Reed Hastings

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Reed Hastings
Reed Hastings, Web 2.0 Conference.jpg
Hastings at Web 2.0 Conference, 2005
Born Wilmot Reed Hastings, Jr.
October 8, 1960 (1960-10-08) (age 53)
Boston, Massachusetts
Residence California, US
Alma mater Bowdoin College (B.S., Mathematics, 1983)
Stanford University (M.S., Computer Science, 1988)
Occupation Co-founder and CEO of Netflix
Net worth Increase $1 billion (2014)[1]
Board member of
Facebook

Wilmot Reed Hastings, Jr. (born October 8, 1960) is an entrepreneur and education philanthropist. He is the CEO of Netflix and serves on the boards of Facebook and numerous non-profit organizations.

Peace Corps service[edit]

Hastings entered Marine Corps officer training through their Platoon Leader Class and spent the summer of 1981 in Officer Candidate School at Quantico, Virginia.[2] "I found myself questioning how we packed our backpacks and how we made our beds," said Hastings.[2] "My questioning wasn’t particularly encouraged, and I realized I might be better off in the Peace Corps. I petitioned the recruiting office and left the Marines."[2]

Hastings joined the Peace Corps after dropping out of Marine OCS "out of a combination of service and adventure" says Hastings,[3] and went to teach high school math in Swaziland from 1983 to 1985. Hastings credits part of his entrepreneurial spirit to his time in the Peace Corps.[3] "It was an extremely satisfying experience."[3] "Once you have hitchhiked across Africa with ten bucks in your pocket, starting a business doesn't seem too intimidating." [4]

After returning from the Peace Corps, Hastings went on to attend Stanford University: "I didn’t get into my first choice, which was MIT, but I got accepted to Stanford," he says.[2] He graduated in 1988 with a master's degree in computer science.[5]

Founding of Pure Software[edit]

Hastings' first job was at Adaptive Technology, where he invented a tool for debugging software.[5] "I worked for Audrey MacLean in 1990 when she was CEO at Adaptive Corp.[4] From her, I learned the value of focus. I learned it is better to do one product well than two products in a mediocre way," says Hastings.[4]

Hastings left Adaptive Technology in 1991 to found his first company, Pure Software, which produced products to troubleshoot software.[3] The rapidly growing company soon proved challenging for Hastings as he lacked managerial experience. "As the company grew from 10 to 40 to 120 to 320 to 640 employees, I found I was definitely underwater and over my head," said Hastings.[2] "I was doing white-water kayaking at the time, and in kayaking if you stare and focus on the problem you are much more likely to hit danger. I focused on the safe water and what I wanted to happen. I didn’t listen to the skeptics."[2] Hastings' engineering background didn't prepare him for the challenges of being a CEO and he asked his board to replace him.[6] "I tried to fire myself — twice," Hastings says.[6] "I was losing confidence."[6] The board refused and Hastings says he learned to be a businessman.[3] "I was an engineer myself. We doubled our revenue every year, but my transformation from engineer to CEO was when Morgan Stanley took the company public in 1995."[3]

In 1996, Pure Software announced a merger with Atria Software.[3] The merger integrated Pure Software's programs for detecting bugs in software with Atria's tools to manage development of complex software.[7] "With a single vendor and a unified sales force, we'll be able to make a really profound difference in the way people develop software," Hastings said at the time of the merger.[7] But the Wall Street Journal reported that there were problems integrating the sales forces of Pure Software and Atria after the head salesmen for both Pure and Atria left following the merger.[8]

In 1997, the combined company, Pure Atria, was acquired by Rational Software, which triggered a 42% drop in both companies' stocks after the deal was announced.[8] Hastings was appointed Chief Technical Officer of the combined companies[8] and left soon after the acquisition.[9] "I had the great fortune of doing a mediocre job at my first company," says Hastings.[9] "We got more bureaucratic as we grew."[9] After Pure Software, Hastings spent two years thinking about how to avoid similar problems at his next startup.[9]

Founding of Netflix[edit]

In 1998 Reed Hastings founded Netflix, offering flat rate movie rental-by-mail to customers in the United States.

