Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio.
Speaker 1: This week on the podcast, I have an extra special guest.
Speaker 1: Her name is Patty McCord and she was the chief
Speaker 1: town officer in charge of things like HR and culture
Speaker 1: at Netflix. And she is also the author of a
Speaker 1: new book, Powerful Building a Culture of Freedom and Responsibility.
Speaker 1: If you were all interested in what it was like
Speaker 1: to be in Silicon Valley in the eighties and nineties,
Speaker 1: how Netflix came together, and why we are now in
Speaker 1: the fifth era of Netflix from DVD to streaming, to
Speaker 1: go down the list to original content to whatever the
Speaker 1: next things they're working on. Uh, if you're curious as
Speaker 1: to how companies recruit and the importance of corporate culture,
Speaker 1: you will find this conversation fascinating. I found her to
Speaker 1: be the lightful. She is extremely knowledgeable about all sorts
Speaker 1: of things taking place both in the world of corporate
Speaker 1: um HR and within technology and startups. Rather than me
Speaker 1: just babbled incessantly, let's jump right into it my conversation
Speaker 1: with Netflix Patty McCord. My extra special guest today is
Speaker 1: Patty McCord. She was the chief talent Officer at Netflix
Speaker 1: for fourteen years. Her presentation on the subject of corporate
Speaker 1: culture has been shared almost fifteen million times. No less
Speaker 1: a star than Cheryl Sandberg called it the single most
Speaker 1: important document to ever come out of Silicon Valley. She
Speaker 1: is the author of a new book, Powerful, Building a
Speaker 1: Culture of Freedom and Responsibility. Patty McCord, Welcome to Bloomberg.
Speaker 1: Thanks for having me. So I'm excited about this because
Speaker 1: A I'm a big Netflix fan and B you wrote
Speaker 1: a really interesting book about the concept of corporate culture
Speaker 1: and how to implement it. Let's let's talk a little
Speaker 1: bit about your background and how you ended up at Netflix.
Speaker 1: In the late eighties, for four years, you ran the
Speaker 1: corporate diversity program at Sun Microsystems. How did you end
Speaker 1: up at Sun? A girl from Dallas? How does that happen? Hmm?
Speaker 1: Let's see. I started out in tech as a recruiter.
Speaker 1: So I started out in a company called Sgate and
Speaker 1: I w hard drives. Yes, I recruited assemblers and then technicians,
Speaker 1: and then engineers and then vice presidents and then I
Speaker 1: ran staffing for them, and um and I did it
Speaker 1: because uh, my husband then was an artist and I
Speaker 1: was working with him and it was too boring for me.
Speaker 1: I needed to be someplace social. So I said, I
Speaker 1: just needed Mr Coffee. I just need to be with
Speaker 1: other people in a Mr Coffee. So that's how I
Speaker 1: I did the recruiting job, and so I got pretty
Speaker 1: hooked on the technology. I really liked the people and
Speaker 1: the things we were doing. I um, so from c
Speaker 1: Gate to Son, how does that um? Because I interviewed
Speaker 1: somebody for a position at H at c Gate and no,
Speaker 1: this was later. Yeah, it was a c Gate and
Speaker 1: she was from Son and I called to make her
Speaker 1: a job offer, and she said, oh, I didn't like
Speaker 1: you or your company or your team. But I know
Speaker 1: I didn't like your company or your team, but I
Speaker 1: really liked you, So why don't you quit and come
Speaker 1: work for me here at Sun's Crazy? So she bugged
Speaker 1: me for about two years and then it was who
Speaker 1: would you work with its son? Was this the Scott
Speaker 1: mcneelie ero or yeah? I said mcneeli ra. Yeah, mcnelie
Speaker 1: who told me one time when I was presenting on
Speaker 1: diversity to the executive staff. So the executive staff at
Speaker 1: that time was Carol Bart's ed Xander Scott McNeely. You know, um,
Speaker 1: Berrik Schmidt murderous. Yeah, and Scott told me one time. Now,
Speaker 1: I wasn't born with a silver spoon in my mouth, Patty,
Speaker 1: Mine was platinum. That's pretty fun. It was a different
Speaker 1: era to say to say at least, So how do
Speaker 1: you go from Sun to Netflix? Um? Let's see, I
Speaker 1: went to Europe for Sun. I uh were in Europe.
Speaker 1: I was in Scotland. We had a plant there in Scotland.
Speaker 1: And I went because our theme dijure in HR at
Speaker 1: that time was going global. And I came back and
Speaker 1: I was like, hey, I'm global, and but we had
Speaker 1: switched themes and now we were quote re engineering, and
Speaker 1: I said, I remember saying, oh, you mean we're gonna
Speaker 1: have layoffs, No, we're re engineering the workforce, you know, Barry.
Speaker 1: I think that may have been the seed of my
Speaker 1: hatred for HR speak. So so right sizing was the phrase.
Speaker 1: I remember that so deplorable. Re engineering is such a
Speaker 1: neutral sense, isn't that nice? You know? And it's so
Speaker 1: geeky engineering. We're giving people new job descriptions. No, we're
Speaker 1: firing that, we're gonna we're gonna call it re engineering
Speaker 1: because we didn't do that. So um, then I took
Speaker 1: a job at Borland, which was a software company that
Speaker 1: was arrival to Microsoft Office at the time. Did they
Speaker 1: ultimately end up buying word Perfect And I'm remembering that correctly,
Speaker 1: but they had it was and then um Microsoft competed
Speaker 1: by basically undercutting the product and price and wiped it
Speaker 1: all out. But it was changed a p s. They
Speaker 1: always did a lot of fun. Here's a fascinating thing,
Speaker 1: you know. I'm a hr I'm not particularly I wasn't
Speaker 1: particularly technical at the time I went to Borland. I
Speaker 1: had a two eighties six standalone computer and I came
Speaker 1: from sunwhere I had a spark station. Right I could
Speaker 1: I could publish newspapers on my desk, and I asked
Speaker 1: somebody to bring me something. I'm like, don't we have
Speaker 1: this in soft copy? Can I get it off of
Speaker 1: the quote net? And they said, I'll bring it to you.
Speaker 1: And the person came to me and handed me a
Speaker 1: floppy drive sneaker net a floppy drive, and I'm like, hey, thanks,
Speaker 1: And I held up my hand like am I supposed
Speaker 1: to do with this? I didn't know anything, but it
Speaker 1: was um it was desktop applications. I could use the
Speaker 1: product myself. Um, it was really cool. I worked a
Speaker 1: lot with the spreadsheet group with Quadrupro and it was
Speaker 1: still HR. So from HR and recruiting, how do you
Speaker 1: make the transition to I'm all about culture, I'm all
Speaker 1: about talents. How how does that take place? Well? I
Speaker 1: think that when you recruit what you are all about
Speaker 1: talent anyway, it's not just money, park stock options, No, No,
Speaker 1: it's matchmaking right, It's about knowing what problem a team
Speaker 1: is trying to solve, who are the right people to
Speaker 1: do it, getting under their skin to understand what drives
Speaker 1: people like that, particularly technical people. You know, they're wired
Speaker 1: really differently, and I like different kinds of problems. I
Speaker 1: was really curious about that. And then when I arted
Speaker 1: recruiting like executives, then that was another insight into what's
Speaker 1: leadership really like? What are people really about? So I
Speaker 1: was at Borland and um one of my vps that
Speaker 1: I worked with had taken a job at a small
Speaker 1: startup and he took it because he really liked the
Speaker 1: CEO there. And so I called him up one day
Speaker 1: and said, Hey, how's it going. How's your HR person?
Speaker 1: He said, Oh, the HR person is terrible. Getting rid
Speaker 1: of them I'm like, how do you recruit? I said,
Speaker 1: I said, great, why don't you hire me? And he
Speaker 1: said to me, you told me if I recruited out
Speaker 1: of Borland you'd break both my legs. I said, like,
Speaker 1: I didn't mean me, and he said, lots of luck,
Speaker 1: I'm not going to do it. The CEO's name is
Speaker 1: Read Hastings. So I hung up the phone. Remember back
Speaker 1: the day you could dial Star six nine and it
Speaker 1: would call back. So I called back and Read sister,
Speaker 1: who was the receptionist, answered the phone and I said,
Speaker 1: may I speak with Mr Hastings? And she put me
Speaker 1: through just like that, just like that. So I said,
Speaker 1: you don't know me, but I'm going to be your
Speaker 1: next HR person. And um, that's how I met Read
Speaker 1: and I went in for an interview. And during the
Speaker 1: interview he asked me about my HR philosophy. Now, remember
Speaker 1: I'd been at SUN so I could speak fluent HR. Read.
