Netflix CEO Faces Fire for Missteps

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.

For the Sport of It

What’s your favorite Indiana sports movie?

BizVoice recently provided a feature on Indiana’s most notable sports films. Check out the article, and vote for your favorite movie at www.bizvoicemagazine.com. You can also leave a comment of your own — maybe let us know if there’s another film that should be on the list. For example, I bet folks down in Jefferson County might contend "Madison" should be here somewhere.

Let us know what you think!

Movie Displays Education Heartbreak

Sure, I could insert some clever references here to kryptonite or various villians faced by one of America’s favorite comic book, TV and movie characters. But Waiting for Superman is too serious and too important to become a laugh line.

The David Guggenheim film has the education community (and hopefully soon many others) abuzz. It is, in the words of a National Review Online column, a "stabbing review of teachers’ unions and a plea for more charter schools."

Yon can check out the movie trailer and learn more. But below is a condensed review that does a good job of letting you know why you should be paying attention.

Bianca, Daisy, Emily, Anthony, and Francisco come from diverse locales — Harlem, L.A., Silicon Valley, D.C., and the Bronx — and are black, Hispanic, and white, but they share the same basic problem: Each is consigned by geography to an inadequate public school. Each wants a choice. 

The stories are heartbreaking. But the real message of the movie is revealed in the scenes of the adults who produce this heartbreak. Superman’s most memorable episode is the cartoon illustration of the “lemon dance,” in which school principals waltz their “lemons” (teachers who just can’t teach but can’t be fired) from school to school. The musical number would be hilarious if it weren’t so devastating. So, too, for the shots of the infamous “rubber rooms,” where middle-aged teachers sit in school kids’ chairs, playing cards or laying their heads on their desks to sleep, collecting full pay and pensions.

Guggenheim chooses one champion and one villainess. Michelle Rhee, the chancellor of D.C. schools, is energetic and assertive. She bluntly admits that D.C. students “are getting a crappy education right now,” she fires a couple hundred incompetent educators, institutes some incentive pay, and starts to turn D.C.’s schools around. Randi Weingarten, president of the American Federation of Teachers (AFT), and Rhee’s foil, is on the defensive. “It’s in vogue to bash teachers and unions rather than celebrate the work they do to help kids,” she said, responding to Superman. “That being said, I’m a big girl.”

Weingarten, obviously, can take the criticism, but she hasn’t rebutted it. Perhaps it augurs victory that the only thing she can find to fault is her opponents’ tone of voice. For now, though, Weingarten still has the power and the money. Weingarten’s AFT funneled over $1 million to defeat D.C. mayor Adrian Fenty (who appointed and supported Rhee) in the recent Democratic primary. The winner, Vincent Gray, used his victory speech to announce his desire for “a strong, empowered chancellor who works with parents and teachers.”Translation: Rhee is out. This is part of a pattern. Guggenheim, whose political sympathies are normally liberal, admits that the Democratic party is, on education policy, a “wholly owned subsidiary of the teachers unions.” The AFT and NEA — combined, the biggest campaign contributors in the U.S. — send more than 90 percent of their donations to Democrats.

New York City education chancellor Joel Klein was emotional as he explained the difficulties school reformers face. The important division, he said, shouldn’t be between Republicans and Democrats, between public schools and private, or between any one ideology or another — it’s about kids versus adults. “Right now, our kids aren’t getting educated because it’s all about the adults. We’ve put adults’ comfort before kids’ education. It’s not going to change until it becomes about the kids. The education monopoly wants to keep its monopoly.  The way things are now works just fine for the unions, many of the politicians, and others — that’s why it keeps going. So if we don’t rock this boat, we’re going to under-serve kids, mostly poor kids and kids of color.”

Waiting for Superman, with all the noise and buzz it’s generating, with the acclaim it’s received from diverse political circles, might be just the thing to start the boat rocking.