Netflix (September 20) continued its string of missteps and corrections today, announcing that it will not be splitting off its two core businesses. The market has actually received the news fairly well with NFLX trading up 6.76% (with overall market up 2.55% so far today). This is the second time in the last month that CEO Reed Hastings has had to alter course/explain a decision he made previously, and both have been received fairly well by the market as a whole. As a public company your missteps are obviously magnified with a herd mentality often compounding losses. Hastings has been reactionary, which appears to have played out favorably in the short term but is concerning for the long term direction of the company.
If the eulogies and writings over the last week about the passing of Steve Jobs have had one consistent message, it's that often times people have no idea what they want (and analysts have no idea what's best for a company). It takes a visionary CEO to have the courage to trust their intuition and do things that go against public sentiment. Chris Dixon had a post the Michael Arrington just dug up about Jobs and Akio Morita and how they each led their companies above and around different focus groups. Each of these CEOs saw where they were going and created their own path to get there ('I drove by the fork in the road and went straight' - Jay-Z), something that Hastings has failed to do.
It takes a courageous person to admit their mistakes. It takes an even more courageous person to trust their gut when everyone else is telling them they are wrong. I spent 6 seasons of my life watching the television show Lost. It was revolutionary and through 3 of those seasons I thought it might end up being on a short list for the greatest show of all time. I realized this would not be the case when two characters, Nikki and Paulo, were written off the show due to fan backlash. It's admirable that the Lost writers heard their fans' voices and catered the show to them, but it ultimately showed the lack of a vision that the great TV shows, the great companies, the great CEOs have. David Simon had a vision for the Wire and its conclusion just like Steve Jobs had a vision for Apple. Neither would have ever compromised the path they were on because of the short term reaction of the masses. Hastings is giving the analyst and business community what they think they want, but appears to lack the vision to trust his intuition and tell them what they need.
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