Guest Post: Lessons in leadership – from a failed startup

By Reed Hastings, founder, chairman and CEO, Netflix

Two decades ago I worked at a great 30-person startup creating the next generation of a type of business software. We all knew it was risky because we were trying to write a huge application in very little time. I was young and hardcore, and I loved all-nighters. You could get so much done late at night with no interruptions, and my colleagues would arrive in the a.m. finding new features finally working.

With this caffeine-fueled lifestyle, the half-empty coffee mugs would clutter up my computer table, and the more they built up, the more I avoided dealing with the mess. But fortunately, every now and then, I would arrive in the morning and find all of them cleaned and sparkling on my desk. I guess the janitor just couldn’t stand it any longer.

After a year or so of this highly productive work, I woke up at home early one morning and went into work just as the sky lightened. Pulling into the parking lot, I saw our CEO’s car. He was a somewhat formal senior exec from a public company – a “suit.” Obviously, he had arrived before dawn.

Inside the building, as I walked down the hall, I stopped in the men’s room. There inside, by the sink, was my CEO, coat off, sleeves rolled up, scrubbing a large collection of nasty-looking coffee mugs. As the shock of the image faded, I realized that those were probably my mugs—and through that whole year, it was probably him, not the janitor, cleaning them. Embarrassment, guilt, shame, and gratitude all pulsed through me as I stammered out a question:  “Why are you cleaning my cups?”

“Well,” he replied, “you’re working so hard and doing so much for us. And this is the only thing I could think of that I could do for you.”

I was blown away. And I learned the lesson of how a leader’s unexpected humility can create great respect. If possible, I worked even harder over the next year. And I knew I would walk through any wall for him.

The second lesson from that startup isn’t as sweet. We sold only one copy of our application. And that customer never deployed it. We had spent two long years building software that no one cared about. The company went bankrupt.

The big lesson? If you are a great people leader, you had better not lead them into a box canyon from which there is no escape. In leadership, market judgment trumps nearly everything else.

Reed Hastings is the founder, chairman and CEO of Netflix (NFLX). After selling his first startup, Pure Software, to Rational Software in 1997, he founded Netflix and launched the DVD subscription service in 1999. The company, with 2007 revenues of $1.2 billion , is the world’s largest online movie rental business. Hastings joined the Microsoft (MSFT) board last year.