In 1997 Hastings and Marc Randolph co-founded Netflix, offering flat rate film rental-by-mail to customers in the United States.[10] Headquartered in Los Gatos, California, Netflix has amassed a collection of 100,000 titles and over 44 million subscribers.[11] "I got the idea for Netflix after my company was acquired," said Hastings.[2] "I had a big late fee for 'Apollo 13.' It was six weeks late and I owed the video store $40. I had misplaced the cassette. It was all my fault. I didn’t want to tell my wife about it. And I said to myself, 'I’m going to compromise the integrity of my marriage over a late fee?' Later, on my way to the gym, I realized they had a much better business model. You could pay $30 or $40 a month and work out as little or as much as you wanted."[2]

Hastings said that when he founded Netflix, he had no idea whether customers would use the service.[3] "Netflix was originally a single rental service, but the subscription model was one of a few ideas we had—so there was no Aha! moment. Having unlimited due dates and no late fees has worked in a powerful way and now seems obvious, but at that time we had no idea if consumers would even build and use an online queue."[3]

Netflix culture[edit]

After his experiences at Pure, Hastings was concerned with the problems of growth. If building an entertainment company was his public goal, his private goal was to build a company that would grow rapidly without losing its entrepreneurial spirit in the process. Netflix was a test-bed for his theories.

As Netflix grew, the company began getting noticed for its innovative management practices—the results of the culture Hastings was exploring—called "Freedom and Responsibility."[9] Netflix is known to pay salaries that are typically much higher than customary to attract the best talent and is one of the few companies where employees can choose annually how much of their compensation they want in cash vs. stock.[9] "We're unafraid to pay high," says Hastings.[9] Other innovations include their treatment of employees who don't meet expectations.[9] "At most companies, average performers get an average raise," says Hastings.[9] "At Netflix, they get a generous severance package," because that way managers don't feel too guilty to let average performers go.[9] The company also gained notoriety for eliminating sick and vacation time for employees, and instead allowing them to manage this time off individually.

Hastings would meet each new employee and discuss the culture and his theories about it. Over the years his personal presentation codified into a Powerpoint slide deck that was widely shared internally, reviewed and tweaked by upper management, and refined actively. In August 2009 Hastings posted this internal culture guide online for public scrutiny. It laid out Hastings' strongly held beliefs about workers and management.[12] As of October 31, 2013 the deck has been viewed more than 5.5 million times.[12]

Internet television[edit]

Hastings is a big proponent of Internet television and sees it as the future.[13] "I think there's a huge category of people who will watch movies on laptops," says Hastings.[13] "And remember, it's not the laptop of today. Think of the laptop in five years. People will continue to want to watch movies on TV. No doubt about it. But laptop screens are improving. And young people are living on laptops."[13] Netflix launched a service in 2007 to stream movies and television to a users' computers.[13] "What we're finding is that young people, under 25, are watching our streaming on their PCs in huge numbers", says Hastings.[13] "They operate more portably than we do with our big screen TVs."[13]

Controversy[edit]

In July 2011, Netflix announced that subscription prices were changing: that DVD rental prices would drop by 20%, but that the initially free streaming service would now be charged. For many customers this represented a savings, but for the group that both received discs and enjoyed streaming, it would result in a cost increase of up to 60%. The move led to reported customer backlash, cancellations, less than projected subscriber growth, and a decline in stock price.[14] In response, Netflix admitted to poor public relations decisions in announcing the change[15] but kept its policy in place.

