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Netflix’s no-rules rulebook

Image: re:publica / Gregor Fischer / Protocol
Reed Hastings

Good morning! Hope you had a great long weekend. I spent mine mostly indoors, because it was approximately 40 million degrees in California. Hope you all stayed safe and cool. This Tuesday, what you can learn from Reed Hastings' new book and Netflix's culture, and why you need a plan for when the bad content comes for your platform.

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The Big Story

The Netflix guide to beating Netflix

Reed Hastings' new book, "No Rules Rules" is out Tuesday. Protocol's Janko Roettgers got an early look and shared his thoughts:

In tech and entertainment, there are two types of companies: Those that want to beat Netflix and those that want to be Netflix. If your goal is the former: Good luck! You'll need it. But if it's the latter, Reed Hastings himself would like to help you.

  • "No Rules Rules" is based on the infamous Netflix Culture Deck, which has long codified the way Netflix works internally. The deck was first published in 2009, which means that you may have heard a lot about the core ideas of "No Rules Rules" already.
  • One famous example: Netflix doesn't track vacations. Instead, Netflix gives every employee the freedom to take as much or as little time off as they need.

But there are some rules at Netflix. Key to its success, according to Hastings and his co-author, Erin Meyer, has been to keep a balance between freedom and responsibility. Employees have the freedom to book their own time off, but they're asked to be responsible adults and act in the company's best interest.

  • And leaders need to lead by example: Hastings writes that he and other key executives regularly take long vacations, and talk about them frequently, to model that it is OK to actually make use of the benefit.

Netflix does sound like a cult in parts of the book, though. Can you imagine hourslong dinners with your co-workers during which they take turns to tell you about all of your flaws?

  • And it's not for everyone: Among countless anecdotes from employees are also some who admit to significant stress and fear.

One notably absent issue, save for one mention in passing, is diversity and inclusion. Hastings and Meyer spend a lot of time explaining how Netflix adapts to different cultures around the world, but there's really not much here on whether the company's emphasis on hiring "rockstars" — and its preference for people with years of experience — contributes to the industry's lack of diversity.

Maybe there's a way to beat Netflix after all!

Like what you're reading? Sign up to receive Janko's new newsletter, Next Up, on the future of tech and entertainment. The first edition is coming this Thursday.

More Reed Hastings

Netflix has new competition

Hastings also did a few interviews ahead of his book launch, and shared a lot of thoughts on the media industry, COVID and the future of Hollywood.

  • He told The New York Times that what keeps him up at night is the "sideways threats." "If you think of Kodak and Fuji," he said, "competing in film for 100 years, but then ultimately it turns out to be Instagram."
  • When Maureen Dowd asked him to confirm or deny whether Jeff Bezos is having a midlife crisis: "No comment." (He last had dinner with Bezos 10 years ago, he told the Times, saying that he doesn't spend his social time hanging out with other tech founders.)
  • He's blown away by how well Disney+ is doing, he told Bloomberg. "If you'd asked us a year ago, 'What are the odds that they're going to get to 60 million subscribers in the first year?' I'd be like 0. I mean how can that happen? It's been super impressive execution." Disney is Netflix's main competitor, he said. Not Fortnite or sleep or HBO or any of the other things Hastings likes to say he competes with.
  • He also poo-pooed the idea of subscription fatigue. "Disney has 'The Mandalorian' and we have 'Stranger Things,'" he said. "They are somewhat complementary. People will subscribe to both."

And what does Hastings make of COVID and its impact on work culture? His interview with The Wall Street Journal was mostly about how it's forcing Netflix, and everyone else, to work differently.

  • Mostly he's not a fan: "Not being able to get together in person, particularly internationally, is a pure negative."
  • He said Netflix will be back in the office ASAP, but he does foresee a small permanent shift. "If I had to guess, the five-day workweek will become four days in the office while one day is virtual from home. I'd bet that's where a lot of companies end up."
  • And he explained why he thinks a CEO's job is to not really be busy at all: "Even if you are good at [tactical stuff], you're not thinking about the long-term health and evolution of the business. You want to really know what's going on in all kinds of places, but not making decisions."

What nobody asked Hastings about is how Netflix's radical candor, brutal-honesty, fire-everyone-but-the-superstars strategy works over Zoom and in a recession. So Reed, if you want to talk, Source Code's right here.

Moderation

Viral content is everybody's problem

These three things seem unrelated, but go with me here:

  • A horrific video was everywhere on TikTok over the weekend, showing a man shooting himself. (Here's a good, SFW tip on what will let you know if you're accidentally watching it, so that you can look away in time.) The video was originally streamed on Facebook, but has jumped platforms. TikTok's been deleting the video and banning accounts that share it, but it's still everywhere.
  • Amazon deleted roughly 20,000 reviews from its platform after a Financial Times investigation found that the reviewers were being paid or otherwise compensated. (The BBC also found that one-star reviews are an increasingly powerful weapon online.) That will surprise precisely zero people who have ever shopped on Amazon, but 20,000 is a big number.
  • After Joe Biden and Kamala Harris started putting campaign signs inside of Animal Crossing, Slate pointed out that the inevitable next step is a disinformation war inside this adorable game.

