Netflix's Annual Reports (10-Ks) used to be a work of art. What happened? | Hacker News Reader

Netflix's Annual Reports (10-Ks) used to be a work of art. What happened?

singhkays.com

242 pointssinghkays77 comments

Annual Report:

A corporation's annual report is usually a colored, professionally presented, and marketable document intended for an audience of shareholders.

10-K:

The 10-K report is submitted to the SEC in a generic format, with no pictures or charts. The SEC has very strict guidelines on what information must be included and how it must be organized.

Source: https://www.investopedia.com/ask/answers/102714/what-are-dif...

Edit: I'm glad to see this is the #1 post on HN (at the time of this writing) even though the author, like many individual and some institutional investors, innocently do not know the difference between a company's PR-like annual report and an SEC-audited 10-K form. Hopefully the upvotes will draw attention to this common misconception which is also discussed by the SEC:

https://www.investor.gov/introduction-investing/investing-ba...

Disclosure / Shameless Plug:

I run https://Last10K.com which is an SEC.gov alternative for investors to find and read 10Ks more efficiently.

Like the ideas of reading 10K more efficiently. But to me, the text interface of Last10k could not deliver this promise. Visualization is IMO a much better way to quickly grasp information.

It's better because if used well, it brings your attention to the most important information. That becomes a problem when the company's idea of what investors should pay attention to is different from the SEC's.

(not a criticism of Last10k, this is more about the overall question of why Netflix could be encouraged to use the blander format).

Yes, I was looking to doing some kind of infographic.

Does this mean that Netflix produced two documents that they both called 10-K's? One pretty and one generic?

Most likely yes. One that goes straight to the bureaucrats (SEC) and one (with the exact same data) that is publicly available to amuse the 'peoples'. Having been immersed in audit/IT/security audit most of my life, I so much more prefer the 'flat'/boring one.

Possibly not the exact problem here, but it’s a general one I have with citizen journalism: writing up the “scoop” instead of reaching out for comment.

Prior to 2003 though, the artworks themselves (shown in OP) do say '10K', like they're cover pages or something.

From then on, they're 'annual report's.

I'm not familiar with US forms, but perhaps it's possible there used to be a vaguer reporting requirement called '10K', and the format had more freedom, but then from 2003 it was just a form to fill out separately to a flashy annual report to investors?

There is no legal address, phone, email and no imprint on your page, that looks highly fishy. Would fix that. Privacy policy is missing as well :0

Doesn't revealing personal information like that on your website allow doxxing?

It's a legal requirement in some EU countries to have a valid imprint with address and owner information.

People getting mail from lawyers, demanding an imprint, is not unheard of.

Who says this is a EU website though?

I will look into this but there is indeed a privacy policy link on all pages in the footer: https://last10k.com/privacy

Not a fan of this:

11. CONTROLS FOR DO-NOT-TRACK FEATURES

Most web browsers and some mobile operating systems and mobile applications include a Do-Not-Track (“DNT”) feature or setting you can activate to signal your privacy preference not to have data about your online browsing activities monitored and collected. No uniform technology standard for recognizing and implementing DNT signals has been finalized. As such, we do not currently respond to DNT browser signals or any other mechanism that automatically communicates your choice not to be tracked online. If a standard for online tracking is adopted that we must follow in the future, we will inform you about that practice in a revised version of this Privacy Policy.

I'm not a fan of this either but at the time of publishing in 2018, that was standard boilerplate text. We will certainly revisit, thank you for pointing this out.

On the topic of Last10k, would you mind updating your iOS app? It wasn't cheap ($10) and still looks like it's formatted for an iPhone 8, not to mention the home screen icon is just a black square.

+1 to this.

The service is awesome but the app needs to be updated.

Sorry about this; we have been giving the mobile app for free to paid members of the site but feel free to reach out to me directly and I can provide a promo code. The content in the app is always up-to-date with a company's latest 10K/Q and has been tested to work on the iPhone 12 but yes, the overall look needs to be updated. I believe the icon appears blank because the image used was transparent.

