Governance & Culture: Munger, Peter Thiel & Netflix Combined

Combining Munger takes on Governance, Peter Thiel’s insights and Netflix HR presentation was fun to delve into intelligent governance frameworks sourced from an equity investor, a venture capitalist and a company. So, what are them?

  • The fundamental principle: good character – when in doubt, there’s no doubt. Do not hire;
  • Strive for a trust-based environment;
  • Provide context to people (why, why, why?), over-communicate – candor & clarity are musts;
  • Inspire responsible behavior through freedom and independence, though reinforce accountability;
  • Less formal processes, DOs and DON’Ts: “Act in Netflix’s best interest”. Yes, that’s it. It’s a principle-based approach that works with minimal good sense and intelligence; 
  • Offer modest fixed salary, roughly equal to fixed costs. Align with equity ownership;
  • Control is for beginners: “When we don’t give our people the space to take calculated risks, learn, apply, and iterate, we are really risking our future. While there is a risk to improvising and spontaneity, control brings its own insidious dangers. In our push for perfection, we over-engineer. We add so many bells and whistles that it takes a Ph.D. to use the product. Just because we can doesn’t mean we should. Just because we can practice to perfection doesn’t mean that’s best.” – HBS Article

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Peter Thiel and His Version of Moats: Durability

“More important than being the first mover is being the last mover. You have to be durable. In this one particular at least, business is like chess. Grandmaster José Raúl Capablanca put it well: to succeed, “you must study the endgame before everything else”.”

Have you ever tried to philosophize on what would be the end-game of a company? Try to play it backwards.