The common thread here is that at some point, bad stuff will come for your platform, whatever your platform is. It comes in many forms, obviously, but whether it's disinformation or hate speech or a horrific video, it will eventually show up everywhere. And no matter how innocuous, niche or apolitical you think your platform is, you need a plan for what to do when it comes.

  • It might be something like Facebook's political ad "kill switch," which it can use to remove them all from the site in one fell swoop. Or moves like limiting how often messages can be shared, changing your moderation rules, limiting new users, or one of so many other things.
  • The only thing you can't do is nothing. It's an election season, it's going to get much crazier, and whether you're building AI to rule the world, an ad platform or a word-search game, you need a plan to fight what's coming. Good rule of thumb: If it can happen to freaking Animal Crossing, it can happen to anyone.

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Join us this Thursday at 9 a.m. PT for a deep-dive conversation on the state of the cloud. Tom Krazit will explore how best practices for cloud computing are evolving during an unprecedented economic period, featuring PagerDuty CEO Jennifer Tejada, Okta CIO Alvina Antar and Novant Health CDTO Angela Yochem. This event is presented by Pure Storage.

RSVP today

People Are Talking

Mark Zuckerberg isn't driven by money, Roger McNamee said. It's about something else:

  • "I really think it's about power. I think Mark Zuckerberg has a vision that connecting all the people in the world on one network — his network — is the best thing any human being can do."

Amazon is furious that the DoD is still awarding the $10 billion JEDI contract to Microsoft:

  • "AWS remains deeply concerned that the JEDI contract award creates a dangerous precedent that threatens the integrity of the federal procurement system and the ability of our nation's warfighters and civil servants to access the best possible technologies."

Making Moves

Protocol's State of the Cloud virtual event is on Thursday at 9 a.m. PT. Don't forget to RSVP!

Could it be TikTok Decision Time? We're now 12 days from the deadline, but as China continues to step into the discussions, it looks like a process that seemed close to being done might now be anything but.

The Digital Summit at Home conference starts today, if you're looking for a deep dive on all things marketing.

Salesforce and Oracle both report earnings this week.

In Other News

  • The Trump administration may add SMIC to the "entity list." That would give China's biggest chipmaker the Huawei treatment, which explains why SMIC's shares fell 23% Monday.
  • Samsung won a $6.7 billion deal with Verizon to supply it with 5G networking equipment. It's a big step in Samsung's plans to become a major equipment supplier — something that the Huawei sanctions are helping with.
  • Epic filed its injunction against Apple, and it's a revealing read. The company says Fortnite has 116 million iOS users (around a third of its total base), but daily active user numbers have dropped by more than 60% since Apple pulled the game. You can read the full thing here, ahead of the Sept. 28 hearing.
  • Apple hired Tim Connolly to its video team. He was previously head of advertising and partnerships at Quibi, and ran partnerships and distributions at Hulu before that. The Telegraph speculates that his hire is part of Apple's big bundle push.
  • Some Facebook employees are mad about new HR policies that they say benefit parents while doing little for nonparents. The New York Times reports that some childless staff think they should get higher bonuses for working more, and said that nonparents should be able to take leave in the same way parents can.
  • ByteDance gave all its employees a bonus, equivalent to a half-month's salary. Bloomberg reports that ByteDance thanked employees for overcoming challenges "posed by the COVID-19 pandemic and changing macro environment," which feels like a big understatement.
  • Google ditched plans for a new 202,000-square-foot office in Dublin. The planned space was set to host 2,000 employees, and Google didn't say why it walked away from the talks.
  • New antitrust investigation alert! This time it's Italy's competition and market authority, which is looking into Apple, Google and Dropbox's cloud storage practices.
  • This was the read of the weekend: Scientific American's look at what access to unlimited information is doing to society. The trend goes back further than the internet, but we're still only beginning to understand how it's changing things.
  • What are the computational brains inside those Apple Maps cars? According to 9to5Mac, a 2013 Mac Pro processes all the data that's captured in real time, but everything is controlled by a modified iPad. Obviously.

One More Thing

But can it run Crysis?

If you've ever played games, built a gaming PC or just been on Reddit, you know that the most important question in PC gaming is: "Can it run Crysis?" Well, with the launch of Crysis Remastered comes a new mode called … Can It Run Crysis? It's designed to "demand every last bit of your hardware with unlimited settings," the Crytek team said. Here are the specs you'll need to run it at full power. And just in case you're wondering? No. No, your computer cannot run Crysis.

JOIN US ON THURSDAY

Cloud

Join us this Thursday at 9 a.m. PT for a deep-dive conversation on the state of the cloud. Tom Krazit will explore how best practices for cloud computing are evolving during an unprecedented economic period, featuring PagerDuty CEO Jennifer Tejada, Okta CIO Alvina Antar and Novant Health CDTO Angela Yochem. This event is presented by Pure Storage.

RSVP today

Today's Source Code was written by David Pierce, with help from Shakeel Hashim. Thoughts, questions, tips? Send them to david@protocol.com, or our tips line, tips@protocol.com. Enjoy your day, see you tomorrow.

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