Hey, everybody, we've been doing this podcast for quite a while now, and we're always kind of reminded of people who come on and kind of maybe for the first time, listeners don't quite understand the format that we've created. And I just kind of like to take this time.

And you like a pilot on an airplane, like, hey, everybody, I just want to let you know we're approaching Chicago O'Hare.

I just thought I'd take it down because of the energy that they're about to be smacked in the face with by you.

Your energy going to be lower your solo. You'd have to rally today at this point that I'm trying to balance this out.

Well, I'm trying to balance this out because you are high on energy 24/7. So I'm just going to keep it like here because these people don't know what they're in for. Welcome to Somalia.

Welcome to the mark. Smart. Jason and I are in a fight, apparently, so Will is Will's doing a project, he's in Atlanta. What's your problem? So he's in Atlanta because I'm in I'm also in Atlanta working when I'm there. When I'm working right now, I'm not I'm in Los Angeles, but so Will Will said. So I'm going to be doing a project in Atlanta. Jason, where you live in is a good spot. Yeah, he has a great apartment building, so you should get a place there.

So he gets a place there in the same building.

In the same building. Now, Will Will is an attractive man and needs no help from anyone yet he is super passionate about keeping a fellow near him that is an artist with a comb I guess. And you feel that you need some sort of hair help. So he's got a guy with him. Yeah, listen, listen. That's not going travels with a groomer and an assistant. No, I'm talking. So he's got three people with them living in Atlanta.

And guess what? It's too crowded to live in the apartment with these three guys. So while I'm out of town, he asked me if he can use my apartment.

Yeah. And you know who gave me the keys? You know, give me the keys to Jason's Atlanta assistant, because he's got a few you know, every city I report he lands. He's got one here. And by the way, let's not get into the fucking assistantship because your assistant. Do you want to tell me do you want to tell a listener this is a work program?

You one I, I am I am trying to help out. Doing your laundry is work, you know.

Guys, guys, can I open up a fucking Pandora's box and you'll never see the world in the gay world.

They're called travel companions. Yeah. Thank you.

Well I know so well a little top heavy on the travel companion, so he needs to get away and stay in my place while I'm out of town. And guess what this guy does? He starts taking snaps of little areas around my apartment and throwing him off on a group chat nappies.

Yeah. So just so I said, know, I'm going to Bateman's fridge, so. And it looks like it honestly, it was just different colors of like different flavored waters that have no sugar. AbbVie. Yeah. Yeah. And a couple of other wonders and then like half a yogurt and a puffy will and I said a picture to Jason and to Jimmy Kimmel and Molly and the throw was saying, just in case you guys are worried that Jason doesn't live like a total psycho in Atlanta, I'm in the picture.

And then I took a picture this morning because I was up there this morning.

I know what you're doing up there this morning because you don't like to crap next year because I was using a treadmill.

Have you noticed the monitor in your treadmill is a little like shaky when you. Yeah, yeah. It's noisy. Can you fix that? Especially when you're heavy. So so I go up there. Doesn't shake that much when I'm on it.

I look in the cupboard and it looks like a hospice, like somebody dying. They're in their final days and it's just it's like seated crackers.

You put that picture up on the chata. I'm saving that one motherfucker. I'm saving it. And, you know, I thought I thought maybe I won't do it. But after this on air. Biraj, have you stayed off my toilet?

Have you stayed off my toilet? Yeah, I haven't taken it.

By the way, if you have your own apartment, what are you doing in Jason's apartment? I told you, he's got travel companions, so they stay there. Where exactly?

I've got my buddy Eli, whom, you know. Yes. So I've got Eli with me, who's my pal, and also works with me.

And some some of us know how to travel alone. I've been there for ten years alone. OK, sometimes I like quiet time.

You'd like to be alone without people. And I include your family in that. You want to be alone.

Your hair's not that complicated. Send Eli. Looks good though, doesn't it? Yeah, it looks great right now. He's nowhere near you, right?

He's right outside. Are you kidding.

Did you do did you do last looks for this. No. You know what I did. I did I when I was working this morning doing some voiceover and then I went up to your apartment and I worked out and and then I took a shower and I came back here and I'm going to right after this, I'm taking a snooze.

Another one in my bed.

How many channels do you get on that cable? Because I haven't cranked that up yet. More than you've got at yours. You've got the full package. You betcha. You got you got a pretty full pack. My handle in high school.

Sean. Yeah, we have a guest here, and it's Jason's guest. And let's get to him. So stop interrupting. Please stop interrupting.

Sorry. Sorry. All right. Listener payments, such a baby, but his apartment.

Shut your mouth or I'm going to take my key listener. We're going to have a conversation. Yes. I've written this listener today, comma, listener, comma. We're going to have a converse. Shut up. We're going to have a conversation with somebody who you've never met, but you live with a person you count on for your routines, your moods, your link to some of your closest and most intimate relationships, someone who if you drastically change the way in which he did his job, it would unsettle your emotional well-being and also the health of the financial markets.

He loves sandcastles, ham radio, taxidermy and light.

And he's right. He's got a very recognized. Will laugh, so shut up. He's recently converted from Virgo to Capricorn, and this is his very first interview here in the United States. Ladies and gentlemen, please welcome our friend and your housemate, co chief executive officer and chief content officer for Netflix, Theodora Anthony Sarandos Junior Montanti.

Hey, Dad Ellacott, I can't believe you started laughing. I saw. We'll stop there for a second. Like, why is that so familiar. What is that smell?

Ted, it's so nice to see you. Hey Sean. How are you? I'm good. You know, we had a dinner a long time ago, Ted, long many, many years ago at our mutual friend John Daviss House, which, yes, he's the best. And he I said to you, I go, gosh, it must be so annoying. You must get so many people that come up to you on a daily basis saying, hey, what about this for a show or about this constantly pitching you anything and everything for Netflix.

And you said, yeah, well, you know, part of the job, but, you know, it's what it's what it is. And I go, wow, that must be something. And then literally maybe two minutes later I go, Hey, Ted, what about this?

I got a thing. No, I was going to ask you about that because you're so you're so, you know, I mean, you listen, you can just hear his laugh.

You're such a personable, warm person. Doesn't throw up any sort of, like, barrier, like, please don't come talk to me. You're always very sort of inviting. I can't imagine that it was bigger and better than that as far as your warmth before you became the man running the world. Like has that has that lessened? It has to, hasn't it, to keep people away.