What happened was Barry McCarthy, who was CFO at Netflix till 2010, left Netflix. Barry was an exceedingly creative and forward thinking CFO. He was the CFO responsible for taking Spotify public via direct listing in 2018, which was an incredibly bold move at the time. Definitely creative as far as CFOs go.

I was just thinking it was probably the work one one guy who doesn’t work at the company anymore

I'm not sure this is a sufficient explanation.

McCarthy left in 2010. But it looks like the decline in the "designy"-ness began in 2006.

Adobe used to do these designy annual reports as well [1], and it looks like they stopped in 2003. I wonder if something in that era encouraged them to knock it off.

Edit: for Adobe, it may have coincided with significantly cutting back their Marketing/Communications department, which had a huge staff of really great artists in the 90's. I believe this became viewed as an extravagance to have a stable of really talented and creative artists and designers on staff when you can hire this stuff out and get "reasonable" results.

[1] example: https://www.yumpu.com/en/document/view/33241791/adobe-annual...

SarBox came out around that time. No one was in the mood to be cute at that time.

Should have known, but I had to look that up.

Sarbanes-Oxley

https://en.wikipedia.org/wiki/Sarbanes%E2%80%93Oxley_Act

Which is about corporate financial responsibility, generally speaking.

Signed in to law July 30, 2002

What is impressive to me is, it still shows there is demand from accountants/investors and offer from authors for artistically pleasing documents.

It dwindled out, but it is similar to corporate websites like SAP which were boring to death and made life in corporate a bane (we should study suicide and boredom-from-boring-documents in corporates), until all layers of management were naturally attracted to software created by little startups, even if it didn’t track time correctly, but it was cuter and nicer and didn’t require IE7.

Boredom-from-documents-and-websites is a key factor for people’s choice of employment...

I worked for a company that would spend hundreds of thousands of dollars on their annual report. Every year it was a big deal. There were meetings, interviews, photo shoots and a lot of late nights to make sure it was just perfect and on time. It was beautiful every year.

Then one year a new Chief of operations was hired. She reviewed costs and saw that the creative department was too expensive. She closed it and outsourced the work.

One thing that happened was that the annual report was turned into a plain accounting report which reported the needed information. Tada, no one really complained, people that needed the information got what they needed and a few hundred thousand dollars was saved every year. It never came back.

Like everything, the fancy designed reports (annual or otherwise) come and go out of fashion.

Yesterday it was a requirement. Today it is too expensive and the COO got credit for cutting expenses. Tomorrow the CFO is jealous of Company X's report and it's back.

Sounds like the newest buzz in biz - "Business Intelligence".

Not new anymore, that started with the "Big Data" craze back around ~2012/2013.

But at the core it makes sense - it's just businesses making better use of the tons of data their systems are generating.

I was about to dispute this because of my experience using the term widely in late 2008-2010 range but Google Trends shows you are probably more accurate on timing. I work in corp finance and BI was pushed on us early.

Sound like it was fun, and now it's boring, was it worth it?

always

Yes it was fun to be part of it. The cuts were not worth it to me but it was for the company. It's been many years and the company is still around.

It happens to all companies. New executives get hired and they make their points by cost cutting and increasing productivity. Employee morale is not really part of the equation.

> Employee morale is not really part of the equation

If that’s the case they cannot claim to care about productivity.

> It never came back.

Just like any kind of fun left in the company?

True, once cost cutting started it became a drag to work for the company.

  1) computer, generic
  2) microsoft keyboard 
  3) microsoft mouse
  4) visual studio

red staplers now need VP signature

If you want fun on the company's dime, convince your boss to take your team to a go-kart track. That would provide a much better fun:money ratio.

Once the cutting has started the company is unlikely to have set the morale/team/event budget large enough to support go kart outings. That or the entire years budget would be gone at once.