Speaker 1: I believe that it's imperative that each individual in the
Speaker 1: organization are empowered to be engaged, and you know the
Speaker 1: relationship between the corporate objectives in there. And he said
Speaker 1: to me, what are you saying? Do you people even
Speaker 1: speak English? How is this supposed to help me sell software,
Speaker 1: and so I got in an argument with him. Yeah,
Speaker 1: at the job interview, I'm like, well, you don't know me,
Speaker 1: and he's like, well, you're not telling me anything. So
Speaker 1: we have this big tip and I go home and
Speaker 1: my husband then said how'd it go? And I said, well,
Speaker 1: he said, you got to grow up and be a
Speaker 1: good girl. You are the breadwinner of this family. We
Speaker 1: have three children. You got to start acting like a
Speaker 1: normal person. So um, he hired me nothing intervening having
Speaker 1: a tiff over corporate speed. So we came back. I
Speaker 1: came back for a couple of interviews and I was
Speaker 1: going to walk that. I walked that back and I
Speaker 1: said I was sorry, and then I was going to
Speaker 1: report to the CFO. And I joined six months before
Speaker 1: the I p O. I joined at the cusp of
Speaker 1: our international expansion. This was a job where I got
Speaker 1: to be in charge of HR and it was a
Speaker 1: tiny little startup and there was literally nothing. How many
Speaker 1: how many people were there when they were about to
Speaker 1: go IPM couple of hundred, maybe more than that, because
Speaker 1: we had opened our European office. We grew that company
Speaker 1: through merger and acquisition. Every time we acquired a company,
Speaker 1: we doubled. So when I left, we were a couple
Speaker 1: of thousand. We'd acquired four companies in five years. That
Speaker 1: was Pure Software. Pure Atria was acquired by Rational was
Speaker 1: acquired by IBM. But it's an important part of my
Speaker 1: story because um Reid was the first time CEO. It
Speaker 1: was my first time actually running a whole HR department,
Speaker 1: and so I was very aware of policies and procedures,
Speaker 1: and I would take if we acquired your company, I'd
Speaker 1: take your handbook in our handbook and I'd smush them together,
Speaker 1: and I try and have overall comprehensive policies that would
Speaker 1: piss off the fewest people that I cut this off right.
Speaker 1: Um anyway, So then the company we got acquired and
Speaker 1: they did what any what we did whenever we acquired
Speaker 1: a company, they wiped out all the upper manage who
Speaker 1: acquired you, guys. Pure Atrio was acquired by a company
Speaker 1: named Rational. Okay, so Rational acquired us Read and I
Speaker 1: and the rest of the executives were gone. Um and
Speaker 1: I started consulting then, and Read started investing in other
Speaker 1: startups at the time, and Netflix was one. Oh, so
Speaker 1: this is when you started with read what it wasn't Netflix?
Speaker 1: What was the company? It was called Pure Atria or
Speaker 1: Pure Software when I was first So when he went
Speaker 1: off and invested in Netflix, how did he end up
Speaker 1: as CEO? And how did he bring you along? He
Speaker 1: was co founder and um, he was chairman of the
Speaker 1: board for a year or so, um, maybe more. And
Speaker 1: then he decided to go in and run the company
Speaker 1: with the co founder Mark Grandolph at the time, and
Speaker 1: the company was expanding, and so he called me up
Speaker 1: to join them, and I said no because I thought
Speaker 1: it was a really stupid idea. DVDs through the mail
Speaker 1: hold that thought because I want I share your thoughts
Speaker 1: and we'll talk about that. Let's talk a little about culture.
Speaker 1: It's become such a huge issue in our society. Uh.
Speaker 1: And there is somewhat of a well documented culture problem
Speaker 1: coming out of of Silicon Valley. Uber is probably, um,
Speaker 1: you know, the poster child. But we're seeing things at
Speaker 1: adventure Capital, farms, at Google, it elsewhere where. There's a
Speaker 1: little bit of a bro mentality and not necessarily the
Speaker 1: healthiest culture. How difficult is it to build a culture
Speaker 1: for a big company. And if you have to step
Speaker 1: into a mess like uber, how hard is it to
Speaker 1: turn that supertanker around. Let's start with what I define
Speaker 1: culture as. I'm very Margaret Meat about it. Okay, it's
Speaker 1: the way you behave, It's the stories that you tell.
Speaker 1: It's what you do when no one's looking. It's what
Speaker 1: employees see management do and say. It has almost nothing
Speaker 1: to do with what you write down. So the famous
Speaker 1: Netflix culture deck, I didn't write. It was a collaborative
Speaker 1: thing that we did to onboard people, and it took
Speaker 1: us about ten years to create. So culture isn't something
Speaker 1: you declare and then it's so it's right. Yeah, So
Speaker 1: if you're in a large corporation and you're setting out
Speaker 1: to empower people, but everyone has to ask five people
Speaker 1: for permission to do anything, then talking about empowerment, it's
Speaker 1: absolutely ridiculous. Secondly, um, I know everybody wants to point
Speaker 1: to the Silicon Valley as the you know, the birthplace
Speaker 1: of bro Topia. And and actually Emily Chang, who's a
Speaker 1: Bloomberg reporter who wrote the book, I think it's a
Speaker 1: fabulous book and I learned a ton and I lived it,
Speaker 1: so her research was really good about it. But the
Speaker 1: issues that are happening in the corporate world right now,
Speaker 1: are happening all over the place. So I just got
Speaker 1: an interview a couple of weeks ago by a reporter
Speaker 1: and the Guardian in the UK and she said, oh,
Speaker 1: you know, the people in Silicon Valley must be just
Speaker 1: freaking out because of their employees going rogue and going
Speaker 1: to the internet and complaining about sexual harassment. What are
Speaker 1: you going to do about that's horrible thing that's happening
Speaker 1: out there. And I said, well, first of all, going rogue,
Speaker 1: you mean like using social media like we all do.
Speaker 1: We don't really think about that is like a rogue
Speaker 1: thing anymore. Yeah, I said, you know, it is a
Speaker 1: problem that people in companies feel like nobody inside the
Speaker 1: company has live thing to to them, and so in
Speaker 1: order to get an audience they have to go to
Speaker 1: a bunch of strangers on the internet. That's a serious
Speaker 1: cultural problem, but going rogue isn't. And second of all,
Speaker 1: I said to her, because you've never experienced any sort
Speaker 1: of harassment as a female reporter in the UK, right
Speaker 1: And she's you know, it's crickets On the other end
Speaker 1: of the line, I'm like, this is a problem. It's
Speaker 1: a real problem. There's actually a phrase called reporting while
Speaker 1: female that so this this covers every single person woman
Speaker 1: if you want to do the me too movement, and
Speaker 1: every single business around the world, from from Maids to
Speaker 1: Maven's right. So it's not an issue of the Silicon Valley.
Speaker 1: The Silicon Valley, however, has a particular problem that's a
Speaker 1: result of so many men in tech. So because of
Speaker 1: the overwhelming you know, we talked earlier about how I
Speaker 1: ran um, how I ran diversity at SUN in the nineties.
Speaker 1: So oh, I actually started running affirmative action, which morphed
Speaker 1: into diversity. So I knew the numbers. And when I
Speaker 1: read Lean in ten years later, and I looked at
Speaker 1: the numbers because I knew what they were right that
Speaker 1: the because I did affirmative action reporting for the number
Speaker 1: of females, the numbers were worse. So the number of
Speaker 1: women in technology had declined. And it just and I
Speaker 1: looked back and I realized, you know, back in the day,
Speaker 1: in the nineties, we celebrated our diversity up one side
Speaker 1: and down the other. I mean, my single day Mayo
Speaker 1: party had ricocon. You know, I had the mariachi band.
Speaker 1: It was amazing, and I didn't fix pay Huh. Right,
Speaker 1: we could have fixed equal pay back then, and we didn't, right,
Speaker 1: And so what would the pushback have been if you
Speaker 1: had said at that time, by the way, we should
Speaker 1: pay male and female engineers the exact same amount, and
Speaker 1: this will allow us to recruit the best people across
Speaker 1: the entire industry. Because that's not how we recruited, because
Speaker 1: the actual, um, the actual fact of recruiting went like this,
Speaker 1: tell me how much you make, we'll give more. We'll
Speaker 1: give you more. Right, we'll give you whatever it takes
Speaker 1: to hire you. And so those were the negotiations, and
Speaker 1: that was what was perceived to be the negotiation. I
Speaker 1: was just reading, um, my friend Jenna Rich just wrote
Speaker 1: an article yesterday about she's a headhunter and Silicon Valley
Speaker 1: has been around for a really long time, and she said,
Speaker 1: you know, if you ask what the salary ranges for
Speaker 1: a particular position, and it's between one and two hundred,
Speaker 1: women will think one seventies a good offer, and then
Speaker 1: we'll always argue for two hundred. Right. So some of
Speaker 1: it is cultural, some of it is by us, some
Speaker 1: of it is the types of positions that we're in.
Speaker 1: And so now I just did an HR conference yesterday
Speaker 1: and I stood up in front of them and I said,
Speaker 1: all right, let's let's be clear. Which are the three
Speaker 1: most female dominated departments in any company? Sales and are
Speaker 1: getting HR and Finance. And I stand with my legs
Speaker 1: apart in my hands on my side of the fists,
Speaker 1: and I get all shrill, and I'm like, fix pay.
Speaker 1: We own it, we own compensation. So like we are women,
Speaker 1: we own our own compensation. So let's fix the systems
Speaker 1: that keep it down. So so, in other words, the
Speaker 1: women in the accounting department HR, these are the people
Speaker 1: who helped determine what the internal pay structure of a
Speaker 1: company is going to be yes, which is a lot
Speaker 1: of what my company is about, my my company, I'm sorry,
Speaker 1: which is a lot of what my book is about.
Speaker 1: What my book is about is re examining all the
Speaker 1: institutions inside of a company and saying, if we had
Speaker 1: to start over again, would we do it the same way? Right?
