From The Editor | June 4, 2018

5 Software Business Lessons Learned From Binge Watching Silicon Valley

Abby Sorensen July 2017 Headshot

By Abby Sorensen, Executive Editor

HTO Television

If there was one good thing that came out of my emergency appendectomy in late May, it was being able to binge watch five seasons of HBO’s comedy series Silicon Valley while recovering. The show is a smart and timely satire of today’s tech world. If you haven’t seen it, it’s worth the time (even if it takes you longer than the five days it took me to breeze through five seasons). For those of you who aren’t yet fans, the show follows a group of developers who found a software company, Pied Piper. Plotlines include chasing VC funding, scaling and hiring, management conflicts, business model pivots, and the sprint to win market share from its main competitor, Hooli (the show’s stand-in for Google).

If I could have sat down with the fictional founder and CEO of Pied Piper, Richard Hendricks, when the show first aired in 2014, I would have given him a handful SoftwareBusinessGrowth.com and Software Executive magazine articles. This content would have helped the Pied Piper team avoid the often-comical mistakes the company has made over roughly 24 hours of episodes. Warning: there are some spoilers to follow.

Here are five lessons software companies of any size can learn from the cast of Silicon Valley.

  1. Who You Hire & Fire Can Make Or Break Your Company

Firing and hiring are among Pied Piper’s many ineptitudes. One of my favorite scenes of the series is when a former Pied Piper employee, nicknamed BigHead, joins Hooli and is soon “unassigned” by a vague HR rep. He winds up on the rooftop with the other “unassigned” employees who are there to “rest and vest.” They sit around and day drink without doing any actual work, but they can’t quit because they have to stay for the duration of their contacts. Before Hooli wooed BigHead away from Piet Piper, Richard can’t come up with reasons to remove him from the team even though there are plenty. He brings no apparent value to the company other than being Richard’s best friend.

Pied Piper isn’t much better when it comes to hiring. At one point in season five, Pied Piper loses out on more than 60 engineer candidates (who are stolen by Hooli to work on a hardware project they aren’t interested in) because of its lack of a disciplined hiring process. The show does a good job of depicting the talent war for developers, and Pied Piper is often on the losing end of the battle. COO Jared Dunn reminds Richard shortly after they acquires two companies for their engineering teams, "You're asking them to spend the primes of their lives on your vision." Pied Piper’s leadership regularly fails to articulate that vision when recruiting new talent.

Recommended reading: 7 Tips For Hiring And Firing Employees While Minimizing Legal Liabilities, by Allison Goico, Dinsmore & Shohl LLP and 3 Pitfalls To Avoid When Hiring Software Engineers

  1. You Can’t Run A Business Without Your Health

The show has a whole host of outstanding secondary characters, and my favorite might be Richard’s doctor. Richard’s constant health problems are an ongoing storyline in Silicon Valley. Early in season one, Richard makes an appointment when his stress manifests in a multitude of ugly symptoms. He has a bout of night sweats and has regular panic attacks any time he is forced to act like a CEO. Decision making in general makes him violently ill. The low point of his mental and physical health comes after a very long code sprint, when Richard crashes through the glass wall of his office. Burnout is real, and not just for founders of software startups in the Valley. Richard’s poor health habits jeopardized the company multiple times.

Recommended reading: Burnout: The Subtle Shift You Can't Afford To Ignore, by Dr. Sherry Walling, licensed psychologist and founder of ZenFounder, LLC

  1. Running Lean Is A Must (Even When You’re Funded)

One of Pied Piper’s investors insisted the young company spend $30,000+ on schwag. A board member spent $10,000 to hire a graffiti artist/convicted felon to design a new logo. Later, a VC-appointed CEO burned through mountains of cash on glitzy offices, a private chef, and an expensive inside sales team that disagrees with Richard’s product roadmap. In the opening scene of the pilot episode, Kid Rock plays a private party for a recently funded company (to a crowd of a few dozen people). And then there is the running satirical theme of the ridiculous spending habits of fictional tech giant Hooli’s CEO. For example, he ships in a live elephant for a board meeting to use as a metaphor. Silicon Valley’s parody of funded companies clearly shows why running lean has its benefits, and the Pied Piper team quickly learned a few million in funding does go as far as you’d think.

Recommended reading: Running Lean: Dos And Don'ts For Running The Agile Software Company Of Your Dreams, by Jeff Kupietzky, CEO, PowerInbox

  1. Software Is Only As Good As Your Ability To Sell It…And Your Users’ Desire To Use It

Pied Piper had a huge problem in season three: signups were high after they launched, but the number of daily active users was trending in the opposite direction. This was a good reminder to be careful with what metrics you’re tracking. In this case, user adoption was much more important than user growth. On the surface the company looked like a ready-made unicorn, but their next VC check was dependent on hitting a milestone of active users.

When the company puts together a focus group, none of the hypothetical users understood the value of the software. One said the platform made him “feel stupid.” Even after Richard spent way too long explaining the tech behind the offering, only one person in the focus group was buying what he was selling. Since Pied Piper was built by a team of self-proclaimed geeks who were obsessed with the tech behind their software, they didn’t understand when their non-technical users weren’t floored by the platform. The team had only given the beta version to their friends – other engineers and tech nerds – and never sought the feedback of regular, everyday users. Then, once they started acquiring those regular users, they didn’t have a proper onboarding plan. Not understanding, or properly educating, your users is a recipe for churn.

Recommended reading: How Streamlined Onboarding Reduced Churn By 9%, by David Duncan, VP of Sales at EPOS Now

  1. An Acquisition Doesn’t Guarantee Success Unless Employees Are Bought In

In season five, Pied Piper scoops up two flailing software companies not for their tech or for their customers, but for their engineers. And the move made sense, especially given the company’s inability to hire engineers. When the new employees show up on day one, no one is prepared. Richard pukes midway through his welcome speech, and the company is too busy to implement the employee training and onboarding plan over the next few days. The acquired employees show up to work still wearing their former company’s tee shirts, the engineers disagree on development styles, and no one is accountable for progress. Pied Piper learned there is a lot of work left to do when it comes to employees after the ink dries on an exciting new acquisition.

Recommended reading: Preparing For Post Acquisition Success, by Bruce Milne, CEO, Corum Group