from Trung Phan | by Trung Phan

Netflix is known for its cutthroat culture and willingness to pay top dollar for superstar talent. The approach -- first outlined in a famous 2009 slide deck -- is about managing people in creative industries (eg. media, tech) while scaling fast. These 7 slides explain it 🧵 pic.twitter.com/wKaNWMnTa1

1/ Netflix competes in media + tech (knowledge work that often requires creativity). High-performers in these fields can be 10x better than the average. In a "procedural" field (manufacturing), the best may only be 2x better (industries that deal w/ atoms are naturally capped). pic.twitter.com/gIH9LKSCS8

2/ Most businesses get more complex as they grow. To deal with this, companies introduce processes (and bureaucracy), which has the adverse effect of driving out creative talent. pic.twitter.com/XwsXvYdR6D

3/ In "procedural" industries (e.g., manufacturing), good processes will often make up for a lack of "high-performing" creative talent. pic.twitter.com/yYqF4VHgIq

4/ But during market shifts, process-driven companies are ill-prepared to change or adapt. Netflix competes in fast-moving industries (tech, media) that require creativity, innovation and quick adaption. It needs the right talent to manage the market shifts. pic.twitter.com/eIX37PuXat

5/ Netflix's ongoing challenge is to scale its business and deal with complexity WITHOUT bringing in more processes. To do that, Netflix needed to staff with lots of A+ creative talent. It does so by offering: ◻️ Top-of-market comp ◻️ Tons of freedom pic.twitter.com/fL8unzGPor

6/ The flipside of the coin is that if an employee doesn't fit, they'll quickly be dropped...as famously highlighted in this slide: pic.twitter.com/apchHJpadC

7/ Netflix explicitly states that its culture is not for everyone: pic.twitter.com/YYd4NS7Yuz

8/ And the streaming giant has faced its fair share of criticism for how it operates. pic.twitter.com/bS7Csrd7l7

9/ Whatever you think of the strategy, it produces results (and your prob a customer): ◻️ successful transition from DVD to streaming ◻️ creation of original IP ◻️ from 2k to ~10k employees ◻️ subscribers 20m --> 200m+ ◻️ market cap $2B --> $200B+

10/ Here's a final stat of note: Netflix’s revenue per employee is $2.6m. More than: ◻️ Apple ($2m) ◻️ Alphabet ($1.4m) ◻️ Microsoft ($877k) (Apple obvi crushes profits and FCF, though) pic.twitter.com/Cm1zSv8UMJ

11/ If you enjoyed that, I write threads breaking down tech and business 1-2x a week. Def follow @TrungTPhan to catch them in your feed. Here's one you might like: twitter.com/TrungTPhan/sta…

12/ PS. I also write a weekly Saturday email with insightful insights and really dank memes: trungphan.substack.com

13/ Link to the 120-slide doc on SlideShare. Looks like it was actually posted by Reed Hasting in August 2009 under the title "Minimize Complexity Growth": slideshare.net/reed2001/cultu…

14/ And here’s the funniest Netflix meme ever pic.twitter.com/kkvf84W12m

15/ Here’s one more Netflix thread for ya twitter.com/trungtphan/sta…