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And this is Tim Ferris. Welcome to another episode of the Tim Ferris show where it is my job to interview and deconstruct world class performers. How do they do what they do? My guest today is read Hastings R-E-E-D read Hastings became executive chairman of Netflix in 2023 after 25 years as CEO. He co-founded Netflix in 1997. In 1991, read founded Pure Software which made tools for software developers. After a 1995 IPO and several acquisitions, Pure was acquired by rational software in 1997.
Read is an active educational philanthropist and served on the California State Board of Education from 2000 to 2004. He is currently on the board of several educational organizations including Kip and Pahara. Read is also a board member of city fund and Bloomberg. He received a BA from Bowdoin College in 1983 and an MSCS in Artificial Intelligence from Stanford University in 1988.
Between Bowdoin and Stanford, read served in the Peace Corps as a high school math teacher and you can find him on Twitter and LinkedIn as read Hastings easy to find. In this conversation, we cover a lot of critical decisions, critical mistakes, lessons learned, first principles behind many of the important decisions made.
Culture decks, we talk about farming dissent and much more. It is a very strategic, very tactical, practical conversation. So without further ado, please enjoy a wide-ranging conversation with read Hastings. Tim, so exciting to be here. I'm excited to have you. And here we are in Utah, but I'm going to start with someone who is not in Utah. Maybe was never in Utah, Alfred Lee Luma's. That's right.
So long ago, one of the books that inspired me was a biography of Alfred Lee Luma's titled Tuxedo Park. So if you would indulge me in the audience, would you be willing to share just a brief sketch? My mom's paternal grandfather was Alfred Lee Luma's and during World War II, he played a role in developing Loran, the Alice, supposedly Luma's, but actually it was long range. But he was like an early Bill Gates type, I mean not a successful, but like sponsoring his own science and lab.
It was sort of the gentleman scientist, Ira, in the 1940s, but I never met him. And he also, this is just to add a little color to the early part of this conversation. Effectively, my understanding is predicted or anticipated the 1929 stock market crash. And that's part of what gave him the funding to then bring these scientists together. You know, it's like the guy who did big short, you know, those kinds of things. If you guess right on a big movement of the stock market, it's a great benefit.
Alright, we're going to hop a little further forward to after college. We're going to bounce around. This is sort of the memento style of my brain. I also, I apologize in advance, but I believe you found yourself in Africa and you can certainly flesh this out and ended up hitchhiking quite a bit with very little money.
And the memento question is, I'd love for you to say just a bit about that experience and how you ended up there. But I'm wondering how you have thought about risk just evaluating risk that we're just thrown around a lot. People sometimes don't define it very well for themselves, but you seem to perhaps frame it differently than some folks. I just be curious how you would speak to me.
I think I've always been pretty risk tolerant, you know, spend a bunch of college hopping freight trains and traveling around. I spent a couple years as a math teacher in Africa and then hitchhiking around on every vacation. So that's always been very comfortable with me. And I've been lucky that nothing bad has happened. So my stays in jail have been short.
And I think all of that very much contributed to my entrepreneurial success once getting in a business and tack because I wasn't afraid to fail. Why weren't you afraid to fail? I think a lot of it is random genetics. You know, you either have a propensity to be cautious or propensity to take risk. So I don't think it's any great character thing I developed, you know, it's more like some people are very risk tolerant. And I think it's wired randomly into our DNA.
So the reason I asked about risk is that there must be some genetic stock component. I agree. Some people have high vertical jump. Other people have different mental attributes or cognitive attributes. But it seems like you've also been very good at distinguishing between and you'll see the tie-in good process and bad process. And I'd love for you to speak to that because it seems like part of that is recognizing reversible versus irreversible or non-reversible decisions.
In the way that say it, Bayesos might think about one way doors versus two way doors. Could you just expand on good processes versus bad processes? For me, free solo is bad process because the end of your life. So, you know, there are some people a lot more risk tolerant than me. And I try to take a lot of risks on things that are recoverable.
So as you mentioned, Bayesos calls them one way doors. If there's one way doors, then they evaluate them very carefully. If it's a two way door, they're willing to get in and experiment and try. And I think that's a great business philosophy. I share it. So generally, good process tries to help you get more done. For example, a weekly meeting where everyone shares context and moves forward, as opposed to just randomly getting together.
And bad process is the stuff that tries to prevent error. Let's, you know, check everything because it just gets in the way of creativity. And in most fields, so not in medicine and not in airplanes, but in most fields, you want to move fast and some things don't work and you fix them fast.
