Reed Hastings explains why startups should offer severance packages

And I think one part of compassion is a severance package because, you know, when you cut someone loose and you know, it's a week or two of pay, it really can be difficult for them. But our minimum is four months and goes up from there. So even if like two weeks in, we realize, you know, there's a mistake as long as the person has a lied to us or something, you know, but we've made a mistake, they get a four month severance package. And that does a couple things. One is, you know, it makes the person feel better about it because they know that's, you know, it's a material amount of money. And again, four months is the minimum. And two, we get a legal release in exchange for that. And so despite the fact that we've separated from 1,000 people, maybe we've never had an employee lawsuit because, you know, of this. And then third and most subtly, managers are really nice people. They're human beings beings and they're good with people. So they don't like doing mean things. And so you can think of the severance payment as like a bribe to the manager to do the right thing because it makes it easier. And without that, what they do is they put an employee on a performance improvement plan and then the two of them go through this excruciating dance. You know, where to, you know, that takes two or three or four months and then they break up. But it's clearly documented and that's just a lot worse. So that's why we avoid that and essentially buy out. And then the person's gonna take a month or two off and then they'll get snapped up somewhere. When did you start with the four month severance package? It was three months from the very beginning. That's unusual for a startup. Yes. I mean, it's real money, but it's worth it because again, otherwise that person, it's costing you anyway. It doesn't really cost you anymore. Okay. Because you're gonna spend the three months the person out, and so you're going to end up with that hit. It's kind of the classic.