Netflix co-CEO Ted Sarandos has shared a crucial management lesson he learned from the streaming giant's founder, Reed Hastings. Sarandos credits Hastings for shaping his leadership philosophy. He focuses on empowering top talent and accepting uncertainty in business decisions.
The Core Leadership Principle
Sarandos joined Netflix in 2000 as head of content operations. He now leads the company with a clear approach. "I think the lesson that he's left for me is that you pick the best people, give them the tools to do the best work of their life, and get out of their way," Sarandos said in a CNBC "Leaders Playbook" interview. This simple idea drives his management style every day.
A Bold $100 Million Decision
Sarandos once made a huge financial move without asking Hastings first. He authorized a $100 million investment in the series House of Cards. The deal committed Netflix to two full seasons. Sarandos saw this as a calculated risk to change the company's direction.
When Hastings later questioned the decision, Sarandos explained his thinking. "I said, 'Reed, it's a simple risk-reward for me. If this show fails, we will have dramatically overpaid for a show. We do that all the time, but if it succeeds, we could completely transform the business as we know it,'" Sarandos recalled. This gamble helped shift Netflix from a mail-order DVD service to a major player in original streaming content.
Learning Leadership from Fiction
Sarandos does not usually read management books. He prefers fiction to understand leadership. His favorite management read is Typhoon, a 1902 novella by Joseph Conrad. The story follows a steamship captain and his crew battling a powerful storm at sea.
"It doesn't sound like a management story on the surface, but I think it's the most powerful leadership story I've ever read. I read it over and over again because I find ... I get something different in the book every time I read it," Sarandos said.
Changing Perspectives Over Time
Sarandos first read Typhoon about twenty years ago. At that time, he viewed the captain as a reckless "hot dog" who endangered himself and others. Rereading the book years later gave him a deeper insight.
"Now, what I see is that when you go through life and you go through business, you make a lot of decisions that don't turn out the way you thought they would. The real leadership test is: How do you manage through that?" Sarandos explained. The story now teaches him about leading through uncertainty and conflict.
Sarandos continues to apply these lessons at Netflix. He empowers his team and takes smart risks. This approach keeps the company innovative in the competitive streaming market.
