Yes, I speak from experience, I worked at Netflix. But I think you're missing some really important details:
- It was extremely rare. In my four years I only saw it happen once, and only heard about it happening one or two other times in the history of the company.
- The general philosophy was to make it easy to both hire and fire people, to allow for nimbleness. But they were open about this and let people know this wasn't for everyone.
- I think it shows great leadership -- the company admitted it made a mistake and tried to rectify it by inviting them back. Seems better to me than just trying to sweep it under the rug.
The sports team mentality wasn't for everyone, but for a lot of us, we loved it. We loved having coworkers who lifted us up and who we could trust to get things done and do them well, and knowing that if they didn't they wouldn't be around for long.