The interview that I listened to recently between you and another read read Hoffman, well known for a gray lock LinkedIn before that PayPal brought up pretty early in the conversation. And I believe again, the phrasing right the culture deck. And I was hoping to hone in on a few of them, a few of the lines of the tenants and that. And just to get your explanation of the Genesis story, like where these came from.
So the first is and I'm paraphrasing here. So you can give me the correct phrasing, but the reward for adequate performance is a generous severance package. Yeah, and the big picture is I'm in the camp that culture eats strategy for lunch. It's all about culture. And whether it's my first company pure software, whether it's a second one Netflix or third one powder mountain.
It's culture runs through all of that. How do you get human beings to work well together and accomplish amazing things. And one of the aspects of that is being around other incredible performers. So if you think about a sports team, if you want to win a championship and you got 11 slots, you know, you've got to have the very best player you can get in any position. And they have to be a great team player work well with others.
So our model is built around that. And so we said adequate performance at E good enough gets a generous severance package. And the reason we wanted people to focus on that is how different it was because normally adequate for work is good enough to stay.
And we said, what if a place was filled just with amazing people and you had that kind of talent density. And that focus on culture through these three very different organizations. So my first company pure software was super geeky software enterprise sales.
Second one was film and television streaming around the world and third is powder mountain. You know, very different, but what unifies them is this specialist approach. Roughly speaking team not family around culture and how effective that can be in very different areas. So I believe something like two out of three prospects in the hiring process. We get really excited after reading this document or being exposed to the stockman, but one out of three would bulk.
I'm wondering when you introduced or when this was in the early days. Let's just say sub 100 employees at Netflix. When did you expose people to the culture deck? We always had 50 hundred page slides of what our culture was and it was used for employees and new employees would get exposed added at the new employee meeting.
And most of the time their managers had told them all about it in the hiring process, but occasionally they didn't. And the new employee would be shocked. Oh my God. And so we realized we should really give it to all candidates. But if you do that, it's pretty much public and of course it quickly became public. And at first, you know, we were like, oh, but then it was great because it was out in the open and those who loved it who wanted a high performance team were very into us.
And those who wanted job security as their main focus were not into us. So it really helped people self select in a positive way. What were some of the line items that quickly helped people to select out or put a different way. Well, what were some of the principles that caused the strongest reaction and folks?
Well, I think you hit one great performance. The other is probably team not family. And so, you know, family has been the primary organizational unit for 10,000,000,000 years. All countries were organized around families, kingdoms. It's only recently that we had, you know, democracies. And certainly most companies have always been family based companies. So family units are how we think. And in a family, what we admire is incredible loyalty.
You know, your brother goes to jail and you stick by them, right? Parents do anything, you know, when you maintain that love and lack of judgment. However, in a company, you know, a family can be kind of dysfunctional. Think of, I don't know, the Ozark. So, you know, that's one crazy family.
I would say we were one of the early ones to just point this out and confront it directly by saying team not family and impeaching family and saying that loyalty is good as a bridge, like over temporary either company performance or individual performance. But ultimately, we were about performance, just like a championship or wanting to be champion ship sports team.
So this is going to seem like a very it is. I suppose very tactical question, but the generous severance that we just talked about a second ago, my understanding is that's four month minimum and you did that in Netflix from the very early days. Could you explain why that makes sense? Well, the people who were on our team were trying really hard.
And they may not make it, but they've done nothing wrong. So we wanted to make sure that they could land on their feet and have a generous severance package. And of course, that's US standards there. So they're higher in Europe because to be generous in Europe is higher than in the US. But think of it as we want people to feel like I'm trying really hard and I'm going to give my all. And if it doesn't work out, I've got a parachute.
And it is it also sort of a not absolve but minimize the guilt that managers feel so you get a more accurate read rather than say putting employees on a performance plan or something like that. And then that takes four to six months or however long anyway, it's a great insight. I mean, managers generally are people they like people and it's hard for them to hurt people and it does hurt to let someone go.
So the fact that there's a big severance package makes it easier for the manager to cut that person and try to find someone else who will be rock star in that role. So I look for you to say a little bit about pure software and some of the lessons learned it seems like one of the lessons learned and I'd love for you to expand on this was that too much process can paralyze on some level cause all sorts of issues.
And that harkens back to what we were discussing earlier about the good process versus bad process and you've spoken about and written about managing on the edge of chaos and so I suppose I'm wondering how you find the sweet spot between those two so I would imagine also at Netflix there are certain processes in place as a company scales.
