25 years ago, Netflix laid off a third of its employees and learned a lesson about ‘talent density.’ New cuts will test whether it still works

Sometime after Netflix’s 2001 layoffs, Patty McCord told Reed Hastings she was having a blast. The company was broke and couldn’t hire. The people left were doing twice the work. Nobody was arguing or complaining. Hastings, Netflix’s co-founder, gave McCord an assignment: “Go figure out why.” Her answer was “talent density,” the idea that a small group of exceptional colleagues will outwork a bigger team. It became the foundation of Netflix’s culture, and of the “keeper test” its managers still use to decide who stays. Twenty-five years later, Netflix is cutting again. The company is eliminating roughly 1,000 jobs, about 6% of its workforce, in a restructuring announced Wednesday. The cuts fall largely on its product, technology, legal and human resources teams. McCord ran human resources. This time, the company has plenty of money and a growth…