If you want a motivated, enthusiastic workforce, don’t try to crush fun for profit.

See, go karts seem like much more fun than pencil pushers making fancy word documents. But for each their own I suppose.

There's a difference between having fun at work, and having fun allocated by work. What most companies have is enforced fun - once or twice a year you'll go to an offsite location with free booze and try some ridiculous forced activity, and the desperate hope from corporate that that can take the place of actually enjoying your job. What most companies want is an atmosphere where people have fun and are passionate actually doing their job. That's what you see in these early annual reports from Netflix - people enjoying what they do. Now, in reality in business sometimes the imperatives change, but that doesn't make those two things the same.

How many people earnestly find fancy reports fun, and how many are just smiling and playing along to avoid being a wet noodle? In the case of Netflix, it was apparently one guy's passion project. Great for him, but how many netflix workers really feel like they're having less fun now that he's not doing it?

Seems like an interesting thesis to test. Does internal brand recognition (annual reports that consumers probably won't see) carry any weight? Because consumer brand recognition sure does.

One of the reasons might be, that the SEC mandated all filers to submit the reports in XBRL Format starting in 2009 (foreign private issuers using IFRS followed 2017). It’s called Interactive Data by SEC and requires to tag each and every value with an XML element to give it an accounting meaning. The XBRL tools have not been able at that time to convert PDF or InDesign files, so all reports look rather ugly since then. I’m head of development team that invented a PDF Tagger; we sold it like warm bread during last month, because all EU listed companies are also mandated to submit iXBRL now. Btw, the cover page always looks that ugly because it must be the „form“ template from SEC.

Here is a link to a more pretty report, also having XBRL tags: https://www.gleif.org/assets/components/xbrl-viewer/gleif-an...

Flashy 10-Ks are hugely annoying, especially in IFRS where there’s no standard. Give me tables all day every day. The lack of standardization in financial reporting already sinks enough of my time.

Is XBRL any good? I see more filings on EDGAR/SEDAR using that.

It isn't a choice for any registrant that is filing to the SEC. Even the smallest filers will have to file most reports using XBRL after June.

The application of XBRL doesn't really affect the design of the reports. It ebbs and flows - it feels like more designed filings are coming back with better tools that allow more designed reports.

The is an entire industry that does financial printing; 10k, quarterly reports, prospectuses etc. they handle the filing with SEC/Edgar. If there is a descrepency it arises there. Any one remember when RRDonnelley submitted Googles data a couple hours early during trading and they had to halt trading in the stock?

About 5 years ago I made an XBRL viewer. In a ton of reports I tested the data did not match the paper reports. After ruling out bugs in my own software I went as far as emailing a few companies investor relations departments and never got a response.

I hope things have improved in the years since but I doubt it. Nobody looks at the XBRL its just a regulatory box tick.

Unfortunately it’s very occasionally wrong, making it almost useless for me.

The foreign (non-US) filers (and also IFRS) are bringing the design back. I don't like it either.

I don't know where this blog is getting their data from, but Netflix's 10-K filings have never been highly designed.

https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&C...

I assume they are pulling these from Netflix's Investor Relations site. That is a very different question than what is officially filed, which is very different from what this blog presents.

It seems like the blog is referencing the documents posted directly on Netflix's website[1], the early versions of which do open up with well-designed cover pages.

In contrast, the link you shared is perhaps the direct filings that the SEC receives from the company, which may remove these designed elements prior to filing.

-----

[1] https://ir.netflix.net/financials/annual-reports-and-proxies...

That's what I figured. So the blog post is completely off-course - this person is complaining that the Investor Relations site no long has tarted up versions of the annual filings.

"One fine day, as I was following the internet rathole, I landed myself on the Netflix investor page for some reason. One thing to understand about these 10-K forms is that these are …. pretty basic."

Like the vast majority of companies that just need to comply with their regulatory requirements.

