How Scale Changes a Manager's Responsibilities: Why Netflix Should Sell Ads

How Scale Changes a Manager's Responsibilities: Why Netflix Should Sell Ads

As a company grows and scales, the responsibilities of a manager begin to change. Founding leaders must learn to let go and empower their team members to take on leadership roles. This shift is crucial for the success of the company and the confidence of investors and board members in the CEO's ability to operate at scale.

One area where CEOs and founders often struggle as their companies grow is in hiring and people management. In the early stages, it is important for the CEO to stay close to the hiring process and establish selection guidelines for candidates. As the company reaches 50 to 100 employees, the CEO's role shifts to guiding and mentoring the team through the decision-making process. Once the company exceeds 100 employees, it's time to let go and trust the team to make the right calls for their teams' needs.

Managing people is another challenge that comes with scaling a company. CEOs and founders may find themselves learning how to manage people for the first time. It is important to seek help and learn from resources such as books, articles, and podcasts. As the team grows to 20-30 employees, it is advisable to bring in experienced managers who know how to manage, rather than just promoting from within. Additionally, investing in people experts, such as human resources managers and experienced recruiters, early on can save time and money as the company scales.

Founding leaders must also understand the power they wield as the CEO or founder of a company. Everything they say and do has a significant impact on the organization. It is important to articulate the company's True North and product guardrails early on and evangelize them until they become ingrained in the company's DNA. However, it is crucial for the CEO to step back from being involved in every product session or review before release. Trusting the team to know what to build and how to follow the high-level roadmap is essential for the company's growth.

Netflix, a successful streaming service, has been pondering the idea of selling ads to offset the revenue impact of a subscriber slowdown. With their massive network and unique content, Netflix has the potential to attract advertisers and expand its user base. By providing a free plan with advertisements and other plans, Netflix can earn more profit and diversify its revenue streams.

One challenge for Netflix is saturation. With 75 million subscribers in the US and Canada, there is limited room for growth in terms of subscribers. However, Netflix can explore other avenues for growth, such as raising prices. The company has been raising prices on an annual basis for the past eight years.

Another area where Netflix can explore growth is in the gaming industry. While Netflix's main focus is on streaming movies and TV shows, there is an opportunity to tap into the gaming market. Gaming is a more active form of entertainment, where consumers are active participants. While it may seem like a departure from Netflix's core offering, it could be a way to attract new users and expand the company's reach.

In the attention economy, selling attention through advertising is the most effective business model. Google and Facebook have capitalized on this by selling effective ads to customers who rely on their platforms to navigate the abundance of content. Netflix's business model, however, is focused on selling content rather than attention. This presents a challenge for Netflix in a world where attention is scarce and content is abundant.

Differentiation is key for Netflix in this competitive landscape. While on-demand, ad-free streaming was once a unique selling point, it is no longer enough. Netflix's investment in unique content sets it apart from its competitors. This unique content can be leveraged to sell attention and generate additional revenue for the company.

Implementing an advertising-supported or subsidized tier could expand Netflix's subscriber base and improve its competitive position in acquiring content. It would also make it easier for Netflix to continue raising prices, as it would provide an alternative for marginal customers who might otherwise churn. Selling attention would increase Netflix's ability to invest in more unique content and charge higher prices to its user base.

While this shift in business model would require significant effort and a departure from Netflix's current value proposition, it is worth considering as the company continues to grow and scale. By embracing advertising and leveraging its unique content, Netflix can secure its position in the attention economy and drive further growth and profitability.

Before concluding, here are three actionable pieces of advice for CEOs and founders:

• 1. Empower your leaders: As your company scales, empower your team members to take on leadership roles. Trust them to make decisions and provide them with clear guidelines for hiring and people management.

• 2. Seek help and learn: Don't try to figure out everything yourself. Read books, articles, and listen to podcasts to learn from others' experiences and insights. Invest in experts, such as human resources managers and recruiters, to support your team's growth.

• 3. Embrace change and new opportunities: As your company grows, be open to new ideas and opportunities. Don't be afraid to explore new business models or industries that align with your company's strengths and unique offerings.

In conclusion, scaling a company brings new responsibilities for managers and founders. It requires empowering leaders, setting clear guidelines, and trusting the team to make the right decisions. Netflix, as a successful streaming service, may benefit from exploring new revenue streams, such as selling attention through advertising. By embracing change and seizing new opportunities, companies can continue to grow and thrive in a competitive market.