Two months later, in September 2011, Netflix announced that it would spin off its popular DVD business under a new brand name, Qwikster, leading to even more customer and market confusion.[16] Netflix reversed the decision less than a month later.[17][18][19] During this time, the company's stock value plummeted and Hastings was asked about resigning, but he flatly rejected the idea. "I founded Netflix," he told an interviewer; "I've built it steadily over 12 years... [and] this is the first time there have been material missteps. If you look at the cumulative track record, it's extremely positive."[20]

Other business interests[edit]

Reed Hastings has been a director of the board of Facebook since June 2011.[21]

Hastings also served on the board of Microsoft from 2007 [22] until 2012.[23]

Educational and political activism[edit]

California State Board of Education[edit]

After selling Pure Software and making a fortune, Hastings found himself without a goal.[5] "I was so ego-identified with [Pure] that I felt like a failure," Hastings says.[5] He became interested in educational reform in California and enrolled in the Stanford Graduate School of Education.[5] In 2000, Governor Gray Davis appointed Hastings to the State Board of Education, and in 2001, Hastings became its president.[5] Hastings spent $1 million of his own money together with $6 million from Silicon Valley venture capitalist John Doerr to promote the passage of Proposition 39 in November 2000,[24] a measure that lowered the level of voter approval for local schools to pass construction bond issues from 66 to 55 percent.[5] “He is absolutely driven to improve the level of education in this country,” said friend Nick McKeown.[5]

In 1995, after Hastings' company Pure Software was acquired for $750 million two years later, his personal wealth allowed him to pursue his passion for school reform.[13] "After Pure Software, I had a bunch of money, and I didn't really want to buy yachts and such things," said Hastings.[13] "I wanted to find something important to do. And I started looking at education, trying to figure out why our education is lagging when our technology is increasing at great rates and there's great innovation in so many other areas -- health care, biotech, information technology, movie-making. Why not education?"[13]

In 2005, Hastings ran into trouble on the State Board of Education when Democratic legislators challenged Hastings’ advocacy of more English instruction and language testing for non-English-speaking students.[25] The California Senate Rules Committee refused to confirm him as the Board president.[25] The California State Legislature rejected him in January 2005.[25] Governor Arnold Schwarzenegger, who had reappointed Hastings to the board after Hastings' first term, issued a statement saying he was "disappointed" in the committee’s action.[5] Hastings resigned.[5]

On April 3, 2008, Steven Maviglio reported that Hastings had made a $100,000 contribution to California Governor Schwarzenegger's "Voters First" redistricting campaign.[26]

Charter schools[edit]

Hastings is active in educational philanthropy and politics[27] and one of the issues Hastings most strongly advocates is charter schools, publicly funded elementary or secondary schools that have been freed from some of the rules, regulations, and statutes that apply to other public schools, in exchange for some type of accountability for producing certain results, which are set forth in each school's charter.[27] "If public schools don't adopt the same principles of competition and accountability as exist in the private and nonprofit sectors, they will continue to deteriorate," says Hastings.[27] "One way to permanently impact the system would be to have 10 to 20 percent of California schoolchildren enrolled in charter schools.[27] That would be critical mass, and enough of a force to induce a competitive dynamic in the system," he added.[27] Hastings is a founding member of NewSchools.org, Aspire Public Schools, Pacific Collegiate School, and EdVoice.net and has led the successful drive in 1998 for a stronger charter school law in California.[citation needed]

On July 11, 2006 the Santa Cruz Sentinel reported that Hastings donated $1 million in startup funds to Beacon Education Network to open up new charter schools in Santa Cruz county, where he lives.[28] "Small schools aren't for everyone but in some kids they work better in terms of academic preparation for college," Hastings said.[28] "The small school focus is particularly true for students who don't get as much academic support at home."[28]

On June 30, 2010, Hastings was a keynote speaker at the National Charter Schools Conference in Chicago, Illinois. The conference's theme was "Innovators in Education."

Technology[edit]

Hastings is a member of Technology Network, a political network of Businessmen and Executives that promotes technology growth and innovation.[29] TechNet brings its members together with national policy makers to advance America's global leadership in innovation.[29] Hastings served as CEO of Technology Network for a year.[30]

In April 2004, Hastings published a Wall Street Journal op-ed advocating the expensing of stock options.[31] He was the only public company CEO supporting this position in Silicon Valley.

