Netflix used to sell and rent DVDs to its subscribers. It had merely 100 employees and 300 subscribers after two years of its inception. They had $57 million in losses. When they attempt to sell Netflix to Blockbuster (one of the largest media companies at the time).

As of May 2023, Netflix has over 223 million subscribers across 190 countries making it one of the world's largest media companies with a current market value of over $85 billion. It spent a whopping $17 billion on producing original content in 2021 alone.

Now few questions arise: How did Netflix launch a streaming revolution? What makes its shows and movies class apart? What makes Netflix thrive in over 190 countries? How has Netflix become one of the most successful and innovative media companies in the world?

The secret of Netflix's global dominance lies in its very culture. A culture that values people over processes, innovation over efficiency, and has very few controls. It focuses on achieving top performance with talent density and leading employees with context not control.

Speaking of context not control, Nobody is tracking your holidays and your travel allowance at Netflix. The context behind it is that if taking a day, a week, or a month off is in the best interest of the company then don’t think twice before going off on a vacation. Weird right?

Millions of businesspeople have studied Netflix's culture deck, Sheryl Sandberg, COO of Facebook, reportedly said that the culture deck may well be the most important document ever to come out of Silicon Valley. I'll be decoding that culture desk in this memo. Let's get started.

Step 1: Build Up Talent Density: As Mary Kay Ash said, "The company is as good as the people it keeps." Talented people make one another more effective. When every member is excellent, performance spirals upward as employees learn from and motivate each other.

Netflix hires the very best employees and pay at the top of the market. It coaches managers to have the courage and discipline to get rid of employees with average performance. From the receptionist to the top executives it hires high-performing and most collaborative employees.

It hires one “rockstar” employee instead of several “good” employees and pays them at the top of the market plus extra bonus over that of their personal market to keep them. Stunning colleagues accomplish significant amounts of important work and are very creative and passionate.

Step 2: Increase Candor: Netflix's culture encourages you to speak up and you'll hear a lot of candid feedback on your ideas as well. Even the CEO is not spared from this feedback loop. It is considered disloyal to withhold your candid feedback on an idea.