Netflix Culture Deck, a famous — and infamous — show of 127 slides that Mr. Hastings put online in 2009. It was hailed, in a 2013 GQ article, as possibly “the most important document ever to come out of Silicon Valley” by Ms. Sandberg. (Mr. Hastings was on the board of Facebook at the time.)
Even Ms. Meyer, a business professor, loathed some of the tenets at first and compared the company culture to the Hunger Games. But Mr. Hastings believes it was essential to his revolution.
Netflix pays top dollar and wants what it calls High Talent Density, which means only stars, no average people. Some of the rules of the Freedom and Responsibility workplace sound rigid.
“Adequate performance gets a generous severance,” one rule says.
Managers use The Keeper Test to figure out which employees are merely average and to weed out complainers and pessimists. How hard would you fight to keep someone? If the answer is “not that hard,” that employee should go. As one former executive frets in the book, they are more like penguins, who abandon those in the group that are weak or struggling, than elephants, who nurture the weak back to life.
Employees are also encouraged to use The Keeper Test Prompt, to ask bosses if they would fight hard to keep them.
Maxing Up Candor, getting rid of the “normal polite human protocols,” is a part of daily life at Netflix with a daily Circle of Feedback and annual written and live 360 Assessments, in which you meet with the team to get ripped apart.
Mr. Hastings, who grew up in a house where emotions were never discussed, said he got the idea for more transparency after going to marriage counseling.
By making things less hierarchical, Mr. Hastings believes the company can be more nimble.
Employees are encouraged to critique those above and below them at any time. (This does not seem to apply to top talent, like Shonda Rhimes or Ryan Murphy.) Staff members must Farm for Dissent and Socialize new ideas. Failures should be Sunshined, talked about openly and frequently.
Mr. Hastings does not think of his employees as family, but as a sports team — and one that has to win trophies.
“For people who value job security over winning championships, Netflix is not the right choice, and we try to be clear and non-judgmental about that,” he writes.
Mr. Hastings writes of his managers: “To feel good about cutting someone they like and respect requires them to desire to help the organization and to recognize that everyone at Netflix is happier and more successful when there is a star in every position.”
Holy Ayn Rand!
Mr. Hastings even demoted Mr. Randolph, who described his own reaction to his co-founder’s radical candor: “There is no way I’m sitting here while you pitch me on why I suck.”
And Mr. Hastings canned one of his best friends and original employees, Patty McCord, who helped create the Culture Deck and who drove to work with him, from her H.R. job.
“It’s not easy, just like you said,” he acknowledged. “There’s a conflict between the head and the heart.” He added that sometimes you just have to tell someone “you’re not as engaged, or we needed someone who’s got these additional skill sets as we grow and face new challenges.” He said it’s “very much a joint conversation” and “it’s not like ‘The Apprentice’ or something.”
He writes in the book: “We all stay friends and there is no shame.”
One fired Netflix executive told me, “When Reed views somebody’s contribution as less than the problems they’re causing or potential risk, he gets rid of them. He’s an extraordinary guy, but he’s coldly rational and calculating. But the trade-off is, you get to go on this amazing fun ride, make a lot of dough, and when your number’s up, your number’s up.”
Ms. Meyer initially wondered whether Netflix’s culture represented bad management — “hypermasculine, excessively confrontational and downright aggressive” — and whether it was “ethical to fire hard-working employees who don’t manage to do extraordinary work.”
How could people feel safe to “dream, speak up and take risks” if they were being injected with fear daily?
But she concludes in the book that Netflix’s “incredible” success is hard to argue with, and employee surveys show a high degree of satisfaction. She said she did not discover the back-stabbing she expected.
Mr. Hastings writes that all the rules apply to him: “I tell my bosses, the board of directors, that I should be treated no differently. They shouldn’t have to wait for me to fail to replace me.”
He adds: “I find it motivating that I have to play for my position every quarter, and I try to keep improving myself to stay ahead.”
But, I pressed, the board wouldn’t really dismiss him, right? With a cascade of tears and apologies, he survived the Qwikster debacle — a separate company he created in 2011 to handle the DVD market — after the Netflix stock dropped more than 75 percent and “everything we’d built was crashing down.”
“They really would do it,” he said of the board, “if there was a better leader.” But he conceded, “I guess it’s unproven, so I’m sure it doesn’t generate a lot of credibility.”
The book describes the problems of imposing “the Netflix Way” on other cultures, especially in Asia and Brazil, where it can be considered rude or debilitating. (The Dutch seemed fine; they’re even more blunt than Americans.) But Mr. Hastings does not give up. He simply doubles down: “With less direct cultures, increase formal feedback moments,” including feedback clinics.
“A high sharing environment,” as Mr. Hastings calls it, is my idea of hell. That’s why I’m not on Facebook.
I broke the news to Mr. Hastings that I could never work at Netflix because I am extremely sensitive to criticism. (I know that is ironic, given my job.) I like to complain and be pessimistic.
“There are a few probably, like you, who don’t like the criticism,” Mr. Hastings said, noting that Netflix is not a good fit for everyone.
With trepidation, I asked Mr. Hastings how I would fare if he gave me The Keepers Test based on our interview.
“Would you fire me right now?” I asked.
Mr. Hastings decided to be diplomatic. “I look forward to having a redo sometime when we’re in person,” he said, “which I’m sure is just richer in every way.”
[How about a Confirm or Deny binge?]
Maureen Dowd: Your favorite movie on Netflix is the erotic flick “365 Days.”
Reed Hastings: Let’s say it’s more stimulating than most people realize.
You still haven’t figured out if you’re subscribed to HBO Go or HBO Max.
You have never felt the need to Netflix and chill.
Jeff Bezos is going through a midlife crisis.
You hated “Roma.”
False. “Roma” is incredible.
Helen Mirren, who last year told a convention for theater owners what Netflix could do with itself, is on your Dead to Me list.
No. Everyone is traditionally against us.
Bob Iger should have bought Twitter instead of Fox.
That’s a very playful and interesting one. I’d say false. Remember in Michael Eisner’s days, they bought Go.com, and then it was just too different and they killed it. Twitter, you’ve got all that user-generated content, all that controversy. So I think Iger made the right set of decisions to go big and buy Fox.
You send John Malone and Greg Maffei a thank-you note every year on the anniversary of the Starz deal.
I would say that’s not literally true.
The person you never got involved in Netflix that you wish you had is John Malone.
Yeah. He’s close to Bill Gates in terms of who I admire.
As a kid, when your father worked in the Nixon administration, you spent a weekend at Camp David and saw Nixon’s gold-colored toilet seat.
In 2010, when he was C.E.O. of Time Warner, Jeff Bewkes scoffed at the idea of Netflix taking over Hollywood, saying, “Is the Albanian Army going to take over the world?” So now, every two weeks, you text Bewkes, “How do you like them apples?”
Well, I’ll firmly deny. He is a great and thoughtful guy.
But you do have a tattoo of the Albanian Army logo on your back.
I’ve got my Albanian Army dog tags.
The Netflix lobby is the new MGM canteen.
TikTok is your toughest competitor.
You sold vacuum cleaners door to door and served coffee at a computer company in Boston.
Executives at media companies make too much money.