Speaker 1: So that's the reason I wrote the book powerful, is
Speaker 1: that I believe that we're actually harming ourselves by using
Speaker 1: the same methodologies for managing people and managing compensation and
Speaker 1: managing recruiting that we've been seeing since the sixties. I mean, really,
Speaker 1: it goes back a long, long way. So when you
Speaker 1: have a merit increased budget that once a year, at
Speaker 1: the end of your annual performance review, we give you
Speaker 1: a six and a half percent merit increased budget on
Speaker 1: a bell curve distribution with ratings and rankings and salary
Speaker 1: ranges and them and them and that, and you start
Speaker 1: out underpaid. You'll never catch up, right, You'll never catch up.
Speaker 1: We were just discussing the challenges in setting up a
Speaker 1: corporate culture or helping to turn one around at a
Speaker 1: Brotopia type shop like Uber. But let's talk a little
Speaker 1: bit about um about the corporate culture. And and there's
Speaker 1: a quote from the book that I really like. A
Speaker 1: great workplace is not espresso or lush benefits or sushi launches,
Speaker 1: grand parties or nice nice offices. What is a great workplace?
Speaker 1: And how does culture play into that question? I often
Speaker 1: ask people when they ask me that, So I'll ask
Speaker 1: you that if you think about the time you went
Speaker 1: home from work and you spontaneously told your spouse or
Speaker 1: your pet, oh my god, it was a great hit work. Today,
Speaker 1: it's almost never that there were macadamia nuts in the
Speaker 1: cookies or that Mohito was just right. Are really they
Speaker 1: are really good? And you might say that, but when
Speaker 1: it's really about work and it really comes from your soul,
Speaker 1: it's usually because you did something hard with other really
Speaker 1: smart people that you didn't think you could do. I
Speaker 1: mean I and it worked out well, and well, I
Speaker 1: spend a fair amount of time with Silicon Valley happy people. People.
Speaker 1: What what are you in charge of? I'm in charge
Speaker 1: of making employees happy. And I tell them, well, I'm like,
Speaker 1: that's not a job. Okay, that's a that's a thing
Speaker 1: to do, but it's not a job, because you know,
Speaker 1: I used to tell my team when I worked at Netflix,
Speaker 1: and I thought of myself as the CEO of the culture, right,
Speaker 1: I would say to my HR team, Yes, we are
Speaker 1: a service organization. It's not spelled s E r v
Speaker 1: A n t S. And by the way, the people
Speaker 1: we serve don't work here. We serve the people that
Speaker 1: use our product. And so our job is to make
Speaker 1: sure that we get out of the way or and
Speaker 1: make sure that our teams are comprised at brilliant people
Speaker 1: who can do the hard work of creating an amazing
Speaker 1: service that keeps people coming back to Netflix. Netflix as
Speaker 1: an example. And now that I work with you know,
Speaker 1: I work a lot these days with pretty large corporations.
Speaker 1: And when you get really large global corporations or hundreds
Speaker 1: of thousands of employees and you have internal departments like HR,
Speaker 1: they get pretty divorced from the business sense. And so
Speaker 1: that for me, that combination, that's the real critical way
Speaker 1: to change things. So since we're talking wrapping that in
Speaker 1: corporate culture, corporate culture is unique to every corporation because
Speaker 1: every corporation serves a different customer. That's quite fascinating. So
Speaker 1: as the HR department starts to grow on the other
Speaker 1: side of the river from software developments in asset management,
Speaker 1: it's going to be research, portfolios, financial planning, all that
Speaker 1: stuff becomes completely separate from that. How do you bring
Speaker 1: it back across the river. How do you get HR
Speaker 1: to serve the customer by working with the other divisions? Well,
Speaker 1: you make we're serving the customer and understanding the business
Speaker 1: a core part of the knowledge of literally everyone that
Speaker 1: works in a company. There is nobody in any company
Speaker 1: that you should hire that doesn't have the capability of
Speaker 1: understanding the basics of a profit and loss statement. So,
Speaker 1: for example, I was just talking to somebody yesterday about
Speaker 1: customer service and she was new in customer service, and
Speaker 1: she said, you know what can I do to really
Speaker 1: enhance this experience for people? And I said, Number one,
Speaker 1: don't lie and tell them that this is the beginning
Speaker 1: of their lifelong career at the corporation, because it's not.
Speaker 1: It's usually a job that people are in for a
Speaker 1: couple of years before they can't take it anymore. To
Speaker 1: teach them how to read a p n L so
Speaker 1: that they can know that if they have a customer
Speaker 1: that hangs up and says, wow, that was a great experience,
Speaker 1: I'm going to tell my friend to use this. That
Speaker 1: is actually a direct line marketing contribution to the business,
Speaker 1: straight to the bottom line, because that's a marketing marketing
Speaker 1: dollars that you didn't spend because you acquired a cut
Speaker 1: new customer for free. It's it's easier to keep customers
Speaker 1: and it is to get new customers. It's it's hugely
Speaker 1: fiscally responsible to do so right. And if I believed
Speaker 1: as a customer service rep, my job wasn't to listen
Speaker 1: to cranky people complaining all day, but my job was
Speaker 1: to create an experience so that somebody would tell somebody
Speaker 1: else to join for free, right that I was contributing
Speaker 1: to the bottom line. Then I would learn more about
Speaker 1: what it is that I do. Secondarily, I would learn
Speaker 1: a skill that I and take with me for the
Speaker 1: rest of my career. I could go into the next
Speaker 1: company and not say, well, how many kinds of craft
Speaker 1: beer do you have? But instead, do you have a
Speaker 1: profitable business model? Right? And and most people don't. Really,
Speaker 1: It's crazy to me. I don't think I understood that
Speaker 1: until I was fifteen years into my work life. So
Speaker 1: when did that that? That's really You're going right to
Speaker 1: my next question. What led to the realization that, hey,
Speaker 1: culture really matters? You know? I don't know that it
Speaker 1: was birthed that way. There was no brand epiphany. It
Speaker 1: was a lot of little things. No, the story I
Speaker 1: told you of when Read and I worked together in
Speaker 1: that software company, when we it was a great company,
Speaker 1: and we had a lot of great people, we made
Speaker 1: a lot of great products, but it was a company
Speaker 1: like every other company. And so when he asked me
Speaker 1: to join Netflix, and I thought it was a dumb
Speaker 1: idea and I didn't want to do it, and what.
Speaker 1: What he did that compelled me was he said, let's
Speaker 1: create the kind of company we want to work for. Like,
Speaker 1: what if we're successful again but we love it, right,
Speaker 1: what will we do? And I said, oh, okay, if
Speaker 1: we did that, how would you know? And he said, oh,
Speaker 1: I'd want to walk in the door every day and
Speaker 1: solve these problems with these people. And then he asked
Speaker 1: me how would you know? And I said it wouldn't
Speaker 1: it be cool if we were a great company to
Speaker 1: be from? Great to be from? Yeah? And it changed
Speaker 1: everything for me, Like what if I could on your resume,
Speaker 1: it's like, oh, you're at Netflix? Were you there during DVD?
Speaker 1: Were you there? What did you do? Because there would
Speaker 1: be an assumption that you did something amazing, right, And
Speaker 1: so the thing that we did differently there that didn't
Speaker 1: seem crazy radical at the time and didn't seem like
Speaker 1: a new wave of inventing culture was we just wrote
Speaker 1: stuff down. So the famous Netflix culture deck was an
Speaker 1: internal document for onboarding people. Uh, you said something war
Speaker 1: that cracked me up that I just have to ask
Speaker 1: you about. When I first heard about from my good
Speaker 1: buddy Jeff Whitzman, who whose company got bought by Yahoo,
Speaker 1: and he moved to Silicon Valley to Palo Alto in
Speaker 1: the mid nineties and has been happily asconced in California
Speaker 1: ever since. We were talking about this, and I'm like,
Speaker 1: DVDs by mail? Who would ever want? You know, there's
Speaker 1: a blockbuster on the corner. Why do I want to
Speaker 1: get DVDs by mail when I'm living here in the city.
Speaker 1: It sounds pretty silly. What was your response when Reid
Speaker 1: first said to you, here's what the business model of
Speaker 1: the company is. I thought it was ridiculous. And only,
Speaker 1: you know, he was the only There are three people
Speaker 1: I knew that had DVD players, and they were all
Speaker 1: geeks like him, right, And I had three kids and
Speaker 1: a house full of VHS tapes. Right. It just there's
Speaker 1: no way I was going to give up that space
Speaker 1: on my bookshelf, right, you know, and for those silly
Speaker 1: little things. And and I met him one time the
Speaker 1: parking lot of an office Max early in the morning.
Speaker 1: He had his kids in a stroller, and I said, um,
Speaker 1: what are you doing? He goes taking the kids for
Speaker 1: a walk and I said, what kind of father are
Speaker 1: you going to office Max? He said, I bought a
Speaker 1: postage meter. I'm mailing DVDs to myself and they don't break.
Speaker 1: And that's how he told me the idea about Netflix. Really,
Speaker 1: so that's how he tested it. He mailed it to him.
Speaker 1: So yeah, it was crazy. And so when I think
Speaker 1: about my career at Netflix, um, I think I'm kind
Speaker 1: of a serial entrepreneur. And so I was very lucky
Speaker 1: because I got three separate companies when I was at Netflix.
Speaker 1: The first one was on the DVD by mail business.
Speaker 1: Could we come up with a business model that would
Speaker 1: actually make money before we ran out? And that was
Speaker 1: very touch and go. So what was the model that
Speaker 1: you would send it to people? They could have one?
