Podcast Episode

Why Netflix is betting on systems thinkers—not specialists—in the AI era | Elizabeth Stone (CPTO)

Lenny's Podcast: Product | Career | Growth

4 clips•Jul 19, 2026•1 hr 12 min•

About

Elizabeth Stone is the Chief Product and Technology Officer (CPTO) at Netflix, where she oversees Engineering, Product, and Design. Since her first appearance on the podcast two years ago—which remained my second-most-popular episode for more than a year—she has expanded her role to lead product, in addition to engineering. Before Netflix, Elizabeth was VP of Science at Lyft, Chief Operating Officer at Nuna, an economist at Analysis Group, and a trader at Merrill Lynch. In our in-depth conversation, we discuss: 1. Why “systems thinking” is now the most important skill she looks for 2. How to manage the flood of AI-generated output without losing quality or signal 3. How Netflix thinks about AI fluency as a universal expectation rather than a level-specific skill 4. What “excellence as an operating system” means — Brought to you by: WorkOS—Make your app enterprise-ready, with SSO, SCIM, RBAC, and more: https://workos.com/lenny Mercury—Radically different banking, now with Command: https://mercury.com/command?utm_source=lennys&utm_medium=sponsored_newsletter&utm_campaign=26q3_brand_campaign — Episode transcript: https://www.lennysnewsletter.com/p/netflix-cpto-on-ai-and-the-future — Archive of all Lenny's Podcast transcripts: https://www.dropbox.com/scl/fo/yxi4s2w998p1gvtpu4193/AMdNPR8AOw0lMklwtnC0TrQ?rlkey=j06x0nipoti519e0xgm23zsn9&st=ahz0fj11&dl=0 — Where to find Elizabeth Stone: • LinkedIn: https://www.linkedin.com/in/elizabeth-stone-608a754 — Where to find Lenny: • Newsletter: https://www.lennysnewsletter.com • X: https://twitter.com/lennysan • LinkedIn: https://www.linkedin.com/in/lennyrachitsky/ — In this episode, we cover: (00:00) Introduction (02:25) AI and role confusion: the storming phase before the forming phase (07:36) How roles have changed in the past two and a half years (11:55) Will functions survive? The case for craft specialism (13:26) What Netflix is hiring more of—and less of (17:22) Why systems thinking is the rising skill across every function (20:20) Is the design process dead? (22:08) Skills trending down (28:33) AI fluency and Netflix’s career ladder overlay (31:00) AI use cases beyond coding (35:12) Netflix’s AI history (38:36) Excellence as an operating system (41:11) The pillars of the excellence OS (46:41) The keeper’s test—and why it’s mostly a positive conversation (50:21) Attracting top talent in the age of frontier AI labs (52:54) Junior talent, craft mastery, and the mentorship question (56:25) Where engineering goes in 5 to 10 years (59:45) The future of entertainment: beyond film and TV (1:02:18) AI in Hollywood: Netflix’s creator-enablement position (1:06:15) Lightning round and final thoughts — Referenced: • How Netflix builds a culture of excellence | Elizabeth Stone (CTO): https://www.lennysnewsletter.com/p/how-netflix-builds-a-culture-of-excellence • Brian Chesky’s new playbook: https://www.lennysnewsletter.com/p/brian-cheskys-contrarian-approach • The design process is dead. Here’s what’s replacing it. | Jenny Wen (head of design at Claude): https://www.lennysnewsletter.com/p/the-design-process-is-dead • Claude Code: https://www.anthropic.com/product/claude-code • Claude Cowork: https://www.anthropic.com/product/claude-cowork • Netflix’s “Keeper Test” and Why You Need It | Lorne Rubis: https://www.highlights.lornerubis.com/2015/08/the-netflix-keeper-test-and-the-courage-to-take-it • Innovation for Filmmaking, By Filmmakers: Why InterPositive Is Joining Netflix: https://about.netflix.com/en/news/why-interpositive-is-joining-netflix • InterPositive: https://weareinterpositive.com • Netflix Prize: https://en.wikipedia.org/wiki/Netflix_Prize • Quarterback on Netflix: https://www.netflix.com/title/81482895 • The Bill Simmons Podcast on Netflix: https://www.netflix.com/title/82186214 • Spencer Pratt on Instagram: https://www.instagram.com/spencerpratt • Salman Rushdie’s Substack: https://salmanrushdie.substack.com • Remarkably Bright Creatures on Netflix: https://www.netflix.com/title/81911351 • Eight Sleep: https://www.eightsleep.com • Tour de France: https://www.letour.fr/en — Recommended books: • Thinking in Systems: https://www.amazon.com/Thinking-Systems-Donella-H-Meadows/dp/1603580557 • Into Thin Air: A Personal Account of the Mt. Everest Disaster: https://www.amazon.com/Into-Thin-Air-Personal-Disaster/dp/0385494785 • Liar’s Poker: https://www.amazon.com/Liars-Poker-Norton-Paperback-Michael/dp/039333869X — Production and marketing by https://penname.co/. For inquiries about sponsoring the podcast, email podcast@lennyrachitsky.com. — Lenny may be an investor in the companies discussed. To hear more, visit www.lennysnewsletter.com

