What has insensitive & politically incorrect humour, amazing satire about the tech world & lessons for investors in the tech space? “Silicon Valley” an HBO TV series created by the legendary writer / director Mike Judge. Mike Judge acquired a cult following for Beavis and Butt-head, an animated series and the 1999 film Office Space which was like Dilbert in a film form. Judge has amazing ability to combine relevant ideas & repackage them with humour.

Silicon Valley, the TV series, is not for all audiences (& the humour is definitely for matured viewers only) but it does have something that succeeds in describing to a layperson, the very illusive world of technology. The technology space is anyway very tough to keep track of but it is equally difficult to develop an informed opinion on how to evaluate various tech businesses. Of course we don’t need to learn the actual technology to understand that Candy Crush is a very popular game, but is there a fun way to learn about how to empathise with a tech entrepreneur & the early investors who risk capital & reputation to bring revolutionary products & services to the masses? Yes.

Here are some of the lessons we can learn by watching Silicon Valley (while we are not busy laughing):

The Idea:
Great ideas can come from anywhere in the organisation but an idea in itself is useless. It needs the support of capable people & technology to turn it into a business. Plus the market conditions have to be right for the idea to be relevant and the technology available to deliver it in a cost effective way.

Richard: I have a meeting with Gavin Belson (a very successful tech CEO & Richard’s Employer). He wants to talk about Pied Piper.
Erlich: I own 10% of Pied Piper.
Richard: You said it was a sh**ty idea.
Erlich: It was a sh**ty idea. I’m not sure what it is now.

(Quote from Silicon Valley sourced from Wikiquote)

Creating a Product:
The biggest challenge for the tech entrepreneur is to find the right product-to- market fit. No matter how useful the product/service is if it doesn’t address a burning need, it has less chance to ever gain acceptance.

Building a business from scratch:
Tech geeks can be a shy bunch who might enjoy sitting in a quite corner and create something revolutionary rather than having to face people or even run their own businesses. It becomes obvious after generating an original idea, how the entrepreneur needs to lean on the support of early Angel Investors, Incubators & the training provided by some Venture Capital firms & mentors in helping to transform this developer entrepreneur into a businessman.

Richard: Look, guys, for thousands of years, guys like us have gotten the sh*t kicked out of us. But now, for the first time, we’re living in an era, where we can be in charge and build empires. We could be the vikings of our day. (Quote from Silicon Valley sourced from imdb)

Raising Capital:
When you’ve created something awesome but don’t fully understand how big it can get, should you dominate the fund raising or allow the VC to dictate the terms? That’s the holy grail of raising capital when you have limited time to go from idea to product to market, especially when someone is already around the corner with a similar idea and perhaps more chutzpah.

Richard: What they have is like Pied Piper, but not as good. People will see that.
Dinesh: Not if they get to market before us. Inferior products win out all the time.
Gilfoyle: Like Jesus, over Satan.
Dinesh: I was going to say VHS over Beta. (Quote from Silicon Valley sourced from imdb)

Negotiating Contracts:
Any tech business relies on several other technologies and manpower. A small, capital starved firm has to make decisions about hiring, having their own office, investing in infrastructure, leasing infrastructure, creating employee compensation policies, workplace policies, deal with the utilities & manage various other business needs. The small firm will rarely have an upper hand in any of their negotiations. It drags the novice entrepreneur in different directions distracting him/her from building a great product.

Jared: I think we need to define our corporate culture.
Erlich: Our whole corporate culture is that we don’t have a corporate culture. (Quote from Silicon Valley sourced from imdb)

Corporate Bullying:
A small firm is also an easy target. The tech world is a giant network of entrepreneurs and VC folks. A bigger firm can choke a smaller firm by poaching employees who have just been hired by promising them better compensation and perks. Like they say in the series – “It’s a programmers market out there and we must bid fast & aggressively if we want them.”

When there’s so much energy, enthusiasm, chance to change the future of the world & money involved, things (people) can get a bit weird. Egos are challenged, egos clash and egos are decimated. All is fair in the “Winner Takes All” game. For instance, here’s what a fictional CEO of a firm says to his team in a product demo meeting:

Gavin Belson: I don’t know about you people, but I don’t want to live in a world where someone else makes the world a better place better than we do. (Quote from Silicon Valley sourced from Wikiquote)

Despite the rapidly changing environment in the tech world, there’s still an obsession to control most of the outcomes. Everything from frivolous lawsuits to pressure tactics are used to dissuade an upcoming rival from becoming a full blown competitor. Rampant stealing of an idea and executing it better than the actual creator is also not unheard of.

Monica: People may take credit for your idea and try and sue you. How awesome is that?
Richard: Uh… yeah, that’s awesome. (Quote from Silicon Valley sourced from imdb)

Success & Network Effect:
Success in old economy businesses was a gradual process. In the tech world, products / services can become a hit in a matter of months. Also these short turbo charged boosts of success can end up in a sinking blackhole of despair when a better product takes over leaving a trail of dead ventures and expectations. The industry’s motto has become – Fail Fast & Move On.

Something more:
An interesting profile on Marc Andreessen, the co-creator of Netscape browser and currently a prominent VC. It shows the tech space from a VC point of view.

A 53 min video of Reed Hastings, the founder of Netflix about entrepreneurship, running a business, creating a product, disrupting old economy businesses & much more.

Silicon Valley, the TV Series, currently in its second season & still crushing it.

Similar article to this one, but focuses on lessons for the tech entrepreneur