Speaker 1: Our original model was late fees and duo days. It
Speaker 1: was just block Best and if you kept it, you
Speaker 1: would continue to hold it for a Yeah, it was.
Speaker 1: And then then we did the subscription model that made
Speaker 1: a little more. So that was the second kind of
Speaker 1: we really were taking down Blockbuster. So that was my
Speaker 1: second start. Hold the DVDs for as long as you want,
Speaker 1: and when you send it back to us, we'll send
Speaker 1: you the next DVD in your queue. I remember interviewing
Speaker 1: somebody one time and she said, oh god, you know,
Speaker 1: my daughter watches The Little Mermaid over and over again,
Speaker 1: and I bet I've had that DVD for six months.
Speaker 1: You probably won't want it back. No, you just bought
Speaker 1: it for three times. I like, you know, keep it
Speaker 1: as long as you want. It's we don't care. We
Speaker 1: just want your daughter to be really happy. And I'm
Speaker 1: thinking the same thing would have bought it seven what
Speaker 1: was it, twelve dollars a month or and but you
Speaker 1: know those are old old days. That's Netflix is twenty
Speaker 1: years old, right, that's azing. So that was my second
Speaker 1: startup was DVD by Mail. The third one was figuring
Speaker 1: out the technology of digital streaming uh and that was
Speaker 1: a very technical challenge that most people don't realize. Back
Speaker 1: if if only the company had a person in charge
Speaker 1: of HR with a lot of experience with engineers. Yeah,
Speaker 1: So I left as the company morphed to be what
Speaker 1: it is now, which is a global original content company.
Speaker 1: That's the fourth business effect, which is the fourth business effect.
Speaker 1: And knowing read they're up to something that's the fifth
Speaker 1: business in the future, I just don't know it now
Speaker 1: because I've been gone for so long. So you know, well,
Speaker 1: I love to reminisce about the days at Netflix, because
Speaker 1: they were wonderful. Um, what I want to talk about
Speaker 1: now is about the innovative spirit that we had there
Speaker 1: and the most important part of the culture. There was
Speaker 1: this belief that if you put the right people in
Speaker 1: the room with a really hard problem that mattered, and
Speaker 1: you took away all the constraints and gave them focus
Speaker 1: on a do date. This is one thing that startups
Speaker 1: don't do very well. You know, their end game is
Speaker 1: someday right instead of like like the end of the
Speaker 1: year or at the end of the quarter, had some
Speaker 1: hard deadline. And that's partly because engineers are very scheduled driven,
Speaker 1: are very you know. It's interesting all the stuff that
Speaker 1: I talked about I learned from them or from product managers.
Speaker 1: You know why. Like I say to HR people now,
Speaker 1: I said, look, let's take the annual performance review. What
Speaker 1: is it? What do you do it? Is it a
Speaker 1: feedback mechanism? Okay, let's say we do that to give
Speaker 1: people feedback on their performance. Well, when you step back
Speaker 1: and said, let's create a system to give people feedback
Speaker 1: for their performance once a year, I mean, seriously, what
Speaker 1: else do you do once a year that you're good
Speaker 1: at that would be nothing, right, So, I mean it's
Speaker 1: just a bad it's a bad system for doing that.
Speaker 1: So if you're an innovative engineer, you would say, well,
Speaker 1: that's dump throw that away. Let's start with the end
Speaker 1: game and work backwards and test a couple of things
Speaker 1: so we can figure out the system that really does
Speaker 1: do that. Right, What a cool idea? Right? If you
Speaker 1: say it's a system to fairly compensate people, and you're
Speaker 1: in a very dynamic work environment where compensation moves pretty
Speaker 1: rapidly constantly for different positions, why would you do that
Speaker 1: once a year by looking at survey that looked at
Speaker 1: companies that were similar to you kind of last year, right,
Speaker 1: I mean, so I I'm okay if you choose to
Speaker 1: do what you've always done. So this is sort of
Speaker 1: my message by my revolution. I want to start right now,
Speaker 1: which is choose it. So what was the the either
Speaker 1: the pushback or the feedback from read when you start
Speaker 1: throwing away hey, views are cherished in long held corporate philosophy.
Speaker 1: No no, no, no no, no, no no no no. The
Speaker 1: pushback was completely the opposite. Just no, no, no, it
Speaker 1: was read he's the innovator. Oh really? Yeah? No, it
Speaker 1: was Reid who would say, how can we have to
Speaker 1: how can we have to have paid time off? And
Speaker 1: you know, the hr v P I was a real
Speaker 1: hr verse off. So so for example, we when we
Speaker 1: went public, we had to come up with a new
Speaker 1: scheme for paid time off and was that a legal
Speaker 1: requirement or just have it? You know we had at
Speaker 1: the time we were paying people you accrued to day
Speaker 1: a month and it was an honor system. And when
Speaker 1: you left the company, we trewed up. But the auditors
Speaker 1: didn't like it because we were technically paying everybody thirteen
Speaker 1: months a year. It was all falling to the bottom
Speaker 1: line because you don't true up until you leave the company.
Speaker 1: The socks guys didn't like it because because it wasn't
Speaker 1: like it what everybody else was doing. And then UM
Speaker 1: and I and I didn't want to write down here's
Speaker 1: your ten holidays and here's your tin vacation days, and
Speaker 1: here's your six six days in my office. We called
Speaker 1: that big boy rules. Yes, so you get work to
Speaker 1: do and if you need to take time, well, so
Speaker 1: I didn't want to write a policy that said that
Speaker 1: and yet tell the engineers I'm just kidding. I don't
Speaker 1: really care what you do, because because engineers will look
Speaker 1: at that and go typical, HR, I sexually harass somebody
Speaker 1: and you're gonna fire me. But the time off policy,
Speaker 1: you don't really care, right, So easy policy or it's inconsistent,
Speaker 1: it's not a policy. So I say that to Read.
Speaker 1: I'm like, this is what I think the engineers are
Speaker 1: going to think, and Read as an engineer says, oh yeah, hey,
Speaker 1: by the way, do you have to have paid time off?
Speaker 1: And the HR VP and ME says, of course you do.
Speaker 1: Everybody's got paid time off, right, So then the hanging
Speaker 1: out with Read Forever VP and me says, you mean legally.
Speaker 1: So I go and google it, and I do some
Speaker 1: research and I can't find any statute that requires paid
Speaker 1: time off for its salaried employees in California. So anyway
Speaker 1: we get rid of it, right. But where where I
Speaker 1: become the CEO is where Read comes up with these
Speaker 1: crazy ideas, Well, maybe we don't even have to have it,
Speaker 1: Maybe we don't even have should we even have a
Speaker 1: travel policy? Should we have expense approvals from finance? And
Speaker 1: I start thinking, well, if we really have hired adults
Speaker 1: who are really smart and really capable and really responsible,
Speaker 1: then you do we really need to do that. But
Speaker 1: I also have to operationally go back and say, well,
Speaker 1: if there's no one in finance that approves the expenditures,
Speaker 1: I still need to know what you're spending. So then
Speaker 1: I got yes. And then you in bed a finance
Speaker 1: person in every organization who says, hey, by the way,
Speaker 1: you budgeted for individual expenditures at ten tho dollars. A
Speaker 1: person in your run rates eleven. So how are we
Speaker 1: going to think about that in terms of the budget
Speaker 1: Which is the real question to ask, not that I
Speaker 1: went to finance and they said no, right, it's what
Speaker 1: do we actually spending? What do we actually and and
Speaker 1: it's that um, it's that product, like look at everything
Speaker 1: that you do. Right, So what's the purpose? What's the
Speaker 1: purpose of the travel policy? Right? Is it to save money?
Speaker 1: Then say hey, by the way, here's your travel expenditure maximum. Right?
Speaker 1: Is it to be efficient? Then you have to think
Speaker 1: about who's traveling for what and what right? And if
Speaker 1: you think about that in terms of what's the right
Speaker 1: thing for the company. See, now I'm teaching people it's
Speaker 1: not about you, it's about us. It's about the p
Speaker 1: m l it's about the customer, it's about the company.
Speaker 1: What's the right thing to do in this and that
Speaker 1: adds up to a corporate culture. It does right, And
Speaker 1: so we wrote down as we started to do these things,
Speaker 1: here's what. So for example, if you look in the
Speaker 1: old culture deck, it says there's five words you act
Speaker 1: in the company's best interest. Now, the whole system around
Speaker 1: that means you have to hire people who do right.
Speaker 1: You have to have people be responsible when they don't.
Speaker 1: There have to be consequences right, good and bad for
Speaker 1: when people act the culture. So the question you asked
Speaker 1: me was how did I come up with that? I didn't.
Speaker 1: We did it collaboratively over many, many years, and the
Speaker 1: thing that was different was we wrote it down. That's
Speaker 1: that's just fascinating. We have been speaking with Patty McCord.
Speaker 1: She is the former chief talent officer at Netflix. She
Speaker 1: is also the author of Powerful Building a Culture of
Speaker 1: Freedom and Responsibility. Be sure and check out our podcast extras,
Speaker 1: where we keep the tape rolling and continue to discuss
Speaker 1: all things corporate culture. We love your comments, feedback and
Speaker 1: suggestions right to us at m IB podcast at Bloomberg
Speaker 1: dot net. Be sure and check out my daily column
Speaker 1: on Bloomberg View dot com. You can follow me on
Speaker 1: Twitter at rid Halts. I'm Barry Ridhults. You're listening to
Speaker 1: Masters in Business on Bloomberg Radio. Welcome to the podcast.
