Reed Hastings built Netflix from a DVD-by-mail service into a global entertainment company worth hundreds of billions of dollars. His book, co-written with culture researcher Erin Meyer, is an account of the management principles that made that possible. They are unusual enough that the book is worth reading even if you never intend to run a company. The foundational principle is talent density. Hastings argues that the most important variable in any team or organisation is not the processes, the strategy, or the values statements. It is the average calibre of the people in the room. He draws on a painful experience from Netflix's early history. After the dot-com crash, the company was forced to lay off a third of its staff. Hastings expected the remaining team to be demoralised and less productive. Instead, the opposite happened: productivity increased, the quality of work improved, and the culture became more energised. The remaining people were the highest performers, and the average increased dramatically. The lesson he took was stark: adequate performers do not just contribute less than great ones. They actively reduce the productivity and quality of the people around them. A team of eight exceptional people produces more than a team of twelve where four are adequate, and costs less to run. This led to Netflix's first unconventional decision: pay the very best they could find, pay above market rates to attract them, and let the rest go when they were identified as adequate rather than exceptional.