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If this is true, as someone who is unemployed and doesn't watch Netflix, I can't even wrap my head around that number. On the other hand, I'm kind of happy to s

If this is true, as someone who is unemployed and doesn't watch Netflix, I can't even wrap my head around that number. On the other hand, I'm kind of happy to see that they're making real money by charging real money (unlike others where your information is the only product) and passing that on to the people who make it good.

dilemma 9y ago
Netflix is in the red, I believe.
- mikeyouse 9y ago
  Nah, they reliably make ~$100M per quarter in net income and have a few billion in cash reserves. They're on very stable financial footing.
  - ravenstine 9y ago
    income =/= profit
    - dmoy 9y ago
      Isn't net income == net profit?
      - ravenstine 9y ago
        A person can have an income of $300k a year but spend every penny of it on debt and necessities. That's generally not considered making a profit. EDIT: Sorry, I misunderstood something. Netflix has indeed been making a profit.
        dmoy 9y ago
        Sure but if a corporation makes 300k a year that's called revenue, the revenue minus costs are profit, no?
        hackits 9y ago
        Revenue-Expenses=Profit
        notyourday 9y ago
        Basically, it depends on the size of the company - the numbers reported by Netflix are GAAP. The tricky part is depreciation and amortization v. cash which would create a different outcomes in a cashflow and GAAP. A company with a positive cashflow and GAAP profitable is in the best spot, followed by a company with a positive cashflow and losing money in GAAP-land, followed by a negative cashflow and positive GAAP-land, followed by a negative cashflow and negative GAAP.
  - dilemma 9y ago
    Their content production is amortized over 5 years. In reality, they're in the red.
    - cletus 9y ago
      Cash flow might be negative but that's not the same as being in the red. And I'm not even sure cash flow is negative. Content should be amortized as it will generate revenue for years. It's essentially being treated as a capital expense, which isn't unreasonable.
    - kevinr 9y ago
      Recognizing both expenses and revenue over time is part of generally accepted accounting practices (GAAP). Intuitionistically, it makes total sense that you get a clearer picture of the true state of the finances of Netflix as a going concern if they recognize the costs of a show on their balance sheet over five years when they expect subscribers to still be watching it for the first (or second, or third) time several years on.
nostrademons 9y ago
They have 100M+ subscribers who each pay ~$10/month. That's a billion dollars a month, or $12B/year. $12B/year can pay for a lot of $300K/year salaries. (Most people have trouble wrapping their heads around just how huge consumer markets are. If you have 300M users - a la Whatsapp when Facebook acquired them - and charge them just $1/year, that's $300M/year in revenue, or enough to afford 1000 $300K/year engineers [or actually more like 1000 $200K/year engineers once you figure in overhead]. Similarly, if just one person out of every 100 acquaintances you know uses a product but they spend $10/month on it, that's about $400M/year. The challenge for consumer businesses is usually that they have to spend more to reach those customers and get them to open up their wallets than they make from each one, not that there aren't enough customers.)
- MagnumOpus 9y ago
  > $12B/year can pay for a lot of $300K/year salaries. Of course out of those $12bn, 7-8 will go to cost-of-goods-sold (buying or making the content they serve up). Still, 3-4bn of gross income pays for quite a few engineers.
  - adventured 9y ago
    Their latest quarter: $2.98 billion sales, $991m gross profit, $208m operating income Tracking toward $11.75b - $12b in sales for fiscal 2017, with a mere ~3,400 employees or so. They've historically had relatively slim margins (especially in the streaming business), probably explains the very thin employee base versus the sales.
- jedrek 9y ago
  > $300M/year in revenue, or enough to afford 1000 $300K/year engineers [or actually more like 1000 $200K/year engineers once you figure in overhead]. I think you're massively underestimating overhead. Each person who works on a product should make a max of 15-25% of what they bring in. If you have a repair shop and you charge $100/h, you should be paying your techs $15-25.
  - 9y ago
ringaroundthetx 9y ago
Netflix compensation packages are base salary only. So they are competitive by attempting to compute the value of Google or Facebook compensation packages which include shares and generous bonuses, and then Netflix aims to slightly beat that as well. Netflix has other perks of course. But they also have a pretty crazy layoff policy and they brag about how awesome their severance package is. Employment as Netflix is really a mixture of the income premium and lack of stability that a contractor would have, with a compensation structure closer to a startup (base salary only, no formalized bonuses).
- lsc 9y ago
  >Employment as Netflix is really a mixture of the income premium and lack of stability that a contractor would have, with a compensation structure closer to a startup (base salary only, no formalized bonuses). Note, ever since IC Engineers started getting significant bonus/stock grants (Which, I think, is something that has been a thing for less than a decade, at least for grants of publicly traded stock.) From what I've seen? Contractors have lost their income premium. I mean, contractors still make more than what they'd make full time for base salary, but base salary is now a relatively small portion of total comp for FTEs at most places. Just my observation; I'm also talking about the sort of contractors who go through body shops and essentially do the same jobs as the regular employees.
  - twodave 9y ago
    Maybe this is true on the west coast, but most of us don't work over there.
  - hibikir 9y ago
    This is only true when looking at tech companies that really hand significant stock grants. There are tons of software developers, all over the US, getting only salary and modest bonuses outside of those few places that grant stock that is as good as money. When you look at that world, contractors still win by a very wide margin: They are organizations where HR will not allow a hire for a competitive salary, but a department head can spend their budget on contractors any way they want. This leads to gigantic pro-contractor differences: As recently as last year, I made three times as much as someone sitting next to me that had Architect in their title, and the contract was for many hundreds of hours, so it's not as if there was non-billable overhead. Now, the big tech companies can compete with contractor billing rates, just as long as it's either Netflix, or someone with good-as-money stock grants, but if you live in, say, Kansas City, you won't smell those companies anyway, and chances are that, barring remote work for a giant, the best you can hope for without contracting is salary that isa little bit below Google's, but no stock.
hatred 9y ago
You also need to understand that they believe in hiring/keeping high-performers that are much more productive than average engineers. This is how you can justify the much higher salaries (top of market). IIUC, this means; You are effectively rewarding the high performing team more by maintaining a smaller team.
briga 9y ago
What's even harder to wrap my head around is that according to this survey around 15% of people at Netflix think they're not compensated fairly. What do they want? 400k? 500k? Would a salary of a million dollars a year be enough?
- sambe 9y ago
  If you worked at Netflix and everyone around you made a million whilst you made half a million, you might give such an answer on a survey, and it probably wouldn't change with the absolute amounts.
  - briga 9y ago
    That's something that worries me about moving down to Silicon Valley. It seems like everyone there is envious of how much their neighbors and co-workers make, regardless of how much they happen to be making. I want to avoid falling into that trap--it seems like a recipe for unhappiness.
    - chickenbane 9y ago
      Another perspective: Netflix is notoriously interested in only hiring top talent. Top talent is ambitious and always seeking to advance. I don't think it's a matter of envy, it's the unending beat of progress.
      - meric 9y ago
        And,or: they hire the people most likely to feel unfairly paid, and it’s when we feel we are unfairly paid we are more motivated to negotiate higher salaries, and the more a company’s employees ask for higher salaries the more likely they are paid higher. And if the root cause of the feeling of being unfairly paid isn’t the absolute amount of money being received, then the higher salaries won’t reduce the feeling.
- Aron 9y ago
  The competition is starting your own company and cashing in on many millions or billions from it. I think it's perfectly reasonable for the highest achievers to have that in mind as the alternative to compare against and hold some ambivalence on whether they are maximizing themselves.