But could you start with pure software and pure I imagined it as a big semiconductor plant where you're doing process innovation and yield management and every time we did something wrong we put a process in place so that that error wouldn't happen again and we did execute very well in one narrow market but we lost the sort of creative inspiration and so when Java came along.
You know, then the company was much weaker and we weren't the leader in that and I realized oh, we were micro efficient you know at the current business but the real risks to most businesses the market shifting and so we should optimize if we want to optimize for the market shifting we had to be to manage on the edge of chaos to be super creative without tipping into chaos.
Okay, the chaos really doesn't feel good where you know the products don't work the customers aren't build that many all kinds of bad things there and so if you're going to run loose but not be chaotic then you have to have really high performance people that's why that becomes the key part. People who get the overall context of what's going on and don't need a lot of rigidity to get good results.
Okay, so you mentioned a word that I'm going to hit on in two questions which is context so we'll come back to that but I wanted to ask you about sourcing high performers because I have heard you say that you can effectively kick the tires and view say hiring as a reversible decision right you can do that but ideally you would also be increasing the likelihood of somebody sticking as a high performer within your culture and I've heard you speak about.
Doing references well which means number one you're sort of cold sourcing those references could you speak to that and also how you do reference checks because it seems like at least when I've I've done very little hiring compared to you but people are very afraid in a litigious society of getting themselves into trouble so how do you navigate doing a reference call and how do you navigate that generally start on LinkedIn and look for mutual connections and the key is that the reference has to be good.
It has to be closer to me or someone I know than to the subject otherwise if they're closer if it's the subject brother I'm not going to get the depth of reference and most of the time I'm able to find a couple people that worked with them at such and such a time and then most of the time I'll try to do a short zoom and when someone's on zoom they're much less likely to lie to me and I can ask a couple questions and they don't feel like it's being recorded and so it has a creed.
It has a creates an appropriate intimacy but also a sort of semi anemity so that's one aspect but it's just really important and hard and then will again use lots of different ways to try to find people that worked with the person before and get to them directly.
Context, so context versus control let's just say and maybe you could use you could certainly use Netflix but you can also use powder mountain how do you set context what does that mean for someone who's heard the word obviously they know that sure well you know the typical metaphor we have for companies as industrial companies right we've had 200 years of the industrial revolution factories you make things boss tells everybody what to do and you're really trying to drive consistency and process and that's how we have.
Million doses of antibiotics that are good and airplanes that are mostly good and that kind of thing but creative companies again like powder trying to create an experience of wonder for our guests what we want to do is really empower people and so we set context we say what are we trying to do we're sparking wonder that's our core thing how are we going to do that create this unique place with mountain recreation and art and beauty so we're setting context in that way.
As opposed to telling employees you know when you see a guest smile like this and say these words I don't know something very reductionist in that way we tried to motivate and educate our employees that it's all about that joyous feeling of wonder and how do we spark it and so again that's an example of setting context versus control.
And letting them make the sort of day to day week to week decisions about how they then their bowl and how are they they use great judgment you know about things because they understand how we're trying to change the guest experience right skiing has gotten so crowded over the last 20 years. It's less joyous and we are the distinctly uncrowded mountain that's our counter positioning and that's why that context is important.
I can second that having just come off of president's day weekend yeah and about or it was wide open and you know exactly really just that we don't take the big passes the epic icon passes and that's what keeps it a huge that is a huge huge advantage.
I want to talk about something that applies I mean certainly to business that applies in a lot of different areas and that is I suppose we would call radical candor or transparency and is it true that at least some iteration of that came from marriage counseling.
I've been married 34 years or very fortunate early in our relationship we had a bunch of marriage counseling and the counselor was very good at getting me to see that I was a systemic liar and I would say things like you know families the most important thing whatever the phrases are and then I would stay at work late and he's like okay here's a situation you're going home for dinner.
This employee walks in with this crisis what do you do and I think it's easy idea with the employee crisis and okay so it's like pretty clear that you're not doing families the most important thing and so as I have the crisis once he helped me see that a I could modify my behavior at work where it had to be a very severe crisis and very rare and I was less of a hypocrite for patty and little more easy to tolerate because I wasn't saying things like families the most important and then I'm not showing up.
So that's an example of I think we humans in order to get along in very dense societies have learned to be polite and to say conventional things without thinking much about is that really true and that misalignment with how we act and what we say can be very hurtful and so since then I've been really committed to try and reflect and say the honest thing and for example the team not family. Or adequate performance as an example.
Few follow up questions so with let's just say in on the personal side the work crisis versus family time a lot of people listening certainly will have experience with some degree of tension between work and personal life what type of guard reals did you set up or conditions so that you wouldn't continue to make that mistake one of the best things they learned from John door was setting a budget.
