What Niccolò Machiavelli can tell us about Netflix

“There is a revolution happening, and within two years I think that Netflix will be built into all the televisions.” – Reed Hastings, Cofounder and CEO of Netflix Inc

Netflix Inc. started as DVD-by-mail service in 1998 and now is the leading worldwide provider of film and television. In recent years, Netflix has expanded to virtually every country in the world except for China. Through shrewd business acumen, strong corporate diplomacy, and a dedicated corps of employees; Netflix has become a significant global media powerhouse. Their remarkable and inspiring rise to power has illustrated many of the fundamental ideals of Italian Renaissance thinker, Niccolò Machiavelli. Netflix’s “Machiavellian” expansion strategy has paid off, but how and what can we learn from this?

Niccolò Machiavelli was born in 1469 during a tumultuous time in Italian history. This era of warring Italian states saw the rise and fall of many short-lived Republics and Principalities. In 1513, after years serving as a senior official in the Florentine Republic, Niccolò Machiavelli completed his Magnum Opus, a political treatise called “Il Principe”. This 16th-century political discourse on statesmanship is still widely studied and applied today. In recent years, Netflix has used cunning and duplicity outlined in The Prince, to shape their corporate practice and business strategy.

 “Men always dislike enterprises where the snags are evident, and it is obviously not easy to assault a town which has been made into a bastion by a Prince who is not hated by the people.” -Niccolò Machiavelli, Il Principe

In order to avoid possible invasion and takeover, a prince must be able to amply secure their principality, against enemies both foreign and domestic. The trials and tribulations of the modern business world are the new warfare on a global scale. In this new hyper warfare of the 21st century, Hostile Takeovers embody the violent military invasions of old. A Hostile Takeover is the acquisition of one company by another by going directly to the company’s shareholders to replace management to get the acquisition approved. In 2012 Netflix exemplified this Machiavellian principle of securing one’s self, with their response to American investor, Carl Icahn, and his attempted Hostile Takeover of Netflix.

On November 2, 2012 Carl Icahn revealed he intended to acquire a 10 percent stake in Netflix Inc. Initially open to the idea of Icahn taking over Netflix; within a week, Netflix’s board of directors soon made 180 degree turn and began to prepare for “battle”, setting the stage for a potential Hostile Takeover. In opposition to Icahn, Netflix’s board of directors approved a shareholder rights contingency plan, also commonly referred to as “Poison Pill” plan within the industry. The “Poison Pill” plan would be triggered only if an individual investor acquired more than 10% of Netflix’s shares or if an institutional investor attained more than 20% percent of shares. Once the trigger is activated, Netflix’s shares would be sold at a considerable discount, causing the purchases of the shares to skyrocket. Once enough shares are sold at a low price, the “Poison Pill” starts to dilute the shares and liquidity of Netflix until it makes a potential Hostile Takeover unattractive. Through its calculating and shrewd maneuvering, Netflix was able to implement enough snags and obstacles, in true Machiavellian fashion, to dampen any potential Hostile Takeover.

Just as Machiavelli revolutionized the realm of politics, Netflix transformed the multi-media industry with the introduction of its Video on Demand service via the internet. As of 2016, Netflix has made a significant global expansion, and is now available nearly worldwide. During the course of its dramatic rise to power, the astute decisions made Netflix’s veteran officers and directors have been indispensable. All the while, Netflix has been able to skillfully defend its hard-earned empire from Hostile Takeovers, with the calculating adoption of the “Poison Pill” plan. From humble beginnings, Netflix has profited from using tactics which can only be described as “Machiavellian”, to slowly but surely conquer the world.  

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