So someone asked me before, you know, but I get to do is big and there's a ton of things to do all over the world. And so that's what I like the most about it. And weirdly, the thing I like the most is sometimes the thing I like the least, which is being pitched. I mean, I actually the best part of the day sometimes is hearing an incredible pitch. It's almost like decadent, almost said this is my job is to be told a story to.

No, it's not great. If I'm in the middle of dinner with my wife at a restaurant, I'm sure I'll do it. And that happens a lot. And I kind of feel for people, I think that. So it gives them the really bad advice, which is, hey, if you ever see a person who buys TV shows, you may never see them again. So do it now.

Just pitch and just get in there, get it out, get the idea out there.

So to that so you started and we can kind of get into the history, the history of Netflix a little bit in your history with them. And I know that you've grown with the company. And what was the first year, do you think, that you started hearing pitches on a regular basis? And how did it increase in volume, like the pick up steam really quickly?

Well, the very first pitch was literally so walking out of the door at the end of a meeting, and it was the guys from MRC who we were meeting with. MRC also produces Ozark. Jason Bateman show. Yes.

What a show. You like it? Yeah. Have you seen it? Oh, God. You guys catch it. No comment from you. I got to catch up.

But we were we are meeting with them about buying the rights to a movie and literally whether walking out of the door, they said, hey, by the way, we're going to make a new TV show, take it out to the market called House of Cards. And it's got Robin Wright and Kevin Spacey and the William Mathis Oscar nominated guy wrote these three amazing scripts. And David Fincher is going to direct the show. Are you interested now? And yeah, so and I just you know, it's funny, I had known the original House of Cards from seeing it on DVD, actually from the BBC.

And we had been talking about someday getting into original content and making original shows for Netflix. So I said, wow, if there's ever a moment to step in, if there was ever a unbelievably perfect package show, it'd be this one. It's a great concept. It's great, great scripts. And then basically they asked us about here in the pitch and we pitched them. Wow.

So you that was something that you and Reid had talked about doing down the road. And then they kind of dropped it on you and it sped up your process a little bit.

Yeah. I mean, we knew we'd do it at some point. I was always a little nervous that we'd end up doing it small, you know, I mean, like people want to get their dip, tow it and then is all original programming doesn't work because the show didn't work and you went the other way. I went the other way, which as if it doesn't work, it's got to I mean, let's eliminate that. We made the wrong choices.

This show was great.

And in order to compete with the other potential buyers, you guys had to really come over the top, because as I think you've said before, like there were a thousand reasons for for David and Marci to not do it with you guys. So you had to come in with two seasons, one hundred million dollars, and kind of make it undeniable, all the creative freedom and autonomy that that you guys have justifiably become, you know, famous for. It was that the moment when Netflix was most exposed as far as like, we're going to do it, let's do it now.

A big outlay of. And if we make it through this transition, the winds at our backs, the main one, yes, is that we thought about there's going to be a couple of things that were we thought about when we thought about should we make original programming on Netflix. A big one was if everybody has all the same stuff, then there's going to be just a big race to the bottom. And it's not a very interesting business. And how do you distinguish how does any network distinguish themselves from the others is by their programming?

And at the time we were just kind of buying everyone else's reruns and putting them on Netflix. So this was like at some point we have to do this. And the other one was if we believe that the world we live in today where there's an HBO max and a Disney plus and a Paramount plus, all those people are not going to want to sell us their programming anyway. So we better we better start getting good at it now.

You knew that was coming, even though they were you were you were in business with those people. You knew that there was going to be that tipping point where it was going to go the other way and that they were no longer and you were going to be their competitor.

The foresight is amazing. And you're so you guys, of course, have always been a sub's business, you know, subscribers. What was your subscriber sort of approximately like when you first started making House of Cards to today, for instance, whatever public. You know what I mean? Yeah.

You know, what's interesting about it is we started in the world. Some people don't know this, but mailing DVDs are out. Right? So we were a DVD by mail service before we were streaming content.

So you're still doing that, aren't you? I still have a couple of. Haven't returned. Still got a couple. They're coming. They're coming. I'll send you a courier over to pick them up. Thanks. So then we started offering the streaming content to our DVD subscribers for free. And then later on we separated the two businesses. But it was before we started doing any original programming. We had about twenty five million subscribers who were taking DVD and streaming.

And then and then, you know, today we're at two hundred and four million. Wow.

204 million worldwide. Yeah, that's incredible. So I mean, but is the math, I mean, I'm not a smart guy and I don't need the chiming in on that. There it is. The if there's seven billion people on the planet and you guys are effectively as a result of your success, effectively a utility. Now, if there's seven billion people on the planet, half of those people you would think would need the utility of basically television if you guys are only at 200 million now.

And it is such an incredible success story, the growth potential for your company is you can't even quantify it.

Instead, before you answer that, just how does that feel that you guys are making credible content and Jason is now a utility? Go ahead.

You're like water and sewer. Well, what?

Well, could you have them? You'd be more successful than being something that people rely on, like electricity or water.

I mean, you're like your TV. Yeah. I mean, like TV is today. And I think there's about a little more than a billion pay TV households in the world, the people who pay in some form for subscription television. And there's about more than three billion people with a mobile phone who watch content on their mobile phone around the world, you know, and they're paying for a subscription and they're watching content on a screen. So you think about addressable world, you know, we're only about 10 percent there.

And then the other pieces of it will you know, we'll keep growing. In terms of the way you use Netflix today, a lot of people share their accounts with other people and all those kind of things. So it's on at about 200 million people. We might have about four hundred million watchers. Yeah. Today. Wow.

Now, in the 70s, especially on CBS, they had Saturday night.

They had the foresight to everybody used to watch TV on Saturday night, like it was like, you know, The Newhart Show or something like that or Carol Burnett.

It was like this massive crazy lineup and the whole nation was watching on Saturday nights. Then the networks had the foresight to go away.

Everybody's now slowly going out on the weekends. They're not spending as much time at home at night on the weekend. So they had the foresight to change programming in that way to the week, right to the middle through that. And then what I think I keep coming back to is, like Jason said, the foresight to know to to actually shift the human behavior, the watching behavior of the audience, to now consume the way we consume entertainment.

Like how describe that. Like for House of Cards. Was it originally just like, well, we have to get to original programming, so let's just do one a week? Like whose idea was it? Like, wait a minute, let's shoot the whole thing.