Politics[edit]

On August 1, 2007 the Los Angeles Times reported that Democrat Hastings had donated $1 million to a committee formed to support California State Superintendent of Schools Jack O'Connell's candidacy for Governor of California in 2010.[32]

On April 12, 2009, Hastings donated $251,491.03 to Budget Reform Now, a coalition supporting California Propositions 1A to 1F.[33] If Proposition 1A passes, $10 billion in "temporary" sales, use, income and vehicle taxes imposed as part of the 2009-2010 budget agreement would each be extended for one or two years, resulting in a further tax increase of some $16 billion.[34]

On September 23, 2010, an interview with Reed Hastings was posted stating that he believes that Americans are somewhat self-absorbed, and ignorant to happenings outside of the United States. In the interview Reed Hastings is quoted as saying "How much has it been your experience that Americans follow what happens in the world? It's something we'll monitor, but Americans are somewhat self-absorbed."[35] He later apologized.[36]

Responses to Hastings' educational and political activism[edit]

Newark, New Jersey elected School Board member and former Deputy Mayor Alturrick Kenney and Milwaukee, Wisconsin Teachers Union President Bob Peterson responded to Hastings' activism by saying unelected school boards are not democratic. They said elected school boards are necessary to slow-down the process of privatization of public schools, and that unelected school boards work to expand privately managed charter schools. Kenney and Peterson also said privately run charter schools are not run democratically, have relatively little accountability, and the data does not show charter schools outperform public schools.[37]

Personal[edit]

Hastings was born in Boston, Massachusetts, the son of Joan Amory (Loomis) and Wilmot Reed Hastings.[38] His maternal great-grandfather was attorney Alfred Lee Loomis.[39] He lives in the San Francisco Bay Area, is married, and has two children.[5]

He was featured in a front-page article in USA Today in 1995, posing on his Porsche.[40] Nowadays he eschews flamboyance and says if he ever appeared on the front page of USA Today again it will "not [be] on the hood of a Porsche, but I would [pose] with a bunch of movies."[40]

One of Hastings' favorite movies is Gloomy Sunday.[4] "It is about a love triangle in Budapest with great sadness and redemption. Thankfully, there are no parallels to Netflix," says Hastings.[4]

In 2012 Hastings was photographed by photographer Kevin Abosch for his project FACES:TECH.[41]

References[edit]

