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Comment by jedberg | Hacker News Reader

I have to praise Netflix here for getting this right. They don't do pidly raises. They look at how much they have to offer to get good candidates in the door, and they give everyone doing the same work a raise up to that level. Some years I got 20%+ raises (and so did all of my peers). Almost no one left Netflix for more money. If they left it was either to do work they couldn't do at Netflix, to get a much larger scope (like going from manager to director), or to start their own company.

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What is it about Netflix that they pay so well? Lots of tech companies have tons of cash, that's not it. Other tech companies are equally profitable, that's not it. What is the tradeoff that Netflix is making, in order to invest in its employees the way that it does?

In general companies in the growth phase operate somewhat like Netflix. Once companies have reached their maximum / optimum size, they start focusing on operational efficiencies.

I think it's because the founders were engineers, but more than that, engineers who actually worked for someone else first and also had another company before Netflix. So unlike say Facebook or Microsoft, the company culture was created by someone who has actually been an employee before.

Also unlike a lot of the other tech companies, the salaries of the engineers aren't their biggest cost -- content is. So they don't take as big a hit on their stock price or profitability when their engineering costs go up because they are dwarfed by content costs.

And lastly because they believe that overpaying for talent makes sense in the long run because then a lot of the best talent wants to work there, so they can get paid a lot and be surrounded by other people who like a culture where poor performance is rewarded with a big severance.

I won't lie, the culture isn't for everyone. I personally enjoyed the pressure of having to constantly perform, I felt it made me do better work, but not everyone is like that.

Is Netflix still doing cutting edge stuff? Back in the day I was in awe of what they have accomplished over the years but now competitors seem to be rolling out basically equivalent services. That makes it seems like the core tech to do what they do has been commoditized and all the "magical" stuff has been figured out.

I made a big miscalculation with Disney+ because when I heard stories of many good engineers leaving BAMTech in the initial rollout I thought these guys are clowns run by non-tech savvy executives. But I was proven wrong when they didn't crash and burn. Since then other companies that seem like legacy firms that don't know anything about tech are also rolling out services and they are more or less working.

From what I hear most of the innovation is around content creation and studio tools down in LA. The innovation in Los Gatos is more around developer tools and efficiency and deployment and failover efficiency. They are however still doing a lot of work on product innovation but it’s all in the algorithms and less user facing stuff.

Is this going to attract the cream of the crop or will they have to raise salaries even further to compensate?

Just a theory: Maybe enough top tier people won't want to do this work at any price as they will be wasting valuable time not innovating on the cutting edge.

I read a year or so ago they were looking at some new video compression tricks. I can't remember the detail but I remember being impressed. I'm sure there is plenty research going to to make the picture quality better.

The one counterexample that comes to mind is Amazon and Jeff Bezos. Jeff spent eight years working before starting Amazon (albeit in finance), and yet Amazon is not particularly known for being employee-friendly.

Because he didn’t work as an engineer. He worked in finance, which is famous for abusing their employees.

He worked in quant finance, which is pretty cushy from what I hear (though not as cushy as tech).

The same Jeff Bezos who had zero passion for the products he was initially selling, drove a Honda Accord until 2013, was too cheap to buy desks for his employees and so proud of this philosophy that the new headquarters was named after it? Not someone I'd expect to be overly generous to engineering staff (let alone the people at the bottom who's issues are well documented).

At previous BigCo I got the feeling management’s approach to problem solving was to get the right organizational structure with the right job reqs and the rest would sort itself out.

At Netflix I felt the goal was to get the right people working on the right problems, and the rest would work itself out.

I never detected a sense of “fungibility” of engineers at Netflix the way I have at previous gigs. Job reqs weren’t job reqs, they were definitions of problem spaces and each team owned their own interview pipeline. Each team defined their own job postings, cultivated their own talent pipelines, and conducted their own interviews. At least from my experience, you don’t interview for Netflix. You interview for a specific team at Netflix. I’ve met at least one NFLX engineer that interviewed for a half dozen teams before getting to “yes.”

I agree with you that at Netflix we hired for specific roles and that worked out well.

But I think that has to do with the fact that we only hired senior engineers. At the other BigCos, they are hiring junior engineers right out of school who aren't specialized yet, so for all intents and purposes, they are fungible.

Even the BigCos hire for specific roles at the higher levels.

Netflix doesn't pay stock. So the offer is straightforward. Their competitors pay stock which employees have to valuate, which is hard and employees usually undervalue it.

Netflix pays stock too. You get a small grant plus you get to choose your stock/cash mix beyond that. So it’s actually for more complicated to value.

My understanding is that Netflix gives huge raises, but shows you the door if you don't perform.

Other companies don't want to be so aggressive, so they take a similar but related tack; give you a lot more money for promos if you perform, and hope you just leave of your own volition if you don't hit those marks and get those raises.

I've heard Netflix also has a perform or get managed out culture. Can you comment on that side of things?

I think everywhere that pays above market rates needs a strict cutting strategy, otherwise people just sit there and stagnate.

There is very little managing out. If you don’t perform they just fire you and give you a big severance check. Of course you get warnings and the firing isn’t usually a surprise, but there isn’t a lot of politics around it.

Ok, but that's just because they have covert levels:

https://www.levels.fyi/?compare=Netflix,Google,Facebook&trac...

The pay raise between levels at Google or Facebook is about 20-30%

The levels aren’t covert, they just don’t have any. But I wasn’t getting a level promotion every year and neither were my coworkers. Besides I started at the equivalent of a senior principal so there weren’t a lot of promotions to be had.

I believe this is what OP means by "covert" levels. There are no official levels but you were equivalent to senior principal even though you had no official level. Either all ICs are doing senior principal level work, which probably can't be true because no org has that many jobs with that scope of work and generally you're talking about cross org, architecture level work, multiple "lower level" engineers need to support and implement that work at that level. All flat organizations have implicit hierarchies, especially once they grow to a certain size

Their claim was that the 20% raises were explained by the person jumping a “secret” level, and my counterclaim was that that wasn’t the cause, because one year everyone in my group got a 20% raise and also because I didn’t have any levels, secret or otherwise, left to go.

Thanks for the details. Yes, I implied it's just some murky water bullshit, but it does look interesting.

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