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But when Ted and Melissa sat down in late October 2017, Ted spoke not about what people at Netflix knew but about all the things they didn’t know yet:

Look, Melissa, we are at a turning point for Netflix. We have forty-four million members in the US. The big growth will be international and we have a lot to learn. We don’t know if Saudi Arabians watch more or less TV during Ramadan. We don’t know if Italians prefer documentaries or comedies. We don’t know if Indonesians are more likely to watch movies alone in their bedrooms or around their family televisions. If we are going to succeed, we need to become an international learning machine.

Melissa was already familiar with the language of bet-taking used at Netflix and the implication that some bets will succeed and others will fail. What the gambling analogy didn’t capture was the critical aspect of learning from all that failing. This brings us to the context set by Ted:

As your team purchases and creates content around the world, we need to be laser-focused on learning. We should be ready to take bigger risks in high-growth-potential countries like India or Brazil so that we learn more about those markets. Let’s have some wins. But let’s also have some big messy losses where we learn how to succeed better the next time. We should always be asking, “If we purchase this show and it bombs, what will we learn from that?” If there is something big to learn, let’s go ahead and take the bet.

MeyerNo Rules Rules
p.225-226

Related Quotes

It was not obvious at the time, even to me, but we had one thing that Blockbuster did not: a culture that valued people over process, emphasized innovation over efficiency, and had very few controls. Our culture, which focused on achieving top performance with talent density and leading employees with context not control, has allowed us to continually grow and change as the world, and our members’ needs, have likewise morphed around us. Netflix is different. We have a culture where No Rules Rules.

HastingsNo Rules Rules
p.xiii

Smith, however, was an entrepreneur, and that Yale paper became the basis for FedEx, which he founded in 1971. He was also a betting man: once, in the early days of FedEx, after a bank had refused to extend a crucial loan, he took the company’s last $5,000 to Las Vegas and won $27,000 playing blackjack to cover the company’s $24,000 fuel bill. Of course, Netflix doesn’t encourage its staff to go to casinos, but it does seek to instill some of Fredrick Smith’s spirit into the workforce. As Kari remembers:

When I started at Netflix, Jack explained to me that I should consider I’d been handed a stack of chips. I could place them on whatever bets I believed in. I’d need to work hard and think carefully to ensure I made the best bets I could, and he’d show me how. Some bets would fail, and some would succeed. My performance would ultimately be judged, not on whether any individual bet failed, but on my overall ability to use those chips to move the business forward. Jack made it clear that at Netflix you don’t lose your job because you make a bet that doesn’t work out. Instead you lose your job for not using your chips to make big things happen or for showing consistently poor judgment over time.

MeyerNo Rules Rules
p.139

Most important were the lessons that not just Yasemin, but the entire Netflix Marketing team learned from her mistake. “When we hire new marketing people, we have a series of historic cases we cover with them to teach what not to do. The Turkey Black Mirror campaign is one of our favorite teaching cases and everyone talks about it.” Yasemin explains. “It demonstrates so clearly the importance of socializing and what happens when you don’t do it. But it also helped all of us in marketing to remember our goal at Netflix is to create moments of joy. So don’t run a campaign that’s a little creepy. Don’t try to spook the public into watching our shows. Instead, a good campaign should be exciting, joyful, and just plain fun.

MeyerNo Rules Rules
p.159

Ten years before, in 2007, Leslie Kilgore had coined a phrase, which is now used across Netflix to describe exactly what Ted was doing as he walked out through the lobby of the hotel: “Lead with context, not control.” At just about any other company, with this much money on the table, the senior guy would get involved and control the negotiations. But that’s not what leadership looks like at Netflix. As Adam explained: “Ted wasn’t about to make that decision for me, but he set broad context to help align my thinking with the company’s strategy. That context he set laid the foundation for my decision.

MeyerNo Rules Rules
p.208-209

Netflix has very deliberately not defined its arena in terms of traditional television. Instead, it has framed its challenge in terms of increasing the percentage of their leisure time its members spend on the service. As their investor messaging says:

We compete with all the activities that consumers have at their disposal in their leisure time. This includes watching content on other streaming services, linear TV, DVD or TVOD but also reading a book, surfing YouTube, playing video games, socializing on Facebook, going out to dinner with friends or enjoying a glass of wine with their partner, just to name a few. We earn a tiny fraction of consumers’ time and money, and have lots of opportunity to win more share of leisure time, if we can keep improving.

McGrathSeeing Around Corners
p.89