It's all about revenue.
It was the classic Silicon Valley dilemma: Building a product that other companies would shell out top dollar for or focusing on potentially changing the world by focusing on consumers—one compressed file at a time.
That’s the question Pied Piper, the fictitious startup at the center of HBO’s Silicon Valley, had to answer as the fourth episode of the third season opened Sunday night. Pied Piper, which Richard Hendricks and his fellow engineers have been building for a couple of television seasons, will supposedly let users squeeze down files to a small size that the world has apparently not seen yet.
But Pied Piper is now headed by Jack Barker, a CEO the startup’s board (read: its main investor) picked because he’s experienced, and Barker has decided that Pied Piper would emphasize business customers, or in tech lingo, the enterprise. As anyone in the real Silicon Valley will tell you, selling boring things to other companies so they can run their business is a less risky bet. That’s why companies like Oracle, Salesforce, and Cisco make oodles of money selling boring black boxes, or the software equivalent of that.
And so Pied Piper will too—build a black box that will sit in a data center, hidden from everyone, and print money for its maker.
As the episode opens, Barker has just discovered Hendricks plans to secretly build the consumer version they stubbornly believe in behind his back (gotta have that TV show excitement!). As the two argue over the company’s direction, Hendricks finally gets his way by reminding his boss that if he fires his team, there’s no way Pied Piper would be able to build the box it promised its customer, much less do it on time. Barker and Hendricks’ deal: They’ll build the most basic and passable version of the promised box, and the minute it’s done, the company will move onto something sexier.
The disdain from Hendricks and his crew of world-changing engineers for that box is so palpable, it almost approaches reality. But of course, as the team gets to work on the hated box, it gets caught up in its own ambition, perfectionism, and genius.
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“Just cuz making the box sucks, doesn’t mean we have to suck at making the box,” says Dinesh Chugtai, one of the main engineers, after they discover they can build a box much more powerful than the one promised to Pied Piper’s customer.
Perfectionism (or maybe it’s just vanity) resurfaces again after Pied Piper’s industrial engineer in charge of designing the box follows Hendricks’ instructions of just making the box black and rectangular. Design isn’t important!
Of course, when he does exactly that, Hendricks is appalled and asks why he’s not even trying to make it look good. “You’re just gonna do the bare minimum and call it a day? Is that what you do?” Hendricks asks. “I guess it’s just a matter of pride and self-respect.” Design is very important!
Even subjective startup valuations got a subtle shout-out in this week’s episode. Toward the end, the Pied Piper guys finds out that Hooli, the Google-like company that previously employed them and has been trying to compete with their product, has acquired a rival startup for $250 million. As Erlich Bachman explains to the rest, in between pot-induced giggles, Hooli’s CEO has effectively put a real-world price on what Pied Piper and its rivals are building: $250 million.
In Pied Piper’s case, that’s important because its board can attach a real value to its ambition. Just a few hours earlier, its board almost voted in favor of focusing on the box, largely because it had a customer order while the consumer product was still but a vision (read: could be a total failure). But it’s also an important remind about startup valuations: They’re imaginary. Well, until someone decides to write a check, that is.
Meanwhile, Silicon Valley has a second sub-plot, much like the real Silicon Valley: housing. A home-sharing company and $25 billion unicorn guest stars as the villain in the housing crisis, of course.
As Jared Dunn, Pied Piper’s business guy and resident den mother, continues his temporary stay at Bachman’s suburban-house-turned-startup-incubator, he discovers that an Airbnb guest who is now squatting in his condo is showing no signs of leaving anytime soon. Dunn had been renting it out to help cover his mortgage until Pied Piper could secure funding, but the situation has taken a new turn.
“My tenant has been leaving my belongings in the alley behind my condo to make more room for his tenants,” he tells Bachman of the squatter he can’t get rid of easily thanks to strong California tenant laws. “Yeah, he’s Airbnb-ing my Airbnb,” says Dunn.
The only irony here, however, is that the current narrative in San Francisco is of tech employees like Dunn pricing out locals who aren’t making as much money.