AI Summary

Netflix’s CPTO Elizabeth Stone argues that the AI era rewards people who can connect the dots across product, engineering, and design rather than stay narrowly specialized. The episode explores how Netflix hires for systems thinking, maintains quality amid a surge of AI-generated work, and treats AI fluency as an expectation across the company. It also digs into Netflix’s idea of “excellence as an operating system” and how that mindset shapes talent, mentorship, and the future of building products.

Clips

38:42

“Netflix’s culture was built for agency, not process, from day one.”▲ Hide transcript

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If you look at the early culture deck of Netflix and also our conversation last time, things that emerged from that are things like high agency. This was like something core to Netflix in the beginning. High agency, autonomy, high talent density, very bottom was up thinking, super quick experiments and launching, paying top of market. This is all stuff that every AI like this is what I hear constantly now from how the top AI labs operate. so we're all ending here and this is where Netflix has been forever yeah it's a little prescient in understanding what makes talent incredible I've thought about all those aspects of the culture at Netflix as this is going to sound a little bit nerdy but excellence as an operating system so the goal of all those cultural elements wasn't the end bone themselves it wasn't let's just make sure people have as much responsibility as possible or let's you know we don't like process, so let's make sure that we don't have any of that. It was instead a very strongly held opinion that you get to excellence by giving people a lot of agency and accountability, by pushing decisions as deep in the organization as possible, hiring great people who can be trusted to have good judgment and make good decisions And that ends up driving incredible outcomes plus a lot more motivation and sense of responsibility It means every person on the team can feel like I'm being given a lot of keys and a lot of accountability for what happens here. And I myself feel like when you know you're carrying that level of trust and accountability, you want to do your best work. And so there's something that feels very intuitive about Netflix's culture has always been aiming at excellence. And when you have great talent and you give them the ability to do their best work without micromanaging it or drowning it in process, you actually get much better outcomes. And so I do think that the newer era companies are picking up on something that is feeling very familiar to us. And it's not something that comes easily. So having culture is not a static thing. Culture needs to grow and evolve as the company gets bigger, the types of problems you're solving change. But the notion that we're going for excellence and trusting that exceptional talent needs to be able to do their best work, that's unchanged and something that I think continues to be a special sauce for us. I love this concept. Excellence as an operating system. It's very systems thinking, you might say, For how to set up a company. Exactly, Lenny.

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41:43

“Netflix bets on imperfect live launches to learn fast.”▲ Hide transcript

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I mean, what would you say kind of like the pillars of creating this excellence as an operating system if people, if founders are listening to this, like, I want them to do that? Well, the talent density is the non-negotiable. You have to start with that. If you don't have that, you can't get to a place where you have confidence in decision making at all levels of the organization, allowing people to take risks and innovate quickly. That's a big part of excellence in the Netflix culture, which is being very comfortable with risk taking. We don't try to avoid failures. We try to recover quickly when we have them. I think there's been great examples of that. Our foray into live was a wonderful example of being comfortable taking a ton of risk, knowing it would be imperfect, knowing we would learn fast and we would be better for it. I've never been prouder of the team seeing how we worked through that. So you have to be talent density, comfortable that people are going to take the context that you give them, strong judgment and risk-taking and fight for the things that are the best outcomes for the business. You have to be very clear that what you're doing is driving outcomes for consumers and Netflix. So Netflix matters. Netflix members matter. It's not about my own personal success or what I prefer. So there's a selflessness that is part of this excellence operating system. And then the other thing I would say is some of the things that are, they're really unnatural for humans to do. So I could give a couple examples of things to get comfortable with, which is there are certainly days where I see decisions happening and I think, hmm, I would make a different decision. Like, is that really going to be the best thing? But my job especially in the Netflix culture is not to step in in every one of those cases an overrule or a veto or question someone especially if it not material it not gonna burn the place down let people make that decision and learn from it and ask for those reflections afterwards of like, how did it go? Maybe I was wrong. Maybe the decision was a great one, but that it's related to the risk-taking and the like help people learn how to feel comfortable making their own decisions, especially when they're not all gonna be the right decisions and they're going to learn something tough from it. I felt that myself from my boss and my peers saying, this is your decision. You know, I can provide input. I can help you brainstorm. It's yours in the end. And it just doesn't come naturally. When the stakes are high, when I feel responsible for what the org's doing to let people lean into risk can be uncomfortable. And I think that also means in cases where things are not going well, as another example, to not assume that process is going to fix it. So if, something I've learned over the past few years, that when planning is difficult, I've never heard someone say like, oh, we figured out the perfect way to plan. Or the perfect way to go through feedback and leveling and compensation. But every time we saw that and we added more process, we spent more time without getting better outcomes. And so it's another unnatural thing that I think everyone's inclination when things are hard and complicated is you think you're simplifying the problem by putting a lot of constraints around it. But it actually goes against the like, is there a more creative way to plan or to make people decisions or to make prioritization decisions that actually get us to better outcomes? And so it's a resistance to do the thing that a lot of bigger companies would do and to feel comfortable in that discomfort very often. So that's something I feel in my role. And I would believe a lot of people at Netflix feel it because you try not to do the thing that is standard.