Although the author may be wrong about whether the 10-Ks he saw were the same ones being submitted to the government, I think his curiosity is still worth indulging.

Why did Netflix slowly stop designing their 10-K reports that lived on their own investor relation page?

My own guess is that there was some downward pressure to just produce the basic report, since that's all the government would see and investors wouldn't really value the design.

If I had to guess (other than the general comings and goings of style), it would have been related to the increasing (mandated) usage of XBRL. The visual presentation was no longer as interesting as soon as you could extract the data in a machine readable format.

Except joke is on them because XBRL and the GAAP taxonomies allows "extension concepts" or tags(1) which basically means "we can make up our own reporting identifiers and you can't do anything about it" and makes categorizing accounting data very difficult across companies.

1: https://www.sec.gov/structureddata/gaap_trends_2019

I understand the point of the article, but if you're serious about reading company statements you (at least at first) skip all promo material / preso-looking pages and skip to the part looks the most boring. Literally, don't even look at them (at first). Or even better you can do it the Buffett way, read from the end to the beginning.

When you dont need to stand out more it stops mattering

Reason: They used to be mailed out.

Did you have to mail them back when you were done reading?

Nah, sending them out was required [0] and the web wasn't the defacto medium for invesetor info not that long ago.

They were all pretty fancy [1].

[0] https://www.investor.gov/introduction-investing/investing-ba....

[1] https://www.ebay.com/sch/i.html?_from=R40&_trksid=p2334524.m...

Hint: Netflix used to require subscribers to send the bytes of the video back to Netflix.

This strikes me as a very on-point answer. Other people have noted that "Annual Report" and "10-K" aren't precisely the same thing: the 10-K is the annual SEC filing, akin to the 10-Q filed quarterly. The annual report is what's sent to investors. It can just be the 10-K, but I've definitely seen many companies in the past that did what amount to full-color brochures. I'm pretty sure the phone company I worked at in the late 90s had very pretty ones, although not as witty as Netflix's.

My guess is that Netflix was still trying to establish itself. Many investors probably were skeptical to invest in Netflix so they wanted to create something more splashy to engage people.

At some point Netflix went from a niche service to being a mature established company that people are going to seek out. The splashiness was no longer needed.

I think it was honestly just a trend. Back then you used to have design students making annual reports for fun so they'd have something to pad out their portfolios. I'd wager that sort of thing is now towards the bottom of the list for most.

Why not doing two versions of the annual reports? One in plain text to meet the regulator’s requirement and the other one, shorter but more creative for the general audience and building of brand awareness? I believe it’s totally worth it.

I'm sure people here will recognize that a boring 10-k is easy for bots to parse and enter into computer systems that most users end up using. In fact 10-ks should probably have standardized XML format or similar for this.

I for one happen to like the typography of the 2010 version much better.

I think the move makes sense. There are lots of avenues for creative advertising available to a company. Standard financial disclosures shouldn't be one of them, especially since more and more of them are being machine-read nowadays.

> There are lots of avenues for creative advertising available to a company. Standard financial disclosures shouldn't be one of them

if a goal of marketing is to stand out then its the perfect place. very little is off limits.

Two come to mind: Cost and lawyers.

Its a canary of sorts; Netflix sold out.

If by "sold out" you mean focusing on delivering value to customers and investors instead of wasting money on frivolous and actually harmful designs, then yes.

If you want a company that didn't "sell out", check out WeWorks IPO docs.

I think it's the difference between paying the word processing department (if those still exist) to edit last year's document and paying for what amounts to an expensive marketing campaign that few people are going to see.

More than a few EU companies are outsourcing the design of their 20-F/40-F documents to design companies.

It is mostly a style/taste thing, although I know that some US companies are also interested in improving the presentations of their filings.

There are a lot of limitations and constraints involved when you're filing HTML that needs to look decent against all browsers and operating systems. Some filers will make a highly designed report and file it as a PDF alongside the official HTML version.

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