Mr. Friedland in February convened his roughly 60-person publicity staff to discuss a Tom Segura stand-up comedy special on Netflix in which Mr. Segura spoke of nostalgia for a time when using the word “retarded” was acceptable. That sparked anger from some viewers.
Mr. Friedland, who worked as a reporter and editor at The Wall Street Journal for a decade until 2004, believed a big part of his and his team’s job was defending the company against such a backlash. Like other veteran Netflixers, Mr. Friedland was used to a culture that encourages bluntness and speaking freely.
He felt some of his staff didn’t appreciate how hurtful the word “retarded” could be. To drive his point home, Mr. Friedland said in a recent interview with the Journal, he told them the word would be a “gut punch” for parents of differently abled children, “as if an African-American person had heard the N-word.” But in the meeting, he used the full epithet.
Complaints rolled in from employees offended by his use of the word. He apologized in writing to his staff, flagged Mr. Hastings about the incident and spent an hour discussing it with a broader group of his PR team. Mr. Friedland later arranged to meet with two black employees in human resources and recounted what he had said, again using the full N-word and not the abbreviation.
In April, Mr. Hastings’ ring of top 90 executives VP-level and above, known as the E-staff, convened at an off-site in Rio de Janeiro. Mr. Friedland “sunshined” the episode and expressed remorse again.
When the controversy didn’t blow over, a group of black employees at Netflix in May invited Mr. Friedland to talk to them and were upset when he didn’t address the matter. The employees didn’t explicitly ask him to speak about the incident, according to a list of questions the group sent Mr. Friedland, which was reviewed by the Journal, but it did ask him to discuss his or his team’s “biggest miss.”
Mr. Friedland “should have been fired right away, not months later,” said Nishant Bhajaria, an engineer who quit in February. He said while he has respect for Mr. Hastings, the CEO failed to apply a key value in Netflix’s culture manifesto—“no brilliant jerks.”
Two prominent black executives in the Beverly Hills office, Tara Duncan and Layne Eskridge, left voluntarily in June, spurring more conversation internally about whether Netflix was supporting diversity.
When Mr. Hastings heard about Mr. Friedland’s second use of the N-word in the months-earlier HR meeting, he became convinced the executive no longer could be an effective leader.
Mr. Friedland was in Japan on business when Mr. Hastings called to fire him. Mr. Friedland, who was constantly traveling as a cultural ambassador for Netflix and visited more than 20 countries last year, felt blindsided.
“I definitely made a mistake and I did my best to address it in the immediate aftermath, but I also neglected to keep an eye on any lingering hurt it may have caused when I was moving at a million miles an hour,” he said.
Some people inside and outside Netflix thought Mr. Friedland’s treatment was harsh. Mr. Welch, the former Netflix talent executive, suggested it may be unfair to “almost weaponize” something that was said in the presumably safe HR environment.
When news of the firing leaked to the trade press, Mr. Hastings, irritated at a very un-Netflix breach of trust, fired off an email to his executive staff saying whoever leaked it should report themselves to HR.
“You’ll get a discreet quiet exit, and our generous severance package if you do it now,” he wrote.
He then sent the companywide memo with the introspective reflections on racism, praising Mr. Friedland nonetheless for building a “diverse global team” and “strengthening our reputation around the world.”
A few weeks later, Mr. Hastings apologized for his emails needling his executives over the leak.
“The lesson,” Mr. Hastings wrote in another note to staff, “is that crazy stuff happens in the fog of war.”
Also from that article: exposing the silly aspects of the "Netflix culture":
New employees soon learn to speak Netflix. The lingo includes phrases like “What is your north star,” “highly aligned, loosely coupled,” and “context, not control.”
“If you don’t use that lingo on a daily basis, you’re not going to succeed,” said one Netflix short-timer.
More than 100 Netflix top executives have taken a specially designed leadership course, in which executives acted out the ancient Greek play “Antigone” and read a book about Lee Kuan Yew, a benevolent autocrat who turned Singapore into a developed nation and distrusted some elements of liberal democracies.
Here’s what you might hear in Netflix’s hallways and in meetings.
- Blast Radius: How far something goes inside the company when you say it to someone else, like “I’m a senior person in the company and my blast radius is greater than others and carries longer.”
- Meme: The “meme” on someone at Netflix is their current standing in the eyes of their bosses. If the “meme” on you is that your boss’s boss doesn’t like your tone or attitude, if you don’t change quickly that could mean you are out.
- Where is your North Star? An oft-used phrase in internal Netflix meetings to ask people to define their ultimate business goals.
- Context not control: A phrase Netflix uses to describe how executives should manage their teams. The idea is that managers should give their employees the right context to make decisions themselves rather than micromanage and seek to control decision-making.
- Highly aligned, loosely coupled: The adjectives Netflix uses to describe its organization as the opposite of a top-down company. Teams are meant to know broad company goals and work toward them without needing too many approvals.
The rapid growth and influx of new cultures, from Hollywood to Japan, has led to near-constant conversation about the culture, current and former employees say. “The best part was knowing that if someone is not working out, we’re going to let them go,” said Mr. Estep, the former engineer. “The worst part of it was just having to hear and talk about the culture so much. Talking about it constantly is just annoying and obnoxious.”