Netflix Culture:

Freedom & Responsibility

Seven Aspects of our Culture

Values are what we Value

High Performance

Freedom & Responsibility

Context, not Control

Highly Aligned, Loosely Coupled

Pay Top of Market

Promotions & Development

Actual company values ,
as opposed to the nice sounding values, are shown by Behavior
and Skills that are valued in fellow employees

ENRON values
Integrity
Communication
Respect
Excellence
 Core Values
We hire, who demonstrate:

Judgment (wise decisions, identify Courage (say what you think, make
root cause, think strategically, smartly separate) tough decisions, take smart risks)

Communication ( Listen well, Passion (inspire others, care for our

treat with respect, remain calm) success, celebrate wins)

Impact (strong performance, focus on Honesty (say things on faces, admit

result, avoid analysis paralysis) mistake, be non-political)

Curiosity (learn rapidly, seek to Selflessness (seek what is best

understand market, contribute outside your for Netflix, make time to help others, share
speciality) information)

Innovation (discover solutions, new ideas, suggest

better approaches)
Seven Aspects of our Culture

Values are what we Value

High Performance

Freedom & Responsibility

Context, not Control

Highly Aligned, Loosely Coupled

Pay Top of Market

Promotions & Development

 We are a team, not a family
Common goal
End result is to win
Team Performance is key
Expectations are clear
Team benefits everyone

Family member wont be fired

Encourages personal relationships
Company hold onto employees that no longer
Family share the same values, common goals or are
underperforming, all due to a sense of emotional
connection
Discourage competition
 The
Keeper Test
Managers Use:

Which of my people,
if they told me they were leaving,
for a similar job at a peer company,
would I fight hard to keep at Netflix?
 Loyalty is Good

Hit a bad fix, no issue, we will give another chance to be a

star of future

What we want: If Netflix hit a temporary bad patch we

want employee to stick with us

Unlimited loyalty, with ineffective employee, is not what we

are about
 Hard Work - Not Relevant

Dont measure people by how many hours they work or

how much they are in office

Sustained B-Level performance, despite A for effort,

generates a severance package, with respect

Sustained A-Level performance, despite minimal efforts, is

rewarded with more responsibility and great pay
 Brilliant Jerks

Some companies tolerate them and in fact prefer them

For us, priority is team work

Diverse styles are fine as long as person keep the 9

core values
 Why are we so insistent on
high performance?

In procedural work, the best are 2x

better than the average.
In creative/inventive work, the best are 10x
better than the average, so huge premium on creating
effective teams of the best

Many people love our culture

Some people value job security and stability over
performance, and dont like our culture
Seven Aspects of our Culture

Values are what we Value

High Performance

Freedom & Responsibility

Context, not Control

Highly Aligned, Loosely Coupled

Pay Top of Market

Promotions & Development

The Rare Responsible Person

Self motivating

Self aware

Self disciplined

Self improving

Acts like a leader

Doesnt wait to be told what to do

Picks up the trash lying on the floor

 Most Companies
Curtail Freedom as they get Bigger

Bigger

Employee Freedom
 Most Companies
Curtail Freedom as they get Bigger
 Chaos Emerges

Chaos and errors spike here business

has become too complex to run
informally with this talent level Complexity

% High Performance Employees

Solution is: Increase Talent faster than
Complexity Grows
Increase Talent Density

Top of market compensation

Attract high-value people through

freedom to make big impact

Be demanding about high

performance culture
 Minimize Complexity Growth

Few big products vs. many small ones (avoid cannibalization)

Eliminate distracting complexity (example?)

Be wary of efficiency optimization that increase complexity

and rigidity
 Prior to Freedom, Some
Rules
Prevent Disasters
o Hacker steal customer credit card info
o Improper Financial produced

Moral, ethical, legal issues

o Dishonesty, politics etc. are intolerable
 Example: Vacation policy
Until 2004 they had the standard model of N days per

Meanwhile, Employees are all working online some nights

and weekends, responding to emails at odd hours,
spending afternoons

Then an Employee pointed out: We dont track hours per

day or week, so why are we tracking days of vacation per
year?