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1:00:21

“Netflix wants one journey from podcasts to FIFA cloud games.”▲ Hide transcript

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So part of the reason that we are going beyond film and TV in our offering is because there's an expectation that consumers have of much greater variety across formats, devices, moments of the day that Netflix needs to be able to serve well in order to meet consumer expectations and hopefully exceed them over time. So when we think about the addition of mobile and TV or cloud games, live content, podcasts, working with a broader set of creators who are now on the Netflix service, all of those things create a greater breadth of what entertainment is. And Netflix is able to define and expand that. And it puts a higher bar expectation on how do we make sense of that for a Netflix member? So how do we show you this very seamless journey from I listened to the Bill Simmons podcast to I watch Quarterback because I love that as one of the Netflix offerings in the more, you could say, traditional film or TV space to I play the most recent FIFA cloud game. And I want to be able to do that on both TV and on my mobile phone because now I'm on the move and I want to be able to discover and engage with the content at different moments of the day. That's already a journey that we're building into Netflix, which I think will become stronger and stronger over time. So the future of entertainment isn't going to be one thing, and it's going to have to be more personalized, more immersive, more interactive with this sense of this is a world that I can explore in lots of different directions depending on what I'm looking for in the moment. And the challenge Netflix has is we've got to make discovery and engagement much easier than it feels today. We have tons of content. It can feel very fragmented. especially when you consider all the services or offerings out there. And I think Netflix is very well positioned to understand how to solve that problem across entertainment, product, and tech.

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1:02:23

“Netflix wants creator flexibility, not one AI production model”▲ Hide transcript

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As an outside observer, it's like so interesting to see how in tech it's like AI, I love it. It's the future. It's the best. In Hollywood, it's like, no, shut it down. There's a mix. There's a very wide array. So Netflix's role in this is to enable creators with whatever tools they want to use to bring their vision to life. There are going to be some creators or filmmakers who are on the end of the spectrum that says, absolutely not. No AI. That is not how I do production. it's not consistent with my vision. That's fine. We work with those creators. There's other creators, a growing number of them, I would say, who are very interested in exploring, wait, can these Gen AI tools make something possible that wasn't possible before? Can I tell a story in a new way? Can I make that story higher quality and more resonant for audiences? Can I do things that are extra creative in how I think about bringing a story to life? and we support them as well. And we support all the folks who are in the in-between. And then that's a really important position for us to be in. Again, because entertainment is not gonna be one thing. There's not gonna be one format. I think there's gonna be types of film and TV that feel traditional. And then there's gonna be entirely new formats that unbelievable creators help to bring to life. And Netflix wants to participate in that, which means we need to have a flexibility in the tools that we provide and the types of partnerships we have and to really have a creator enablement view rather than a prescriptive we only do this one way I think people are going to be surprised by just how good AI content is, like Spencer Pratt's videos are just like everyone's like, wow, this is entertaining. Obviously AI, but it's so interesting. Do you think we'll get to a place where it's just like the whole TV shows are AI and people love it? I have a hard time picturing entertainment that doesn't have humans at the heart of it. So that's humans in the creation of the storytelling, which I think is a scarce and valuable skill. Storytelling is one and the same with humanity and knowing what connects with people. So I think humans will be part of the, will always be a core part or a critical part of the story. And I think watching characters on screen who don't have that humanity feels less compelling to me. And what the power of storytelling really is to see another human and to watch how they perform a role or bring an emotion to life. That's such a human element. Will AI help to bring that to life? will play a material part in some of those productions or how we get them to look and feel a certain way. Yeah, definitely. But I don't see the version of it that doesn't have the human as the backbone.

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