Home Netflix CEO Explains Why A “Gut” Feeling Is Still Better Than Big Data

Netflix CEO Explains Why A “Gut” Feeling Is Still Better Than Big Data

This post appears courtesy of the Ferenstein Wire, a syndicated news service. Publishing partners may edit posts. For inquiries, please email author and publisher Gregory Ferenstein.

The CEO of one of the fastest-growing tech companies has some advice on how to make decisions with big data: Trust your gut.

Speaking at DLD’s flagship European conference in Munich earlier this week, Netflix’s Reed Hastings says that even though the company famously invests heavily in data analytics, the ultimate decisions come down to smart intuition

“We start with the data,” said Hastings. “But the final call is always gut. It’s informed intuition.”

Specifically, he gave credit to the man in charge of the company’s wildly successful original programming, Ted Sarandos, who, Hastings says, has the “golden gut.”

How To Find Your Gut

One question readers may be asking themselves is how Hastings’s strategy applies to their business. Gut instincts may work for picking shows—but what about other categories of products?

In a follow-up to that conversation, he gives a key insight: Intuition works for him when he’s deciding between a ton of products and can treat them like an investment portfolio. Under this scenario, he only needs a smaller percentage of those risks to pay off big to make up for failures.

“The advantage of Netflix at this stage is that we get to make a number of bets in parallel and manage it like a portfolio,” explains Hastings.

It’s a simple fact that data science simply isn’t sophisticated enough to predict whether a product will be a hit. Ultimately that rests on a bit of faith that we can predict the future of how consumers will react to a new idea.

In other words, it’s difficult to know which idea will be an outlier: something surprising that doesn’t fit the trend. At Netflix, with lots of bets, come lots of opportunity for hits. 

Can you manage your product decisions like a portfolio? Maybe you’re not making video entertainment, but you can still derisk your intuition by making lots of bets—and being analytical with data after you place them.

Here’s the entire interview:

Screenshot via DLD Conference

For more stories like this, subscribe to the Ferenstein Wire newsletter here.

About ReadWrite’s Editorial Process

The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

Gregory Ferenstein
Staff Writer

Former Staff Writer for ReadWrite. I started my career as a freelance writer in 2009 covering business innovation, did peer-reviewed research on Silicon Valley,(2016), architected bills in Congress (2017), and ran economic field experiments (2019).

Get the biggest tech headlines of the day delivered to your inbox

    By signing up, you agree to our Terms and Privacy Policy. Unsubscribe anytime.

    Tech News

    Explore the latest in tech with our Tech News. We cut through the noise for concise, relevant updates, keeping you informed about the rapidly evolving tech landscape with curated content that separates signal from noise.

    In-Depth Tech Stories

    Explore tech impact in In-Depth Stories. Narrative data journalism offers comprehensive analyses, revealing stories behind data. Understand industry trends for a deeper perspective on tech's intricate relationships with society.

    Expert Reviews

    Empower decisions with Expert Reviews, merging industry expertise and insightful analysis. Delve into tech intricacies, get the best deals, and stay ahead with our trustworthy guide to navigating the ever-changing tech market.