dilemma 9y ago

Netflix is in the red, I believe.

mikeyouse 9y ago
Nah, they reliably make ~$100M per quarter in net income and have a few billion in cash reserves. They're on very stable financial footing.
- ravenstine 9y ago
  income =/= profit
  - dmoy 9y ago
    Isn't net income == net profit?
    - ravenstine 9y ago
      A person can have an income of $300k a year but spend every penny of it on debt and necessities. That's generally not considered making a profit. EDIT: Sorry, I misunderstood something. Netflix has indeed been making a profit.
      - dmoy 9y ago
        Sure but if a corporation makes 300k a year that's called revenue, the revenue minus costs are profit, no?
        hackits 9y ago
        Revenue-Expenses=Profit
        notyourday 9y ago
        Basically, it depends on the size of the company - the numbers reported by Netflix are GAAP. The tricky part is depreciation and amortization v. cash which would create a different outcomes in a cashflow and GAAP. A company with a positive cashflow and GAAP profitable is in the best spot, followed by a company with a positive cashflow and losing money in GAAP-land, followed by a negative cashflow and positive GAAP-land, followed by a negative cashflow and negative GAAP.
- dilemma 9y ago
  Their content production is amortized over 5 years. In reality, they're in the red.
  - cletus 9y ago
    Cash flow might be negative but that's not the same as being in the red. And I'm not even sure cash flow is negative. Content should be amortized as it will generate revenue for years. It's essentially being treated as a capital expense, which isn't unreasonable.
  - kevinr 9y ago
    Recognizing both expenses and revenue over time is part of generally accepted accounting practices (GAAP). Intuitionistically, it makes total sense that you get a clearer picture of the true state of the finances of Netflix as a going concern if they recognize the costs of a show on their balance sheet over five years when they expect subscribers to still be watching it for the first (or second, or third) time several years on.

nostrademons 9y ago

They have 100M+ subscribers who each pay ~$10/month. That's a billion dollars a month, or $12B/year. $12B/year can pay for a lot of $300K/year salaries. (Most people have trouble wrapping their heads around just how huge consumer markets are. If you have 300M users - a la Whatsapp when Facebook acquired them - and charge them just $1/year, that's $300M/year in revenue, or enough to afford 1000 $300K/year engineers [or actually more like 1000 $200K/year engineers once you figure in overhead]. Similarly, if just one person out of every 100 acquaintances you know uses a product but they spend $10/month on it, that's about $400M/year. The challenge for consumer businesses is usually that they have to spend more to reach those customers and get them to open up their wallets than they make from each one, not that there aren't enough customers.)