  1. ^ http://www.forbes.com/sites/briansolomon/2014/06/09/netflix-ceo-reed-hastings-joins-billionaire-ranks/
  2. ^ a b c d e f g h New York Times. "Out of Africa, Onto the Web" by Reed Hastings as told to Amy Zipkin. December 17, 2006.
  3. ^ a b c d e f g h i Inc.com "How I Did It: Reed Hastings, Netflix" by Patrick J. Sauer December, 2005
  4. ^ a b c d e CNN Money. "Questions for... Reed Hastings" Interview by Matthew Boyle May 23, 2007.
  5. ^ a b c d e f g h i j k Stanford Magazine. "Home Movies" by Joan O'C Hamilton. January/February 2006.
  6. ^ a b c USA Today. "'Charismatic' founder keeps Netflix adapting" by Jim Hopkins. Updated March 23, 2006.
  7. ^ a b Wall Street Journal. "Software Firms Pure and Atria Agree to Merge in Stock Deal" by Don Clark. June 7, 1996.
  8. ^ a b c Wall Street Journal. "Investors Pan Rational's Plan To Buy Pure Atria for Stock" by Don Clark. April 8, 1997.
  9. ^ a b c d e f g h i j Business Week. "Netflix: Flex To The Max" by Michelle Conlin. September 24, 2007.
  10. ^ "Netflix Facts". Netflix. Retrieved March 2, 2007. 
  11. ^ "Press Release". Sec.gov. Retrieved June 26, 2012. 
  12. ^ a b Netflix Culture of "Freedom and Responsibility".
  13. ^ a b c d e f g h i Wall Street Journal. "Movie Man" by Jason Riley. February 9, 2008
  14. ^ "Company Town". Los Angeles Times. September 15, 2011. 
  15. ^ Loftus, Tom (September 19, 2011). "Netflix Customers: Sorry Doesn't Cut It, Pal". The Wall Street Journal. 
  16. ^ Can Netflix fix its mistakes? http://www.forbes.com/sites/panosmourdoukoutas/2011/10/10/can-netflix-correct-its-strategic-mistakes/
  17. ^ DVDs will be staying at Netflix http://blog.netflix.com/2011/10/dvds-will-be-staying-at-netflixcom.html
  18. ^ By PCWorld Video, PCWorld   September 20, 2011 4:13 PM (September 20, 2011). "Netflix Says Sorry, Then Irks Customers Again with Qwikster". PCWorld. Retrieved June 26, 2012. 
  19. ^ Qwikster Goes Qwikly: A Look Back On A Netflix Mistake http://www.huffingtonpost.com/2011/10/10/qwikster-netflix-mistake_n_1003367.html
  20. ^ Goldman, Andrew (October 23, 2011). "Reed Hastings Knows He Messed Up". The New York Times Magazine (The New York Times Company): 22. Retrieved November 9, 2011. 
  21. ^ {http://www.prnewswire.com/news-releases/facebook-names-reed-hastings-to-its-board-of-directors-124429638.html PRNewswire.com "Facebook Names Reed Hastings to Its Board of Directors" June 23, 2011.]
  22. ^ PRNewswire.com "Microsoft Board of Directors Adds New Member and Declares Quarterly Dividend." March 26, 2007.
  23. ^ "Microsoft Announces Reed Hastings Will Not Seek Re-Election". October 9, 2012. Retrieved December 28, 2012. 
  24. ^ Wall Street Journal. "Silicon Valley Moguls Spend On Education Ballot Battles" by Ann Grimes. October 31, 2000.
  25. ^ a b c California Department of Education. "O'Connell on Reed Hastings - Year 2005." January 12, 2005.
  26. ^ the California Majority Report. "Is Reed Hastings Six Figure Contribution to Schwarzenegger's Redistricting Effort Simple Revenge?" by Steven Maviglio. April 3, 2008.
  27. ^ a b c d e Stanford Online. "Charter schools advocate Reed Hastings to speak April 12" by Thouraya Raiss. April 5, 2000.
  28. ^ a b c Santa Cruz Sentinel. "Netflix CEO gives $1 million to open charter schools" by Matt King. July 11, 2006.
  29. ^ a b Technology Network
  30. ^ New York Times. "One Man's 2 Challenges" by Laurie J. Flynn. June 3, 2002.
  31. ^ Wall Street Journal. "Expense it!". April 4, 2004
  32. ^ Los Angeles Times. "State GOP awash in red ink" by Evan Halper. August 1, 2007
  33. ^ "California Secretary of State - CalAccess - Campaign Finance". Cal-access.sos.ca.gov. Retrieved June 26, 2012. 
  34. ^ [1][dead link]
  35. ^ Vlessing, Etan (October 14, 2010). "What Netflix CEO hopes U.S. won't notice". The Hollywood Reporter. 
  36. ^ Hastings, Reed (September 23, 2010). "The Official Netflix Blog : US & Canada: Apologies". Blog.netflix.com. Retrieved June 26, 2012. 
  37. ^ Response to Netflix CEO Reed Hastings , Alturrick Kenney and Bob Peterson, The Real News Network, 2014.05.04
  38. ^ http://humphrysfamilytree.com/Royal/Larson/Edw3-ReedHastings.pdf
  39. ^ http://www.fool.com/investing/general/2012/11/12/9-fascinating-things-about-reed-hastings-and-netfl.aspx
  40. ^ a b Wall Street Journal. "Netflix's CEO Is Mobilizing For Battle With Amazon" by Carl Bialik. October 20, 2004.
  41. ^ The Next Web article


External links[edit]

Reed Hastings on Facebook