On this week’s episode of HBO’s “Silicon Valley,” our heroes at the fictional startup Pied Piper ran smack into a hard truth about the real Silicon Valley: All the positive buzz in the world can’t make up for a fundamentally flawed product.
For Pied Piper, the issue presented by the episode is that its Dropbox-like data storage and compression platform may have been downloaded 500,000 times, but it’s only yielded 16,000 daily active users. That’s not a great rate for a startup that, in the show’s universe, is supposed to be the Next Big Thing.
At episode’s end, facing the harsh reality that the company may have to shut down, it’s revealed that Jared, Pied Piper’s overeager business chief, has secretly turned topaying a “click farm” in Bangladesh to use the app and juice up the numbers.
Before Jared comes up with his secretclick farm scheme, Hendricks is prepared to shut down the startup: If Pied Piper is unusably complex, they simply don’t have the time to spend or the cash to burn to fix it. Without showing substantial user growth, they can’t get more investment capital.
It means that Pied Piper could go from Silicon Valley golden child to flameout case almost overnight. It’s way more feasible than it sounds.
Path had raised $77 million in its lifetime. And not long before the sale, it tried to pivot, releasing a selfieapp to expand the Path universe. But whatever Path was building, users simply weren’t sticking around at the rateit needed to in order to justify its continued existence as a venture-funded company.
Back on HBO, Pied Piper CEO Richard Hendricks realizes the problem is his app’s complexity anddifficulty to use. See, he only beta-tested Pied Piperwith engineers, meaning that they never designed it for an Average Joe.
Hendrickscomes up with all kinds of cutesy explanations for how it works, and Pied Piper goes on a charm offensive at trade shows and Bloomberg TV to try to sell it to consumers. Nothing works, and the company’s daily active usersstay stalled.
And as venture capital money becomes harder to find for early-stage companies, you can expect to see more caseslike Pied Piper in the real tech market- investors increasingly want to see actual growth, and it’s going to shake out any startup that can’t show it.