Speaker 1: Thank you Patty for doing this. I'm really enjoying the conversation.
Speaker 1: And before we get to our standard favorite questions, there's
Speaker 1: still a bunch of things I have to ask you
Speaker 1: that I didn't get to. Um. First, you were right
Speaker 1: in the heart of Silicon Valley in the late eighties
Speaker 1: and throughout the nineties. What was that period of time
Speaker 1: like how to be man? It wasn't I mean, it
Speaker 1: was just something new and exciting every day. There were
Speaker 1: you know, there's an energy in the Silicon Valley that
Speaker 1: anything is possible. Really yeah that uh, I think partly
Speaker 1: because of the whole stand Stanford, you know, young entrepreneur thing.
Speaker 1: You know, much has been said about the maligned millennials term.
Speaker 1: I really hate um, you know because when you're in
Speaker 1: your twenties, you were a millennial. I was millennial. It
Speaker 1: was a while back when we were millennials. We work
Speaker 1: but but but yeah, but here's what we had. This's
Speaker 1: the same. What do you want when you're twenty something everything,
Speaker 1: when do you want it now? Right? And there's some
Speaker 1: of that energy that's always been in the Silicon Valley,
Speaker 1: which is it should be better, and we should be
Speaker 1: able to make it better, and so let's just go
Speaker 1: do it. You know, when I consult with startups, I
Speaker 1: tell them, look, here's the three types of employees you
Speaker 1: want in a very early stage startup. You want the
Speaker 1: smartest people you can hire for whatever you can afford
Speaker 1: to pay them. You want them to work really hard
Speaker 1: because when you solve early stage problems, they're problems of difficulty,
Speaker 1: and the way you solve them is you just pound
Speaker 1: at it. You know, not that. You know, your white
Speaker 1: boards are full of lists of like, not that, not that,
Speaker 1: not the value, do it? Screw it up because you're
Speaker 1: making off up. If there was, if it was a smart,
Speaker 1: reasonable idea, somebody else would already be doing it. So
Speaker 1: all startup ideas are stupid. So when people say that's
Speaker 1: a dumb idea, it's like, of course it is. It's
Speaker 1: a startup. And the third thing you want is you
Speaker 1: want people to believe, right, and those beliefs in those
Speaker 1: early companies are not rational, right, and so it's like, well,
Speaker 1: I think because you're gonna believe you have to beat theage,
Speaker 1: you can believe you're gonna do something no one has
Speaker 1: done before, and that all the stars aligned and there's
Speaker 1: a giant cash yeah right, and and it's all everybody's
Speaker 1: gonna be a millionaire on the day of the I
Speaker 1: p O. I mean, so all the myths that go
Speaker 1: with it. But you actually don't want experience people in
Speaker 1: those early days very often because they'll say, no, we've
Speaker 1: tried that, it doesn't work. Now. As soon as you're
Speaker 1: at the point where you actually have something and you
Speaker 1: actually have a customer and you might actually have a
Speaker 1: business and there's actually a light at the end of
Speaker 1: the tunnel, then almost instantaneously those are the wrong people
Speaker 1: because now you say, okay, how do we take this
Speaker 1: to a level of scale and complexity. And in the
Speaker 1: early stage, people go work hard without food or water
Speaker 1: maybe beer, right, not sustainable? Not well, and so you
Speaker 1: have to say, well, or we could plan it um.
Speaker 1: So that's where you know, I try and help people
Speaker 1: through those step functional changes in their organizations. Is that
Speaker 1: is that why we so often see the founders not
Speaker 1: succeeding as CEOs. It is why we sometimes see that happen.
Speaker 1: You know, I've seen it all, Like a lot of
Speaker 1: the myths that we have, I've seen busted. Right, could
Speaker 1: can co founders continue to run a company that's never
Speaker 1: gonna happen. It's never gonna happen forever. Um. I work
Speaker 1: with Warby Parker, their co founders still run the company.
Speaker 1: The well read Hastings, Google, go down the list of people,
Speaker 1: well they're founders, but but I mean co founders. Right
Speaker 1: in my day, there was only gonna be one Larry Ellison,
Speaker 1: There's only one Bill Gates, There's only one read as things.
Speaker 1: You know, there's only one at the top. But we
Speaker 1: see now a number of co founding organizations that exist
Speaker 1: with co founders for a long time, like two at
Speaker 1: the top for example, and that work. That can work out. Yeah,
Speaker 1: So I think that what I want to talk about
Speaker 1: now is the innovative nature of Silicon Valley. We can
Speaker 1: all pick up in terms of how we operate in business.
Speaker 1: So when I go consult with or talk to Bank
Speaker 1: of America or Fidelity or some very large organization, now
Speaker 1: they want to know, Okay, now how do I undo
Speaker 1: this albatross. You know that we've created that's very efficient.
Speaker 1: It is a huge scale and has no ability to
Speaker 1: be nimble. And all of these little fintech companies are
Speaker 1: nibbling at my ankles and they move so much faster,
Speaker 1: faster than more innovative, the creative, and they could address
Speaker 1: problems you're not even aware of. So I have to
Speaker 1: tell you a story. It's an interesting way. I'm consulting
Speaker 1: to one of these large institutions and somebody says, well, um,
Speaker 1: how do you feel about remote working? And I said,
Speaker 1: that's an odd question to ask me in uh And
Speaker 1: I said what do you mean by that? And he said, well, um,
Speaker 1: here at our bank, in this particular city, we still
Speaker 1: require people to come in at nine and leave at five.
Speaker 1: They have to they have show up for work. And
Speaker 1: I said, do they have to bring their own tools?
Speaker 1: To what I said to it? I said, do you
Speaker 1: take away their cell phones that they walk out of
Speaker 1: the door at five? Yeah, exactly. And it made me think,
Speaker 1: you know, it's one of the answers to your question. Later,
Speaker 1: I made me think, why did we have to use
Speaker 1: to show up to work? Because our equipment was there right,
Speaker 1: and and the and the thing I hold in my
Speaker 1: hand now, I used to have to ask a burly
Speaker 1: guy to help me get out from under my desk, right,
Speaker 1: so you know what I said to him, Like we
Speaker 1: all work remotely now, I mean there are issues of
Speaker 1: supervision and control and company however you could I'm not
Speaker 1: a big fan of any of those. But even if
Speaker 1: you're mandated to do that, the technology exists, whether the
Speaker 1: person is down the hole or on the other side
Speaker 1: of the country, you still you could still monitor email
Speaker 1: with whatever software you need to. You could still make
Speaker 1: sure they have all the tools that everybody in the
Speaker 1: room has. The the the idea of you have to come
Speaker 1: into the office at nine, and you we prefer you
Speaker 1: stay at least till five. That seems almost you know.
Speaker 1: I have been in situations in innovative companies in the
Speaker 1: Silicon Valley where I think it's really important to be
Speaker 1: at work. And here's when I think it's really important
Speaker 1: to be at work, when you're collaborating and inventing stuff.
Speaker 1: When you need to walk up to somebody and go,
Speaker 1: you know, I got this idea, I just need to
Speaker 1: run it by you. It's funny. I said it in
Speaker 1: Netflix at one point The only perk I want to
Speaker 1: have is showers, because you know how like you say, um,
Speaker 1: I had this idea the shower this morning. But well,
Speaker 1: if we get stuck in the meetings, like everybody in
Speaker 1: the shower don't come out. You have an idea, right,
Speaker 1: But my wife makes fun of me because I will
Speaker 1: rehearse presentations in the shower, not just goes to the acoustics.
Speaker 1: It's just a great place to free. So so back
Speaker 1: to remote you know, so, I think, um, a lot
Speaker 1: of planning and execution happens at work. A lot of
Speaker 1: innovation happens when you're you know, on the beach space
Speaker 1: bust in space, or in the shower or whatever. So
Speaker 1: I don't think that having I don't think technology tethers
Speaker 1: us like all the things that you just said. I
Speaker 1: think it frees us to be able to participate in
Speaker 1: work kind of on our own schedule. And so the
Speaker 1: idea when you said about command and control and compliance
Speaker 1: and so I'm not sure that those things are necessarily
Speaker 1: part of a healthy work environment at any size at
Speaker 1: this point. Well, if you're a regulated entity, you have
Speaker 1: to check those you do, but but like you said,
Speaker 1: you don't have to check those boxes by walking around
Speaker 1: with a clipboard. And so that's my whole point. You know,
Speaker 1: we should use the tools and the technology we have
Speaker 1: to innovate the way we work, just like we innovate
Speaker 1: the products that we use. When you think about when
Speaker 1: you think about how I'm looking for the exact word,
Speaker 1: when you think about how popular and attractive urban spaces
Speaker 1: have remained or become what you described, having all that
Speaker 1: intellectual capital in one space, having people in the same
Speaker 1: room collaborating, innovating and venting, just just brainstorming. That's challenging
Speaker 1: to do remotely. You need to be face to face
Speaker 1: for that. Ideally. I'm not saying you can't do it
Speaker 1: other ways. But when everybody's in the same room it's
Speaker 1: just for three hours, it's different. If it's a different experience,
Speaker 1: it's true. But you know, I UM, I wrote my
Speaker 1: book collaboratively with the team people that I put together
Speaker 1: all over the u S. We've literally never been in
Speaker 1: the room together UM and they very much feel like
Speaker 1: my team, UH and I know them really well. And
Speaker 1: so I think technology changes out a lot. Let's look
Speaker 1: at the technology of UM skyping and you know remote
Speaker 1: screen screen sharing. I mean that's changed. So I'm a recruiter.
