A Netflix Timeline
In order to understand the culture created at Netflix, we first need to look at its timeline.
- 1998: Reed Hastings hired Patty McCord under an agreement that there would be no “bozos” at Netflix.
- 2001: A third of the employees were laid off, and everyone liked the company more.
- 2005: Creation of the culture deck
- 2009: Release of the Netflix culture deck
- 2012: Patty McCord left Netflix because she wasn’t the right person for the next level.
- 2017: House of Cards gets canceled, a decision made based on the values of Netflix
Now let’s say a VP of content for Netflix went to a conference and accidentally released confidential information regarding the decision to start streaming movies. The consequences of doing so resulted in the CFO getting pissed and preparing a press release. Now, would you do nothing, reprimand, or fire this VP? Well, Netflix decided to reprimand the VP because people make mistakes. However, the VP didn’t understand what the big deal was with his actions and that resulted in his termination.
From this whole experience, we can learn that case studies prepare you for future decision making. In addition, we should be okay with testing company beliefs and values. This is because you might stumble into a new belief/value that can make your employees more productive. Lastly, the firing of the VP sent a strong statement to the rest of the company. If you’re holding confidential information, you need to be responsible with it. Unfortunately, this VP was not responsible with it.
First Principle Origins and Mechanisms
Rather than using best practices, Netflix believes in using first principles. The first principles at Netflix sought to establish some company norms that broke traditional practices. Here are some of the first principles that resulted in a positive company culture.
- Required processes: Talent density + context
- Vacation tracking: Unlimited vacation
- Confidential compensation: Open compensation
- 2 week/year severance: Generous severance
- Loyalty: “A great company to be from”
In order to maintain these first principles, we needed to use mechanisms to make people understand the culture. There are many ways of using mechanisms. However, we decided these mechanisms worked best for us.
Mechanisms:
- Four years of editing culture deck
- Cases and Role Playing
- Hire, Fire, and Promote conversations
- Strategy meetings
- Many ways of reinforcing culture
In addition to the mechanisms, Netflix had people mechanisms to ingrain the culture into people from all levels of the company.
People Mechanisms:
- Hire: Culture Deck
- Fire: Generous severance, star in every position
- Develop: Continuous feedback, radical candor
- Promote: VP jobs available, “great role at the next company”
In the end, Netflix succeeded in creating their desired culture. You can read the Netflix culture deck now. Don’t worry its no longer 120 pages. It’s more like two. Nonetheless, these are the big ideas to the culture at Netflix.
The Culture:
- Encouraging decision making by employees
- Share information openly, broadly, and deliberately
- Extraordinarily candid
- Keep only our highly effective people
- Avoid rules
About the speaker
Gib Biddle is the fmr Netflix VP Product Management and is currently the NerdWallet Board Observer and Executive-in-Residence for Product. He joined Netflix as VP of Product in 2005. In 2010 Gib became the Chief Product Officer of his next startup, Chegg, a textbook rental and homework help company that went public in 2014. Today he’s an adviser, speaker and guest lecturer at both Stanford and INSEAD.