So so many nights a week I would have dinners so it varied to different phases but let's say in one phase it was 11 nights so I had 11 night budget and then if Tim Ferris calls I might say okay I'm going to use one of my 11 slots or not but I would really stick to the 11 slots and by having a strict budget that you stuck with it was easier for this house because it wasn't an unlimited thing and it was easier for me because then you know I pick and choose and I'm going to do that.
I pick and choose and not say yes to a bunch of other things with vitamin nice but weren't essential and again different people's budget will be different amounts but by having that explicit agreement I think it's pretty helpful.
You don't strike me as someone who has trouble saying no maybe you are but would you then let's just say number 12 comes in invite number 12 and you say no would you state your policy in the sense that I have a budget for 11 sorry I'm out of slots and that's that or would you just say no. Not can't really I would yes I would say I just can't make it as if I had a big conflict with some other meeting.
The reason I'm asking about this is it does seem like focus is a strength of yours and you've been able to institutionalize that in a number of different settings for instance to give credit credit is due with read off men and his class really blitz scaling when you had that conversation and he said yeah I reached out to read this read sitting in front of me and I think you asked you be on a board or something and you're like starting a focus on education.
How do you phrase those declines not to get too much in the weeds but I am curious because this is something people struck me and I've always thought the people who really focus on a few things will get the most done the problems of society are ones that our parents and grandparents couldn't fix.
So they're like all very hard and if you make you know some material contribution in one or two areas that's remarkable and I think what can happen is people get drawn into 20 different things and they did then they don't make much of an impact on any of them and you know once in a while you get an Elon Musk can do magically wide number of things but that's very rare and it's not me and so tans your question of how do you say no.
I say really just honest about it I really can't do that because I want to focus let's say on education or powder mountain or whatever the thing is. Coming back to the radical candor or the transparency there are a few people I imagine in the interview process we're going to say you know I actually prefer to be quietly deceptive in a harmless way like on paper they'll agree and my question is how do you I think this is a term you've used farm for descent like how do you actually
help encourage that transparency during the hiring process I think we try to just listen and be intuitive and trying to figure out which people to give a shot at then when you're in a company and especially if you're a leader it's important to farm for descent because it's not normal to disagree with your boss right normal we learn
deference my job is to please my boss you know as opposed to we want to fill my job is to help powder or Netflix or pure software grow sometimes if to help them grow I've got to be willing to argue with my manager and that's okay and so because it's difficult emotionally in most companies to disagree with your manager we call it farming for descent and we have managers do things like what are three things you would do differently if you were in my job.
I would regularly you know every 18 months or so do that with you know 50 topics executives and have them right down what would be different we would be in games out of games we would be in porn out of porn we'd be in sports out of sports 100 different business decisions what would they do different and that was an example of farming for descent.
When you were going head to head with blockbuster back in the ship in mailing DVDs that's right so they come out they decide to launch their attack and then my understanding is and I've read and listened to different versions of this but there were
things launched in sort of counter attack that ranged from banner ads or advertising to selling used DVDs and then I don't know if several months later or a year later in retrospect none of those things really contributed to the success that you had the victory that you had
or blockbuster how did you take that learning meaning if we just double down on our core competency we would have probably beaten blockbuster sooner how do you this is not quite the right word but institutionalize it put it into the organizational memory so that you don't make the same
as the game or you lessen the likely I was a kid there was a dishwasher so crystal maybe and supposedly a clean better because it had green crystals and and it's an example in human behavior of assigning meaning or causality to something it wasn't very effective just say we're a great soap it is a great so because the green crystals and we're the only one that has these green
crystals you know spread throughout the diswashing food so when you're got a big competitive battle and all your employees and investors are wondering why are you going to win how are you going to win we say well we got to talk about the green crystals and we didn't understand it at first but we would do various things that were kind of irrelevant like selling used DVDs and in hindsight it's because we ourselves needed to believe in the green crystals
