Homepage / Technology / Netflix has won by simultaneously emulating and running from Amazon
Amazon says this Prime Day was its biggest shopping event ever Kudlow says President Trump is 'so dissatisfied' with China trade talks that he is keeping the pressure on As stocks regain their footing, an ominous warning looms Goldman Sachs downgrades Clorox to sell, says valuation is 'unsustainably high' How Satya Nadella has spurred a tripling of Microsoft's stock price in just over four years Kudlow says economic growth could top 4% for 'a quarter or two,' more tax cuts could be coming The one chart that explains Netflix’s stunning comeback US housing starts plunge 12% in June to a nine-month low Aerospace titans Boeing and Airbus top $110 billion in orders at Farnborough Target uses Prime Day to its advantage, logging its 'biggest online shopping day' so far this year Billionaire Marc Lasry sees bitcoin reaching up to $40,000 as it becomes more mainstream and easier to trade These are the 10 US airports where you're most likely to be hacked Amazon shares slightly higher as investors await Prime Day results Wreck of Russian warship found, believed to hold gold worth $130 billion A bullish ‘phenomenon’ in bond market is weeks away from fading, top credit strategist says Stocks making the biggest moves premarket: MS, GOOGL, TXN, UAL, NFLX & more Twitter shares up 50% since late April means most upside priced in, analyst says in downgrade EU fines Google $5 billion over Android antitrust abuse Mortgage applications fall 2.5% as buyers struggle to find affordable homes America may not have the tools to counter the next financial crisis, warn Bernanke, Geithner and Paulson Investors are getting spooked as the risk of a no-deal Brexit rises EU expected to fine Google $5 billion over Android antitrust abuse Ex-FBI chief James Comey urges Americans to vote for Democrats in midterm elections Elon Musk apologizes to British cave diver following baseless 'pedo guy' claim Disney, Comcast and Fox: All you need to know about one of the biggest media battles ever Xiaomi shares notch new high after Hong Kong, mainland China stock exchanges reach agreement The trade war is complicating China's efforts to fix its economy European markets set for a strong open amid earnings; Google in focus Hedge fund billionaire Einhorn places sixth in major poker tournament The biggest spender of political ads on Facebook? President Trump Asian stocks poised to gain after Fed's Powell gives upbeat comments; dollar firmer Stocks are setting up to break to new highs Not all FAANG stocks are created equal EU ruling may be too little, too late to stop Google's mobile dominance Cramer explains how Netflix's stock managed to taper its drop after disappointing on earnings Airbnb condemns New York City's 'bellhop politics,' threatens legal retaliation Amazon sellers say they were unfairly suspended right before Prime Day, and now have two bad choices Investor explains why 'duller' tech stocks can have better returns than 'high-flying' tech names Elon Musk is 'thin-skinned and short-tempered,' says tech VC Texas Instruments CEO Brian Crutcher resigns for violating code of conduct Google Cloud Platform fixes issues that took down Spotify, Snapchat and other popular sites Uber exec: We want to become the 'one stop' transportation app 'What a dumb hearing,' says Democrat as Congress grills tech companies on conservative bias Amazon shares rebound, report says Prime Day sales jumped 89 percent in first 12 hours of the event How to put your medical history on your iPhone in less than 5 minutes Investment chief: Watch these two big events in 2018 Even with Netflix slowing, the market rally is likely not over Cramer: Netflix subscriber weakness debunks the 'sky's the limit' theory on the stock Netflix is looking at watch time as a new area of growth, but the competition is stiff Why Nobel laureate