I love this answer.

I don't to tell that this is the happy accidents of happy accidents because I never thought about it. Sean, when we when we finished the season, we were getting ready to launch. Somebody said, how are we going to put it out there?

Already done shooting both seasons of House of Cards, not both, but that shot out the entire first season. And we had a meeting say, OK, well, how are we going to release them and how do you mean? And they're well, you know what, a week for a month. And then said, well, I don't know everything on Netflix. We got to the season after was on TV before. And we put up the whole season, so I said, well, we can't have one show, one episode a week and everything else all at once, let's just put it up all at once and see how people watch it.

And you were seeing the data on your service that people are watching multiple episodes of those full seasons that they were pulling down.

And some people watch to some people at three, but nobody watched one. Yeah, like nobody was watching a week.

And you had to have a conversation with Stevie Van Zandt, Lilyhammer, before this, correct. Or was it last or tell them how that went.

Yes. So Lilyhammer was actually our first original show that launched on Netflix. Our first deal was House of Cards. But talk about getting a great pitch. I get a phone call from an agent who said, would you take a phone call with Stevie Van Zandt?

Yes. Out of the blue. Yes, exactly. Yes. And so I get on the phone with Stevie. He's in Norway and he went to Norway to produce this garage band album. And somebody approached him with a script for a show about a guy who is just like his character from The Sopranos, who goes to Lilyhammer, Norway, to be in the witness relocation program.

And and he goes, yeah, I'm on board. And he does it. He plays this character. He produces the show. And they didn't give him very much money. It's Norway. And he was trying to get a soundtrack money together to put music on the show. He got all the fish he could handle, though, right.

Got a great deal of intrigue and three bananas. Yeah, yeah.

But no, but by the way, no trailers in the middle of winter for Tyler, the bit like knock on doors and ask neighbors if they could use their houses. Oh, my gosh. But anyway, he tells me about the show, they go great. Can you send me a script or some? He was already finished. I'll send you the whole show. So he said the show. We loved it and we did this deal to put it on.

And then when we told him how we were going to put it up all at once, he goes, wait a minute, wait a minute. We just spent nine months of our lives making this show. You're just going to dump it out all at once. And I go, Yeah, just like an album. Just like an album.

Yeah, but yeah. But it changed the world. It changed everybody's. Now you don't even think about it.

And we will be right back. So the question I always ask is, are you hiring for spring and what type of role are you hiring for?

You know, maybe you need to hire someone to wear many hats, which can be really challenging. Yeah.

Or you might have a simple position to fill, but it's taking forever to find someone who's a great fit for your company. And that Sean, that's where ZIP recruiter comes in.

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Sean, yeah, nobody wants to get caught with their pants down. Well, what do you mean except for. Well, I mean, sorry, let me rephrase that. There are certain people who their whole objective is to get caught with their pants down.

Down. Yeah, but I'm saying yeah. Because sometimes when I drive by your house, the curtains are open and you do. It's like you are on this display but you want. That's what I meant. That's when I said that some people do want to get caught with their pants down. And what I meant was me.

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The smart, simple way to shop. So, Ted, kind of getting back to, I don't know, do you guys still have is there still the DVD business at all or is that there's a few million people who still take DVDs?

I'm guessing it's, you know, parts of the country that don't have fast broadband people of a certain age that are unlikely to adapt to new things. And then maybe it's for a hardcore like if you're a real crazy deep movie lover, they still have everything. Ever published a DVD of this service, right?

Oh, wow. OK, so that's so that's where you start. So you started and you had started before Netflix. You were in the video business as well, right?

Home video. Yeah, back at the video store and video distribution. All right.

Are you and Quentin Tarantino worked out well out of that video store video store.

So you started that and then you then you come on to Netflix and you continue in distribution and it becomes distribution of DVDs and then quite sort of organically kind of by you. I know that you guys had this plan, but that just kind of happened. You start getting into content and you start being sort of the gatekeeper of all this content for Netflix and making all these decisions.

And your guy who has a really strong, strong sort of encyclopedic knowledge of film and television, you know, there's I don't think there's ever been a time where I've referenced something where you haven't gone. Oh, yeah, yeah, yeah. And list like everybody who's in it. And so you went from that and then you became the guy who started to greenlight and all these like really great shows. These really top like, you know, quality programs and movies.

Now of course, Netflix makes original movies. What was that shift like kind of going from distributor to to sort of content provider and really overseeing all this great. You kind of backdoor way into becoming a creative in a way. And that's usually the length of a question.

Yeah, I know what it is. That's from using my apartment and I guess it's catching. So you became the maker and not the seller?

Yeah, it was. You know, in all fairness, we failed miserably at it first because we did a thing back when we were just doing DVDs where I took a bunch of money that we could barely afford and and started a label for Netflix called Red Envelope Entertainment. And that was the point was at the point. No, no, no. That is a good point there, too, though. But this was basically foreign language films and documentaries, indie film and and some live stand up stuff that we recorded only for DVD to put it on.

Netflix has exclusive content with that live at The Purple Onion. Was that part of that? Yeah, that was Zach Galifianakis. Yeah. So we did it. One of the first things we did was a documentary with Patton Oswald called The Comedians of Comedy. Yeah. And it was a documentary about their comedy tour, Paten, Brian Bazaine, Maria Bamford and Zach Galifianakis, who I was a huge Galifianakis fan. I didn't know anyone else who knew him at the time.

I remember you were and that you're not. Now, I remember that, you know, I said the past tense listening dad hates your shit.

But in the middle of the production of the doc, Zach came in with this idea of a comedy special which was basically going to be like a fake documentary about him traveling to do his show. And it was so the pitch was so crazy. And I said, look, we don't really do all this yet. I'll tell you what I'll do. I'm going to give you one hundred thousand dollars and a camera and whatever you bring back, I'll put on Netflix, I promise.

And it was Zach Galifianakis live at the Purple Onion.

Now, now, you know, you you you were nowhere near a doormat, nor the people that that are on your team. But that sense of of of creative latitude and and freedom is something that you have been really consistent with. And your place is known for giving that kind of autonomy to the creatives. And it's a great recruiting element. It's a sincere position that you take. Like if we're going to hire creatives, let's let them do the creative work.

It seems like such a common sense policy and position. Why is it that you think it is so rare in in the industry?