If not focus on working days then why focus on vacation?

Now they have no Vacation policy

 Summary of Freedom &
Responsibility

As we Grow, Minimize Rules

Reduce Chaos with More High Performance People

Flexibility is more important than rules & regulations

Seven Aspects of our Culture

Values are what we Value

High Performance

Freedom & Responsibility

Context, not Control

Highly Aligned, Loosely Coupled

Pay Top of Market

Promotions & Development

 If you want to build a ship,
don't drum up the people
to gather wood, divide the
work, and give orders.
Instead, teach them to yearn
for the vast and endless sea.

-Antoine De Saint-Exupery,
Author of The Little Prince
 Context, not Control
Provide the insight and understanding to enable sound decisions

Context (embrace) Control (avoid)

Strategy Top-down decision-
making
Metrics

Assumptions
Management approval

Objectives Committees
Clearly-defined roles
Planning and process
Knowledge of the stakes valued more than results
Transparency around decision-
making
Seven Aspects of our Culture

Values are what we Value

High Performance

Freedom & Responsibility

Context, not Control

Highly Aligned, Loosely Coupled

Pay Top of Market

Promotions & Development

 Three Models of Corporate
Teamwork
1. Tightly Coupled Monolith
2. Independent Silos
3. Highly Aligned, Loosely Coupled
 Highly Aligned, Loosely
Coupled
Highly Aligned
Strategy and goals are clear, specific, broadly understood
Team interactions focused on strategy and goals, rather than tactics
Requires large investment in management time to be transparent and
articulate and perceptive

Loosely Coupled
Minimal cross-functional meetings except to get aligned on goals and
strategy
Trust between groups on tactics without previewing/approving each one
so groups can move fast
Leaders reaching out proactively for ad-hoc coordination and perspective
as appropriate
Occasional post-mortems on tactics necessary to increase alignment
Seven Aspects of our Culture

Values are what we Value

High Performance

Freedom & Responsibility

Context, not Control

Highly Aligned, Loosely Coupled

Pay Top of Market

Promotions & Development

 Pay Top of Market
is Core to
High Performance Culture

One outstanding employee gets more done and costs

less than two adequate employees

We endeavor to have only

outstanding employees
Three Tests for Top of Market
for a Person

1. What could person get elsewhere?

2. What would we pay for replacement?
3. What would we pay to keep that
person? If they had a bigger offer
elsewhere
Seven Aspects of our Culture

High Performance

Values are what we Value

Freedom & Responsibility

Context, not Control

Highly Aligned, Loosely Coupled

Pay Top of Market

Promotions & Development

Three Necessary Conditions
for Promotion
Job has to be big enough
o We might have an incredible manager of something, but we
dont need a director of it because job isnt big enough
If the incredible manager left, we would replace with a manager, not with a
director

Person has to be a superstar in current role

o Could get the next level job here if applying from outside and we knew
their talents well
o Could get next level job at peer firm that knew their talent well

Timing
o If a manager would like to prevent an employee from leaving, the
manager should promote that employee now instead of waiting, but
above two points should remain intact
 Development
We develop people by giving them the opportunity to develop
themselves, by surrounding them with stunning colleagues and
giving them big challenges to work on

Mediocre colleagues or unchallenging work is what kills progress of

a persons skills

Formalized development, e.g. Mentor assignment, rotation around

the firm etc., is rarely effective and we dont try to do it

We support self-improvement: manage you own growth and dont

rely on firm
Seven Aspects of our Culture

Values are what we Value

High Performance

Freedom & Responsibility

Context, not Control

Highly Aligned, Loosely Coupled

Pay Top of Market

Promotions & Development

 We keep improving
our culture as we grow

THANK YOU