Netflix founder Reed Hastings on talent density and the “keeper test”

After we did this one third layoff, it was 120 people to 80. We had expected to basically grind to a halt and really not be able to make any improvements because it would take 80 people just to keep the lights on. But in fact, we got more done with only 80 people. And we tried to figure out why and we realized now there was no more, there was no dummy proofing necessary. And so it was just everybody was going fast and everything was right. And so we realized with the right density of talent, there's very little process needed. And that was the joyful thing. But talent density matters so much. So then we figured no, let's not do a layoff every year like that, let's just do continued focus. And the big evolution we came to is for managers, they have to each year testify for each of their people that if that person were trying to quit, they would try to change their mind. And so it's up to the manager to decide, yes, I would want to change their mind. But sometimes you find that you have people working for you and if they quit, you'd be like, oh, that's pretty good. And that's the case we wanted to proactively not wait for them to quit, but proactively give them a generous severance package.