In Conversation: Netflix' Ted Sarandos and Marc Andreessen | Summary and Q&A

TL;DR

Netflix started as a DVD-by-mail company but quickly transitioned to streaming, expanding to original content and becoming a global entertainment powerhouse.

Key Insights

• 💌 Netflix's early success was attributed to its efficient DVD-by-mail service and a culture focused on optimizing for postal wait.
• 🥶 Co-founder Reed Hastings had a clear vision of the future, predicting the rise of streaming and the internet as the primary platform for entertainment.
• 😥 The decision to switch from DVD-by-mail to streaming and to invest in original content were critical turning points for Netflix's growth and success.
• 👻 Netflix's approach of giving creative control to showrunners has allowed for the creation of unique and compelling content.
• 🛀 The company takes a localized approach to entertainment, producing local language original shows in different regions.
• 🌐 Despite the trend of cultural homogenization, Netflix strives to create authentic, locally-focused content while also catering to a global audience.
• 💁 Netflix's success in content creation is based on a combination of finding great talent, giving them the resources to excel, and using data to inform decision-making.

Transcript

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Questions & Answers

Q: What was Netflix like in its early days?

Netflix's early days were marked by a small office, piles of DVD boxes, and a focus on optimizing for postal wait. The company was mainly focused on DVD-by-mail at the time.

Q: How did Netflix transition from DVD-by-mail to streaming?

Co-founder Reed Hastings had a clear vision of the future and believed that all entertainment would come through the internet. The decision to switch from DVD-by-mail to streaming was a game-changer for Netflix.

Q: What was the significance of investing in original content?

The decision to invest in original content was a big milestone for Netflix. It allowed them to differentiate themselves from competitors and create unique, captivating shows that attracted a global audience.

Q: How does Netflix maintain creative control while working with showrunners?

Netflix places a high emphasis on creative control and gives showrunners the freedom and resources to bring their vision to life. While there is collaboration and feedback, the final decision-making power lies with the showrunners.

Summary

In this video, Ted Sarandos, the Chief Content Officer at Netflix, talks about the early days of Netflix and their journey to success. He also discusses the decision to transition from DVD-by-mail to streaming and the importance of creative control in their content. Sarandos outlines the unique approach Netflix takes in creating and selecting content, and how they strive to balance both artistic vision and commercial success. He also touches on the global impact of Netflix and their efforts to create authentically local shows in different countries.

Questions & Answers

Q: What was Netflix like in 1999 when you joined?

For Sarandos, Netflix was like a whole new world. The first ecommerce transaction he made was buying an airline ticket, and when he visited the Netflix office, he was amazed by the number of boxes and the fact that people were getting razor blades online. The business primarily focused on DVD-by-mail at that time.

Q: What was the transition from DVDs to streaming like?

The decision to transition from DVDs to streaming was a significant one for Netflix. Sarandos had a meeting with Reed Hastings where they discussed the future of entertainment being delivered over the internet. At the time, streaming didn't exist conceptually, but Hastings had a clear vision of how it would revolutionize the industry. Sarandos initially found the idea absurd due to the slow internet speeds at the time, but he was inspired by Hastings' confidence and forethought.

Q: How did you maintain the balance between Silicon Valley and Hollywood cultures at Netflix?

Netflix values both the Silicon Valley and Hollywood cultures and has not tried to force one on the other. The company maintains a presence in both areas and respects the individual strengths of each culture. They have fostered a culture of open communication and trust, allowing everyone to have a voice at the table while supporting the decisions made by the leaders. The company has also implemented initiatives, like new employee college, to help foster understanding and shared vision among all employees.

Q: How many pitches do you receive for content each year?

Netflix receives about 7-10 pitches per day, which amounts to around 2,000 pitches per year.

Q: How many pitches do you accept?

The acceptance rate for pitches is only about 1 in 100, meaning Netflix approves around 20 projects each year.

Q: How do you evaluate pitches and decide which projects to greenlight?

The evaluation process involves assessing the team's ability to execute on their vision. Sarandos looks for people with a track record of accomplishment and the ability to bring their ideas to the screen effectively. While there is no shortage of ideas, finding the right people to execute those ideas is the challenge.

Q: How often do successful projects change from what was initially pitched?

Successful projects often change a lot from what was initially pitched. Sarandos states that almost all the successful projects Netflix has worked on have gone through significant changes along the way. This is because much of the work is done before the project is greenlit, and the process is one of continual adjustment and refinement.

Q: How do you judge the success of a show, both creatively and commercially?

Judging the success of a show can be a subjective process. Sarandos mentions that sometimes a show's success is not apparent until it is released and gains momentum through word-of-mouth. In terms of creative success, the early cuts of the show often give a good indication of whether the vision is being executed effectively.

Q: In a world where culture is seemingly becoming homogenized, where do you think culture is headed?

Sarandos believes that culture is becoming both homogenized and specialized in different ways. While platforms like Netflix bring global content to a wider audience, there is also an increased emphasis on authentic local content. The challenge is to find a balance between the two, creating shows that have global appeal while still being true to the local culture.

Q: How does Netflix handle creative control with its showrunners and writers?

Netflix is known for giving showrunners and writers a significant level of creative control. This approach started out of practicality, as Sarandos didn't have staff to provide feedback and instead focused on selecting great people and giving them the resources to do their best work. Netflix believes in letting creatives make decisions and supporting them, while also recognizing the importance of balance and making sure the overall vision is being served.

Q: At what point do you assert control and make changes if a project is not going in the right direction?

The decision to change course on a project is often a collaborative one, with everyone involved recognizing when things are not going as planned. This can include factors like going over budget, a decline in performance, or a deviation from the original vision. It's a natural process that allows for better creative and commercial outcomes.

Takeaways

Netflix's early days were focused on DVD-by-mail, but the transition to streaming and creating original content was a pivotal decision. The company values both Silicon Valley and Hollywood cultures and aims to balance artistic vision with commercial success. They receive numerous pitches but only approve a small percentage, seeking out talented individuals who can execute their ideas effectively. Successful projects often go through significant changes, and a show's success may not be apparent until it gains traction through word-of-mouth. Netflix's approach to creative control involves giving showrunners and writers a significant level of autonomy, while still ensuring the overall vision is being served. The future of culture lies in both homogenization and specialization, with a focus on authentic local content that also has global appeal.

Summary & Key Takeaways

• Netflix's early days were characterized by a small office, piles of DVD boxes, and a culture focused on optimizing for postal wait.

• Co-founder Reed Hastings had a clear vision of the future, predicting that all entertainment would come into homes through the internet.

• The decision to switch from DVD-by-mail to streaming and to invest in original content were key milestones in Netflix's success.