How to Steal Netflix’s Company Culture in Six Easy Steps

“Good Artists Copy, Great Artists Steal”
Pablo Picasso

We unabashedly stole our company culture at Touchstone from Netflix with a little bit of Zappos and Sandy Koufax thrown in.

There.

I’ve said it.

We were thieves and robbers, but I’d like to think we were just being smart. I’ve always felt you can take inspiration from many different sources, not just from your industry, but from anywhere.

I was fortunate to be exposed to Reed Hastings’ wonderful culture manifesto (http://www.slideshare.net/reed2001/culture-1798664) right after we started operations, and many parts of it resonated with me. I shared it with our executive staff, and they liked it as well. How do Zappos and Hall of Fame Baseball Pitcher Sandy Koufax fit in? We’ll get there. For now let’s focus on the six things we stole, er, borrowed from Netflix.

I want to emphasize again that I think Netflix’s culture is fantastic, but these six things really stood out to us:

1. Adequate Performance Gets a Generous Severance Package. Nothing kills a company quicker than mediocre co-workers, and this is especially true at a start-up where there is tremendous pressure to hire key personnel. Think about a 20-person start-up with one bad employee. That translates to 5% of your workforce being ineffective, so that one person can really wreak havoc. Hiring mistakes will happen, and you need to take quick action. That being said, handle these terminations with class and grace.
2. Brilliant Jerks. Diverse styles are fine as long as the person embodies the company values. It’s easy to tolerate jerks when things are going well, but things don’t always go well. One jerk, especially in a small start-up, can destroy a company. Hiring pressure can push you to hire a jerk, and you will likely regret it. We did hire a couple of jerks along the way. Shortly thereafter, they were given a generous severance package.
3. Responsible People Thrive on Freedom, and Are Worthy of Freedom. The natural tendency of all companies as they grow is to create more rules and procedures. RESIST IT AT ALL COSTS! Instead, make the bold decision that Netflix made to increase employee freedom (shown brilliantly in slides 43 and 55). We did, and it paid off for the team. Do it, and your team’s motivation will go up big time.
4. There is No Vacation Policy, or said another way, take as much vacation as you want as long as you get your work done. You’re worried about abuse, of course, and you’re right. There will be abuse if you haven’t hired the right people. Hire the right people and this policy is self-correcting. By the way, a hidden benefit is that you don’t have to financially reserve for vacation when you go to a no vacation policy.
5. Act in the Company’s Best Interest. The executive staff had a vigorous debate about enacting a rigid expense and travel policy. Again, the worry was abuse. Our theory was that it’s self correcting. Employees that continually abused the policy would be given a generous severance package. I do remember one employee who tried to expense a one-mile car trip to interview a candidate. Can you imagine receiving a $0.55 expense report? I couldn’t. We talked about it in our staff meeting, and one of his peers set him straight.
6. No Fixed (raise pool) Budgets. You have to look at what the market is for a particular role every year. For example, if the salaries for senior design engineers go up 15% in a year, we would increase the pay of senior design engineers commensurate with the market. We quickly gained a reputation for fairness by working this way. Employees knew we rectified any pay inequities, and it helped build employee loyalty and employee retention.

Okay, so you want to know how Zappos and Sandy Koufax Fit in. Here we go.

Let’s start with Zappos, the online shoe retailer that Amazon bought. I was flying, I think, to Chicago when I read an article in American Way magazine about Zappos CEO Tony Hsieh. That led me to buy his book, “Delivering Happiness.” We loved Zappos’ customer service model of no scripts and letting the customer service team make the decisions, and we modeled our customer service organization after Zappos’. We regularly received accolades from our customers about our tremendous customer service.

We embraced Sandy Koufax’s “Keep it Simple” Mantra. Koufax was a two-pitch, and on many days only a one-pitch, starting baseball pitcher for the Los Angeles Dodgers. Most starting pitchers throw at least four pitches. Koufax dominated baseball by honing just two.

It worked brilliantly in baseball, and simplicity in business is key to success. Take notice whenever you hear someone say, or, better yet, you hear yourself say, “It’s complicated”. It usually isn’t that complicated.

When you think something is complicated, it usually means something is wrong.

So, there you have it. Our company culture, stolen from the likes of Netflix, Zappos, and Sandy Koufax. Where will you steal your company culture from?

That’s all for now,

Brett