The New York Times conducted a pretty intense Q & A with Netflix CEO Reed Hastings following the Qwikster debacle last month. Likely some lessons here about long-term thinking — and facing the proverbial music. A sample:
Part of Steve Jobs’s legacy is how incredibly well he managed the Apple product rollouts. What do you think Jobs, who never minced words, would say about how Netflix has operated in the last three months?
I’m not going to put words in a deceased man’s mouth.
But you really botched the handling of the DVD spinoff, Qwikster. In your recorded launch announcement, you flubbed your lines. You somehow neglected to secure the Qwikster Twitter handle. Then, facing a backlash from shareholders and consumers, you put the kibosh on the whole idea. Seriously, what’s the deal?
Over the last couple of years, we’ve been moving toward streaming, doing the Starz deal, doing the Xbox deal. We simply moved too quickly, and that’s where you get those missed execution details. It’s causing, as you would expect, an internal reflectiveness. We know that we need to do better going forward. We need to take a few deep breaths and not move quite as quickly. But we also don’t want to overcorrect and start moving stodgily.
Last month, when announcing Qwikster, you apologized for the way Netflix handled its price hikes, writing, “In hindsight I slid into arrogance based upon past success.” But wasn’t introducing Qwikster the way you did the most arrogant move of all?
No, I think it was just a mistake in underestimating the depth of emotional attachment to Netflix.
I’m curious if you could have done any kind of research — or even a select-market rollout — that could have anticipated this?
I don’t know of any Internet service that opens on a regional basis. Our focus-group work concentrated on trying to understand consumers’ perspectives on names other than Netflix.
The company’s stock has fallen from more than $300 in July to under $120. More than $9 billion of market capitalization has disappeared. For the benefit of shareholders, have you considered stepping down?
No, not for a second. I founded Netflix. I’ve built it steadily over 12 years now, first with DVD becoming profitable in 2002, a head-to-head ferocious battle with Blockbuster and evolving the company toward streaming. This is the first time there have been material missteps. If you look at the cumulative track record, it’s extremely positive.