and so there's a temptation and all management teams to like focus on shiny objects in that way as opposed to just focus on we have great so in that case so in hindsight what we did is wow we really got a we spent 20% of our effort not 80 but 20% of effort on green crystals and we could have done better if we had had the discipline and confidence to just execute on the core better so that would be DVD shipping time
producing DVD breakage better envelopes you know making the the core work better and I think this is on the Netflix website my team sent this to me because I was asking a number of follow up questions on the on the culture deck and I believe it's very explicitly stated if you are being disloyal to Netflix if you disagree with someone
who do not voice that disagreement or if you disagree with your boss is very very explicit to disagree silently is disloyal yeah okay there we go in the early days let's just say sub 100 let's maybe maybe it's sub 50 which of the principles in that culture doc do you think we're most valuable to have permeate the smaller organization and it could be the ones you mentioned
on his high performance team not family because if you've got that that is the energy driver because everyone around you's amazing you learn so much you attract other amazing people so kind of talent farming in that way and specifically the density of talent almost every organization has some fantastic people it's an incredible feeling when everybody is amazing
so part of that is hiring part of that is firing I mean there's a lot of between but how did the keeper test what is the keeper test and how did that come to be when I was maybe seven or eight years old I caught a large fish and my dad said that's a keeper read so I always remembered that and when thinking about this test so the test is if someone's thinking about quitting and you know going to a different firm would we try to change their mind to keep them
or would we say bummer but go ahead and so we wanted to fill the company with people that we would fight to keep and so that's the keeper test and what we say is if we wouldn't fight to keep someone we should proactively give them a generous severance package and try to find someone that we might well fight to keep
so we're going to ask a maybe a mundane question but well few one is how frequently was that done as an exercise for the managers in the company and secondly would you fire someone and then find a replacement or get the search going for replacement and then fire the person and it might seem like a really kind of nipygy question
generally we would let people go and then do the search because you want the search to be open and we want to treat the person with respect they're trying hard and think of it as we wanted to let people go in the way that we would want to be let go if we're on the other side which is difficult but let's be direct and thoughtful and supportive on it and then it's up to managers how often they might think about it once a quarter what I really fight to keep that person and then it's a degrees
of oh my god I pull out all the stops you know I'd be like that person is most incredible too you know yeah I think I'd fight to keep them some you know and that's fine versus the big one had done covers is no if the person left to be fine and that we want to make sure that person that manager gives that person a severance package
I've read at least in two places maybe three about your fondness for beyond entrepreneurship Jim Collins but specifically the first 80 pages I think and the ability to go back every year and reread these 80 pages so I've had Jim on the show twice I think and he's amazing and I've read quite a bit of his work I've never read that one
what are some of the things that really stick out to you in those first 80 pages and that's where he really does the role of self discipline sort of rinsing the cottage cheese for Natalie and the important it was that yeah someone who's so manic about their diet that they rinsed the cottage cheese something you know the milk way I don't know so for me this was when I was 32 it came out and it was the first
first manage a book that made me feel like I could succeed because it wasn't you know like Larry Ellison of these huge personalities you know he pointed out of how many people had great success of sort of quiet determination and discipline and how much caring about the organization first over yourself made a difference so a lot of fundamental precepts which gave me permission to be myself and not try to be Mr.
charisma flamboyant which is kind of the CEOs that you read about so I think that's why it was so impactful what are sure there are the other handful of books that you have recommended the most are gifted the most to people who are would be entrepreneurs or entrepreneurs slash founders probably the Jim Collins oriented stuff is good patrick
glancy ones you know five defunctions of a team the advantage those are excellent so those ones and then you know on the more human side sapiens you all horary book of sort of the meaning of life and understanding the big picture you know is extraordinary.
Do you read much fiction I know you read the and like the over story. Yeah but no I don't read that much I tend to do fiction on film and series and then I'll do biography although I'll watch a just watch the Helen ready biography I am woman so you know I like a lot of nonfiction both in reading and in film
and in film any standouts in recent memory well I get two days ago I watched a five year old biopic of Helen ready Australian woman who broke through in New York and L.A. you know an incredible number of hits in the 70s and 80s including I am woman so it's a super well done biopic.
