Updates to the Netflix Culture Memo
How to navigate this new roadmap for these leaner startup times
Last week’s newest iteration of Netflix’s Culture Memo prioritizes agility alongside innovation, and reflects this new era of building talent dense startup teams today.
It’s hard to be in the startup world as long as I have without intimately familiar with the Netflix Culture Deck and their approach to talent density which has not only led to our collective intolerance for commercials, but also a roadmap many other startups have followed.
I can personally attest that the “keeper test” has been a helpful piece of decision making as a leader throughout my career. And while I and many of my colleagues who I’ve had insightful discussions on this with have never worked at Netflix, we’ve all worked at companies that have been influenced by these tenants, and even been able to consume detailed context from the many books written detailing their rise alongside these cultural pillars. Having this subset of shared language (as defined by the internal Netflix team), lets us debate team building with a really engaging draft upon which we can iterate, shift and build.
But today’s piece is not a debate about the viability of their approach, but instead a look at their newest shift as the next potential roadmap for this leaner startup phase we’re in the midst of.
Somewhere along the way, talent density got conflated with density depth, and led to hypergrowth. Hypergrowth isn’t a problem in itself, especially in service of speed towards longterm marketshare, ubiquity and value. But when it’s done for the sake of hope that this growth alone, with headcount as a core metric (second only to funds raised, without a clear revenue path should new funding slow down), will define success… we’ve all seen where this leads. 1,191 tech companies laid off teammates (263,180 employees) in 2023, a year that saw a major shift in the industry around growth itself. (layoffs.fyi)
This new iteration of Netflix’s Culture Memo prioritizes agility alongside innovation, and reflects this new era of building great startup teams today.
The updated core principles (released of 6/24)
The Dream Team: We aim only to have the highest performers at Netflix, modeling ourselves on a professional sports team, not a family.
People over Process: Our goal is to inspire and empower more than manage because employees have more impact when they’re free to make decisions about their own work.
Uncomfortably Exciting: Netflix works best if you thrive on change because success in entertainment requires us to think differently, experiment and adapt (often quickly).
Great and Always Better: We often say we suck today by comparison to where we want to be in the future. So we focus on constant improvement, and the resilience needed to get there.
So how is this latest updated Memo different?
>> The Dream Team: We aim only to have the highest performers at Netflix, modeling ourselves on a professional sports team, not a family.
This covers the original bullets of:
High Performance
Pay Top of the Market
Promotions & Development
>> People over Process: Our goal is to inspire and empower more than manage because employees have more impact when they’re free to make decisions about their own work.
This covers the original bullets of:
Freedom & Responsibility
Context, not Control
Highly Aligned, Loosely Coupled
Values are what we Value
The last two components encompass new concepts. (Note that these pieces have likely been part of Netflix all along, but there’s a reason that they are being explicitly stated and prioritized here)
>> Uncomfortably Exciting: Netflix works best if you thrive on change because success in entertainment requires us to think differently, experiment and adapt (often quickly).
>> Great and Always Better: We often say we suck today by comparison to where we want to be in the future. So we focus on constant improvement, and the resilience needed to get there.
In addition to the talent density and employee autonomy pieces, these last two points add a strong focus on change, adapting and resilience. In the wake of the past few years of tumult (broadly as well as for Netflix as a business), this makes sense. Let’s see how these additions enhance a new map for culture building in today’s startup landscape.
Adaptability & Innovation
These concepts both compliment and constrain each other. Innovation must have an element of being nimble and iterative now.
These updates provide a new map for us to evaluate on the road to talent density, industry innovation and also now longterm viability.
Maintaining the ability to cast and walk across that invisible bridge spell of building successful startups takes a constant focus on these three core themes. (tl;dr - it’s an invisible bridge that only stays in place if you believe it will… for those who heaven’t seen Onward, one of my favorite Pixar movies/sob fests) Doing this well transforms the consistent tradeoffs and tension between short and longterm goals into a calculated balance.
OK, let’s go “onward” into our new roadmap!
Step one, know what we need.
Netflix has built their culture the way they have because “the biggest threats [in their industry] are a lack of creativity and innovation. And we’ve found that giving people the freedom to use their judgment is the best way to succeed long term.” What do our respective industries need? What will continue to differentiate us as a business while tackling this problem?
Step two, know what we value
Define, refine, live and share these core values ultimate tennant of team building. This ensures that we bring on folks who are aligned and ready to bring the right chapter of their careers into the fold. These values will become the context that allows freedom and ownership amongst the team towards the overall vision.
Karissa Justice (COO @ Growth Ops, cultural values champion) is fond of saying “every team has values”, reminding us that even if we don’t explicitly set up and maintain “company values”, it doesn’t mean that there aren’t underlying values driving the organization.
What are our core values? How have we used them as guardrails when we had hard decisions to make? What are we willing to give up in pursuit of these values?
PIT STOP: If we’re not clear here, at the core “why” and “values” stages - it’s hard to continue using this map. As each of these next steps are dependent on following the path that best reflects this core lens of the company ethos.
Step three, understand the phase of the team that we’re building.
It’s critical that we identify whether we’re building to learn, test and optimize for PMF, OR to scale a system (including sales, messaging, product, operations and culture) that’s already getting traction. From what I’ve seen, scaling culture is often the trickiest in the group. And yes, there will be nuance within these and pivots between these phases, but it’s often pretty clear whether we’re in one phase or the other.
