Netflix’s Management Team: Battle-Tested and Able to Reinvent Itself

When following a company over time, look beyond smooth sailing to whether its senior team can lead it out of difficulty. Netflix’s senior team has looked strong over the long run. It first disrupted Blockbuster with DVD-by-mail, then transformed into streaming, disrupting its own DVD business, and then invested heavily in original films and television. It has made at least two major transformations since founding. During the first-quarter plunge, I therefore remained relatively confident: this team has fought battles, challenged giants as an underdog, and repeatedly reinvented itself. So far, the shares have rebounded 50% from the bottom. Besides continuing price increases and tackling account sharing, Netflix is entering advertising, potentially making subscribers’ viewing time positively correlated with business performance. Previously, growth came from subscriber numbers. Future growth involves keeping subscribers on the platform with video, games, and other content. The longer they stay, the greater the returns from the attention economy.