I think, you know, it's an offshoot of the executive philosophy of Netflix. Do, you know, hire the best people and give them the tools they need to do the best work of their life and they get out of their way? It's just something about human nature that people feel like they need to add value to everything, no matter, you know, if they do or not. And I think the idea and I would always have a lot of friends like you guys who tell these horrific stories about network notes for television shows.

And I always think that if I was ever in that role, I'd hate for people to be talking about me like that or my company like that. And I was thinking about this idea, like, who has a better idea of what's funny than the funny person you hired to make the show?

Right. So. Right. It's such a common sense concept.

By the way, do you ever have this fear that you're going to become that Netflix once you guys become you're very successful now, but you become so successful that you end up becoming like the status quo that that starts happening? The culture at Netflix, is that something you have to kind of stay on top of always? I don't I don't imagine any of the folks we're talking about while they do end up doing this right. I think there's something made a left somewhere where they should have made it.

Right. Right. I'm constantly thinking about how do you make sure we keep that spirit alive? How do we make sure I had somebody who made a documentary film for us recently who made one back in those early red envelope days. And when they came in, they said, I have to tell you that it felt about the same, which is a huge compliment.

I just I love to and I don't know if you remember, you and I had a conversation, we can use this or not, but about somebody that we both know who was working for you in. And I said that this person comes from that world. They had come from a more standard studio world and in network world. And you had said I said, is it tough? Do you have to kind of break them of those old habits? And you said, yes, I do.

Absolutely. Yeah, you do. Absolutely. And I do think it's one of those things where it's like I've had someone on our team basically say something a lot to the effect of they couldn't get into the writers room to meet with with the writers. And I said, well, this showrunner must not think you add much value.

So that's really that's that's really how you you really have got to. Wow. Because I've never met a creator yet that didn't want to have a great collaborative conversation. Right. I really didn't want to figure out is this working.

But there is that dynamic where a creative person will will quickly sense whether the note is coming from a place where they're sort of assessing a false negative on what you're doing, because they're giving you a note to try to get you to do it the way that they always imagined it would go, as opposed to the note coming from a place of trying to help you do what they think you're trying to do. Right. So it comes from a place of helpfulness, is the good note, as opposed to conformity, which is the bad note.

Right. And and it really is consistent over there with you guys. It's great.

We'll go super meta talk about one of your other episodes. But the interview with Ron Howard, I love that. And I thought his what his comment was, is that I'm not looking for a different idea of looking for a better idea. Yeah, right. That's great. I love that.

I think I got that figure because different is disruptive. Better is additive. Yeah, it was great because there is a million difference, you know, they're all good.

What is your opinion about?

I would love to hear your opinion about the network system because it seems like the pilot system is kind of broken and like so listen, our pilot is sort of like the audition episode and if everybody likes it, then they order more episodes.

Yeah. Sean, how could you leave that out? Sorry. Sorry, Tracy. It's usually your. I can't believe you'd be so responsible.

So sorry. That's right. My sister in Wisconsin.

So so because the business model I don't understand. Explain it to me and where you think it's going and is it just like a cycle that can't be broken at the networks where they shoot all of these?

They spent all this money shooting. All of these pilots are buying these scripts and then they make ten pilots and then they pick one and then that one doesn't work. And then and now the audience is now onto them. Now, the audience I feel for and it seems like for sitcoms especially, they'll put like two or three on it. They don't get enough of to pull it off. So the audience goes, I'm onto you.

If you're not invested, how do you expect me to be invested? That's why I'm going to Netflix, because Netflix is invested.

Yeah. A lot of these tools that were built, I think we're all like figuring out safe ways to say no, you know what I mean? Like and I felt like I'm always trying to figure out how can we possibly say yes to we figure out how to make this work. And I think the pilot, you know, again, for the audience, they shoot one episode, they test it with sometimes like fifteen or sixteen people. And if they didn't think it was funny, they don't do it.

And I felt like, well, that's seems crazy. Who are these sixteen people? And that's just a weird offshoot of the way they test screen movies and they all just go to a shopping mall and find one hundred people who have nothing to do but go sit inside of a movie theater. And then those hundred people decide the fate of this. Sometimes a hundred million dollar investment. That seems insane. Right? So I feel like what we can do is say, let's bet on the creatives, let's bet on ourselves.

When we say yes, you know, we we may say yes to a full season or we may say yes to a little bit more development. But I never want to do like a pilot and then see how that thing work is. I still see our own shows evolved from the first episode to the last. If you watch a you know, the famously the Seinfeld didn't do took four years, years. Mary Tyler Moore, James Brooke said that Mary Tyler Moore was not Mary Tyler Moore for four years.

Yeah, right.

And there's that kind of and I think the Jason Sean will agree with me. They probably not part of shows before that. Or you just preemptively disagree.

Yeah, well, both of you, Sean, have both said that there's this kind of there is this sort of adversarial relationship between creative than the networks. Often until you kind of have it, you become a big success. And then even then then they're playing catch up and it's like now we're going to fuck the studio or we're going to try to. Get more money. There's never a great dynamic there, it's always it's always adversarial. And of all the shows, every time I've worked with you guys, whether it was unarrested or biogeographic or whatever.

There's never that relationship. That relationship is always really solid. You're regarded as a partner, truly.

And I don't even mean that in some sort of B.S. fucking way. I mean that for real. Like, hey, let's check with Netflix and the notes that come from you guys never come like, hey, man, you guys have it's almost like, hey, did you guys think that maybe Bubba?

And you go, oh yeah, yeah, yeah. No, I think it's I just feel like it scales better. It last longer because remember I came into this business as a fan. Yeah. I didn't grow up in the business. My dad didn't do that stuff.

I also think the audience might get a sense that there is, you know, the fact that there's no ratings and that you guys, for many probably great reasons, keep all of that information in-house. You don't share it with any of us. That makes stuff for you guys. You'll imply, you know, it's it's kind of doing well or not doing well, perhaps. But it's really sort of like if it's not doing well, it's gone. But if it's doing well enough to stay on, it stays on.

There's no sort of teeth gnashing about how the ratings were up or down today or tomorrow. There's sort of a all of that kind of nonsense is taken out of it and things just really exist on the merits, which I think the audience picks up on as well.

And sometimes, you know, relative to what it costs to make a TV show or movie, sometimes you don't get enough people to watch it. And eventually, if you do that too often, you don't have enough money to make new shows. So the balance of this is just relative to what it costs. Can we get people to show up? Maybe what's unique about this relative to TV is, you know, it costs X amount of money to make a half hour of network television, and that's what that's the like.

