Know the state of your health that day . A few weeks ago, Reed Hastings surprised the corporate world when he said even though he was the ceo and founder of netflix, he would give up that position and become the coceo. I have been a coceo for a while. It can work and it did work for me but it is challenging to be coceo. Ceo and be the you realize he does not have a big ego. He is willing to listen to other people. I think it will work and i think it is working. Public iny now, point 2002, the market cap is up 86,000 . Stock is up 41,000 since then. Did you ever think it would become that big, that successful . No, because then i would never have sold a share. You never know on that. Honestly, there has been a lot of luck along the way. Blockbuster could have wiped us out many times. Off blockbuster in 2004, they saddled them with a billion dollars of debt as their goodbye kiss. That severelyn limited blockbuster when they attacked us. That was one. Another one is blockbuster had is on the ropes and then carl icahn got elected to the board of directors to blockbuster. He fired the ceo over some silly bonus issue and they completely changed strategies. All these things have been incredibly lucky strokes. So you need both and luck, which im am sure you have experienced. David i have had a lot of luck. Let me ask you, for those who may not be familiar with the new book youre coming out with, in that book, you describe that you at one point wanted to go to blockbuster and sell them the company for a modest amount today, 50 million. Reed absolutely. Likee early days, we were blockbuster is going to wreck us as soon as we get big. We were almost right about that. We went to see them. They were very polite, but they were not interested. David had they bought the company, where do you think blockbuster would be today and where you think netflix would be today . Reed i think we could have made block esther a modern brand. Blockbuster a modern brand. David you have a culture that is very unique that. May go through a couple things that i have found. Where peoplestem can take whatever vacation they want to take. There is no limit. People can take any time off, no limit. Where did you get that idea from . Economy the industrial like factories, we measured people by how many hours they did on the job. 9 00 to 5 00, 8 00 to 6 00. We want people to focus on ideas, on generating important work. We do not measure them during the day. We do not clock our people in. If we are not going to tell whether someone is working 5 00 to 9 00 or 9 00 to 5 00, which is a two to one difference, why are we tracking whether they do 50 weeks or 48 weeks a year of work . Vacation is sort of like saying, dress how you want. People still did not come to work naked. There is a cultural assumption about appropriate clothing for work. We do not need to specify that. People understand getting work done. They get to live more flexibly. David you also say you do not have to please at your company your boss. You can go ahead and do what you think is best and if your boss does not agree, that is ok. Is it easy to run a company that way . Reed again, we are focused on inspiration over supervision. Is thatitional paradigm Good Management is close management, sets objective, manages tightly. All of that is appropriate in safety critical environments. Producing vaccines, etc. In a creative business, you do not care so much about what goes wrong. You care about enough of the right things get done. We really focus on inspiring our people and having it be very open and collaborative and from that, you get amazing Technical Innovation and you get amazing content innovation. David you point out that if people do a reasonably good job, they still might lose their job if they have not done a spectacular job and they get a good severance but not a continued job. Can you explain that there . Reed in the traditional industrial paradigm, you have to do something wrong to let go. You can think of a job as a property right until you lose it by abusing your position. If you think about professional sports, if that team is going to win a championship, it has to have a mix of the right players that work well together that are the best in the world. We try to model ourselves like a professional sports team. Highly paid but you have to earn your position every year. It is about performance. That is not right for everybody. Some people care mostly about job security. Other people care mostly about excellent colleagues and playing great team ball to achieve something important for the consumers. We are attracting that group of people who care about team excellence. David i have no doubt your book will be a bestseller because it is a very interesting book. I could not understand whether you are saying your culture is one that if other Companies Adopted they would do better or you are explaining what is so unique about your company and why you are so successful, so which is it . Reed a certain type of company, a company in Creative Industry where there is a lot of change will do better by optimizing for flexibility than efficiency. Other Companies Like an airline or factory want to optimize either for safety or for manufacturing yield, so again, highly consistent results. That is not for the netflix culture. Be a company that wants to inventive and create new things, this offers a lot of fresh ideas for people to rethink the traditional industrial paradigm. David recently, you made an announcement that stunned a number of people, which is the i am bringing in your chief content officer who has been with you for 20 plus years and making him the coceo. Reed externally, it is a change and that helps on his ability to do big deals. David lets go back to your background. You grew up in the boston area, is that right . Reed boston ndc boston and d. C. David you went to college at bowdoin. After you graduated, what did you do . Reed i went into the u. S. Peace corps and i was a height tool that a High School Math teacher in africa. David you decided you would go to Business School in stamford. Business school at stanford. Reed i went took him i i went into computer science. I try to take a Business Class and they rejected me. Being at stanford in the mid80s mid 1980s was an incredible experience because you learned so much entrepreneurial work from all your colleagues. Everyone is bubbling with ideas. That is still happening today 40 years later. David when you graduated from stanford, you decided to get into the computer industry and you were a programmer for a while. Reed yeah, i was a programmer at a couple Different Companies and then i was fortunate and had an idea for something i really wanted