Reed Hastings is a technology pioneer who built one of the world’s largest Internet companies and transformed the entertainment industry. But he’s bad at investing.
The Netflix co-founder, who resigned as co-CEO of the video streaming platform early last year, revealed his dire record in the latest episode of “The Tim Ferriss Show” podcast.
“The few times I’ve invested, I’ve lost my shirt,” Hastings said, explaining that he’s overly optimistic and says yes to every good idea that comes his way.
In contrast, accredited investors have “different DNA” that allows them to be more discerning and turn down all but the best opportunities, the Netflix executive chairman continued.
“So I’m a pure index fund investor, I’m Netflix plus index funds,” he said.
Hastings may be taking notes from Warren Buffett. The investing icon and CEO of Berkshire Hathaway has long championed a low-cost index fund as the best option for an “ignorant investor,” and gave this advice to Ferriss himself in 2008.
Buffett has repeatedly said that almost everyone would be better off if they were content with market returns instead of trying to beat the average – and that they would outperform most Wall Street stocks over the long term. .
Unlike Hastings, Buffett is picky about what he invests in, priding himself on saying no to almost everything. He even nicknamed his late business partner Charlie Munger “the Abominable No-Man” for relentlessly rejecting ideas.
Yet Hastings – who grew Netflix from nothing in 1997 to $32 billion in revenue and $4.5 billion in net profit in 2022, and a market cap of $300 billion at its peak – found other ways to make your money grow.
In late January, he donated 2 million shares of Netflix stock worth $1.1 billion to the Silicon Valley Community Foundation. The donation reduced his direct stake in Netflix by about 40%, to just under 3 million shares, a position valued at about $1.9 billion.
The tech veteran’s net worth is still around $6 billion, as he owns 3 million Netflix stock options and has sold around $2 billion worth of them over the years, according to the Bloomberg Billionaires Index.
Hastings has also donated large sums of money to education providers like charter schools and historically black colleges and universities (HBCUs).
Netflix’s executive chairman might be hesitant to buy individual stocks or back startups, but he’s not afraid to make big deals.
He reportedly invested more than $100 million in Utah’s Powder Mountain last year to gain a majority stake in the nation’s largest ski resort, and has begun upgrading its facilities and refocusing its business model .
It may be that Hastings is better placed to take the lead than to back the right horse.
businessinsider
