NetFlix

Don’t be afraid to change the model.

Reed Hastings

There are no shortcuts.

Reed Hastings

Occasionally great wealth is created in a short amount of time, but it’s through a lot of luck in those situations. You just have to think of building an organization as a lot of work. It may or may not turn into great wealth.

Reed Hastings

Be big and fast and flexible.

Reed Hastings

Experts and analysts have written the obit on Netflix so many times I’ve stopped ordering flowers for the funeral.

Reed Hastings

We named the company Netflix, not DVDs by Mail because we knew that eventually we would deliver movies directly over the Internet. DVDs will be around a long time, but we’re building for the day when they’re not.

Reed Hastings

One weekend when I was about 12, my parents, sisters and I were invited to Camp David, when the president wasn’t there. Elliot Richardson, who held several cabinet positions, invited us. We rode around in golf carts, had a tour and I saw that President Nixon had a gold-coloured toilet seat.

Reed Hastings

Imagine if every person (you worked with) is someone you respect and learn from. In creative work, the best are ten times better than the average.

Reed Hastings

Responsible people thrive on freedom and are worthy of freedom. (They are) self-motivating, (pick) up the trash lying on the floor, (and behave) like an owner…Our model is to increase employee freedom as we grow rather than limit it.

Reed Hastings

Guessing right is a skill developed over time. Not all smart risks work out, but many of them do.

Reed Hastings

We tried not to get drunk on the future, but actually to predict it accurately.

Reed Hastings

I found I was definitely underwater and over my head. I was doing white-water kayaking at the time, and in kayaking if you stare and focus on the problem you are much more likely to hit danger. I focused on the safe water and what I wanted to happen. I didn’t listen to the skeptics.

Reed Hastings

I wanted to go to a small liberal arts school and went to Bowdoin College in Maine. I majored in math because I found the abstractions beautiful and engaging.

Reed Hastings

I found myself questioning how we packed our backpacks and how we made our beds. My questioning wasn’t particularly encouraged, and I realized I might be better off in the Peace Corps.

Reed Hastings

It was an extremely satisfying experience. Taking smart risks can be very gratifying.

Reed Hastings

I had never been to California and arrived in late summer. Driving up to the campus I saw palm trees. I was dry and brown. I asked myself, ‘Where’s the ivy?’ Within a week I had fallen in love with California.

Reed Hastings

Once you have hitchhiked across Africa with ten bucks in your pocket, starting a business doesn’t seem too intimidating.

Reed Hastings

As the company grew from 10 to 40 to 120 to 320 to 640 employees, I found I was definitely underwater and over my head. I tried to fire myself – twice. I was losing confidence.

Reed Hastings

I was an engineer myself. We doubled our revenue every year, but my transformation from engineer to CEO was when Morgan Stanley took the company public in 1995.

Reed Hastings

With a single vendor and a unified sales force, we’ll be able to make a really profound difference in the way people develop software.

Reed Hastings

I had the great fortune of doing a mediocre job at my first company. We got more bureaucratic as we grew.

Reed Hastings

I was down in Arizona in 2003 visiting one of our distribution centers on the outskirts of Phoenix. It was raining, and my umbrella wasn’t working, so I walked the half mile from the distribution center to the hotel. I got the message on my BlackBerry that we hit a million [subscribers] that day while I was walking in the rain. It was this beautiful moment where I was just so elated that we were going to make it, and that was also the first quarter that we turned profitable. It was a magic walk.

Reed Hastings

I got the idea for Netflix after my company was acquired. I had a big late fee for ‘Apollo 13.’ It was six weeks late and I owed the video store $40. I had misplaced the cassette. It was all my fault.

Reed Hastings

I was embarrassed about it…I didn’t want to tell my wife. And I said to myself, ‘I’m going to compromise the integrity of my marriage over a late fee?’

Reed Hastings

On my way to the gym, I realized they had a much better business model. You could pay $30 or $40 a month and work out as little or as much as you wanted.

Reed Hastings

Early on, the first concept we launched was rental by mail, but it wasn’t subscription based, so it worked more like Blockbuster. Some people liked it, but it wasn’t very popular. I remember thinking, God, this whole thing could go down.

Reed Hastings

We said, ‘Let’s try the more radical subscription idea.’ We knew it wouldn’t be terrible, but we didn’t know if it would be great.

Reed Hastings

We launched the service on September 23, 1999, and we could tell within a month that we had a renewal rate. It was a free trial, but only 20 percent didn’t go from the free trial to the paid. We’re up to 90 percent renewal now.