And this has got to be like, you know, we can make a show for a couple hundred thousand people if it's economically sensible. We can make a show for one hundred million people if it's economically sensible. One thing that we get to look at sometimes it's super helpful is among the people who push play. There's a million reasons that sometimes the show does doesn't connect with the public. And nobody, everyone missed a great show. But among the people who push play, did they like it?

And then they like it enough to watch the whole thing that they watched four episodes of one night because they couldn't go to sleep. They loved it so much. Those are really positive signals, even if the big audience didn't show up in the first season that we used to make that second season.

So, Ted, so like a lot of your competitors that I remember a few years ago when they first started making noise about to Jason's point about not releasing your numbers, and there were a few people who who ran other networks who were almost beside themselves about the fact that you wouldn't release it.

And we know that because what they actually said publicly, they were almost beside themselves. Can you imagine how they were privately and they were so pissed in your language in dealing with it was so great because you were just like, yeah, I know people are mad, but we're just not going to do it.

And how did that feel to you?

Well, the funny thing was I wasn't we were not trying to be secretive that I just don't think it's an apples to apples thing. When we say how many people watch a show on Netflix versus how many people watch on the network and on day one. So if you're selling advertising for a movie that's going to open this weekend, how many people saw your ad on Thursday night is hugely valuable information and it correlates to the fee you're going to charge.

Yes. Crest toothpaste to run your 30 second ad. If it's on a show that's watched by 30 million people, you don't have to pay for that 30 seconds. Yeah, ten million people. It's why.

Yeah, and because our business doesn't we're not selling toothpaste for us. It's it's irrelevant in the same way. So over time, I think there is a measurement of is this show relevant to the culture? Are enough people watching it for me to think about it? And I do.

And that's how you see us being much more open about, you know, in the first twenty eight days X, millions of people watch this show and that show, because I do think it's a bit of a cultural measure, not a business measure, but also even practically speaking for you guys, when you're hearing that pitch, you can go back to your office, you can say, OK, so this is a show about auto racing in, you know, Iowa.

And you can go on your right. I mean, it's a great show already. And you can look at your internal metrics and you can say desert it. How many of our subscribers love stuff about Iowa and cars? And you go, well, that's a million people. And so a million people paying seventeen bucks a month for the subscription. Would that justify the presumed budget of this show?

I mean, I know it's not as simplistic as that, but that's kind of at the core of what you're trying to manage in your mind about whether to make the investment of the show or not, whether it's right for your subscribers or not.

Correct all those indicators. Yeah. And then every once in a while, something just comes out of the blue, like a Queen's Gambit. Nope. There was no data that says chess lovers in this period, chess pieces get a. You'd be the most watched. By the way, Ted Queen's Gambit was great, I could have used less chess, you know what I mean? That's your know, it was a little I was a little was a little honestly.

And I didn't know till the last episode I was about chess.

You didn't even realize. I was like, what's this game? And then I bought a board and I'm in now.

I'm in a play by play. It's kind of like checkers, right? Yeah.

It's just a little bit checkers on the other side of the checkerboard. Flip it over like like the underworld and stranger things and everything.

OK, so my question is back to my kind of original thing. So in your opinion, how long do you think the network system can sustain itself before what happens before? I don't know. Like what? What do you think about that?

I think the inevitable thing that happens is everyone starts bringing their original stuff to their streaming services. That means they're not going to put it on the network and it's just going to be a race to the bottom. It's going to be sports and news. Yeah. And, you know, and you saw Amazon, but Thursday night football hours by Thursday Night Football. So what does that mean?

Like, so when so NBC, CBS, ABC, Fox, what's going to happen to those channels and those networks? I don't know, I mean, we have to go, OK? Good night, everybody. One way to think about it is if you watch I'm a I'm a big fan of we watch a lot of home and garden TV in our house. I'm a very embarrassed by the number of hours we spend doing this. But but if you watch it right now, you see they just launched their own service called Discovery.

Plus, I still pitch for them and they have turned their network into a BACHAR channel for that service there. Basically, every minute you watch the Discovery Network on TV, they're saying, don't watch it here, watch it. They're the one blessing that we've had in our business, in our professional existence, is we've never had to manage ourselves out of anything. Mm hmm. You know what I mean? Like, we don't have to like, how are we going to replace our movie theater business?

We didn't really have a business. Right. Right. Yeah. So for us, we been say just go where the audience is. Right. And we were able to do it pretty nimbly. All these companies make all of their money on advertising and cable television fees are going to have to replace that with the revenue on their services and in kind of some balanced way, or they're going to end up in these weird places. And anyway, I think they'll end they'll navigated fine.

But it just these these changes don't come around very often. Yeah. I mean, this is the first big change since cable TV years.

How have you noticed personally, to the extent you're comfortable revealing in and around the community, how is it evolved socially when you are at a function or a dinner with one of your colleagues that happens to be heading up, let's say, one of these broadcast networks, the some of the places where you represent a threat to their to their existence early on. Now, actually, you guys have become such leaders that it's actually boogieing, the whole industry and changing the model.

And people are having these these these plusses. Right. These streaming services is offshoots. And it's really elevating some of the business models. Are they now less sort of confrontational for lack of a better word? And are they more sort of deferential?

And he wants to know if people are hissing at you at friendlier now or or how how do you feel about all that stuff?

What's it feel like out there?

You guys know this town? Not to my face, but you sense that you're really in touch and a sensitive guy. I'm sure you can see how it's kind of ebbed and flowed.

Yeah. This person, it was particularly annoyed by the existence of Netflix and all of the changes. And, you know, basically that we didn't have to put out ratings. And why would they put someone from a Netflix show on the cover of a magazine? No one knows who's I mean, to say these things very publicly. Right. I was very upset about it. But the irony is this Precedex now runs a network doing exactly that. But the comments didn't age well.

Yes, but it was really the funniest story for me in my time in the business is we there was a part of one of these nights before the Emmy Awards parties, and there was two parties going on next door to each other. And one of them was the big industry party. And the other one was just for this person's network and their and their talent. And what I walked about people, I mean, I was I'm walking in the party.

I went left instead of right and walked into their party and they're all, you know, the biggest stars in town. So I thought, this is the big party and and it was their private party. And as I'm walking around, I come to the realization, oh, this is his party, his party. So I like it was almost like an episode of I Love Lucy.