Speaker 1: I go back a long, long way, right, And phone
Speaker 1: screening used to be something that I was really good
Speaker 1: at because I listened a lot for nuances of voice.
Speaker 1: But I'm telling you, screen sharing changes everything. Seeing somebody's
Speaker 1: body language, having those conversations. You and I are talking about,
Speaker 1: how much more fun this is because we're in the
Speaker 1: same room together. But the closer you can get to that,
Speaker 1: the more I think you can still extend those collaborative
Speaker 1: conversations without having to physically be there. That that makes
Speaker 1: perfect sense. So I have one more Netflix question. You
Speaker 1: were there for fourteen years. What led to the decision
Speaker 1: to EDG? Is it? Was it mutual? Was it your decision?
Speaker 1: How did it come about? Everybody loves the breakup story?
Speaker 1: Down what happened. We've been together for a really long
Speaker 1: time and the company was morphing, and so as the
Speaker 1: company morphed into UM, you know, a original Programming Global,
Speaker 1: it was a good time to leave. And we had
Speaker 1: just come out of the Quickxter scenario that that whole
Speaker 1: disaster of UM splitting the company from the DVD by
Speaker 1: mail business, and and so we're both kind of ready
Speaker 1: to say, let's move on, let's do something different. So
Speaker 1: you know, I was sad that I left because I've
Speaker 1: been there for a really long time, but I also
Speaker 1: was like super grateful that I've been there long enough
Speaker 1: to see what I had seen. And you had a
Speaker 1: big pile of stock options, pile of stock options. And
Speaker 1: I've been saying forever, forever and ever and ever be
Speaker 1: a great place to be from and clearly sitting here
Speaker 1: in front of you, that turned out to be really true. Right.
Speaker 1: That sounds great. It's um, it's kind of fascinating watching
Speaker 1: the company grow and they have the ability it seems
Speaker 1: to be as disruptive as Apple or Amazon has been. Uh,
Speaker 1: stop and think about the current generation of millennials. They
Speaker 1: could care less about having a cable let me, let
Speaker 1: me push back. They have already it's over. Oh you know,
Speaker 1: I'm not in Reed's head anymore. But I'm telling you
Speaker 1: world domination is so yesterday. Well I'm talking, you're talking.
Speaker 1: So it's really just where this specific We've been talking
Speaker 1: about what Netflix is doing, not with the technical tactical details,
Speaker 1: but that if you build a business from the perspective
Speaker 1: of the customer, don't we all want to be able
Speaker 1: to watch whatever we want to watch, whenever we want
Speaker 1: to watch, personalized to us anywhere in the world. Yeah,
Speaker 1: of course, I think it's kind of done and done.
Speaker 1: It's if it's not fully realized the overall trends. Certainly
Speaker 1: we're we're not debating if we're debating. When I would
Speaker 1: argue we're close there, it's not quite a hundred because
Speaker 1: every time I go so I'm a fan of the
Speaker 1: expanse and I open fire up my Amazon firestick and
Speaker 1: I have to say, was that was that an Amazon Prime?
Speaker 1: Is that Netflix? So there's so many choices you have
Speaker 1: to you have to and now Apple is throwing billions
Speaker 1: of dollars at it. There's gonna be a run of
Speaker 1: there is no like flick on the TV. I certainly
Speaker 1: hear you, and I know and I know that will
Speaker 1: get better because Amazon Prime and Netflix are tech companies
Speaker 1: at their heart. They all stink it organizing the material,
Speaker 1: and that goes for across the board. I'm going to
Speaker 1: argue with you because I just can argue I just
Speaker 1: walked out of my hotel room this morning, so flip
Speaker 1: to the channel guide on your hotel. It's better than well,
Speaker 1: first of all, it's an unfamiliar set of channels at
Speaker 1: home if you still have cable of satellite and you
Speaker 1: flip to the guide, Well, I know exactly where my
Speaker 1: favorite things are. I know where HBO is, I know
Speaker 1: where the Science Sci Fi channel is. I know what
Speaker 1: BBC America is. Those are my three go two's, and
Speaker 1: there are a bunch of others. Um but I also
Speaker 1: know I don't know where Showtime is, but I assume
Speaker 1: it's near HBO, so I could go find it. These
Speaker 1: are really good questions. I'm gonna have to call it
Speaker 1: my geeks and see what's up. So because you know
Speaker 1: they're working on it, so you know that that's obvious
Speaker 1: to Ever, when I go to either UM Apple TV
Speaker 1: or Amazon Prime or even Netflix, Netflix gives me a
Speaker 1: run of stuff and it. Now here's the other issue,
Speaker 1: and this, I think is is our problem because neither
Speaker 1: you nor I or millennials. I suspect, although I've asked
Speaker 1: millennials and they don't they don't agree with this. I
Speaker 1: suspect it's geared towards millennials. And they look at me
Speaker 1: and say, well, who cares what you want to see?
Speaker 1: We're putting your favorite list here, and then Netflix originals here,
Speaker 1: and then there's a bunch of other things. And that's
Speaker 1: the order that these kids want it, and they're a
Speaker 1: future I just find there's such a fire hose of
Speaker 1: amazing stuff and try and not. Like, my issue isn't
Speaker 1: how do I find something I want to watch? There's
Speaker 1: a million things I want to watch. I know what
Speaker 1: I want to watch. How do I go find that?
Speaker 1: Like Jack Ryan is coming in August. I know that's
Speaker 1: going to be an interesting show. I don't need to
Speaker 1: see that every time I log on. I've already made
Speaker 1: a note of it. It's already in my favorites list.
Speaker 1: In August, they'll see it. But why is that the
Speaker 1: second tile bunky? I'm not there anymore. I don't really know.
Speaker 1: But but but is that user interface is the next challenge?
Speaker 1: I will tell you that I am absolutely one sure
Speaker 1: that there are people all over the world working on
Speaker 1: this particular issue. And where where I saw the trend line,
Speaker 1: which I think is happening all over technology right now,
Speaker 1: is that what's been driving most of the solutions to
Speaker 1: what you're talking about is not our our age, whether
Speaker 1: we're millennials or boomers or what our habits are because
Speaker 1: we remember, innovators don't start with what the problem is now?
Speaker 1: They start with what's the solution going to be for everyone?
Speaker 1: All right? So it has heretofore been personalization. It's that's
Speaker 1: the magic thing. Can I use the data to give
Speaker 1: you stuff? Can I intuit what you're gonna want? And
Speaker 1: so now we're in the middle of the why is
Speaker 1: that a good thing or not? You know debate that
Speaker 1: was certain to happen when big data began to touch
Speaker 1: every single one of our lives. Right this is the
Speaker 1: whole Facebook scenario right now, and the Russian meddling and
Speaker 1: all that, you know, So personalization is it until somebody
Speaker 1: else gets to decide what's personal to you? So I mean,
Speaker 1: I think that's a really interesting technical um new frontier
Speaker 1: for us right now. And uh and since I'm not
Speaker 1: inside a company that's doing that, I can't tell you
Speaker 1: what's happening, but I can tell you that knowing knowing
Speaker 1: these people the way I know them, this is somebody's
Speaker 1: full time. Can't go to sleep at night without thinking
Speaker 1: about what's the solution to this issue? What I miss
Speaker 1: about the DVD era of Netflix? Oh you're getting nostalgic
Speaker 1: old school, But it's not. It's It's was the ability
Speaker 1: to go to the website and organize my list, right,
Speaker 1: But now I want to be able to do the
Speaker 1: same thing for my Netflix screen. So that Why are
Speaker 1: you showing me this run of documentaries, none of which
Speaker 1: I like? Why is that even here? What I have
Speaker 1: to scroll through a thousand You're not there. Listen, I'm
Speaker 1: not not asking you to solve this from me, Patty.
Speaker 1: I'm just identifying somebody's built an app to do it. Um,
Speaker 1: Now do I need an app between me and Netflix
Speaker 1: on my television? The way you're going to think about
Speaker 1: how you use all of these devices in the future
Speaker 1: is going to be a bumpy road as we start
Speaker 1: to solve some of these problems like they always have been.
Speaker 1: Like for example, when I was there, okay, when I
Speaker 1: was there, I was there when the first ability to
Speaker 1: remember when the back and you want to go back
Speaker 1: on the day, back in the day streaming was it
Speaker 1: was it was downloading, and it was downloading into a
Speaker 1: tiny little app on your on your screen on your
Speaker 1: PC that didn't have very good sound. It was kind
Speaker 1: of choppy. So I I was at Netflix from the
Speaker 1: we invented the interface on your laptop tow porting to
Speaker 1: every technology known to human kind. I remember interviewing somebody
Speaker 1: from Motorola at one point who kept messing with this
Speaker 1: flip phone during the interview, and I said, will you
Speaker 1: put that thing down? I'm trying to talk to you
Speaker 1: because you know we're gonna be watching video on our
Speaker 1: phone someday. And I said, right, that's just not going
Speaker 1: to happen. He's like, yes, it is. It is absolutely
Speaker 1: gonna happen. You're going to do it, and you're gonna
Speaker 1: commercial from and I and I sounded just like you.