Richard Thaler follows Warren Buffett's advice to avoid bitcoin Rolls-Royce is developing tiny 'cockroach' robots to crawl in and fix airplane engines After Netflix plunge, Wall Street analysts forecast just tame returns ahead for the once high-flying FANG group Roku shares rise after analyst raises streaming video company's price target due to customer growth China is investing 9 times more into Europe than into North America, report reveals Amazon says US Prime Day sales 'so far bigger than ever' as glitch is resolved Netflix is on pace for its worst day in two years US lumber producers see huge opportunity, rush to expand San Francisco to consider tax on companies to help homeless Homebuilder sentiment, still high, stalls as tariffs, labor and land drive up costs Powell backs more rate hikes as economy growing 'considerably stronger' Netflix history is filled with big stock declines – like today – followed by bigger rebounds Intel shares get downgraded by Evercore ISI due to rising competition from Nvidia, AMD Petco aims to reinvent the pet store with something you can't buy online Genetic testing is coming of age, but for consumers it's buyer beware Tech 'FAANG' was the most-crowded trade in the world heading into the Netflix implosion, survey shows Netflix weak subscriber growth may indicate a 'maturity wall' that could whack the stock even more: Analyst This chart may be predicting the bull market's demise Wall Street says Netflix's stock plunge is a ‘compelling’ buying opportunity because the streaming giant ‘never misses twice’ Tesla sinks after Musk tweets, again Boeing announces new division devoted to flying taxis Stocks making the biggest move premarket: NFLX, UNH, GS, AMZN, WMT & more Deutsche Bank downgrades Netflix, but says big subscriber miss is not 'thesis changing' IBM is experimenting with a cryptocurrency that’s pegged to the US dollar North Korea and Zimbabwe: A friendship explained Virgin Galactic spinoff Orbit to launch rockets from the UK with space deal Artificial intelligence will create more jobs than it destroys? That’s what PwC says ‘Treasonous’ Trump and ‘Putin’s poodle:' Scathing headlines follow the Trump-Putin summit China’s fintech companies offer ‘enormous’ opportunity, investment manager says Trump's performance at summit with Putin was 'unprecedented,' experts say Walmart and Microsoft link up on cloud technology as they both battle Amazon European stocks seen mixed amid earnings; Fed’s Powell to address Congress How I knew I should quit my day job and run my start-up full-time: Viral website founder China's stocks have been trounced, but the trade war may ultimately be good news for those shares Billionaire tech investor Peter Thiel bets on crypto start-up Block.one Asian shares subdued open after mixed close on Wall Street; energy stocks under pressure Amazon cloud hits snags after Amazon Prime Day downtime Netflix isn't doomed by one quarter unless people start questioning the long-term investor thesis Tech stocks set to sink on Tuesday after rough evening for ‘FANG’ Netflix plummets after missing big on subscriber growth This wristband lets humans control machines with their minds The U.S. has a rocky history convincing Russia to extradite computer criminals Amazon suffers glitches at the start of Prime Day Jeff Bezos is now the richest man in modern history 'The United States has been foolish': Read Trump and Putin's full exchange Goldman Sachs recommends these 5 highly profitable companies — including Nvidia — to combat rising inflation Goldman Sachs releases 'tactical' stock picks for this earnings season Three red flags for Netflix ahead of its earnings report The bond market may be raising recession fears, but don't expect one anytime soon Cramer: Banks are 'making fortunes' but are still as hated as they were during the financial crisis Putin told Trump at summit: Russia never meddled in US election


