- Reed Hastings kept losing money as an investor so he sticks to owning Netflix stock and index funds.
- “The few times that I’ve done investing, I’ve lost my shirt,” Netflix’s ex-CEO told “The Tim Ferriss Show.”
- Warren Buffett advises most people to invest in index funds instead of trying to beat the market.
Reed Hastings is a technology pioneer who built one of the world’s biggest internet companies and transformed the entertainment industry. But he sucks at investing.
The Netflix cofounder, who stepped down as the video-streaming platform’s joint CEO early last year, revealed his terrible track record on the latest episode of “The Tim Ferriss Show” podcast.
“The few times that I’ve done investing, I’ve lost my shirt,” Hastings said, explaining that he’s overly optimistic and says yes to every good idea pitched to him.
In contrast, skilled investors have “different DNA” that enables them to be more discerning and turn down all but the very best opportunities, Netflix’s executive chairman continued.
“So I’m a pure index-fund investor, I’m Netflix plus index funds,” he said.
Hastings might be taking notes from Warren Buffett. The investing icon and Berkshire Hathaway CEO has long championed a low-cost index fund as the best option for a “know-nothing investor,” and gave that advice to Ferriss himself in 2008.
Buffett has repeatedly said that almost everyone would be better off if they settled for a market return instead of trying to beat the average — and they would outperform most of Wall Street in the long run.
Unlike Hastings, Buffett is picky about what he invests in, priding himself on saying no to almost everything. He even dubbed his late business partner Charlie Munger the “Abominable No-Man” for relentlessly shooting down ideas.
Yet Hastings — who took Netflix from nothing in 1997 to $32 billion of revenue and $4.5 billion of net income in 2022, and a $300 billion market capitalization at its peak — has found other ways to put his money to work.
In late January, he gifted 2 million Netflix shares worth $1.1 billion to the Silicon Valley Community Foundation. The donation slashed his direct stake in Netflix by about 40% to just under 3 million shares — a position valued at about $1.9 billion.
The tech veteran’s net worth is still around $6 billion, as he holds 3 million Netflix stock options and has sold about $2 billion worth over the years, per the Bloomberg Billionaires Index.
Hastings has also donated vast amounts of money to education providers like charter schools and historically Black colleges and universities (HBCUs).
Netflix’s executive chair might balk at buying individual stocks or backing startups, but he’s not afraid of striking big deals.
He reportedly plowed more than $100 million into Utah’s Powder Mountain last year to secure majority ownership of the nation’s largest ski resort, and has started upgrading its facilities and refocusing its business model.
It may be the case that Hastings is better suited to calling the shots than backing the right horse.
