No businesses can survive for more than decades without highlighting the challenge presented by the competitor in the same field. Overtook the market leader isn’t an effortless task, some may successfully upend the industry over decades, and some others may not get any chances.
Take Reed Hastings, co-founder, and co-CEO of Netflix. His entertainment company has experienced increase streaming subscriptions more than eight-fold over a decade and in the past three years, international subscriber shows two times higher than U.S subscribers.
Following with the skyrocketing number of the subscriber, the company have reached market value by over 50% as of 2020. It meant Netflix’s recent market capital $238 billion. Conveying Hastings at number 132 on The Forbes 400 with a net worth of $5 billion.
Before turning into the most lucrative business, however, Hastings has been waiting for 2 decades for this moment. He has created a strong culture within his digital company. Despite confronting a crisis, this culture finally helps Netflix to upended the entertainment industry.
During the crisis in 2001, Hastings face a tremendous funding issue and need to cut expenses. Eventually, Hastings began to identify which employees are high performers, one who keeps thriving despite the rise of workload. He was forced to fire one to third of his employees who merely competent.
In contrast, with the remained employees in the company, great ideas and positive energy were evoked and Netflix yielded better outcomes. This problem shaped Hasting’s outlook on leadership and taking care of employees. It also fundamentally altering the company foundation soon called The Netflix Way.
Inspired by his experience work with highly competent employees, Hastings with The Netflix Way has been treating his employees as a professional sports team. Group of individuals who extremely competitive and supportive to each other, but not feel resentment when their friend ejected all for an upgrade.
Hastings holds an annual event known also as ‘culture of fear,’ a brief moment of evaluation and giving feedback to another person live in front of everybody else.
Being evaluated by a number of colleagues is not a blissful moment. Some of them are even crying during the process, but after getting judged by colleagues one-by-one, they have to say ‘Thank you for making me a better person”.
This culture creates both intimacy and transparency.
Hastings believes that learning is a feedback loop in which we make decisions, see the results, and improve ourselves based on mistakes that we’ve made as a result.
“Every time you confront something painful, you are at a potentially important juncture in your life — you have the opportunity to choose healthy and painful truth or unhealthy but comfortable delusion.” — Ray Dalio
Implementing 360 degrees, Hastings believed it could accelerate the learning process exponentially.
Initially, Netflix began selling DVDs in 1997. Despite crashing with Amazon due to the same business model, Hastings successfully initiating the subscription model — customers who rent up to three movies at a time don’t have to worry about the specific returning date and additional charge fees.
In 2011, Netflix started to invest in broadband streaming. At that time, the connection was not as fast as today, so lagging was inevitable. In addition, Television content like HBO was mainstream back then. Hastings cannot compete against the television industry and experienced a total loss.
Over the past decade, Netflix invested a decent amount of money in streaming content such as initiating its own series and internationally content production. Netflix content consists of a wide variety of film-production from western to eastern. K-Drama and Anime was a big hit for attracting international subscriptions.
Amidst the coronavirus, which cinemas are closed, sports temporarily sealed, and television offered the same content, After waiting 2 decades, Hasting successfully took a leap gaining 1 million subscriptions a month in the U.S and 2 million global subscriptions since the pandemic.
Today, Netflix successfully overtook Amazon prime, Disney, and HBO because Hastings initiate infinity inventions that provide spurts of benefits. Netflix fundamentally changing the way we consume entertainment to streaming content.
Keep walking through the storm. your rainbow is waiting on the other side — heather stillufsen
The world full of a great idea at once but it will deteriorate. Only a few of them keep reinventing themselves to go on the height of greatness.
Reed Hastings has gotten this far because of the work ethic he has created 2 decades ago. He punctuated in the internal team created high performer employees. He keeps evolving through never-ending inventions and focuses on streaming entertainment. Hence, he could outrace Amazon prime, Disney, and HBO by taking the right moment.