Netflix Happens When a CEO Has Too Much Power

NEW YORK ( TheStreet) -- When you do what I do, you have to make assumptions about other people. I take that seriously.

Whether you write nice things about them or give them a hard time, some CEOs simply do not want to talk to you.

I have reached out to Netflix ( NFLX) CEO Reed Hastings several times -- through his company's PR department and directly via email. I have tried breaking the ice by bringing up the great work he does with charter schools. He wants no part of a dialog with me.

That troubles me, primarily because all I can do is assume and speculate about Hastings and what happens at his company. This guarded, closed-door policy Hastings enforces at Netflix hurts him.

Like I told a Zynga ( ZNGA) corporate communications person the other day, Don't be like Netflix! Put Mark Pincus out there. Let me sit down and talk to the guy. Humanize him!

People, particularly investors and their end users, "hate" guys like Hastings and Pincus. They don't seem real. They have become multi-million dollar caricatures of themselves. They cash out options. They get rich in secondary offerings. And they have complete and total control of their less-than-well-managed companies.

This makes them enigmas.

That's a dangerous position for these guys to be in.

Maybe you picked up Gina Keating's excellent book, Netflixed: The Epic Battle for America's Eyeballs, and read it in one night. It's page turner. You can't help but walk away from the book wondering about Hastings' ego, his seemingly out-of-control narcissism.

There's no way not to because, other than lame YouTube videos and planned-well-in-advance magazine features (like this one in Vanity Fair where I get some love), the public has no lens, other than a murky, filtered media lens, to see Hastings through.

So when I answer the PsychCentral's Narcissistic Personality Quiz for Hastings, here's what happens:

And, no joke, I gave him the benefit of the doubt in a big way.

This whole notion of access, egomania and control is a big deal. And word that Reed Hastings is in hot water with the SEC over a Facebook ( FB) post he made only allows concerns over the amount of control he has at his company to resurface.

This is not the first time Hastings has appeared on the SEC's radar. Late last year, a report hit claiming that the Commission wanted to know more about how Netflix reports subscribers metrics, as I noted on Seeking Alpha at the time. Hastings, for all intents and purposes, seemed to think the SEC was out of line for asking. Netflix now reports less subscriber data, not more.

Along similar lines, Netflix has a history of ignoring the will of its shareholders. At the 2011 annual meeting, investors overwhelmingly passed a measure Hastings disagreed with; he directed the board to shoot it down. Just hideous, practically non-existent corporate governance.

And, of course, Hastings is willing to dilute the living snot out of his stock if Carl Icahn or anybody else buys too many shares. Hastings' poison pill strategy does not represent the best interest of his company, but is simply a guarantee he personally maintains control.

In his response to the SEC this time around, Hastings tells the government it's wrong and here's how it should interpret the "Fair Disclosure" regulation.

Kudos to CNBC's Herb Greenberg, who saw this coming back it when happened in July. At the time, Greenberg noted on CNBC that the SEC needed to deal with social media as it pertains to Reg FD:

My advice to the SEC: Do it and do it soon. Common sense would seem to prevail, but for some CEOs, arrogance gets in the way.

"Arrogance gets in the way."

As far as we know, that's been Netflix since Hastings took credit for its founding. Things went well. He believed his own hype. He got what he wanted -- complete control. Maybe not officially, but it might as well be, given the figurehead board and executive team Hastings has in place.

It's this arrogance, this disregard for anything but the trajectory of your personal and professional destiny that gets companies in trouble.

When you buy shares of Netflix, you're not buying a stake in a company -- in an organization with checks and balances -- you're putting your faith in one guy. Given what we know about this one guy, that's a scary proposition.

--Written by Rocco Pendola in Santa Monica, Calif.
Rocco Pendola is TheStreet's Director of Social Media. Pendola's daily contributions to TheStreet frequently appear on CNBC and at various top online properties, such as Forbes.

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