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So we could talk about it and certainly I'm open to it but you've had a lot of big wins you've had a lot of highlights I'm wondering if you have any favorite failures and I'll put that in quotation marks from Netflix stays or before in
I say favorite failures meaning something that really did not go as you had hoped but that actually somehow set the stage for larger successes later in some fashion I get a little bit of irony and favorite failure I would say our quickster episode at Netflix so we were
growing in DVD and streaming since 2011 and we realized the future was streaming and the customers currently were doing DVDs and we decided to split into two companies one called quickster to do the DVDs and the other Netflix to do the streaming it was roughly the
right idea but five years too early the customers were screaming mad because they mostly used to DVD streaming at that point you couldn't get to the television so it was really just like streaming to a laptop so it wasn't like a very great solution we didn't have that much
content and what I learned about it was sometimes you can be so strategic you know in long term that you don't bring along the customers with you then I made it worse by trying to do a YouTube video of a apology and I had this very odd teal shirt and we there was just like everything was wrong I take it there a lot of comments which which four years later we burned it is ceremony so the reason it's the favorite
failure is because you can go from a string of amazing successes to arrogance and that's kind of what happened and so it's ever since that we've done a lot more kind of ground to checking. So just a follow up related to that internally how is that decision made and can you kind of spot the train wreck in the making if you look at it in hindsight and then related to that is how do you I suppose buy some insurance with better
process in the future if that's the right way exactly the right way we didn't do much farming for descent in those days so I was messianic convinced this is the right move looking around the corner and it turned out that lots of people had severe doubts but they didn't know the other executives had doubts so the thing we instituted is on big decisions we make everyone say 10 to negative 10 whether they think it's a smart idea
okay and so if we had done that at the time we would have seen a whole tons of like negative sevens negative six negative eight and then we would have been shocking and so establishing a clear input mechanism on big decisions and we'd have the top 50 or 100 people way in on it is a very positive step. Are there any CEOs or leaders who stand out let's keep the CEOs or founders who stand out to you as being courageous in talking about the uncomfortable things right.
Jeff base also I think is probably a great standout in that and has always been very clear about being customer centric and you know they have various controversies at times but he's very clear about what they stand for so I think he might be the standout example.
Paragon one of the Paragons for sure so customer obsession certainly Jeff has written about that since shareholder level one and you've said that you have two religions a customer satisfaction and operating income could you hit both of those and just expand on on what you mean by both well I think customer satisfaction is clear but it's
probably incomplete because customers would love to have everything for free so the challenge is to have great customer satisfaction and to charge them enough to have growing operating income and that constraint is what makes business challenging fun exciting so I lean into that.
What were some of the greatest insights or decisions that have allowed you to find that Goldilocks medium that contains both you know I think the main thing is back to setting context so whether it's powder mountain Netflix or pure before that. Not saying we're only about customers I guess just naive right we are about customers and growing operating income and so I think that really.
Back to the honesty theme you talked about you know it may not be a sexy but it's more complete context for employees and shareholders about why we're making certain decisions. Talk about yeah why powder mountain I've been a small skier you know because of intense work most of my life and we've had a place in park city for a long time and loved to raise the kids you know here skiing but it got super
crowded and when you look around skiing all around the United States because of the growth of the epic and icon passes has gotten very crowded and so powder mountain is counter positioned as the uncrowded mountain and that creates you know some constraints on on what we do but it's an incredible opportunity patty
and I had a house there and we've enjoyed it but just really been homeowners and nothing more and then after Netflix retirement I was like oh here's a project why don't we figure out private skiing so about 20% of US golf courses are private and they have you know better T times nicer clubhouse you know the people you know that kind of thing and that's what private skiing is so we've introduced private skiing on about half of the powder territory and so that's
the key in just for the homeowners and then you know the people on the left the powder is untracked you know because there's only a few hundred families there it's a pretty amazing there's a couple other private skiing places while such peaks yellow stone but they're all super expensive and we're relatively affordable so we think it's just a great opportunity again in reaction to all the super crowding that everybody's feeling and Tahoe and Colorado and Utah
so for a lot of people listening to me think of project is making a canoe with their kids but you're taking on this huge 10,000 acres 10,000 acre skiing territory I've spent a lot of time there the skiing is fantastic you have lots of on track powder as you would hope given the name amazing cat skiing and it doesn't seem like a minor project I guess is what I'm saying so at least to mere mortal
know we've invested over a hundred million dollars in it in this first year we got three new public lifts and one private lift going in this summer so it's definitely a big project but also a big opportunity to build a community that's very adventurous artistic creative outdoorsy I mean it's an amazing place that we hope to spend a lot of time over the next 30 years.
So you're in a position I would have to imagine where the menu of options is pretty long in terms of how you can spend your time I'm sure you plenty of offers and inbound things are interesting and then that doesn't even take into account the number of things you might be interested in of all the things out there why this like what do you personally get from this experience helping to nurture a place of beauty with a warm community so I do Netflix millions of people but I don't know most of them who are customers and then I do a lot of play it's just like that I'm not going to do it.
And then I do a lot of philanthropy and education other things and again it affects hopefully in a positive way millions of people but I don't particularly know them our mountains very intimate it's this close little community I we everyone has coffee together in the morning so it's doing sky lodge is amazing it's been upgraded since you were last there services cool so it's something I can touch and feel and so I think it resonates in a very deep way because it's personal connection.
