…yesterday along with the other gazillion people he wrote to.

The letter began Dear Lennie,

“I messed up. I owe you an explanation.”

Thank You Reed but you didn’t do anything to me. Even though I’m going to keep reading in hopes of finding a gift certificate in your letter.

“It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming and the price changes. “

Oh! So you’ve had an attitude problem.

And now, even though you’ve made us really happy in the past by changing the way we watch movies, you need us to love you again as you grow, except for the part about the big honking price increase we’re getting stuck with.

“That was certainly not our intent” (to make you mad) “and I offer my sincere apology. Let me explain what we are doing.”

“For the past five years, my greatest fear at Netflix has been that we wouldn’t make the leap from success in DVDs to success in streaming. Most companies that are great at something – like AOL dialup or Borders bookstores – do not become great at new things people want (streaming for us). “

“So we moved quickly into streaming, but I should have personally given you a full explanation of why we are splitting the services and thereby increasing prices. It wouldn’t have changed the price increase, but it would have been the right thing to do.”  (so now we are channeling our inner Meg Whitman?)

Translation: Now that we’ve had a big honking backlash we need  to make it right. Our customers have a point and we are listening.

Here’s a synopsis of the rest of the letter.

The company is splitting into two divisions because they are really two different businesses “Qwikster” for DVDs and Netflix for streaming. They operate differently, have different overhead and require different marketing.  There is a bunch of benefits to both and they’ll just keep getting better.

Reed continues:
“For me the Netflix red envelope has always been a source of joy. The new envelope is still that lovely red, but now it will have a Qwikster logo. I know that logo will grow on me over time, but still, it is hard. I imagine it will be similar for many of you.”

“I want to acknowledge and thank you for sticking with us, and to apologize again to those members, both current and former, who felt we treated them thoughtlessly.”

“Both the Qwikster and Netflix teams will work hard to regain your trust. We know it will not be overnight. Actions speak louder than words. But words help people to understand actions.”

Respectfully yours,

-Reed Hastings, Co-Founder and CEO, Netflix

My response:
Dear Reed,

Just want you to know I was only using streaming so we’re cool.  But for those families and customers who are spending their hard earned money with you and paying more, I think offering them a month of free DVD service would have a far greater impact on demonstrating your sincerity and ethics beyond an email apology..which is a good start.

I understand it’s hard to grow a company and survive. And you really have made life a better place by offering me an endless buffet of movies.

But for people who are living close to the bone, where every dollar counts – they may have to sacrifice to continue with you or make a decision of what to cut in their budget so they can.

My suggestion to you is this – if you are asking people to give more to get the same, then you need to give them more as they adjust their budgets and thinking.  Why not invest in your customers, while investing in your company? 

If you can’t afford to send everyone a free month of DVDs you can afford to send them SOMETHING because it is your job to give more if you ask more.

As Warren Buffet said, “Price is what you ask, Value is what you get.”

Reed, it’s clear you’ve reached a crossroad in your company. If you are going to grow into the future with a soul, then demonstrate it with the extra mile.

“You can’t build a reputation on what you are going to do.” Henry Ford.

But you can build a reputation on how you handle this next phase.

Good luck to you and I hope you guide the company back to the WOW you did when we started.

Best,

Lennie Rose, Chief Netflix Customer & Household  Purchasing Agent