Reed Hastings on life after Netflix and the coming ‘creative destruction’

Two months after he stepped down as chairman of Netflix, Reed Hastings admits to getting “little tinges” of nostalgia where he still wants to be in the room as decisions are made at the company he co-founded 29 years ago. “I miss some of that, but I decided to try something totally different,” he says in an interview for The CEO Signal.

Hastings has resisted the temptation to play backseat driver since leaving the board. If they need to, his successors, co-CEOs Greg Peters and Ted Sarandos, “are able to [ask], ‘What would Reed think?’ And then they sort of put that aside and do what they think is best, which is what they should do,” he says.

Leaving the company he launched as a DVD-by-mail distributor and reinvented as a streaming pioneer that’s now worth $325 billion “hasn’t really been a big transition at all,” Hastings insists. The bigger moment was when he stopped being co-CEO in January 2023: going from 70 hours of work a week to one, “that’s the drama.”

Being a chairman rather than a CEO is like being a godparent versus a parent, he explains — “a pretty easy gig” — at least when things are going smoothly. Even as chair, he recalls leaving some of the company’s most consequential decisions to the two executives he’d picked to succeed him.

When Netflix walked away from a proposed $83 billion deal to buy Warner Bros. Discovery’s studio and streaming business this February, for example, “I wasn’t involved in that call,” Hastings says. Peters and Sarandos worked through the trade-offs together, before concluding that they couldn’t justify beating the price offered by Paramount Skydance.

The path to a co-CEO succession

Exiting CEOs often struggle when they find that nobody is hanging on their every word anymore. Founders can find the adjustment harder still. But Hastings sounds relaxed about walking away from the business that made him a billionaire.

Part of that is his comfort with the succession at the company where he remains a sizable shareholder. The staggered process, in which Hastings first made Sarandos his co-CEO, then gave Peters the same title as he stepped aside to chair the board, was one in which he became gradually more confident that the company could run without him.

The COVID-19 pandemic proved to him that the two men could take on decisions in ambiguous and challenging circumstances, and reminded him of life’s “twists and turns,” Hastings says. He could have stayed another 10 years, as he indicated in 2020 he would do, but he concluded that he had more interesting options. “Ted and Greg were fully capable of running it. It’s not that it was going to run worse; it probably would run better.”

Netflix is an outlier in splitting the CEO’s responsibilities between two people, and Hastings says its board considered alternatives: “What if it’s just one of them? What if it’s an outsider? What if you don’t go?”

He doesn’t pretend that the co-CEO model will work at every company. “If you’ve got two people who really trust each other and who love the organization more than themselves, then you can get some real benefit because [you have] two people who can be in different places at different times,” he says. But “it’s a rare set of personalities to make it work so well.”

Hastings puts little weight on studies that suggest that companies with such power-sharing arrangements perform slightly better than their single-CEO peers. “I think that’s mostly a signaling effect,” he says: “The companies that are really confident of their direction, they take risky steps like a dual CEO.”

A ‘new life’ rather than a second act

Hastings says risk-taking is the thread that runs through all his endeavors.

He is on the board of Anthropic, deepening an interest in AI that began with a master’s degree in the subject 40 years ago. He and his wife have given more than $1 billion to fund educational philanthropy, a theme close to his heart since he taught for the Peace Corps in the 1980s. And he is a CEO once more, of a ski resort in Eden, Utah, called Powder Mountain.

“There’s something very stimulating about big challenges where you really might fail, and then working really hard to avoid that and to hopefully have a big success,” he says.

Hastings wasn’t looking for a second act akin to the first one. Launching another online entertainment service in games or music, for example, “wouldn’t have been that interesting.” Instead, he deliberately chose “a new life” with a range of interests.

First among them is his effort to rethink Powder Mountain, which was in debt and losing money when he took it over. He wanted to “try something very physical, compared to very virtual; very local, rather than very global; [and where] you know all your customers, as opposed to Netflix, which is vast.”

A capitalist turns away from the mass market

Hastings already owned a house on Powder Mountain, to which he retreated after handing over his executive duties at Netflix. By the end of that ski season, he had decided to buy the mountain “and fix it up.”

Since then, he has invested an undisclosed amount to build a private luxury development stretching over an area almost as large as Manhattan. Membership of Powder Haven is limited to just 650 families, who have access to a private, 70,000-foot clubhouse and roughly 3,000 acres of uncrowded wilderness, separate from the public slopes.

Hastings describes it as a passion project whose primary aim is to build an art-filled community enticing enough that he and his wife will want to spend time there. But he also hopes to make “a bunch of money,” he says. “I like capitalism. I think it’s a good marker.”

Powder Mountain has yet to turn a profit, but Hastings is determined to master a new business where mass scale is not the goal. The ski industry has been transformed by the multi-resort Epic and Ikon passes operated by Vail Resorts and the Alterra Mountain Company, but Hastings has opted for the opposite model.

“Think of them like Costco,” he says of Epic and Ikon. “It’s great value, and that gets more people skiing, and so we love that. But then, we’re trying to be super boutique, high-end luxury, special. So frankly, they’re the most important business, and we’re kind of the most beautiful one, or the most enjoyable one, with no compromises.”

The idea of offering private, uncrowded access to the great outdoors has some precedents, like Yellowstone Club in Montana, but is far more common in golf. “There’s 4,000 private golf clubs in the US, but in skiing, there’s only three,” Hastings says. “Everyone who’s a member of a golf club gets it.”

Not every Powder Mountain season pass holder who can’t afford a home in its most exclusive areas does, however.

“There’s tensions” with some locals, Hastings says. The man who spent decades bringing affordable entertainment to the masses says pushback was “inevitable.” But he stresses that he has invested heavily in Powder Mountain’s public ski area too, adding new lifts and lodges, and creating a business model to spare the resort from getting swamped with multi-mountain pass holders.

“The mountain was in financial trouble, and it was going to change no matter what, and it didn’t go the way of just becoming a classic, very crowded resort.”

What AI’s disruptions demand of CEOs

To learn the art of luxury real estate sales and understand the vagaries of ski lift technologies, Hastings has turned to large language models for help. And he thinks we’re underestimating how much disruption the technology will bring to traditional business models.

“For the last decade, AI has been getting roughly twice as good every year. If that continues, which looks pretty likely, then in five years, the AI will be 32 times smarter [and] more effective than it is today,” he observes. “These things are going to be so much more intelligent than us.”

Harnessing those advances is like doubling a company’s workforce each year, Hastings argues, which presents executives with a choice.

“You can either cut your workforce in half and stay in the same business lines, or you can use all these new resources to expand against your competitors.” As AI makes it easier for an insurgent to make everything that a rival makes, “you’re going to see a lot of companies attacking each other.”

The CEO’s role in that fight, Hastings believes, is to “keep an open lens around the right things,” studying the most likely scenarios with the intensity of a master chess player while tuning out more outlandish possibilities.

It’s easy to say that only the paranoid will survive, he says, but paranoia is associated with delusions. “If you spend all your time worrying about things that are very, very unlikely to happen, [like] a comet hitting the planet, then that’s not time focused on scenarios that matter more. … It’s really the people who have judgment that survive.”

What AI heralds, Hastings says, is “the great act of creative destruction.” That’s a phenomenon he knows well, having shaken incumbents from video rental stores to Hollywood studios in his first career. The AI transformation that’s coming, he implies, may consign some of today’s companies to the same fate as Blockbuster Video while faster-moving rivals build new Netflix-sized disrupters.