Reed Hastings

Having unlimited due dates and no late fees has worked in a powerful way and now seems obvious, but at that time we had no idea if consumers would even build and use an online queue…The subscription model was one of a few ideas we had – so there was no Aha! moment.

Reed Hastings

From her, I learned the value of focus. I learned it is better to do one product well than two products in a mediocre way.

Reed Hastings

Stay flexible. An example: AOL failed to adapt to the broadband world and clung to its narrowband dial-up specialty.

Reed Hastings

I was a Peace Corps volunteer right out of college in rural Africa, in Swaziland. Either that developed my risk tolerance or it was symptomatic of it.

Reed Hastings

We’re very happy with the Blu-ray adoption. This fall, we hope to see some very low-priced Blu-ray players with increased adoption. The biggest factor would be how low they can get the player prices. Walmart had an offering at $99 last week. It would be great if that spread.

Reed Hastings

In 2004, we were entering the U.K. We’d moved people over, hired others, but ended up closing just before we launched. With Blockbuster attacking, we needed to concentrate on the home market. That decision turned out very well but was heartbreaking.

Reed Hastings

With failures, you learn one of 99 things to avoid. So they are not that useful. I think it is more useful to learn from others’ failures.

Reed Hastings

Never underestimate the competition.

Reed Hastings

We went public in 2002, and by publishing our financials, we let Blockbuster see that this was a profitable business. It entered two years later. If we had stayed private for another two to four years, not as many people would have understood how big a business this could be.

Reed Hastings

We erroneously concluded that Blockbuster probably wasn’t going to launch a competitive effort when they hadn’t by 2003. Then, in 2004, they did. We thought, “Well, they won’t put much money behind it. Over the past four years they’ve invested more than $500 million against us.”

Reed Hastings

The most difficult thing is anticipating the threats ahead of time. We’ve got a great head of steam, fast growth, big earnings, customer growth, all kinds of good things, but we’ve watched a lot of companies rise and then fall, especially in Silicon Valley. So we work very hard to kind of game-theory it out: what could happen if all of these things happened, how we’d react in that scenario, strategic planning, anticipating what will come up.

Reed Hastings

Fear because we’re fighting Wal-Mart, which is the world’s largest company, and Blockbuster, which is much bigger than us. Derision in that we’ve been competing with them for more than two years already, and we have a 95 percent market share. Our service works better, and we continue to invest to make it better than theirs, so we keep a steady eye on them. But we have so much more momentum and are so focused on a better consumer proposition that we’re not too worried.

Reed Hastings

We see that there is a big market in advertising-based video that Hulu and Google’s YouTube and others will be very competitive in. We are going to focus on commercial-free subscription, which is not the largest segment, but it is a big enough segment for us to grow in for many years.

Reed Hastings

Well, no one dumps their cable. They expand to get the larger cable broadband package. Cable is the best provider of broadband out there, so it is not a realistic message.

Reed Hastings

I think the stock will trade down significantly because of lower profits for the next year, but the long term value will rise – in two years – because of our actions today, being decisive and taking the steps to ensure our continued leadership in this larger market with larger competitors.

Reed Hastings

Americans love convenience, and they constantly choose convenience over almost every other thing. Think of [a great business model] as a triad of convenience, selection, and value relative to what people are used to. You nail all three, then you take off.

Reed Hastings

I started to investigate the idea of how to create a movie-rental business by mail. I didn’t know about DVDs, and then a friend of mine told me they were coming. I ran out to Tower Records in Santa Cruz, Calif., and mailed CDs to myself, just a disc in an envelope. It was a long 24 hours until the mail arrived back at my house, and I ripped them open and they were all in great shape. That was the big excitement point.

Reed Hastings

There’s a lot of brainstorming about the nature of the problem that sets the context and gets your juices flowing. But ultimately there is a moment of epiphany when one recognizes the solution. With Netflix, one epiphany was that DVDs by mail could work, and the second was our subscription model with no late fees and a flat fee per month.

Reed Hastings

Most good management isn’t day to day. It’s a lot of investment in things, say, over the next 2 years – investments in relationships, in management. So most of my time is spent making sure that the day-to-day urgent doesn’t take over for the important. If you keep working on the important, you’ll have to do some of the urgent, but as little as possible.

Reed Hastings

Avoid chaos as you grow with ever more high performance people, not with rules.

Reed Hastings

When there’s an ache, you want to be like aspirin, not vitamins. Aspirin solves a very particular problem someone has, whereas vitamins are a general ‘nice to have’ market. [The Netflix idea] was certainly aspirin.

Reed Hastings