The Self-Made Man: Reed Hastings

I usually watch TV when I write, and since I don’t have a proper television, I use Netflix most of the time. I always figured Netflix was the result of corporate boardroom thinking, but it turns out that an entrepreneur came up with the idea and changed the way we watch movies.

That entrepreneur’s name is Reed Hastings, and he’s this week’s Self Made Man.

First of all, Reed Hastings is one of the most perfectly upper-class names I’ve ever heard. He sounds like someone who should always be wearing tennis whites and matching wits with James Bond. Luckily, he’s a bit more down-to-earth than that.

Reed was born in Boston and spent a brief period in Marine Corps officer training before joining the Peace Corps, which sent him off to teach high school math in Swaziland. ?Once you have hitchhiked across Africa with ten bucks in your pocket,? Reed said of the experience, ?starting a business doesn’t seem too intimidating.? Man’s got a point.

From there, Reed went to Stanford University, where he got a master’s degree in computer science and used that as his entry point into the software industry. He ended up starting his own company, Pure Software, but found himself unequipped to handle being the CEO of a growing company. After trying to fire himself twice, Hastings left the company once it went public, and started Netflix on a whim when he realized that he owed a video rental store $40 in late fees.

Reed considered that movie rentals could work like a gym membership, where you pay a flat monthly fee to use the service as much as you want. He didn’t know if anyone would be interested in an online movie rental service, but clearly his fears were unfounded.

As a boss, Reed tries to keep his company’s entrepreneurial spirit alive even as it grows and consequently becomes more bureaucratic. He pays on the higher end of the scale, and his employees get to choose their compensation’s cash/stock ratio, which is nice. They’re also allowed to manage what would be their sick/vacation time individually, which is a new one for me.

His firing policies might seem a bit cutthroat (?At most companies, average performers get an average raise?at Netflix, they get a generous severance package?), but those probably stem from his time at Pure Software, and they’re a better long-term policy than the usual corporate approach of promoting incompetent employees until they can’t harm anything important.

Reed’s now-legendary Powerpoint slide deck explaining Netflix’s business culture is still online, and made publicly available for anyone to read. I suggest that you do, and also check out this interview with the Guardian.