This takes consistent questioning of whether we have the right people in the right roles at the right times. And when it’s time to make moves, as what serves us to get from 0-1 very often isn’t the right mix to go from 1-2 and beyond. If we’re building teams that have a chance of doing the best work of their lives together, we must help them self-identify into whether this is the right work and the right chapter for them to be on this journey.
To continue the sport’s analogy, Brad Stevens (coming straight from team building in the older, more stable collegiate level with Butler) was the right coach to grow Jayson Tatum and Jalen Brown in their first years in the League, building a strong foundation of a team that wins together in a way that is rarely part of the NBA. But he was not the right person to lead them (the Celtics to those less obsessed than I am) to a title. See also Mark Jackson > Steve Kerr if you’re struggling to contend with our recent championship and therefore this metaphor #SorryNotSorry.
Step four, define a compensation philosophy.
This is a big overall lift, but can start with core principals and iterated on over time (ps - my favorite tool to support this initial infrastructure build is CandorIQ). Despite the other amazing reasons we do the work we do, most all of us do indeed work for money, and it’s often the main metric used to place value on performance. So we have to get this right.
Beyond compensation in monetary terms, the other core piece of this strategy that needs to be identified is for career pathways. Especially for newer workforce participants who don’t have many reasons to trust the traditional “employer, employee” relationship, this is a big move of transparency that goes a long way. If employees are going to do their best work, they must feel safe enough to be vulnerable, knowing that their organization is at least bringing similar care to their own career growth.
Step five, continuous context and feedback.
Setting clear expectations and an understanding of where each person’s work fits within the broader organization-wide goals takes work. So often, disconnects between what a leadership team is hoping to get from an employee, and that actual work from the employee comes down to a gap in context and feedback. Storytelling helps us to show the direct connection between each role, team and it’s ultimate roll-up impact on the business. But building a culture of continuous feedback often takes a more holistic approach.
After learning that her superpower in building teams at Gusto is owed largely to her ability to build a culture of continuous feedback, Mel Miller has dedicated her life to helping teams start and scaffold their own way there too (most recently, she’s co-founded Tandem, a tool for tracking and supporting feedback through slack with the slogan “Top Performers Stay for the Feedback”). Netflix has worked through many iterations of their own feedback policies to inspire the right feedback (esp. As they’ve become more of a global company), but it’s always started from the top with leadership modeling blunt and honest feedback sessions for themselves first.
This aligns with a recent expert session we had in the Cohort of Startup Operations + People Leaders that I facilitate (learn more about our summer cohort that starts soon here).
Does everyone on my team know what their part of our collective goal is this quarter? Would anyone be surprised if they got the feedback I have in my mind for them (be it negative or positive)?
Step six, lean into and be open to hiring for discomfort.
Founders frequently tell me they want a founding marketer/salesperson/engineer etc. that has “led this exact growth stage before, with a proven track record of success a couple of times.” But so often, the person who is the right person for this type of founding role (starting as an IC, consistently altitude sqitching between strategy and execution, while slowly building a lean team) is often someone who doesn’t see this opportunity as a rinse/repeat job, but instead as a new challenge they can bring their upward slope into and grow along with the function’s needs.
Now this doesn’t mean that experience isn’t helpful and that folks who have “done it before” aren’t also amazing team mates. But not exclusively. When we look at the leaders who built the early core functions out at any unicorn - they were often doing it for the first time, and brought undaunted tenacity, consistently building despite the nature of the hurdles or challenge itself.
Another skill that’s only built through discomfort is agility. That moment of lift while jumping from one rock to the next. That unexpected push that you weather and stay upright. It’s not about how well we plan for the future, but instead how well we plan to weather anything the future might bring out way.
So often lately, this has included layoffs and downsizing when it’s the right move for the ultimate viability of the business. Never a comfortable topic, there’s been a big difference between the organizations that had built agility and a transparent understanding of how the organization would show up when pushed off balance, and the ones where this was clearly new territory approached in a silo.
Step seven, modeling learning and growth from the top.
To learn means that we’ve updated a belief that we once held. In other words, we were wrong.
Adam Grant has provided incredible leadership on this topic of iterating, making the best choices based on the data available, and being excited to evolve these beliefs as we continue to know more (book recommendation - Think Again).
Empowering employees to take [and be accountable for] risks as owners of their respective functions without needing arduous approvals has been a key to Netflix’s success. None of us would have has access to the landmark cycling documentary Icarus if this hadn’t been such a part of Netflix’s ethos that the project owner was encouraged to make the decision about whether or not to spend an industry leading $5M on it, without needing to request more senior sign-off. (see more in the book No Rules Rules).
This new memo shows me that the company is doubling down on supporting these risks, to the point of proactively anticipating that many will fail, and that will be mostly ok as long as there’s learning. As long as this cycle is happening within an agile ecosystem with tight test cycles and ruthless reprioritization.
Where do we go from here?
Comment with your thoughts on how you see this updated Memo driving shifts towards longterm innovation through increased discomfort and agility.
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Joining in our second (!!!) upcoming Startup People + Operations Leader’s Cohort that I’m facilitating. We’ll meet as an intimate group, debating and discussing expert perspectives on important issues like these, and then applying them back into what our unique startups need. Details and Interest Form here.
Cheers to you and the teams you’re building today and always!
-Nikki