Netflix’s largest individual shareholder is Reed Hastings, co-founder, and former CEO of the company, now Chairperson of Netflix, with a 1.76% stake, valued at over $4.5 billion as of January 2024.
Table of Contents
Background
Wilmot Reed Hastings Jr. is a prominent American entrepreneur and co-founder of the streaming platform Netflix. He served as CEO from 1998 to 2021 and led the company to become a global entertainment powerhouse.
Hastings is a philanthropist and supports various education initiatives through the Hastings Fund. He is also known for his unconventional management style and focus on innovation.
Early career
After earning a Bachelor of Arts in Mathematics from Bowdoin College, Hastings joined the Peace Corps and found himself teaching math to high school students in Swaziland between 1983 and 1985.
In a later interview with Fortune, Hastings noted that his time in the Peace Corps fostered his entrepreneurial spirit: “Once you have hitchhiked across Africa with ten buckets in your pocket, starting a business doesn’t seem too intimidating.”
After he left the Peace Corps, Hastings enrolled at Stanford University and earned a Master’s Degree in Computer Science in 1988.
Adaptive Technology and Pure Software
Post-Stanford, Hastings found himself working on debugging software at Adaptive Technologies. There he met CEO Audrey MacLean and learned the value of doing one product well instead of two products in a mediocre way.
He then left the company to co-found Pure Software in 1991 with his business partner Mark Box. Pure Software was a software development company that focused on software testing and quality assurance services. It grew rapidly in the 1990s and went public in 1995 to become one of the most successful IPOs of that year.
However, the company’s success proved a challenge for Hastings because he lacked managerial experience. At one point he asked the board to replace him, but they refused, and Hastings was forced to learn to become a businessman on the job.
Pure Software merged with Atria Software in 1996. The resultant company, Pure Atria, was acquired by Rational Software in 1997. Hastings served as its CTO for a brief period before leaving after the acquisition.
He spent the next two years determining how he could avoid a similar predicament in his next business endeavor.
Netflix
Hastings is best known for starting the DVD rental service Netflix in 1997 with Marc Randolph. The pair become co-workers in 1996 (and later friends) after Pure Atria acquired Integrity QA – a software testing start-up that Randolph had founded.
Before the Rational Software acquisition, both men would carpool to work and discuss business ideas. One day, Hastings was angry over $40 in late fees from Blockbuster at a time when DVDs were being test-marketed in a few cities.
The pair then wondered if the thinner, lighter entertainment format could be sent to consumers by post and enable them to avoid the hassle of dealing with video stores.
Management and culture
According to Randolph, Hastings is not the most empathic person in the world when dealing with staff. In an interview with the Sydney Morning Herald, he noted that “He’s not a bad person – he just doesn’t feel what others feel. The dominant mode for him is, ‘It would be irrational for us to keep someone on, just to keep us from hurting them’”.
Hastings is also known for the Netflix “Keeper Test” where managers are asked to consider which of their employees they would work to retain if they received an offer from another company. By extension, those whom they perceive to be not worth the effort should be let go.
The test was an early iteration of the Netflix culture deck known as Freedom and Responsibility which Hastings wrote with chief talent officer Patty McCord over 10 years. To warn off job applicants who were not a good fit, Hastings even went as far as publishing the 126-slide presentation online.
Among the nine behaviors and skills Hastings looked for include judgment, communication, impact, curiosity, innovation, courage, passion, honesty, and selflessness.
Key takeaways
- Reed Hastings is a prominent American entrepreneur and co-founder of the streaming platform Netflix. He served as CEO from 1998 to 2021 and lead the company to become a global entertainment powerhouse.
- Post-Stanford, Hastings worked on debugging software at Adaptive Technologies. There he met CEO Audrey MacLean and learned the value of doing one product well and not two products in a mediocre way.
- Hastings founded Netflix in 1997 with Marc Randolph. The pair become co-workers in 1996 after Pure Atria acquired Randolph’s software start-up Integrity QA. In the early days of Netflix, Hastings was known for the company’s Keeper Test and the decision to make the company’s culture deck publicly available.
Key highlights:
- Reed Hastings: Co-founder, former CEO, and executive chairman of Netflix, with a net worth of $2.4 billion.
- Early Career: Hastings joined the Peace Corps after college and taught math in Swaziland. He later earned a Master’s Degree in Computer Science from Stanford University.
- Pure Software: Hastings co-founded Pure Software, a successful software development company that went public in 1995.
- Netflix: Hastings co-founded Netflix in 1997 with Marc Randolph. The idea for Netflix came from a frustration with late fees from video stores.
- Management and Culture: Hastings is known for his unconventional management style, including the Netflix “Keeper Test” and the company’s culture deck known as Freedom and Responsibility. He values skills like judgment, communication, innovation, and passion in employees.
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