Netflix cofounder Reed Hastings to CEOs: Stop calling your teams family, as you will never ...
Netflix co-founder Reed Hastings has urged the CEOs to stop describing their companies as families, warning that the metaphor creates false expectations. Hastings said the lesson came in 2001, when streaming giant Netflix, then a rental DVD startup, laid off one-third of its workforce after the dot com bust.
“If you describe yourself as a family at a company, you better not ever do a layoff. You would never lay off two of your kids,” he told Semafor on The CEO Signal podcast.A championship team, not a familyHastings argued that companies should be seen as championship sports teams, where performance standards are kept high and roster changes are made to stay competitive.
Netflix adopted this philosophy, introducing the “keeper test” — managers ask if they would fight to keep an employee or hire them again knowing what they know today. If the answer is no, the company parts ways quickly.Netflix pairs its performance‑driven culture with flexibility, offering unlimited paid time off and parental leave.
Hastings said the goal is not simply to cut costs but to ensure the right talent is in place to win against competitors.Wider pushback against ‘family thinking’Hastings is not alone. Airbnb CEO Brian Chesky admitted during the pandemic that calling employees “family” blurred important distinctions when layoffs hit.
Shopify CEO Tobi Lütke similarly warned in 2021 that “family thinking” makes it harder to hold poor performers accountable, insisting Shopify is a team, not a family.Reed Hastings on why he stopped calling CEOs Ted Sarandos and Greg Peters about the businessRecently, Reed Hastings said that now Netflix's co-founder Reed Hastings spent 29 years at Netflix and now sends its two CEOs almost nothing.
Not because anything soured — the opposite. He says Ted Sarandos and Greg Peters have absorbed his thinking so completely that phoning them is redundant. He's tested that theory in the biggest way possible. When Netflix walked away from the Warner Bros. Discovery deal this year, its founder wasn't in the room for the call.Speaking on Semafor's The CEO Signal podcast, hosted by Penny Pritzker and Andrew Edgecliffe-Johnson, the Netflix co-founder said he's been "very disciplined" about not calling the co-CEOs on business matters since leaving the board in June.
He tried, briefly. For the first couple of months he lobbed in the occasional thought, then noticed something: they could already run the simulation without him. They ask what Reed would think, set that answer aside, and do what they believe is right. Which, Hastings said, is what they should do. "They can mimic me and conjure me easily.
I'm very predictable in that way."Get the latest technology news and updates. Download the TOI App.