to do. That was in 1990. I took a year off and consulted on the side parttime and wrote a program that ultimately turned into a company, which was a reasonable success. Morgan stanley took as public in 1995. It doubled every year. Ultimately as a company, that was so much process that it got too rigid. It was a great learning lesson. David when you left that company after taking it public and merging it with somebody else, you had the idea of starting what is now netflix. Reed the timing was shortly thereafter. , markeague of mine randolph and i, were brainstorming on different ideas and like many people at that point, i had this [indiscernible] thinking there has to be a better way. It was one this friend told me about tbd, you could about dvds, i thought, you could mail those cheaply. Amazons best interest because you would return these dvds. It was ecommerce, but a smaller market than what amazon is going after. David the story is you took out some dvds i guess from blockbuster. He found out you had kept them too long, you did not like paying a late fee and that prompted you to think of Something Like this . Reed that is accurate. Time something goes wrong, the idea did not pop into my head then. It was later when i was debating ideas that the sting of that stock because it was a 40 late fee and it was all my fault. Just not bringing it back. David you are mailing dvds back and forth. The idea of streaming, who came up with the idea that would be butter and was streaming that prevalent or people knew what it was . Reed people knew what it was. Thehe good fortune year i came back from the peace corps, so mid1980s, i got a companying coffee at a and it turned out that company, computer lab, was the very first. Com. Very first dot com. Symbolics. Com. This was a company out of m. I. T. That was the hotbed of the internet but nobody knew the internet. Coffee,was serving soaking up the culture and how they thought. So when i eventually went on to stanford, i was in the internet thing and had been part of that for a decade it was a decade when netscape went public and everyone else tuned into it. Some of that is incredible serendipity of, what is the job servingt a coffee in the computer lab. David you would take a program like disney or nbc had and you would put it up and people would pay for it and you would pay the people who produced it some loyalty. When did the light go off and you said no, we need to have original programming . Reed ted was intimately familiar with the history of Cable Television and right from the beginning, he educated us on hbos path. Their first 20 years, they had recycled programming. With shows like the sopranos and the wire, they moved into original programming and what a difference it made for them. We were aware of that history. That was just a matter of biding time until we got big enough. David today, the original programming you have, is that more popular than the nonoriginal you are renting from somebody else . Reed that is right. The original programming driving the old guard, our newest movie, kissing booth two, an amazing movie. Our series like india matchmaking or Umbrella Academy are all driving both the viewing and the membership growth. Fundamentally and original content business that supplements with licensed content around the world. David why is it that on netflix your content is popular but you do not do things like news or sports . How come you have not done those yet . Reed those are great areas, but they are well covered by other companies. We have so much more we want to do on series and films and we are breaking into animated films and series now. We have done well with unscripted reality programming like india matchmaking. And love is blind, tiger king. Our hands are full. There are other companies doing other things. We want to focus on entertainment. David one house of cards was on netflix, did you suggest themes for it or plot lines or did you ever get involved in that or did you stay away from what they are going to do . Reed our book talks about, do not please the boss, do what is right for netflix. Because of that, ted, when he was negotiating with house of cards, with kevin spacey and david fincher, they were willing he was willing to do bold things because he was convinced he was right. We paid a fortune and guaranteed two seasons, which at that point no one had done. He only told me about it later. His willingness to make big independent decisions is what led to us getting house of cards. Of course, he could have been wrong and they couldve been a disaster, but it was a great series and put us on the map. That is somewhat a testament to his personal skill but also to the culture that allowed him to make those decisions. David when you started Winning Academy awards and emmy awards, without a surprise to you that you were getting that recognition . Reed no, we always wanted to work with great talent and right from the beginning, we knew that with house of cards, the talent that was involved in that, robin wright kevin spacey, there was a potential to win emmy nominations for that. If you back great talent, they will win awards and it is lifechanging for them. For consumers, it does not matter as much. They are not as visible. In the talent ecosystem, it is significant. David you made an announcement that stunned a number of people, which is that you are bringing in your chief content officer who has been with you for 20 plus years and making him the coceo shared usually people who are cocau people who are ceos and founders do not give up a lot of power. Why did you say whether you decide to do this . What did you decide to do this . Reed we have been virtual coceos for the last several years. We have been pay the same. We do not really do anything material without checking in. This was just acknowledging and formalizing what has been. Externally, it is a change and that helps on his stature and ability to do big deals, but internally, it is no change at all from how we have been operating. Reed at the time of the announcement, you said you were good for another decade. In october, you will turn the big 60. 