The test is a tool for creative work. Hastings contrasts it with a semiconductor factory, where the goal is to drive out variation. A company that wants new ideas needs high variance, and it runs close to what he calls the edge of chaos.
The first failure is one Hastings owns. He says Netflix's people did look out for each other, but the words the company used were not warm enough, and it came across as brutal from outside. At Powder Mountain the culture starts with "big-hearted champions who pick up the trash." The keeper test is still part of it; only the opening words changed.
The second failure is why he checks references his own way. He rarely asks candidates for references, because those say little. He climbs through LinkedIn histories to find people more loyal to him than to the candidate.
On the third, Hastings ran the test on someone close to him. He let Patty McCord, Netflix's head of HR, go because he thought the company would perform better with a new one. He says he liked her and felt conflicted. He still thinks it was right, because a company run to protect friends is a political company.
In 2020 Hastings called Netflix's turnover quite modest: around 8 to 9% a year, counting both people who left and people who were let go. First-year attrition ran higher, about 20%, because Netflix hired from a wide funnel and decided in the first year. At Powder Mountain he calls the talent density model worth the pain of that turnover.
The test pairs with Kim Scott's radical candor, which covers the harder half of step 2: saying it to the person while there is still time to change it.