I'm trying to sneak out the side door so no one sees me at there. And then I walk around behind the outside of the party and walk out. But I walk out across this big glass wall where he is making a speech and I'm literally walking by.

I know his nightmare come true.

Yeah, yeah. And Person X, by the way, is so talented. I mean, of course, incredible decisions.

But that brings me to like the fact that you, again, talking about the foresight into into this new world of programming with Netflix and then you see things like quippy or other people trying to push those boundaries further by thinking about what's next.

And I know you probably get this question, but to the guy you that thought of this whole thing that changed the world, do you have any kind of what's in your crystal ball next? Like what in the world is next?

You know, it's funny. Every couple of years we're doing that thing that we we didn't do before. So we started off making our first year out. Right. We had House of Cards, Lilyhammer, Arrested Development. What a show. I say both words, by the way.

Oh, you do that because, you know, Ricky you know, Ricky knows Ricky Gervais is so crazy. They arrested it makes.

And Hemlock Grove. That was all right. That was our big lineup. And then after that, we started, you know, we didn't do any unscripted. We didn't do any animation. We didn't do any feature film, and we didn't do anything outside of the United States or not in English. So over the next every two years or so since that launch in 2013, we've expanded to do all those things and now we are. Producing a 200 million dollar feature film, we're doing local language shows and about to have about 200 local language original shows premiering this year when I wanted to get to.

That's been a big part of your expansion. Well, two things. One one was when we started making Arrested Development. And Jason, you remember we all went out to Las Vegas to make this announcement was very weird. We didn't really know each other, Ted, at all. I mean, we'd sort of met. Yeah. And then we ended up you and I stayed with David Cross and we played and we stayed and played craps one night.

We almost cleaned the place out and we broke today. And we go, come on.

Where was I was I was I was already passed out. Because you were in bed. Yeah, with a mouthful of walnuts. You were just already asleep. And so we got to. And so at that time, I will admit that when we first started having started hanging out and you announced the show, I had no idea. Of course, I had very little idea of what it was going to be. You had didn't know what you guys were going to become yet.

I had even less of an idea. Right. And then it became we arrested development kind of happening at a time when you guys were rocketing. Your business was really expanding quickly.

But I was wondering, we asked for stock. I know, because we're so stupid because you got in there is why you got in the deal. You go for a walk. We would be good if we just listen to our lawyers and not Bateman. So anyway, we go to.

But I was going to say so, Ted Akutsu, a couple of years later. We we do BoJack. And I want to quickly tell the story about how BoJack came to be in a minute. But we got to you remember that scene. We went to Europe. I just done the first season of Flaked and we went to Europe to promote Netflix. You were opening in France. So we went to Madrid and we went to Italy. We went to Paris.

And you read gave all these great speeches in front of people. But I remember distinctly so we're in like I guess we're in Milan and all these reporters going, oh, why should we care about Netflix?

What's it going to do? And I said to them, clearly, I want you to remember saying this to me now, a year from now. And of course, it becomes true. And Netflix goes and it explodes in all these countries and it becomes the thing. And part of that, this is a huge question. So long board myself. Yeah, it is.

It's Tuesday. You made all these local productions in every country that you went to. Yeah. Became a big part of your success.

It's very big. And what's cool about it is they get watched everywhere, including in the U.S. So our watching of non English television has grown 50 percent year on year and things like, you know, Korean dramas growing 100 percent in the US. Huge, huge.

And you know how much I love those European shows. I know you years ago. And then you'll text me. Let's say we got a new show coming out. You've got to check it out now, you know, totally.

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So far, we've been chatting with Ted Sarandos, CEO. I would like to chat with Theodore. Oh. Oh my gosh. Here we go. This is where he makes you cry. Your favorite color. Get ready. That was a very smooth transition.

Take us back to Arizona. What were you driving to the video store? Was it. Let me let me make a guess here. Was it a three? Was it a three 20?

I was it was it a Gedda or was it a Datsun B ten.

And was there a mullet there. That was not a mullet, but there may have been a Ford F 150 pickup. There we go. There you go. This was Phoenix, Arizona. This is this.

Are you doing the thing you've dreamed of doing? If not, what is that dream? How much longer can you do this? Do you get burnt out? What else do you want to do?

I am doing way beyond what I could have dreamed of doing in my life. I, I really hold the art of making film and television in very high regard. I think it plays a critical role in people's emotional and mental health. I agree. I think it is so important what happens every day there, and I feel like being involved in it at any scale is insane. As a kid, I for some weird reason, I needed like five hours of sleep so I would be up late and I'd watched TV and my life matter.

I've talked about this kind of publicly before. My my home life was pretty chaotic when I was young. I have five brothers and sisters, very young parents, and it was kind of like there was no bedtime, there was no curfew, and it was pretty crazy. Fame. Television brought me a sense of order. I knew what was on at eleven o'clock on Channel five, and it was really important for me to have that order. I really did had a huge influence on me and then but it came through as I had a deep reverence for old things.

I mean, I've seen every episode of Dick Van Dyke and Andy Griffith and the shows the harder times I can quote them. And so growing up in that's thinking about how important that was to me. I just wanted to be around it, that alone, which was fine for me, you know, when I was young, the the Gauntlet movie from Clint Eastwood. Yeah, they came to Phoenix to shoot and my parents drove me downtown and dropped me off for the day to watch them shoot the movie.

And it was anybody want to get out completely.

It was the hottest day in Arizona history. I don't think they gave me any money for a drink, though, I'm sure. But but they sat there all day and watched them shoot. And my my tennis shoes, like, literally melted on the street. It was hot that day. Wow. And and it was just hard to get a glimpse of this magic that was happening. And I don't know, I probably still have them somewhere. But I collected some of the old shells where they were shooting at the bus and all that.

Wow. And it just to me, it's like I got close to the gods that day and then so to it to me. What would you say?

Are you doing what you want to do beyond that, the art, but also changing it to a way that that that you kind of saw, maybe even in a young age where it was kind of missing and where it could become better. I love what you said. I read somewhere where you got tired of of sleeping too late on Saturday. I'm missing your cartoon. Yeah. So the sense that you could have that on demand at some point maybe was was logical.

And then also watching all the Mary Hartmans back to back to back to back on a Sunday night after they aggregated at that on that day. That was my first binge. Right, exactly. So that that wouldn't be a negative when that became a possibility for you guys.