You toss famous for champagne powder light fluffy powder for people who do not have any familiarity with you talk where is powder about an hour from Salt Lake City Airport. What's the name of the closest town I eat. Yes, yes, there's even paradise liberty also great down there but we're on a mountain top in Eden Utah and it again it's really extraordinary ski experience because of being uncrowded and so the powder last for days.
Last for a really long time I've been there was last a deal week plus that's what I want everyone to feel like it's even better than you said. What do you think and I'm sure you have thought about this like what are the biggest challenges for powder for powder.
It's been poorly managed for a decade they just didn't have really good people but didn't have any money and so then I get to take it over in Walton and then invest you know again over a hundred million so far and it's relatively easy transformation because people want uncrowded skiing.
So it's hitting a market opportunity you know in a significant way and then it's just very joyous because we get to like skiing in the morning and the new meetings in the afternoon and so it creates a great team feeling. Do you think you are have the hardwiring to ever retire in a capacity without an enormous product. Unlikely. I do like being engaged and making a contribution so I hope to be able to do that for a long time.
What is one or two of the best investments you ever made doesn't need to be financial could be investment of time you know Warren Buff talks about the al-Karangie public speaking courses. It's a bit of the yashok's grandpa thing that he's got gone but do any particular investments of time energy money come to mind as like real.
Financial investments the little few times I've done investing I've lost my shirt and I realize I'm just so optimistic I'm like anybody who's have a good idea I'm like sure you know so I think it's a different DNA that investors have that are different
and I'm really good investors so I'm a pure index fund investor I'm Netflix plus index fund so if we brought in the definition of investment to think about time and energy I put a lot of work into charter schools and I've done that over the last 25 30 years because I see a real opportunity for these nonprofit public schools to create great learning environments and great teaching environments.
So I've been on the board of Kip Academy one of them for 20 years been on the board of many of the other related charter organizations and they're somewhat controversial because they're not the same as the district schools but I think it's a very healthy kind of creative tension and the cities that have high charters percentage of charters like Denver and Washington DC and Indianapolis have done much better than other cities.
So it really is a positive effect you know on kids and on the profession of teaching where again you can start your own public school.
I'd let's chat some more about this so starting with my first book even before that but 2007 became involved with donors choose dot org where I was an advisor and then quest bridge which seemed to do a lot of really good work and this from my perspective I was deeply interested in education because I recognize how my trajectory differed from a lot of my friends growing up because of educational opportunities.
It seems like a excellent way to try to maybe level the playing field is to stranger statement but when you see a movie like waiting for Superman I'm not sure I did the documentary but you can leave the theater or after watching this movie feel quite like low performing teachers can't be fired next Wednesday that there are all these challenges in say the US public school system.
What are some of the changes that you would like to see that you think can be catalyzed in some meaningful way the fundamental problem in the US public education is our school boards turnover pretty quickly and especially in large urban districts which makes the superintendents or the CEO's turnover quickly.
So the average superintendent tenure and Dallas and Denver and Atlanta and Boston in LA is three years so superintendents come in they last for you know a little bit of time the school board changes and then the superintendents changed and so you know why is that because the school board members run on change that's how they got elected. And these are big prizes running big organizations and big budgets and then you go on to city council and state representative and all those things.
So we've got a system that because the superintendent changes constantly the organization is trying to chaotic you know it's not some well run nonprofit like the red cross or suitor health or it's not certainly a for profit.
But the main issue is that turnover and so shifting to nonprofits running public education it will be a big positive from where we are now and that's what charter schools are again and in subsidies like Washington you know it's about half of the kids go to one of the charter schools one of the nonprofit schools in Atlanta it's about a quarter Denver it's about a quarter Indian apples it's about a half.
So we're making a lot of New Orleans it's 100% of the kids. So for just for clarity for people listening almost everybody will have heard the term charter school but that means it's not dependent on taxpayer dollars it's dependent on fundraising or how does it just a public schools know it gets full tax dollars. But it's run by a nonprofit instead of the school district a government entity so that's the big difference.
What are the maybe this isn't the objective what are the biggest challenges to scaling charter schools in the United States usually it's the political climate so it's difficult in blue states the unions generally oppose charter schools because then they would have to organize many different nonprofits as opposed to one big school district.
So that's more expensive for them but in red states which are relatively low union charters are growing very quickly because if you know parents want choice they teachers want a climate that's innovative and when they work in a nonprofit it can be very stable and have great leadership for a long time because it's got a stable boarded directors.
So that's the big difference is a governance so when you express the frustration that people at Donor's shoes or others feel it's because people have been trying to fix the school districts we have for a hundred years and they've made very little progress because they get a program in and then the super intent and changes on the program goes.
