(Welcome to the “Most Important Story of the Week”, my bi-weekly strategy column analyzing the most important (but often not buzziest) news story of the last two weeks. I’m the Entertainment Strategy Guy, a former streaming executive who now analyzes business strategy in the entertainment industry. Please subscribe.)
Writing about the New York Mayoral race, pre-election, Nate Silver applauded the work of one particular pollster for publishing a poll even though it was an outlier. For those not versed in the polling discourse, an “outlier” is a statistical event that sits well outside the average. In polling, you should expect these outliers to be published regularly.
But that’s not what happens. Some pollsters don’t want to look out of step with consensus—whatever that may be—and they end up burying outlier polls so they don’t look bad.
I think this happens to an even worse degree in the punditocracy.
If you read a lot of takes hyping the latest trend—be it anime or concert films or celebrity production companies—do you want to step outside the mainstream with an original take or do you want to stay on the bandwagon? For most, it’s the latter. It’s safer to push along the conventional narrative than to hold up your hands and say, “Hey, wait a minute, is this true?”
Anyways, you can probably guess that I bring this up today because I pride myself on outlier takes. I love to question the consensus, and today’s “Most Important Story of the Week” column has a few of those takes, on everything from the YouTube/Disney carriage dispute to the launch of CNN+ and more.
But we start with a real hot take: why I wouldn’t (necessarily) hire former Netflix executives.
Most Important Story of the Week – The Netflix Hiring Frenzy…Good or Ill?
NFL teams have a really tough time drafting quarterbacks.
Despite ample information, from statistics to film tape (going back to high school!) to in-person interviews, when it comes time to pick who will fit on what team, often, very well-paid general managers simply pick the wrong guy. Nearly every year, some team uses a very good draft pick to draft a quarterback, often trading up to do so, while other QBs drafted later end up thriving. The San Francisco 49ers epitomized this in one draft where they managed to trade future assets to draft third overall, and then ended up starting a player they drafted with the last pick overall a few years later.
Teams (and NFL draft pundits) struggle to figure out a player’s situation versus his natural talent as the drivers of their success. I call this the “USC Trap” after multiple USC quarterbacks in the early 2000s underperformed in the NFL. They were fine QBs, yet never reached elite status in the NFL. But in college, you couldn’t tell because they were surrounded by a lot of other great players, which masked their deficiencies. Nowadays, this often happens to Alabama or Ohio State QBs.
Related to the introduction, if you’re a GM, you’re not going to lose your job if you draft a QB that mock drafts have highest on the big board, but you might lose it if you buck the consensus, so most GMs make the safe pick.
Can this happen in business? Yep. In this case, I’d call it the “Amazon Hiring Trap”. And I’m worried two companies are making it right now.
What is “The Amazon Hiring Trap”?
Well, first off, it’s partially an excuse for moi to coin another term. (For the entertainment industry dictionary!)
But I think it’s a real world phenomenon, too. Specifically…
The “Amazon Hiring Trap” is when the board of directors or executives at a small-ish company hire executives from Big Tech companies, who often end up failing at their new job.
The trap has two parts. First, folks sometimes benefit from just having arrived at a company on the upswing. Like executives who joined Amazon in the 2000s. The entire company grew at an incredible rate. If you simply held on to your job, you’d have impressive resume bullets.
Second, while folks ride those rocket ship companies, they often learn the wrong lessons, developing skills that work at a dominant firm that don’t apply to smaller companies.
I first noticed this with Amazon, because for a while it seemed like ex-Amazon executives were getting fired constantly. Want some examples? I’ve collected these examples over the past few years…
It may seem like a smart idea (“Let’s grab the person who runs logistics/devices/web services/e-commerce from the world’s leader in e-commerce”) but that’s the exact problem. Most of the people you’re hiring from Amazon are used to exploiting Amazon’s market power. Its size. Its dominance. They don’t have experience running a lean company that needs to compete to win business.
In most of these cases, the businesses found that outside of Amazon, the same skills they used to dominate competition no longer worked. In extreme cases, the executives don’t even really have the necessary experience with profit and loss. Sure, they had to deliver on financial results at Amazon, but we’ve seen that many times Amazon runs extreme losses. It’s easy to run a business with losses; it’s much harder to run a small company that will go bankrupt if you do the same.
Who May Be Falling Into This Trap in Entertainment?
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