It's funny, my kids are twenty six and twenty four, and I try to get them to understand that there was a time that existed. If you slept it on Saturday, you missed cartoons that went the whole week and if you didn't see a show in primetime, you had to wait twenty years to see it again, right.

That's right, yeah.

And and now you not only when you have a new show this week and you go, you know, you can watch it whenever you get around to it, but you're also when you come on against other shows new this week, you're also coming out against everything ever made. Yeah, yeah. So it's like it's a very strange dynamic. And I think the relationship people have with programming, all kinds of storytelling is so different. I think about a movie.

Our relationship with movies used to be movies were huge, right. They were bigger that way, bigger than us, and they were totally in control. If the movie started at eight o'clock, you better be in your seat at eight o'clock or you're going to miss the beginning. Right. And if they said something that you missed, you had to buy a ticket and come back in two hours where they say again. Right. And now movies are smaller than us generally and we control when they stop and start.

And I don't interesting thing to me that they helped with the relationship to to storytelling and listening and all those things, how that evolves over time when that relationship is so dramatically different than it used to be. Yeah.

Well, also, it's funny you said that we do now measure everything sort of apples to apples. Like you can watch a show and say, hey, I watch this comedy and then somebody go, yeah, but it's not as good as The Wire. And you're saying, well, yeah, of course it's different. Like this operates over here and this lives over here. And now everybody just compares everything to like everything. The question you ask each other.

We all ask our friends and we get asked of each other, what are you watching? What have. You've seen lately, I think one thing that doesn't get mentioned enough, Arrested Development in that first season of new content on Netflix, why it's so kind of symbolically important is when we first started the DVD business, people would just try boxset television. We started seeing how people watch TV shows like that because they're watching, you know, three or four episodes on a disk and a changing disc really fast.

They really got into it and then we started streaming. The only things that the networks would tell us were things that were not sold into syndication and Arrested Development had just come off of the network that year and they didn't have four seasons, so it hadn't been sold, hadn't been syndicated. So Arrested Development is one of the first things we had on Netflix to stream. And it was literally a completely different experience to watch Arrested Development four or five episodes at a time, because, as you guys know, Mitch will write a joke that sets up an episode to and pays off in episode seven.

Yeah. And there's a 30, 40 percent chance you are not going to see Episode seven if you watch episode two. Yeah.

So in a Netflix, people watch the show in its entirety, in a complete straight setting and realize the genius of this comedy, how it was written, how it pays off the complexity, the multiple, how many storylines, how many characters, how many jokes can all be running at the same time, because you needn't waste any time repeating exposition because you can assume the audience just finished watching that episode.

Nobody missed the reference, nobody missed the reference.

And then taking from that, I remember kind of the conversations leading into that fourth season, the first Netflix season of Arrested Arrested, that Mitch would development.

Have you seen. Yocha, I know you saw a couple of you all in it for you guys saw the first three and I laughed out loud. You'd had enough third.

But what was my character then. What's my character's name. God, not his character name his job.

And then the structure that Joe he said gub about the car but but but said, you know, Mitch started immediately.

One of the things that he got on to was he might have been one of the first, you know, show runners, creators, writers to write to the format. Yeah, he was really into that idea. Remember how excited he was by that? He was so, like, giddy. I mean, he's giddy all the time, but he was really particularly giddy about that.

The first time I walked in and Mitch was writing the new season for Netflix.

And I walked in that little room that he was writing and it was index cards and color coded yarn all around the string of plots.

It was insane. It was so amazing. I'm so I'm that is an incredible comic mind. But I think in general I'd say that usually when people say things are ahead of their time, that's a nice way of saying it didn't work. But Arrested Development is truly ahead of its time. It's a show that was built to be binged before anyone was bingeing. Television.

Yeah, so so going from a show there was ahead of its time to a show that almost never was. BoJack Horseman was a 13 minute presentation that Rafael Babelsberg wrote and that that I did with with Aaron Paul and Paul Tompkins and Amy Sedaris amongst other people, that Payton was in the and everybody passed on it and they brought it to you. And I remember talking. You were like, yeah, I think we're going to do it.

You were literally like the last stop. And you're like, it's like, really? Yeah. I think we're going to. Yeah. And you got not only did you pick it up, you got right into it. Yeah. And if you remember that first. So first of all, tell me about what it was when it when it came across your desk, Rafael's piece.

Well, first of all, it's remarkably funny. Yeah. I mean, the show and it was had real meat on the bone. I mean, it wasn't just really funny. It was funny with a really serious I mean, it's a comedy about depression. Yeah. Which is not on TV. And and if it was it probably wasn't funny or was getting that balance right is really tough. And that show did. Right. It was unusual in that way.

And I remember at your old offices, you remember like this first season, I forget what episode it was.

But one night you and I went for dinner and then you're like, hey, I just got the rough in the rough animatic of like episode five.

And then we kind of look together and you said, let's go to my office and watch it. And we went we went watch it in the old screening there. Yeah.

And we were both so excited about that before it even came out. We were really excited about it.

That's never had that great elicitation animation sequence since we were dying to see. That's what it was. Yeah. Yeah.

But I got to tell you, you know, you told that story earlier about us going with the Vegas. Again, this is back to that. You know, you just we were so green, you know, at the beginning of this, we brought everybody to the NAB convention in Las Vegas, which is where all the like the TV tech people go, not not like the press to go there. No one was bringing talent to the convention. We did it.

Maybe it was an accident. I'm sure it was. But I'm sure why are they bringing all that? I remember it was the whole cast of Orange is the New Black. The guys were Arrested Development. Yeah. And it was like a big stars, the. Think of this place where the TV tech people, you were just kind of winging it. Yeah, they said friend of mine and I play this stupid thing where we go, quick, quick, quick.

And you have to name, like, three things, but you can't think about you have to you have to say it super, super fast. You cannot think about it. Right. I'm going to ask you a question you have to answer. It's super, super fast. Ready?

Quick, quick, quick. Name two shows that you're watching right now on Netflix. Go fast, super fast.

Go Jenny in Georgia and Firefly late. Great, that's all the time we have. Wow. Wait, wait, now, are those the same shows that Nicole, your wife, is watching or show? That's why it was so easy for me to answer. So do you guys. Do you guys are you one of those ideal couples that watches all the same shows together?