So all the work that Annemburg gates and others have done you know it gets deployed in some school districts for a couple years and then it gets unwound whereas the charter schools are very stable and continue to grow they're not all perfect but the parents have an ability to choose and the kids and the families and so if it's not a great charter school you can move to another but it is free like public schools.
If you were to teach a class could be a seminar could be one day could be a semester let's just say for the time being that was an obligation anywhere from fifth grade up to you know masters what age range would you choose and what would the subject matter of the course because when I was 22 I was teaching my high school math I think I jump right back in there you know it just brings back so many great memories of helping kids solve problems and gain confidence.
So I don't know if that's the strategic answer of the highest impact but in terms of the emotional payoff it is the highest.
God you know I had one this is much turned this into a personal therapy session but I was pretty good a math back in the day and I had a really abusive teacher in 10th grade and I just got turned off on the other side my brother same school had a fantastic 10th grade teacher and then he went on to get a PhD in statistics and so on and so forth it's just wild at these little things.
It's not horrible that that happened to you but it happens again to kids all over and in particular in lower income big cities where the average level of teaching is not that I. So you have all of this involvement education it's very deep involvement now powder mountain is your primary focus is that fair to say do you continue to do the education or do you have a conversation or send out emails to those people to set expectations that now you have shifted.
And therefore there's a firewall here's your budget for certain things how do you make that transition from one focus so for 25 years I was you Netflix which consumed a lot of my time and I did philanthropy a couple days a month and I do powder intensely and I do philanthropy a couple days a month.
So they go it hasn't really changed and then now I'm doing a bunch of work in Africa on economy and technology sort of better cell phones better coverage solar things that I hope will stimulate the economy so I'm in Africa once a quarter and you know some country doing some investment and trying to make a difference there so that's my kind of additional frontier that I didn't spend that much time on during Netflix but I've got a little more time now.
Now is Africa in this case the chance beneficiary of you having been assigned to Africa way back in the day or could it just as easily have been someplace in Latin America or else you notice that so most people are very strategic and for me when I'm ordered my causes education and Africa economy basically because I was a peace core volunteer math teacher so I think I'm just trying to relive my 22 year old self. I think it seems to be working out pretty well as far as I can tell.
What else are you doing at Patamount that is different or exactly the same as say what you did in Netflix in other words what lessons have you carried over if any fundamentally on the culture we talk about being big-hearted champions that pick up the trash.
And then the who picks up the trash is the self responsible self discipline self learning you know does the right thing when no one's looking so I think about are we actually with our employee phrase of big-hearted champions who pick up the trash that's we want to hire. We actually are better than the old Netflix description you know that I've learned from because we're willing to be tighter more memorable and more loving that's the big-hearted part.
Makes me also think of you mentioned Lencioni earlier makes me think of the advantage a little bit humble hungry and smart very very impossible does rhyme. What would you metaphorically speaking put on a billboard a message to get to millions or billions of I might say hope is everything.
Having the fundamental positive human force is hope hope of better things in the future when we live in a very imperfect world we always have we are very imperfect creatures we always you know have been and will be and then we have hope of trying to do better. And so when people lose hope then you know it's a very tough situation.
How do you cultivate that in someone let's say there's a parent listening and they have a kid who's doesn't have any clinical psychiatric disorder but maybe they see the glasses have empty they're. Roached by negative news headlines on social media and they're just kind of apathetic what would your advice be to that. Parent in terms of what they can do to help I would say in that case the kids are being withdrawn and protection from a world that confuses them or doesn't treat them well.
And then trying to understand from the kids perspective why are they feeling that way and then certainly you know helping them understand that growing up is really tough and then by the time you get to 20 and 30 and 40 and 50 and 60 you start to know yourself better. And it doesn't feel as bad feels better and there is hope of great happiness in the future for them. And so I think you were talking about high density of talent if a very high density of clear actionable thoughts.
Check a lot of boxes read is there anything else that you would like to say or discuss before we land the plan. I mean I'm not in a rush I've got so excited to be with you Tim and hope we get to do this more often and love to have you and your listeners all come to powder mountain. And I'm going to go to the books powder for days. Thank you read is there any place you would like to point people as your website for powder mountain powder mountain that's not not on the notes.
Well thank you very much read for the time I really really appreciate it. It's nice to be looking out the window at snow as we're talking about powder mountain and third party listening we will put everything discussed in the show notes as per usual at Tim. And until next time just be a little kinder than it's necessary to others but also to yourself and thank you for tuning. Hey guys this is Tim again just one more thing before you take off and that is five bullet Friday.
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