What Netflix founder Reed Hastings told co-CEO Ted Sarandos when he spent $100 million on 'House of Cards' series without seeking his permission

Netflix co-CEO Ted Sarandos has revealed a major decision that he took without asking for permission from founder Reed Hastings. In a recent interview, Sarandos said that he once spent $100 million on the series House of Cards without asking Hastings. Sarandos noted that he committed to two seasons of the show as a major financial risk to change the streaming giant's future. When Hastings questioned the decision, Sarandos explained his logic as a simple calculation of potential loss versus potential gain. He also recalled the conversation about the project's high cost. However, this move eventually helped Netflix move from a mail-order service to a leader in original streaming content.

In CNBC’s "Leaders Playbook," interview, Sarandos said, “When he asked me, ‘Why would you do that?’ I said, ‘Reed, it’s a simple risk-reward for me. If this show fails, we will have dramatically overpaid for a show. We do that all the time, but if it succeeds, we could completely transform the business as we know it.’”

Sarandos, who joined Netflix back in 2000, also added that the experience taught him a particular style of leading, which he is still using to date. He said that it was Hastings who showed him how to treat talented employees by trusting them.

He said, “I think the lesson that he’s left for me is that you pick the best people, give them the tools to do the best work of their life, and get out of their way.”

Netflix co-CEO Ted Sarandos said he reads this book ‘over and over’

Sarandos also said he doesn't really read management books. Instead, he reads fiction novels to learn about leadership, he said. His favourite management book: "Typhoon", a 1902 novella by Joseph Conrad about a steamship captain and crew navigating a severe storm while at sea.

“It doesn't sound like a management story on the surface, but I think it's the most powerful leadership story I've ever read. I read it over and over again because I find ... I get something different in the book every time I read it,” Sarandos noted.

When Sarandos first read the book about 20 years ago, he thought the captain was a careless "hot dog" who put himself and his family in jeopardy, he said. When he read it more recently, he learnt a more important lesson about leading in the face of conflict and uncertainty.

"Now, what I see is that when you go through life and you go through business, you make a lot of decisions that don't turn out the way you thought they would. The real leadership test is: How do you manage through that?” said Sarandos.