Reed Hastings – How Netflix Came to Dominate Entertainment

3 min

Born on October 8, 1960, Wilmot Reed Hastings Jr. is an American entrepreneur and philanthropist. Hastings is best known as the co-founder, Chairman, and CEO of Netflix. Hastings served on the California State Board of Education for four years (2000-04). An advocate for education reforms, Hastings is a board member of various educational bodies including Pahara, DreamBox, and CCSA.

Early life 

Born to Joan Amory Loomis and Wilmot Reed Hastings, Wilmot Reed Hastings Jr. went to Buckingham Browne & Nichols School in Cambridge. Very few people know that Hastings entered Marine Corps officer training, but never completed the program. Instead, he chose to join the Peace Corps after graduating from Bowdoin College.

From 1983-85, Hastings taught mathematics in Swaziland. He claims his stint with the Peace Corps played an important role in shaping his entrepreneurial spirit. In 1988, Hastings graduated with a master’s degree in Computer Science from Stanford University.

The founding of Pure Software: Hasting’s first company 

Hastings’ first job was with Adaptive Technology. During his stint with Adaptive Technologies, he developed a tool for debugging software. In 1990, Hastings met Audrey MacLean, the then-CEO of Adaptive Technologies, who had a significant influence on his professional life. Hastings says- Audrey taught him the importance of focusing on one job at a time.

In 1991, Hastings quit his job to find his first company, Pure Software. The company developed tools to troubleshoot software. Though the company grew at a healthy pace, Hastings was not ready for the challenges that came his way due to lack of managerial experience. He found managing the growing workforce an uphill task and requested the board to relieve him of his duties. The board, however, refused his request. In 1995, Pure Software went public.

In 1996, Pure Software merged with Atria Software to form Pure Atria. The focus of the merger was to combine Pure Software’s troubleshooting capabilities with Atria’s experience of developing complex software. Soon after the merger was announced, the sales head of both Atria and Pure resigned. The development was a major setback for Hastings who had plans to integrate the sales forces of the two companies.

In 1997, Rational Software acquired Pure Atria. Soon after the announcement, the stocks of both Pure and Atria fell by 42 percent. Hastings was appointed the Chief Technical Officer of the new company; however, he soon resigned from his post.

Founding of Netflix 

In 1997, Hastings founded Netflix with his business partner Marc Randolph. In 1998, the company came up with a mail-order DVD subscriptions model that utilized two emerging technologies; DVDs and the Internet. Customers were required to create an online account with Netflix through which they could create a list of movies. Netflix mailed customers up to three DVDs from their list to their address. Once a customer returned the DVD through the mail, the next movie on their list was automatically mailed to them.

Hastings says the idea of Netflix came to his mind after he incurred a hefty penalty for not returning a cassette on time. Because VHS cassettes could not be delivered through the mail, Hastings chose DVDs for his business model.

Once Netflix started getting subscribers, the company went on an aggressive expansion spree. To expand its subscriber base, the company launched various aggressive marketing campaigns and joined hands with movie studios. These collaborations helped Netflix add various indie films, documentaries, and movies that were not easily available to its collection.

Internet television 

In 2007, Netflix started offering a streaming service that allows subscribers to stream movies and television series to their computers. Hastings believes Internet television to be the future of viewing and credits YouTube for a shift in his strategy to come up with the idea of a video streaming service. In 2011, Netflix announced its plans to increase rental prices and split the company in two. Soon after the announcement, Netflix reported a drop in its stock price and loss of customers. These negative developments forced the management to cancel their plans.

Hastings: The leader 

Hastings has always supported the idea of paying average employees a higher than normal severance package. Hastings believes that offering employees who do not meet expectations a high severance package helps lighten the weight of guilt that managers feel when firing their team members. Hastings takes out time from his busy schedule to meet every new employee to explain to them the company’s ideologies, culture, and policies. A guide on his internal culture policies has amassed millions of views since Reed posted it online in 2009.

Other ventures 

Reed has been a Facebook director since 2011. He is expected to resign from his post in May 2019. Hastings had also served on the board of Microsoft for five years (2007-12).

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