70 you will beby ready to slow down. Is that a Fair Assessment . Reed you tell me. What is your experience of 60 to 70 . David i would say workaholics dont Pay Attention to age and so as long as her health is good, i do not think you will change that much but when you get 70, might look around and say i would do something else, but you have a long 10 years ahead of you i suspect. Reed i am super excited about it. There is a lot we can do in terms of bringing the world together, sharing stories from around the world. To everyternet grows human being, i think there is an amazing opportunity ahead. David will would you say is the key to leadership that enabled you to be what you are today . Reed you want to be super proud of the organization and personally humble. David i assume you are coming to u. S. To us from your bedroom should your bedroom. Reed it is actually my sons old bedroom. We are locked down in covid. We are working out of the home. David how have you found that to be . You are a Technology Company so people would presume you are good at adapting. Did it turn out to be harder than you thought . Reed the hardest thing has been producing our films and series because that is very much onset in physical realm. We are working on that. I would say it is a hallmark of the call church of the adaptive. No one waits for me to tell them what to do. When you build a culture as we have, everybody pitches in and figures out what they need to do. An example would be our animation group. I cannot take the credit, but they moved hundreds of workstations out of the office into the home over a weekend and have been able to continue to produce a great animated films and series from the house in a way that was remarkable and not centrally directed. Offcamera ceos say they are not going to be hiring back everybody they once had. They realized they can get by with fewer people and they do not need as much of a space because people are happy to work from home. Will that be true in your case . Reed the virus has been so tragic for people, the economy and unemployment. Hotels and other businesses like that are down. As an internet business, we are up so we have continued to hire through this crisis. We are adding new buildings. We are incredibly fortunate. David you and your wife recently made a contribution to Morehouse College and spelman college. Why did you decide to do that . Is that your largest philanthropic contribution . Reed it is not the largest, but is the loudest. We tend to be quiet about these things. We wanted to show solidarity for black education and black education is so critical to economic ability, political mobility, and the sense of belonging. The challenge for us as a culture is really the legacy of slavery. Tremendouss to be a scar across the soul of america so badis awful and it is that it is hard to look at and talk about and it is so hard to look away. We have not come to terms with the legacy of slavery in our country. Modest donation relative to the need isabella black economic gains and black economic gains and education. David the story i read was you were considering a gift of 1 10 that size and at the last minute you increased it. When you called the head of the United Negro College fund, what changed your mind . Reed he has taught me a lot about race in america. We have been a donor for a number of years. It was really the current time that got us to make such a substantial and public donation. To then, bring attention role of the hbcu Historical Black College and universities like morehouse and spelman and to support their work because they do develop thousands and thousands of black leaders throughout this country. Of ourlly positive part education system. Because white capital tends to float away organizations, there is relative capital isolation in the same way we have social isolation. And so, we wanted to be part of building those wages. David the industry i have been in is not replete with as much success as it would like in terms of minority hiring. The Technology Industry is probably somewhat that way. Is there something you can do at netflix to enhance your minority herring minardi hiring . Reed we published the data and we have made great progress and we have doubled our number of africanamerican employees over the last three years. That is throughout the business, but in particular on the media side. Our text i did still underrepresented arotech side is our tech side is still underrepresented. We are trying to make those efforts not only for africanamericans but to many underrepresented groups both in in america and around the world. David people wanting this will say i liked i want to be like Reed Hastings. Want to build a great company, have a great family, active. What would you say is the key to leadership enabled you to be the one you are today . Reed it is about achievement of the company as opposed to personal achievement. Tont to be sober proud be super proud of the organization and personally humble. David i assume you hear from your high school classmates, your college classmates telling you they always know you were going to be successful and by the way, they have a script for you and Something Like that. Do you hear from a lot of people like that . Reed i stay in touch with a lot of friends that way. I was definitely a late bloomer. I do not think i was one of those people that was marked at an early age. You read about how at age 16 they were unbelievable. I was very average, runofthemill kid. Fortunate wither a series of events in terms of my First Company doing well, having that idea that went into being able to do netflix. I feel incredibly fortunate, which is part of why my wife and i are so dedicated on philanthropy. Oculus that weor have this money and we live a very comfortable life, but it is the compton the excitement of using that money to help others. David 10 years from now when you say you might hang up your spurs at netflix, you are not committed to it, what might you do . Would you run for office . You want to be president of the United States . What you think you white to do when you turn the age of 70 . Reed i want to have my own interview show. David im sure you can get anytime you want. I know a good company you can get on, netflix. Good morning, everyone. You are watching Bloomberg Markets china open. The trading debut will be focused on yum china. A couple other things i want to tell you about in terms of the regulatory risk. A reporting suggesting china might be looking at cracking down the local fundraising. Also watching the chinext indexed. They report that speculative trading should be curbed. We are coming off a fairly steep drop as far as equities are concerned. Yesterday was quite bad. We are rebounding today. Nasdaq was the big story overnight. Asia is pointing up. The open is coming up. 64. China is now down in terms of comparison, 412 was your ipo price. We had a big listing a couple days back. Down on the second day. Perhaps as we moved into the thick of things, a lot more of these Companies Come in, look to list and subscribe. Some of that money might be getting sidelined. 1. 5 down. Lets bring in tom mackenzie. He will be speaking with the ceo later on. What you think about what is happening wi t