A Product Leader’s Playbook to Take Wicked Hard Decisions

by Gibson Biddle, Former VP Product at Netflix and CPO at Chegg

Netflix was born nearly two decades ago, when Silicon Valley was shaking with the startup overdrive. Tens of millions of subscribers later, Netflix morphed into a streaming giant, outpouring billions of dollars in its production pipeline. Today, the company is hailed as HBO of streaming, likely to dethrone television in the near future.

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Prioritizing Customers and Facing Lawsuit

Gibson Biddle joined the Netflix wave in 2005, when the company was making inroads in the DVD space. Back then, Netflix had around 100,000 subscribers, who would wait in frenzy for their DVDs just like people counting days before their iPhone’s delivery. Each month, the company was adding new subscribers to its bandwagon, but it also created a huge divide between number of users and available DVD disks.

“There were 50,000 DVDs for 100,000 customers. And we had to do the math to decide who will get the disks first and who will have to wait,” reckons Biddle. It wasn’t something Netflix was hoping for. “In the end, we gave priority to the people who were renting fewer movies in a month than other subscribers,” adds Biddle. It was an intelligent move by the company as it maintained balance between its core and idle customers. The only mistake was Netflix didn’t add this update to its user-policy. Soon, a class action lawsuit of five million dollars was filed against the firm.

Fight versus Settle

For a company making over two hundred million dollars a year, settling for five wasn’t a call for an uphill battle. “The only difference settlement could create was whether we will have appraisals or bonus distribution for employees that year or not,” underlines Biddle. Netflix chose to fight and fight hard.

The legal battle stretched for two years, which was more than what the company had anticipated. Eventually Netflix settled. It wasn’t for the monetary reasons though, but excess consumption of valuable time, and bad press that made them rethink their best approach. The court battle was over and it was time for Netflix.

In retrospect, the fight versus settle episode paid rich dividends in Netflix’s favour. Had the company not sleeved-up to fight, they may have missed the hidden opportunities and lessons from the experience that came in disguise.

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