The business lesson Reed Hastings learned from his marriage counselor that helped shape Netflix

Netflix's Reed Hastings.
Ernesto S. Ruscio | Getty Images

Before Reed Hastings co-founded Netflix in 1998, he learned an invaluable lesson that helped him build the company into the $226 billion business it is today: Honesty is always the best policy, even when the truth is uncomfortable.

But Hastings learned the important concept from an unlikely source – his marriage counselor. 

"[E]arly in our marriage, we had this great marriage counselor," Hastings, who has been married to Patricia Ann Quillin since 1991, told CBS's Lesley Stahl in an interview published on Sunday.

"He got me to see that I was just lying a lot. I was saying conventional things like, 'Family's the most important thing,' and then I would stay at work late, you know? And so, it helped so much for him to really show me that I wasn't being that honest."

The counselor taught Hastings that you have to be honest, no matter how hard it is, to gain others' trust, and that it's vital to admit mistakes in real time.

Hasting said the counselor became a "great CEO coach and mentor," because the lesson in marriage also taught him that "total commitment to the truth, even when it is uncomfortable, is the right way to build a company," too, Hastings told Stahl.

So he took that lesson in honesty, which he now refers to as "radical candor," and made it protocol at Netflix, according to Hastings' new book, "No Rules Rules: Netflix and the Culture of Reinvention." 

Now "every time I feel I've made a mistake, I talk about it fully, publicly, and frequently," Hastings wrote in the British Times on Monday. Doing so encourages employees to think of "making mistakes as normal," which in turn, "encourages employees to take risks when success is uncertain . . . which leads to greater innovation across the company," Hastings wrote.

Hastings also holds "Live 360" meetings at Netflix, where employees give others (including Hastings) verbal feedback over a meal (usually lunch or dinner).

Hastings told Stahl that feedback he has personally received at the 360 meetings is that he can be "too glib" and that he sometimes does not listen. "[O]r I'll get critiqued about being too positive and Pollyannaish and not really seeing the problems. Lots of things. And, you know, there's always grains of truth," Hastings said.

CNBC Make It is NOW STREAMING on Peacock. Find our original programming in the Channels section.

'Anyone' could have built Netflix, according to its co-founder

Why Netflix co-founders turned down Jeff Bezos' offer to buy the company

Etsy's $14 billion handmade empire