An Open Letter to Reed Hastings

One Fool is still on your side, but less enthusiastically.

Brian Stoffel
Brian Stoffel
Jul 17, 2011 at 12:00AM

Dear Mr. Hastings,

You, sir, are a brilliant businessman.

As a customer, I have used and loved your Netflix (Nasdaq: NFLX) service for years. As an investor, I have bought and profited from your shares beyond what I could have ever hoped for. I have every intention of continuing to use your service, and to hold your shares.

Now that we've established that I'm on your side, I was hoping we could have a difficult conversation -- because this is what friends do for each other.

Customer delight
Though I wasn't there for the company's birth, the story of Netflix's conception is well known. You returned a movie late to Blockbuster, paid a ridiculous late fee, and thought to yourself, "There has to be a better way."

You knew that we, as customers, appreciated convenience, entertainment, and honesty. We loved the DVD-rental service -- it's even better than Coinstar's (Nasdaq: CSTR) Redbox. And we were wowed by your prescience in beating the likes of Apple (Nasdaq: AAPL), Google, and (Nasdaq: AMZN) to the amazing convenience of streaming.

You even went so far as to send me a personal email letting me know that you were crediting my account because of an unexpected outage in your service.

That's impressive stuff, and it doesn't go unnoticed. This year, your company was named No. 1 in consumer loyalty by the Brand Keys Customer Loyalty Engagement Index, dethroning Apple on the way.

Personal confusion mixed with business savvy
You have to know, Reed, how important customer satisfaction is to your continued success. So it was with confusion that I read about your recent rate increase. I'm one of those customers who got one DVD at a time, plus streaming -- one of the people who are "feeling the pinch." Your letter to me (signed "The Netflix Team") was cold and impersonal.

I thought we were friends, Reed!

I don't mind paying up another 60%, because I love your service. But at least explain yourself to me. Tell me how the licensing deals are going to start costing more and more. Tell me why, in order to provide me with great content, I need to start paying about $0.53 per day, instead of $0.26.

For my own dignity, just put it in terms that'll make me feel as if I'm still getting a deal, not like some powerless customer you're kind of embarrassed to serve.

I think you're setting yourself up well, Reed. As a customer, I think you still have the best value proposition out there to meet my viewing needs. As an investor, I think this additional revenue will go a long way toward providing quality content as you move abroad.

I just wish you didn't make me feel so used in the process.

Brian Stoffel