Reed Hastings on the role of the CEO at a startup

November 06, 2023

As the Netflix founder explains in the clip below:

“In the first couple of years, you do everything—you’re doing dishes at night, you’re coding, you’re writing marketing materials, you’re dealing with customers and investors. And you have so many disadvantages as an irrelevant little nothing of a company that you have to make up for it with talent, hard work, and brute force.”

If you’re lucky, this company stage only lasts for a couple of years, as opposed to 10. But once you get to 50-100 people, you have to evolve your management style entirely and adapt to be more strategic. You no longer know everyone at the company, and are no longer involved in every little detail.

At Netflix’s scale, Reed’s responsibilities are almost entirely company strategy and vision. He’ll decide which markets Netflix should be in, but he’s not picking countries or shows. He’ll decide that the marketing budget should be 5-10% of revenue, rather than 50%, but he’s not deciding what the campaign is. And lastly he’ll set the vision in terms of culture:

“What are the rules of the road of how the firm operates? What’s our character so that it’s a healthy place?”

But at Netflix’s scale, the CEO can’t do much of the work:

“It’s just too big. And if you try to, you’ll (A) burn yourself out, and (B) get everyone else upset.”

This is actually what happened at Reed’s first company Pure Software:

“I was 33, the company had grown to about 50 people, and I was still trying to code at night and trying to be CEO during the day and sleeping at work, and I wasn’t careful enough about taking showers… It was just gross… And when there was bugs in my code, it was hard to get me to fix it because I was off doing other things… I was trying to hold on too long to the dual roles.”