Speaker 1: That's not the way I want it. I have never
Speaker 1: gotten an animal I want, and so I don't care.
Speaker 1: So I because I lived my whole career there in
Speaker 1: Silicon Valley. You think it will happen. I know it will.
Speaker 1: I know every you know to go from not buffering
Speaker 1: to streaming, like to push the button and have it
Speaker 1: play instantaneously. That inside our company was probably a four
Speaker 1: year effort. It's harder than I remember when the news
Speaker 1: reports would come out and say, of Internet traffic from
Speaker 1: eight till midnight is Netflix or some insane I don't
Speaker 1: remember what it was. I write in the book about
Speaker 1: how we realize we're going to be third of the
Speaker 1: US Internet band, which we all just stopped and shocked,
Speaker 1: but now you know. But but the Silicon Valley also
Speaker 1: has this thing called Moore's law, UM, and so which
Speaker 1: we theoretically are coming up on the end of which
Speaker 1: theoretically and but engineers believe in as a religion, which is,
Speaker 1: don't worry it'll show up right, It'll get solved because
Speaker 1: somebody and I guess that's um. That's a really important
Speaker 1: part of the message I'm trying to send, which is,
Speaker 1: for every person, there's some problem that's really compelling, and
Speaker 1: somewhere there's a company that needs someone to solve that
Speaker 1: really compelling problem, you know, and that matching happens over
Speaker 1: the course of your entire career, and that no company
Speaker 1: continues to give you that compelling problem forever, nor did
Speaker 1: they owe it to you. So that dance between learning
Speaker 1: what you love to do that you're great at doing,
Speaker 1: and finding the place that really needs someone who loves
Speaker 1: to do and are great at doing that. That's the
Speaker 1: dance of living. Are are living our careers for the
Speaker 1: rest of our life. You are describing the current season
Speaker 1: of Silicon Valley. I don't know if you watch Oh God, yeah,
Speaker 1: I love it. But it's that whole idea of here's
Speaker 1: the problem we're trying to solve. People want to participate.
Speaker 1: You watch the show, you enjoy How how much of
Speaker 1: a parody gets really close? It's really close. I mean,
Speaker 1: I don't like the stereotypes, but I know every one
Speaker 1: of those guys. They they've claimed that there is no
Speaker 1: one individual, that it's all a composite so as to
Speaker 1: not make any one person by type they are. There
Speaker 1: is always those types. But but you said something really important. Um,
Speaker 1: that's what's the essence of my book is too, which
Speaker 1: is own your career. You know, don't wait for somebody
Speaker 1: else to tell you what to do. Don't be a victim, um,
Speaker 1: be proactive about doing great stuff that's going to satisfy you,
Speaker 1: because otherwise you're gonna end up to be a victim
Speaker 1: and not and be disappointed. And on the other side
Speaker 1: of things, my message to corporations is stop lying to
Speaker 1: people and telling them your your family and that we're
Speaker 1: going to take care of you and will always be fair,
Speaker 1: because right now that's simply not true. It hasn't been
Speaker 1: for a nor has it been for a long time.
Speaker 1: So I think that we can be grown ups and
Speaker 1: have these kind of conversations for twenty or thirty years,
Speaker 1: which or forty however long we're going to work. So
Speaker 1: let me get to my favorite questions is are what
Speaker 1: I ask all of my guests. I'm curious to see
Speaker 1: how some of your answers go. U tell us the
Speaker 1: most important thing that people don't know about your background.
Speaker 1: I was going to be a teacher. I was passionately
Speaker 1: going to be a bilingual elementary school teacher. Why did
Speaker 1: that not happen? You know, it didn't happen because I
Speaker 1: got uh. I was a reader in antitrust litigation when
Speaker 1: I was in college, in my student teaching year, and
Speaker 1: they offered me a job at like three times what
Speaker 1: a salary what a tenured teacher would make, and I
Speaker 1: took it. And all these years I felt really guilty
Speaker 1: because I had given up my dream. And I was
Speaker 1: at this executive off site one time. All men, right,
Speaker 1: we're up in Sonoma and we're writing down you know,
Speaker 1: what would you tell your twenty year old self for
Speaker 1: you know, one of those things? And I'm writing about
Speaker 1: how like I gave up my dream and I realized.
Speaker 1: I looked around me, I was like, wait a minute,
Speaker 1: I speak fluent engineering. They're taller than I expected, and
Speaker 1: they're all men. But I am a bilingual teacher. That's right,
Speaker 1: English and engineer. Yeah, I ended up doing it anyway,
Speaker 1: Who knew? Tell us about some of your early mentors
Speaker 1: who guided your career when you were just getting into
Speaker 1: hr UM. I was thinking this morning about a woman
Speaker 1: named Nancy Haggey, who is the woman I told you
Speaker 1: the story about his son who hired me. And the
Speaker 1: first one on one I had with her, I had
Speaker 1: my you know, my pen and my little pad of
Speaker 1: paper to take notes, and she said, now write this
Speaker 1: down very carefully. I have something very important to tell you. Poised,
Speaker 1: She said, I'm your safety net fall. That's very nice,
Speaker 1: very nice, And at the time I was really worried about,
Speaker 1: you know, doing the right thing and following the right
Speaker 1: career path. And so that early advice really stuck with
Speaker 1: me forever. Who who else influenced your approach to hr
Speaker 1: and the development of culture? Oh, it's totally read. My
Speaker 1: working with Read Hastings was the most incredible innovative part
Speaker 1: of my whole career. And I mean, it's it's because
Speaker 1: it's not that I rolled off the turn up truck
Speaker 1: and met Read and everything was wonderful. Our collaboration was
Speaker 1: really really fruitful for both of us. Um, there are
Speaker 1: members of my family who always say, you know, you're
Speaker 1: awfully lucky you met Read, And I often say, you know,
Speaker 1: he's awfully lucky he met me. And if we hadn't
Speaker 1: both had the lives that we had before we came together.
Speaker 1: But but at the point where you know, when you
Speaker 1: start throwing things away and all bets are off, then
Speaker 1: it gives you the confidence to just keep going. I mean,
Speaker 1: and in my field, like what if you try something
Speaker 1: it turns out to be the dumbest idea you ever had. Well, no, biggie,
Speaker 1: you just go do what everybody else is doing and
Speaker 1: call it best practices. That that is such a dangerous phrase. Uh.
Speaker 1: Tell us about some of your favorite books, be they fiction,
Speaker 1: non fiction, h R related or not. Well. I just
Speaker 1: finished bro Topia Emily Chang Bloomberg Reporters book. I love
Speaker 1: it a lot because she really researched a life that
Speaker 1: I lead. I can imagine. First of all, she's very,
Speaker 1: very good at what she does. But she's also this
Speaker 1: very cute woman in the middle of San Francisco. I
Speaker 1: can't imagine what sort of nonsense she deals with out there,
Speaker 1: A lot, I would guess, enough to write a book
Speaker 1: about a lot of nonsense. So I I love Emily's book. Um,
Speaker 1: I was thinking of the books I loved lean In,
Speaker 1: Um I love I loved Gloria Steinham's biography. Right, got
Speaker 1: a trend here? My daughter, my twenty seven thing. Daughter says, oh, well, mom,
Speaker 1: you know you're a two point oh feminist. I'm like, seriously,
Speaker 1: I have a number. What does that make her? She's three? Yeah, yeah,
Speaker 1: it's a whole different thing, understandable. Any other books not
Speaker 1: that I think of. Okay, uh, tell us what has
Speaker 1: changed within the industry of both HR recruiting and corporate culture.
Speaker 1: We talked about a little bit. I think, uh, I
Speaker 1: think mobile computing, if that's the right way to I
Speaker 1: think it's funny that we call it a phone, right
Speaker 1: when it's a phone and it's a camera, and it's
Speaker 1: it's video and it's yeah, you know, it's it's a computer,
Speaker 1: it's a it's a search engine, it's uh, you know,
Speaker 1: all those things, and I think that ability it's creepy
Speaker 1: sometimes when you're in rooms of a hundred people. You know,
Speaker 1: I do a lot of public speaking, and when I
Speaker 1: first started doing it with younger audiences, I thought, oh,
Speaker 1: that I'm too old. They don't like me. It's not
Speaker 1: very interesting. They're all looking at their phones. And then
Speaker 1: then I realized, oh, they tweeted every word, so that
Speaker 1: processing is really different. And I wasn't a Twitter user.
Speaker 1: I thought it was ridiculous and I'm completely be a
Speaker 1: junkie because it's such real time information. Absolutely, so I
Speaker 1: think Twitter is the new tape we like to say whatever,
Speaker 1: or it's the old tape. And because you know, my
Speaker 1: kids will be like, mom, it's so snap right, nobody
Speaker 1: tweets anymore. But but so that I think that technology
Speaker 1: of having that ability with you at all times, I
Speaker 1: think that's really significant. I think that will really change.
Speaker 1: It's made the world so much smaller because things happen
Speaker 1: in parts of the world and suddenly you have a
Speaker 1: bird's eye view of exactly what's going on, which has been,
Speaker 1: which has been going. I mean, the idea that we
Speaker 1: can undo globalization is just like it laughable. It's crazy stuff.
