But readers also will be introduced to a cold-hearted side of Hastings that never surfaces in his public appearances, or the many interviews that he has done with reporters during his 14-year tenure as Netflix’s CEO.
Viewed through Keating’s lens, Hastings “seemed to lack an empathy gene.” He is depicted as a brilliant mathematician who looks at almost everything as an equation to be solved. Once he’s convinced he has figured out all the variables, Hastings never let compassion trump his logic, based on anecdotes in the book. In one scene, Hastings fires Netflix’s first human resources manager in front of her coworkers’ because he wanted to bring in a former colleague from his previous company, software maker Pure Atria.
Keating thinks Hastings‘ data-driven approach also makes it difficult for him to anticipate how Netflix subscribers will react to things like last year’s price increases and the botched attempt to spin off the company’s DVD-by-mail rental service into a separate company called Qwikster.
“He has one blind spot and that he just doesn’t understand the consumer-facing aspects of the business,” Keating said in the interview. “It’s illogical the way consumers act, and I think it’s frustrating for him because he is trying to do the best thing for customers. But he just doesn’t understand that you can’t dictate to them. They have to be ready to go at their own pace.”
From Keating’s vantage point, Hastings used a $2 million investment he made in Netflix’s early day to muscle his way into the company’s management and persuade then-CEO Randolph that they should share the top job. Eventually, Randolph was relegated to other management positions with fewer responsibilities and lost his spot on the board of directors.
Randolph, who now dispenses advice to entrepreneurs launching startups, left Netflix as a rich man after the company’s initial public offering of stock in 2002. He owned nearly 840,000 shares worth about $12.5 million at the time of Netflix’s IPO.
The book makes the case that Randolph never got the credit he deserved for coming up with the idea for sending DVDs through the mail _ the concept that turned Netflix’s red envelopes into a ubiquitous sight.
“Marc co-founded Netflix with me, was our first CEO, came up the name Netflix, and was instrumental in our success,” Hastings said in a statement to the AP. Friedland said Hastings wasn’t available to be interviewed for this story.
Hastings‘ spin went something like this: The idea for a video subscription service came to him after a Blockbuster store hit him with roughly $40 in late fees when he returned a VHS tape of the Tom Hanks movie, “Apollo 13”. A few years later, the story would be amended so the late fees were charged by an unnamed independent video store.
“That’s a load of crap,” Randolph says in the book. “It never happened.”
The truth, according to the book, is that Netflix was born out of conversations that Randolph and Hastings had while they were carpooling to their Silicon Valley jobs at Pure Atria from their homes in the beach town of Santa Cruz, Calif.
Randolph, who was a marketing manager at Pure Atria while Hastings was the boss, had always been fascinated by the moneymaking potential of direct mail and started wondering how it might be combined with DVDs, a still nascent technology in 1997.