Yeah, we don't have very similar taste. I mean, Nicole does not like anything dark in any way, and I do. And she really loves like, she's a very tough customer. My wife Nicole says she but she loved she was an early supporter and graduated and she knew it was going to be a hot one. And the show Virgin River was one that she really loves. And the one thing that our sweet spot we agree is, is I said HDTV.

So that's why I watch stuff.

So she's not cross infecting your your your your algorithm. Right.

She's got her own account because Amanda is screwing mine up so badly.

You guys have to you have to set up a separate procuracy key because for us it's the same thing. We will watch for hours of Virgin River. And then Nicole goes to bed and I watch six hours of the Chappelle's Show. And I don't think Netflix knows anything about that.

Jason, just get another account. Give Ted Jesus Christ, man. Don't be such a cheap dick.

Just get another fucking account for your wife so that she can and don't.

Gipp Ted, by having 80 people with the same password and all this B.S. that you always show off about. Listen, if I had stock, I would protect my profits.

You know, my favorite thing about my favorite thing about Nicole is when she admitted to me years ago, well, she said in front of you about how much stuff she gets from Amazon. And she's like, I don't give a shit.

No, Nicole was buying DVDs from Amazon movies that are on Netflix now.

Was it pulling teeth to get to get a little window to do a little TED time today or see what's what's it like over there in your personal world? You live in a prison or.

She did she did she give it up? Now, she you know, she, I think really appreciates the time, but I bet you go off and do something. Yeah. I mean, the thing about this pandemic, it us being like in the off, I go to the office now a couple of days a week at her request. Sure, sure.

I had a good buddy, a good buddy who said when this pandemic was a few months and he said my marriage wasn't built for 24 hours a day.

No, none of them were no more. So she was I said, I'm going to do this tomorrow. Oh, great. And she'll I assure you, she's I do bring a little bit of a hectic energy to the place, and she appreciates the distance sometimes. Sure.

Well, we won't take you away from her any longer. Yeah. She was very jealous when I told her who I was going to be talking to today. She said, slapdown, we love her to her.

And I've got to tell you, you know, a lot of people I've heard a lot of folks throughout the quarantine saying how much Netflix it was so important to them. But I have to tell you, prior to the Gornstein was not I did not listen to a lot of podcasts. I don't have a long commute. I want us both. And what did I get into? I mean, of course, because my three great friends have this great podcast and I obsessively listen to every episode of Smart List.

I think it's I love what you guys are doing. The only thing I like better than someone who I love when they're, I guess is what it's someone I don't know much about. Yeah. And you guys have so much fun with them and I really enjoy it. I said thank you for dogs. Thanks, buddy.

Very cool. And thank you, Ted, for being here. Absolutely good.

It's great to see you, man. It's so good to see you, Ted. You guys do have a good bye. All right. I'll see you, but have a good day. Bye bye. Bye bye. Boy, that here's the thing about Ted, we all know, and even to our listener, to everybody knows bosses in the world, right? Everybody has a boss, everybody knows a boss about. Sure.

But like, Ted is so rare in that he's like you said, Jason, so personable and so likeable and so jolly and so supportive. And he never you never see him in a bad mood.

Yeah, I really I was really sincere about that at the beginning. Like, I just don't know how he manages his time being so inviting to everybody. He talks like, how does he ever leave a room.

I know. Sociopath. Yeah, sociopath. Ted is such a here's a weird kind of saying, like not only sort of a very personable guy and quite gregarious.

He's just a very even keeled guy. Yeah. And so he doesn't lose he never loses sight of the prize.

And it's a testament to somebody who loves their job and loves the position they're in and always has. Right.

And came by it organically. What you know what I mean. Like, he's not in he's not out of his depth at any at any juncture.

Yeah.

Like, I didn't even ask the obvious question of so do you want to be a writer or a director or producer like he just like he just seems so pleased and content with where he is and what he is doing and enjoying expanding that diversifying and staying in his lane and sort of the best possible version and going to say, Stan, I knew you were going to say this thing.

You like to sound like everybody is.

If I can say Lane each day, I will continue to.

Well, why does he stay in his lane? Do you think he's got a sexy difference? Oh, God damn it. You know what?

I think we're spending too much time together. We're wait a question, though.

What is highway rhyme with my. Oh, shit. That's it, baby. But that's a no, no, no, hang on. No, I'm going to throw on the highway. Does not rhyme with Bayway. No. You got better than that.

Yeah. No, no, you're right. You're right. So let's buy that back. So we do. I don't think we're done talking about Ted. Is that the first ever aborted. Yeah, definitely.

OK, so what we didn't get to with Ted was Netflix and Chill, which I wanted to get to, which you still don't fully understand. Am I right, Grandpa? I don't know what that is.

It's a sex thing, right. Or a cold, for fuck's sake.

This is so fucking embarrassed. How do you leave the house? What is Netflix and chill. OK, so sounds seans equally dumb. OK, smart. Less OK.

So so you know what, I might just include my parents on this too so I just don't have to explain it four times.

I'll just knock off four of you or listen to the only smart guy in the world. Go ahead Will. So soon.

Netflix and chill is a way it's not necessarily a sex thing, but it's a term that people use to say, hey, why don't you come over and hang with me and we'll watch Netflix and chill?

It's like the old like the old old timey like, hey, let's make out and watch TV.

Or it's sort of like, hey, let me show you my apartment. Come on up. Let me show you around. That's like the old code for come on at once. You're in.

What then I can just kind of let me show you around my apartment. What the fuck are you when you're picking up a street, look behind the dumpster. What's going on?

Let me let me let me introduce you guys to the gay world. We don't say that. We just say, hey, do you want to hook up? Oh, like, why Travelex and chill. Well, because we have a Hulu thing though, isn't it?

Oh, because I've always wondered what Hulu means.

Is it a derivative from hook up H in the U and. No, I think so. So wait.

I want to say that I think we're always fascinated, like to go back to Jason, which Jason said about the foresight of like I think we're endlessly fascinated with people who seemingly can see into the future and predict anything like any kind of scientist.

Or in this case, this programming genius about Netflix is like, how did you know that? How did you and the risk and the timing, it's just always fascinating to me.

Yeah. And right at the beginning, you'd see that stock and you'd say, oh, gosh, what are they going to do? I just I want to I want to sell that, you know? But like today, if you saw a bunch of stock, what would you say? And you wouldn't say sell.

You'd say buy my. That's how you do it, fuckface smart. Smart Bombs Smart List is published and distributed with simple cast.