How to Hire Like Netflix — 'This Is a Completely Different Way of Thinking About Human Capital' The streaming platform built an incredible team with a strategy called "talent density." But you don't need to be a tech giant to do it.
By Liz Brody Edited by Frances Dodds
This story appears in the September 2024 issue of Entrepreneur. Subscribe »
Looking for a job? ClassDojo has 15 positions open, but heads up: The bar is death-zone high, and they're in no rush to hire. The children's education company has a team of 220 and a hiring rate of 0.09% of those who apply.
How can a company grow while hiring that slowly? The answer is "talent density," a concept that's gaining steam lately.
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Netflix coined the term years ago, and it was popularized in cofounder Reed Hastings' 2020 book, No Rules Rules. He defined it as "a smaller amount of talent overall, but the amount of talent per employee is greater" — which is to say, you hire a smaller team, and you only take superstars who can do multiple people's jobs.
Netflix adopted this strategy after laying off a third of its workforce in 2001, and Hastings credits it for the streaming giant's success. "This is a completely different way of thinking about human capital," says Josh Bersin, a global industry analyst in HR with his own advisory firm — and it's ever more relevant today with AI replacing jobs. "It's also a really important strategy for a small company that wants to outperform big ones."
But how does a startup do this, when they can't pay Netflix-like salaries or attract the best talent in Silicon Valley? ClassDojo cofounder Sam Chaudhary has the answer — because he's been doing it for years. "Just by writing the right piece of code, one great software engineer can literally create billions of dollars of company value — while enormous teams of less-talented people will never get there," he says.
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Here are his three rules of hiring that have helped ClassDojo reach 45 million kids:
Rule 1: Evaluate by effectiveness.
Talent density is not just about recruiting a brilliant candidate. Each hire must be a force multiplier who unblocks and lifts others so they can perform better. "It's a very rare kind of person," says Chaudhary, and sometimes they take years to court. "But it's what we require. We can't compromise on that."
To test an applicant out, he might ask about a deep belief they have. Then he'll follow up with: OK, tell me why that might be really damaging for the world. "If you can't see the downside of your own opinions, then you're likely to be pretty dogmatic and hard to work with."
Rule 2: Hire only for 'hell yes.'
Chaudhary selects a handful of employees to become hiring managers on top of their jobs. They go through an intense training process and are 100% accountable for filling a position. After reviewing candidates and getting feedback from colleagues, they ask themselves questions like: If this person went to a competitor, would it be devastating? If I was interviewing at a company and met this person, would I join just to work with them?
Then they make a simple evaluation: Is this person a "hell yes" — which is to say, an incredible can't-miss opportunity? If so, hire them. "If everyone's just okay with this person being here, to me that's a no," says Chaudhary.
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Rule 3: Talent attracts talent.
Awesome performers attract — and create! — other awesome performers. "We tend to imitate the most impressive among us," says Will Felps, associate professor at UNSW Sydney. (His research also finds the opposite: Jerks and slackers can worsen a team's performance by 30% to 40%.) That's another big reason to pursue talent density: It means everyone improves everyone else.
"Look," says Chaudhary, "we have the usual pressures, and there's a temptation every day to just drop the bar. But if we stay laser-focused and just keep increasing the average level of effectiveness with every hire, there isn't a problem we won't figure out."
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