Netflix Success Proves Two Heads Really Are Better Than One

VCs prefer cofounders because “you need colleagues to brainstorm with, to talk you out of stupid decisions and to cheer you up when things go wrong.” The very same is true for co-CEOs.

While viewers (and Netflix stockholders) eagerly await the next hit series to follow Bridgerton, The Queen’s Gambit and Lupin, it’s fast approaching a year since Netflix’s CEO Reed Hastings appointed Ted Sarandos as his co-CEO—and the company is stronger than ever. This dynamic duo is upending one of the vestiges of traditional leadership thought: that there can only be one Caesar in the C-Suite.

“A body with two heads is in the social (as in the animal sphere) a monster, and has difficulty in surviving,” is how the Frenchman Henri Fayol, one of the founders of modern management, put it. It slows decision-making, even leading to paralysis. It leaves employees without a clear idea of who they should deal with. It leaves the board unsure who to hold accountable. And so the objections go on.

That sentiment not only holds across corporate America, but also in the usually disruptive technology sector. When venture capitalists look at our cards and see “co-CEO,” we often get quips like, “So you haven’t picked yet?”

David Brown, co-founder of one of the leading incubators, TechStars, sums up this sentiment, writing: “We’ve been very vocal about why having two CEOs at the helm of any company is generally a bad idea.” He also points to their rarity, challenging: “Can you name a single company with $10 million in sales that has two CEOs?”

Yes. Netflix. And Oracle, until Mark Hurd pass away. And Harry’s, the online shaving company.

True, among the Fortune 500 fewer than 25 companies have had co-CEOs in the last 30 years. But the absence of something doesn’t prove anything. The few female or minority CEOs of Fortune 500 companies is not a case for only having white male CEOs. We’ve found that in business, simply put, two heads are better than one—and we’re not alone.

As Andy Katz-Mayfield, co-CEO of Harry’s, puts it: “People underestimate the value of debating major decisions and having a thought partner.” He’s the linear thinker; his co-CEO is a creative one. David Gilboa jointly runs the online eyewear retailer Warby Parker with Neil Blumenthal, who writes, “We’re able to represent the company and each speak with the authority of a CEO. We can cover double the ground.”

The Wharton Professor Adam Grant in his book, The Originals, writes approvingly of Warby Parker’s rejecting “advice to conform to the norm of selecting a single leader.” In fact, Professor Grant notes, “evidence shows that having co-CEOs elicits positive market reactions and increases firm valuation.”

And while there have been notable instances of where co-CEOs hasn’t worked (Chipotle and Whole Foods both tried and dropped them), there are thousands of instances where single CEOs haven’t worked either. Just read the business section on almost any day. And the average tenure of co-CEOs? Four and a half years—which is the same as single CEOs.

What’s particularly strange about the tech world’s seeming opposition to co-CEOs is that it’s radically in favor of co-founders. Many investors have a rule not to invest in companies with a single founder. Paul Graham the founder of Y Combinator—who is about as close as there is to a godfather of the startup world—in an essay listing the “18 Mistakes” that kill startups, lists number one as “Single Founder.” He writes, “You need colleagues to brainstorm with, to talk you out of stupid decisions, and to cheer you up when things go wrong.”

Problems and bad decisions don’t disappear as companies grow up. The stakes just get bigger. And that’s clearer today perhaps more than ever, with tech companies dominating the news for all the wrong reasons, from monopolistic behavior to propagating false news and inciting violence. As Mr. Hastings and Mr. Sarandos are proving with Netflix’s best surprise hit series yet—”Two Caesars in the C-Suite”—many of those companies could use a second leadership voice.