Netflix has won by simultaneously emulating and running from Amazon

Netflix is an unassuming insurrectionist.

CEO Reed Hastings is known for the endearing sweaters he wears during his investor calls. Past and present co-workers say he’s respectful and hands-off. Netflix‘s culture is famously lenient: Employees have freedom to work on projects they find important and get unusual perks, including unlimited vacation, no set schedules, and the choice to be paid in cash, stock options or any combination of the two.

From Netflix’s earliest days, executives prepared for how it would adjust to rapid growth. Netflix knew DVDs would be anachronistic years before internet streaming was invented, said Joel Mier, Netflix’s director of marketing from 1999 to 2006 and a lecturer of marketing at University of Richmond.

“The constant question asked at Netflix has been how do you deliver what customers want today while building for a different tomorrow — organizational ambidexterity,” said Mier. “I remember talking about phasing out the DVD and the internet driving content consumption at my first interview in 1999.”

The company’s ambitions were higher than typical start-ups, partly because Hastings was already a millionaire when he started Netflix.

A former Peace Corps volunteer who once taught high-school math in Swaziland, Hastings sold his first company, Pure Software, in 1997 for $750 million. Netflix executives such as former Chief Product Officer Neil Hunt and former Chief Talent Officer Patty McCord, who worked at Pure with Hastings, spent time focusing on culture to ensure Netflix could grow without losing talent.

“He brought in former co-workers from Pure,” said Michael Rubin, who joined Netflix in 2006 as the company’s director of product after working with the company in an informal manner years earlier. “They started trying to answer the question ‘how do we build a company that can sustain massive growth without becoming a lousy place to work in the process?’ They started looking at why other companies failed.”

Hastings relentlessly emphasized strategy and culture to his employees, culminating in a 128-slide reference guide that was released to the public.

While media companies are freaking out about Netflix, the feeling is not mutual.

Instead, Netflix pays its closest attention to native digital streaming services that limit Netflix’s potential market reach. Those include Amazon and even Chinese services that don’t yet compete.

Hastings was concerned about Amazon as early as January 2013, when he prepared a quarterly business presentation on the subject, according to a person who remembered the slide deck Hastings made. Hastings saw Amazon as relentlessly motivated by delighting the customer — a stark contrast to the traditional cable companies, which always finished near the bottom in customer satisfaction polls.

“There are a fair amount of similarities in the way Reed and Jeff [Bezos] run things,” Enderwick said.

You can see this relentless customer focus in Netflix’s long-term strategy, which it updates each year on its website.

“We strive to win more of our members’ ‘moments of truth’. Those decision points are, say, at 7:15 pm when a member wants to relax, enjoy a shared experience with friends and family, or is bored. The member could choose Netflix, or a multitude of other options.”

But Hastings believed Netflix could win by doing one thing well, instead of aping Amazon’s strategy of doing everything from books to cloud computing infrastructure to grocery stores.

Netflix has toyed with different tactics to win these “moments of truth” over the years. The company considered allowing its customers to buy and own new releases of movies and TV shows, similar to Amazon. Netflix has considered allowing advertising on its site. It has thought about investing in live sports and news. It once sold used DVDs and showcased movie screening times at theaters on its site. It dabbled in producing independent films and original movies (dubbed Red Envelope Entertainment) for DVD distribution. It nearly launched a Netflix set-top box, which would have brought the company into the hardware business.

Ultimately, Hastings scrapped all these ideas.

The set-top box idea was killed just weeks before launch, as Hastings realized it might inhibit other manufacturers from wanting to integrate Netflix.

“Reed said ‘streaming is our market, we’re not doing that,'” said Tom Willerer, a partner at Venrock and formerly Netflix’s vice president of product innovation. “His idea is, strategy isn’t about what you say ‘yes’ to, it’s what you say ‘no’ to.”

“Jeff Bezos seems to put his fingers in everything,” said Willerer. “Reed wants to do one thing exceptionally well and that’s it.”

“We realized we could compete with Amazon as long as streaming was not in their top three or five things they focused on,” said Gib Biddle, Netflix’s former vice president of product management. “In the early days, video certainly was not. It probably still isn’t.”

This focus comes through in Netflix’s long-term strategy document:

“Netflix is a global internet entertainment services network offering movies and TV series commercial-free, with unlimited viewing on any internet-connected screen for an affordable, no-commitment monthly fee. Netflix is a focused passion brand, not a do-everything brand: Starbucks, not 7-Eleven; Southwest, not United; HBO, not Dish.”

If Netflix is to justify its grand valuation and not come crashing down to Earth, one of two things must happen — either it has to dominate the global media landscape, or it has to use its scale to go after new markets.

It’s clear Netflix has already decided expanding into adjacent markets isn’t the strategy. Instead, its only way forward is to win in media.

Source: Tech CNBC
Netflix has won by simultaneously emulating and running from Amazon

Comments are closed.