‘Silicon Valley’: When the CEO gets fired and the engineers stage a revolt

What makes the HBO show "Silicon Valley" the definitive show on Silicon Valley start-up life is its clever use of authentic storylines in their plot narrative. In episode 3 of the new season, the show captures the often prevalent situation when a CEO wants a product built a particular way, while the engineers want to build it in a completely different way.

A scene from "Silicon Valley," season 3, episode 3.
Source: HBO
A scene from "Silicon Valley," season 3, episode 3.

Jack Barker (played by Stephen Tobolowsky), the newly installed CEO of Pied Piper, wants the team to build the product as an appliance. Richard Hendricks (Thomas Middleditch), the ousted founder, wants to build the product as a platform and thus, the conflict ensues.

"Firing a young CEO and installing a much more experienced one looks like leadership. Firing two CEOs in a month looks like chaos." -Monica (Amanda Crew) in HBO's "Silicon Valley"

Having been in venture capital for over 42 years and in over 450 companies, we see this situation pop up in our portfolio often. While the reactions may not be as dramatic as in the show, the emotions still run deep in real life.

The core conflict is driven because the CEO or sales team is laser-focused on short-term revenue, while the CTO and engineers are focused on the purity and technical elegance of what they are building. The show's resolution to this conflict is a "skunkworks" project, where the team acts like it is going to build the product the CEO wants but really builds the product they want.

This is a clever homage to Silicon Valley history. The first release of Apple's Macintosh computers started as a skunkworks project by Steve Jobs. Many of Google X projects including the driverless car also started as skunkworks projects. We find that many of the big innovations in big companies start out as skunkworks projects that quickly grow to be the main product. Most famously, Amazon Web Services started out as skunkworks project in Cape Town, South Africa.

One of my favorite lines in the show is said by Monica (Amanda Crew) when asked by Richard why Laurie Breem (the lead venture capitalist) would not fire Jack Barker even though he is directly contradicting her direction. She says, "Firing a young CEO and installing a much more experienced one looks like leadership. Firing two CEOs in a month looks like chaos."

This is very true. When VCs transition technical founders from the CEO role, it usually signals the coming of age for the company (i.e., the company is ready to scale and make some serious revenue). When the experienced CEO who is brought in is fired, this means the company is in trouble and the investors screwed up. This is why most VCs are reluctant to fire the experienced operator brought in early.

Some additional notes on episode 3 in that context:

Best unicorn name drop: First, I am changing my LinkedIn status to "looking for work."

Most natural product placement: Oculus and Hoverboard as part of recruiter swag

Best prop: Burning Man poster on top of Gilfoyle's desk.

Best use of Silicon Valley jargon that sounds like something profound while in truth meaningless:

Jack Barker: What information do I not already have . . . So before you waste time with some free form jazz odyssey of masturbatory bullsh--, just tell me what concrete information you have for me that I don't already possess.

Most authentic line people think but do NOT say:

Monica Hall: She cannot fire him because she fired you. Firing a young CEO and installing a much more experienced one looks like leadership. Firing two CEOs in a month looks like chaos.

Best 90's reference:

Gilfoyle to Dinesh (who recently bought a gold chain): You are "too legit to quit."

Commentary by Venky Ganesan, a managing director at Menlo Ventures and the chair-elect of the National Venture Capital Association (NVCA). Follow him on Twitter @venkyganesan.

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