First Principles from Netflix on Building Company Culture

Nearly every successful technology company has a strong culture—a true articulation of how employees work together. It’s almost impossible to succeed without one. But that doesn’t mean that they have a good culture. Just ask Reed Hastings. Before he led Netflix to global dominance, he co-founded a software company that grew from garage to IPO, but ultimately couldn’t evolve with the times. As CEO of Pure Software, Reed had built an organization he didn’t want to work for. Selling was a relief, and he promised himself that he’d be far more thoughtful about culture with his next company.

In this week’s Masters of Scale podcast, Reed joins me to talk about how he shaped the culture at Netflix, and why he believes it was the key strength that allowed it to shift from renting movie DVDs via snail mail to being the leading provider of Internet television, accounting for over 1/3 of all Internet traffic in the US.

You’ll learn the hidden value of Netflix’ famous “culture deck”; why Hastings favors first principle thinkers over rule followers; and why letting employees choose for themselves whether to sip champagne in first class or ride a Greyhound bus on business trips ties into first principle thinking. Reed lays out “The Keeper Test,” and why every employee at Netflix can ask their manager to take it. And you’ll hear the specific distinction that explains why he never refers to Netflix co-workers as “family”.

Along the way, we’ll be joined by guests like Aneel Bhusri of Workday and Jeff Weiner of LinkedIn, who argue that one of the most important things a CEO can do is to teach people how to reject “perfect” candidates who don’t share the organization’s cultural values; Margaret Heffernan, who explains why a competitive managerial approach causes more damage and destruction and waste than any other misunderstanding she knows; and Wharton professor Adam Grant, who discusses what founders can learn from Travis Kalanick’s resignation at Uber.

As always, I’d like to hear your thoughts and reactions to this conversation. What are the key “first principles” of your company’s culture, and how do you impart them to others?

Please write a short post on your LinkedIn newsfeed to share your answers with the wider community. Tag your post #mastersofscale so I can find it. And if you’d like, Tweet it at me (@ReidHoffman) and @MastersOfScale.