Speaker 1: It's just so silly. So so mobile computing slash iPhones
Speaker 1: are the current major shift. What's the next shift that's
Speaker 1: going to take place? I think the technology is going
Speaker 1: to enable us to work the way that is really
Speaker 1: efficient and effective, which is collaboration across geographies, um, across cultures,
Speaker 1: across you know, thinking about customers as global customers. I
Speaker 1: think that that will change speed and that you know,
Speaker 1: we have this belief I think from the fifties that
Speaker 1: business grows in a linear fashion, you know, all those
Speaker 1: up into the right charts that we're so used to seeing,
Speaker 1: and actually I see it really evolving right the when
Speaker 1: I talked to the large financial institutions, for example, that
Speaker 1: say I think we've got it. You know, we've been
Speaker 1: doing it like this for three hundred years and we're huge,
Speaker 1: and momentum won't stop us. Well, tell Blockbuster even better,
Speaker 1: that's exactly right. Tell us about a time you failed
Speaker 1: and what you learn from the experience, you know, and
Speaker 1: this moment in my life and the whole me too movement, Um,
Speaker 1: I think about the times I failed to stand up
Speaker 1: for what was right when I is there, you know, well,
Speaker 1: maybe he won't do it anymore, and we really need
Speaker 1: him because he's a sales guy and we have a
Speaker 1: hockey stick end of quarter, right, So let's just he
Speaker 1: won't misbehave. And it took me a long time to
Speaker 1: realize that people who misbehave inappropriately with each other. Let's
Speaker 1: take that particular example, are probably lying about the quarterly
Speaker 1: sales number two clients. MS. Yeah, So I think, you know,
Speaker 1: if I look back and think about what I would
Speaker 1: do over again, it would be to own my shrillness sooner.
Speaker 1: What do you do about somebody who is just spectacular
Speaker 1: at their job but brings so much baggage it may
Speaker 1: not be worth it. You let them work somewhere else.
Speaker 1: And that's I just told somebody yesterday. I said, cocktail
Speaker 1: party last night, we were talking exactly about this, and
Speaker 1: I said, well, you guys, it was a bunch of recruiters.
Speaker 1: And I said, you know, you can tell them in
Speaker 1: the interview. I've done it many times. You know. We're
Speaker 1: done with the interview, and I say, you know, you're
Speaker 1: you're a brilliant guy, and you have a lot of skills,
Speaker 1: but you know you've got an attitude that's really off putting.
Speaker 1: And I don't think you're going to be successful here.
Speaker 1: In case anybody hasn't it has not told you this
Speaker 1: explicitly before you fall into that category, right, and we're
Speaker 1: just not doing it. Thanks a lot at what's the
Speaker 1: reaction to that? Um? A lot of times like humble, stunt, silence,
Speaker 1: or they somebody's people have said that to them in
Speaker 1: one way or another their whole lives, and it's until
Speaker 1: somebody says, well, we're not tolerating that. It's the same
Speaker 1: with sexual harassment, right. You know, it makes me crazy.
Speaker 1: I don't want us to be I don't want this
Speaker 1: to be an HR issue to fix. You know, go
Speaker 1: tell HR and there's a hiring issue screen. No, it's
Speaker 1: a living, every day issue. We need to not be
Speaker 1: the people that investigate set harassment after it happens. So
Speaker 1: that's your question, was what have I failed at? I
Speaker 1: failed at standing up going That's what I'm talking about
Speaker 1: right now. You just did it. Knock it off, right
Speaker 1: and saying in your twenties, look when you look at
Speaker 1: my body instead of my face when we're having a
Speaker 1: conversation at work, that's weird. Please stop. And when you're young,
Speaker 1: you'll go, oh, I didn't realize I was doing that.
Speaker 1: I'm sorry. Thanks. When you're forty five, Yeah, not acceptable,
Speaker 1: And every no one's ever said anything then you think
Speaker 1: it is acceptable that that's that's pretty astounding. Um. What
Speaker 1: do you do to keep mentally fit outside of work? What? What?
Speaker 1: What do you do for fun? I have two grand dogs,
Speaker 1: grand dogs, grand dogs, kids dogs, and my kids dogs
Speaker 1: and grand dogs I think are close to as good
Speaker 1: as grandchildren because I had to give them back. Um,
Speaker 1: we have we have a sailboat and uh we do
Speaker 1: a lot of sailing in the Monterey Bay, which is
Speaker 1: where I live. And um, and I've taken up gardening again.
Speaker 1: I'm going to now do all of those like things
Speaker 1: that semi retired people might do if I have semi
Speaker 1: We were just talking about the weather here in New York.
Speaker 1: The nicest thing about spring is all the shoots are
Speaker 1: coming up. All my raised beds I'm getting ready to replant.
Speaker 1: It's really this is my favorite time of the year,
Speaker 1: or certainly seems that way. It's very zin, isn't it.
Speaker 1: It is totally getting your hands in the dirt. There's
Speaker 1: just something specially maybe the future is the combo of
Speaker 1: like your hands in one hand in the dirt. On
Speaker 1: the other hand, on your cell phone. No, when I'm
Speaker 1: out there, the phone sits in the shade. If I'm lucky,
Speaker 1: I leave it on the charger and side so I
Speaker 1: don't have to deal with it. But there are times
Speaker 1: to be completely in totally UM. And now my two
Speaker 1: favorite questions. If we were talking about millennials, If a
Speaker 1: millennial or college graduate came to you and said, I'm
Speaker 1: interested in a career in HR, what sort of advice
Speaker 1: would you give them. Well, I'll tell you what general
Speaker 1: career advice I give people early in their career. Anyway,
Speaker 1: I say, it's not what you know or who you know,
Speaker 1: it's who knows what you know, who knows what you know,
Speaker 1: who knows what you know. So the idea of a
Speaker 1: network we used to call it networking is now part
Speaker 1: is breathing, right, because everybody is socially networked all the time.
Speaker 1: But I would say, early on, start building a group
Speaker 1: of people around you. It can be on social networking
Speaker 1: that know what it is you're interested in, that you
Speaker 1: get to know. Because more importantly, UM, it's about owning
Speaker 1: your own career from the very beginning and not passively
Speaker 1: joining a company and waiting for them to take care
Speaker 1: of you. And it's about trying new things and figuring
Speaker 1: out what it is that you love to do. So
Speaker 1: I have in the book I talked about my algorithm
Speaker 1: for success, and it's a mathematical formula and it says,
Speaker 1: is what you love to do that you're extraordinarily good
Speaker 1: at doing something we need someone to be great at.
Speaker 1: And so when you're early in your career, you don't know, right,
Speaker 1: And so it's really important early to try things that
Speaker 1: you think you might not like to do to find
Speaker 1: out if you really don't interesting And my favorite question,
Speaker 1: what is it that you know today about culture and
Speaker 1: hr and the like that you wish you knew twenty
Speaker 1: plus years ago? I wish I had realized my own power. Um,
Speaker 1: I wish I realized how much it mattered. I mean
Speaker 1: I came up with you know, when I started well,
Speaker 1: I started recruiting. So that was a very um measurable
Speaker 1: thing to do. I called this many people. I got
Speaker 1: this many phone screens in this many interviews, and I
Speaker 1: made this many offers and I got this many hires.
Speaker 1: And because I was an internal cruder, I could see
Speaker 1: sort of who worked out and who didn't like when
Speaker 1: I put a button a seat that I knew wasn't
Speaker 1: the right butt right. Um so, but I didn't know
Speaker 1: how important what I did was. I thought it was administrative.
Speaker 1: And then I went through a part of my career
Speaker 1: and part of my function where our job was to
Speaker 1: protect ourselves from those evil employees that might sue us.
Speaker 1: And I lived through that long enough to realize that
Speaker 1: when evil employees sue you, it's usually because you did
Speaker 1: something that made them really mad, usually by not telling
Speaker 1: them the truth that made them think it was totally unfair,
Speaker 1: that they were blindsided by something or tortured with their
Speaker 1: performance improvement plan into ben into being told that they're
Speaker 1: incompetent when they're not. That's when people sue you. And now,
Speaker 1: you know, I kind of live in this goofy. I
Speaker 1: tell HR people all the time, like you you know,
Speaker 1: you think they think you're schizophrenic. Half the time you're
Speaker 1: there to make them happy with craft beer, and the
Speaker 1: other half you're protecting the company from them suing you,
Speaker 1: like who are you? That's that's fascinating. And so I
Speaker 1: think we're a vital part of every organization, and that's
Speaker 1: putting the right teams together that get amazing stuff done.
Speaker 1: We have been speaking with Patty McCord, former chief talent
Speaker 1: officer at Netflix and currently the author of Powerful Building
Speaker 1: a Culture of Freedom and Responsibility. If you enjoy this conversation,
Speaker 1: be sure and look up an intro down an inch
Speaker 1: on Apple iTunes, where you can see any of the
Speaker 1: other two hundred such conversations that we've had over the
Speaker 1: past four years. I would be remiss if I did
Speaker 1: not thank my crack team who helps put together these
Speaker 1: conversations each week. Uh Modina Partwana is our audio engineer
Speaker 1: slash producer, Taylor Riggs is our book or slash producer,
Speaker 1: and Michael Batnick is my head of research. We love
Speaker 1: your comments, feedback and suggestions right to us at m
Speaker 1: IB podcast at Bloomberg dot net. I'm Barry Rihoults. You've
Speaker 1: been listening to Masters in Business on Bloomberg Radio.