It helps that they have repeatedly proven this strategy works. When the CTO goes to the CEO and says "we're going to build this, not buy it," the CEO obviously trusts his decision making because he's seen him successfully execute his strategy so many times.

It sounds like Netflix engineering culture is built a lot around trust. Management trusts that only top engineering talent works there, and the sink-or-swim culture, coupled with performance bonuses and a rising stock price, ensures that the engineers are making the best decisions for the company. It's a lot easier to approve a "build" vs "buy" decision when you know that the interests of the engineers pushing for it are actually aligned with the company business interests.

Contrast this to a company with a large separation of incentives between the stock price and the engineers. In that scenario you end up with a bunch of engineers who are bored and want to prematurely optimize systems because there is no clear personal cost to doing so.