NEW YORK ( TheStreet) -- For as long as I have called Netflix (NFLX - Get Report) a short, I have expressed a certain level of due respect for Reed Hastings.
Of course, I took shots at Hastings along the way, but it has been difficult not to. And, while I am reluctant to put him in a class with Steve Jobs and Jeff Bezos, you're simply not being objective if you do not think he's a sharp guy and a visionary.
|Netflix CEO Reed Hastings
He invented DVD-by-mail. That, in and of itself, deserves props. It's not simply that he invented it; it's the way he invented it.
Long story short, Hastings was returning an overdue movie while on his way to the gym. As he agonized over the resultant late fee, it dawned on him: the movie rental industry should run its business more like a gym. Charge a flat, monthly rate and allow people to use your service as often as they like. What might have ended as a daydream for most people creative enough to even have it in the first place turned into a company that changed the way millions entertain themselves.
Now, as Netflix transitions aggressively into a streaming pure play, Hastings has not had much to say over the last few months. Other than lashing out at
over net neutrality and gliding his way through a couple of conference calls, he has been relatively mum.
The silent treatment, whether intentional or not, makes sense for Hastings. It should make you think twice if you're short Netflix stock.
When Reed Hastings talks too much, he tends to get himself in trouble. That's been his history over the last year or so. And I am not talking about the so-called missteps the mainstream media latched onto in 2011. The well-publicized price increase and Qwikster debacle came as no surprise to me. They were merely outcomes of two larger, more structural errors Hastings made along the way.
Netflix's Suddenly Quiet Transition
First, Hastings killed DVD too quickly. He took a high-margin business that generated cash and, for all intents and purposes, snuffed it out. Without that source of revenue to fund digital content acquisition, international expansion and marketing expenses, Netflix put itself into a precarious enough financial situation that it had to go to market to raise $400 million towards the end of 2011.