Last Thursday, we bid farewell to Reed Hastings, the famed Netflix founder and CEO who announced on the company's earnings call that he would be stepping down from his co-CEO role after 25 years of running the company.
There have been plenty of revolutionary executives. I don't think any CEO has ever had a better understanding of what made insanely great products than Steve Jobs. I don't think any CEOs have ever been better at recognizing smart acquisitions than Mark Zuckerberg and Bob Iger. I don't think any CEO was ever better at designing an organization around a set of shared values than Jeff Bezos.
And I don't think any executive ever saw around corners better than Reed Hastings, and I'm not sure it's a particularly close race.
Three pivots come to mind when I think about Hastings' 25-year tenure. The first is the change in Netflix's business model from one-off movie rentals to subscription revenue, which would have been a crowning achievement for most executives yet is now hardly a pimple on the face of Hastings' legacy. The second is the switch from Netflix being a DVD-focused company to being a streaming-focused company, which likely set the company up for another 20 years of success rather than a final 20 months of relevancy. The last is the switch from primarily offering licensed content to primarily offering original content, an astronomically expensive bet that likely saved Netflix from becoming a streaming company with nothing to stream.
There are plenty of companies that manage to stay relevant for 25 years, but there are very few companies who continue to lead their industry in innovation for that same length of time. Incumbents often get complacent, and complacency kills innovation. The fact that Netflix has been able to be the clear market leader and the most innovative company for over two decades is entirely attributable to Reed Hastings and his teams' thorough understanding that to not innovate in the media industry is to write your own death scene.
It was probably time for Hastings to step down. Netflix is facing broad competition like never before. It's navigating a switch to an ad-based tier, which could benefit from having a fresh perspective at the wheel. 25 years is also just a long time, and a changing of the guard is good every now and then. But what a tenure it was.
Thank you, Reed Hastings, for giving every business school professor the pinnacle example of what "a successful pivot" looks like. I know they appreciate it. Your business strategy instincts are almost unrivaled, and you will be missed.
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