DHM model: Delight customers in Hard-to-copy, Margin-enhancing ways.

What customers say doesn’t always match their behavior. You need A/B testing to measure behavior change.

It’s helpful to understand how much customers value different features. We invested in things our members valued (broader DVD selection, lower prices, next-day DVD delivery). We invested less in features they didn’t value (new release DVDs, social, unique movie-finding tools).

We never established a more precise word-of-mouth factor, though I’ve heard that Amazon sometimes uses an 8X factor. A large WOM multiple encourages more investment in customer delight

The free trial reminder builds trust, which creates a more robust, world-class brand. Although Netflix loses $50 million, it builds a long-term advantage through its hard-to-copy brand.

When you make product decisions, ask yourself if it’s a high or low-stakes decision. If the magnitude is high and it’s hard to reverse, consider the decision carefully. Give it plenty of time, and gather as much data as possible. If the stakes are low and the decision is easy to reverse, decide quickly, then move on. Most decisions by product leaders are low stakes (although they almost always believe the opposite). Postponing decisions creates ambiguity, which makes things worse. Be decisive.