There are some people who will take personal advantage of every situation. There are some people in whom the dark side wins. Your company should rigorously weed these people out. You can do it with compassion (remember, it was your mistake to hire them in the first place); but it should be done.

Fortunately, these people are rare. And we don’t base this claim solely on a personal faith in human nature.

I’ve known some geniuses who were such a pain to work with that we had to let them go; then again, some of our most brilliant, delightful, and effective people were let go by previous employers for being none of those things. It would be nice if there were some magic bullet that turned difficult people into success stories, but there isn’t. There are just too many unknowns and immeasurable personal characteristics involved for us to pretend that we have figured out how to do that. Everyone says they want to hire excellent people, but in truth we don’t really know, at first, who will rise up to make a difference. I believe in putting in place a framework for finding potential, then nurturing talent and excellence, believing that many will rise, while knowing that not all will.

These aren’t mere gripes. They are evidence of a fundamental disconnect in incentives. Employees in market-facing roles know that if they fail to satisfy user needs, they’ll get fired by their customers. Corporate staffers, by contrast, can only be fired by their overlords, so that’s where their loyalties lie. Internal administrators suffer little or no penalty when they inflate costs, offer substandard services, or insist on compliance at any cost.

But for all creative jobs we would pay one incredible employee at the top of her personal market, instead of using that same money to hire a dozen or more adequate performers. This would result in a lean workforce. We’d be relying on one tremendous person to do the work of many. But we’d pay tremendously.

This is the way we have hired the majority of employees at Netflix ever since. The approach has been remarkably successful. We have exponentially increased our speed of innovation and our output.

Cities controlled by big companies are old hat in science fiction. My grandmother left a whole bookcase of old science fiction novels. The company-city subgenre always seemed to star a hero who outsmarted, overthrew, or escaped “the company.” I’ve never seen one where the hero fought like hell to get taken in and underpaid by the company. In real life, that’s the way it will be. That’s the way it is.