MagnumOpus 9y ago
> $12B/year can pay for a lot of $300K/year salaries. Of course out of those $12bn, 7-8 will go to cost-of-goods-sold (buying or making the content they serve up). Still, 3-4bn of gross income pays for quite a few engineers.
- adventured 9y ago
  Their latest quarter: $2.98 billion sales, $991m gross profit, $208m operating income Tracking toward $11.75b - $12b in sales for fiscal 2017, with a mere ~3,400 employees or so. They've historically had relatively slim margins (especially in the streaming business), probably explains the very thin employee base versus the sales.
jedrek 9y ago
> $300M/year in revenue, or enough to afford 1000 $300K/year engineers [or actually more like 1000 $200K/year engineers once you figure in overhead]. I think you're massively underestimating overhead. Each person who works on a product should make a max of 15-25% of what they bring in. If you have a repair shop and you charge $100/h, you should be paying your techs $15-25.
- 9y ago

ringaroundthetx 9y ago

Netflix compensation packages are base salary only. So they are competitive by attempting to compute the value of Google or Facebook compensation packages which include shares and generous bonuses, and then Netflix aims to slightly beat that as well. Netflix has other perks of course. But they also have a pretty crazy layoff policy and they brag about how awesome their severance package is. Employment as Netflix is really a mixture of the income premium and lack of stability that a contractor would have, with a compensation structure closer to a startup (base salary only, no formalized bonuses).

lsc 9y ago
>Employment as Netflix is really a mixture of the income premium and lack of stability that a contractor would have, with a compensation structure closer to a startup (base salary only, no formalized bonuses). Note, ever since IC Engineers started getting significant bonus/stock grants (Which, I think, is something that has been a thing for less than a decade, at least for grants of publicly traded stock.) From what I've seen? Contractors have lost their income premium. I mean, contractors still make more than what they'd make full time for base salary, but base salary is now a relatively small portion of total comp for FTEs at most places. Just my observation; I'm also talking about the sort of contractors who go through body shops and essentially do the same jobs as the regular employees.
- twodave 9y ago
  Maybe this is true on the west coast, but most of us don't work over there.
- hibikir 9y ago
  This is only true when looking at tech companies that really hand significant stock grants. There are tons of software developers, all over the US, getting only salary and modest bonuses outside of those few places that grant stock that is as good as money. When you look at that world, contractors still win by a very wide margin: They are organizations where HR will not allow a hire for a competitive salary, but a department head can spend their budget on contractors any way they want. This leads to gigantic pro-contractor differences: As recently as last year, I made three times as much as someone sitting next to me that had Architect in their title, and the contract was for many hundreds of hours, so it's not as if there was non-billable overhead. Now, the big tech companies can compete with contractor billing rates, just as long as it's either Netflix, or someone with good-as-money stock grants, but if you live in, say, Kansas City, you won't smell those companies anyway, and chances are that, barring remote work for a giant, the best you can hope for without contracting is salary that isa little bit below Google's, but no stock.

hatred 9y ago

You also need to understand that they believe in hiring/keeping high-performers that are much more productive than average engineers. This is how you can justify the much higher salaries (top of market). IIUC, this means; You are effectively rewarding the high performing team more by maintaining a smaller team.

briga 9y ago

What's even harder to wrap my head around is that according to this survey around 15% of people at Netflix think they're not compensated fairly. What do they want? 400k? 500k? Would a salary of a million dollars a year be enough?

sambe 9y ago
If you worked at Netflix and everyone around you made a million whilst you made half a million, you might give such an answer on a survey, and it probably wouldn't change with the absolute amounts.
- briga 9y ago
  That's something that worries me about moving down to Silicon Valley. It seems like everyone there is envious of how much their neighbors and co-workers make, regardless of how much they happen to be making. I want to avoid falling into that trap--it seems like a recipe for unhappiness.
  - chickenbane 9y ago
    Another perspective: Netflix is notoriously interested in only hiring top talent. Top talent is ambitious and always seeking to advance. I don't think it's a matter of envy, it's the unending beat of progress.
    - meric 9y ago
      And,or: they hire the people most likely to feel unfairly paid, and it’s when we feel we are unfairly paid we are more motivated to negotiate higher salaries, and the more a company’s employees ask for higher salaries the more likely they are paid higher. And if the root cause of the feeling of being unfairly paid isn’t the absolute amount of money being received, then the higher salaries won’t reduce the feeling.
Aron 9y ago
The competition is starting your own company and cashing in on many millions or billions from it. I think it's perfectly reasonable for the highest achievers to have that in mind as the alternative to compare against and hold some ambivalence on whether they are maximizing themselves.