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'Silicon Valley' incestuous threesome: Start-ups, VCs and the media

Spoiler alert: It is not possible to review and comment on Episode 5 of the HBO show "Silicon Valley," which aired on Sunday, without revealing some critical plot twists. You are forewarned.


Suzanne Cryer as Laurie Bream on Silicon Valley
John P. Johnson | HBO
Suzanne Cryer as Laurie Bream on Silicon Valley

The core narrative of Episode 5 is around the role media and perception plays in the life of a Silicon Valley start-up. There is a flurry of articles in Techcrunch and CodeRag around the fact that Laurie Bream (Suzanne Cryer) is meeting various CEO candidates around Silicon Valley but not able to close (i.e., hire) any of them.

CodeRag (heaven forbid) even calls into question the technical chops of Richard Hendricks (Thomas Middleditch) and music app Pied Piper. This causes Richard to go into a tizzy as he believes the bad press will prevent him from being able to hire great technical talent. He wants to meet the tech blogger face to face to set the record straight. Obviously much fun ensues when he actually meets her.

Tech media and technology start-ups have a complicated love-hate relationship. Both of them need each other to survive and thrive but they also look down at each other. The tech media, always in the shadow of their east-coast brethren in New York and Washington, want to do investigative journalism more akin to Bob Woodward and Walter Cronkite.

Tech entrepreneurs on the other hand view the tech media more like bloggers than journalists and expect that in return for inviting them to fancy places for product introductions and plying them with alcohol and tchotchkes, they should get fawning coverage over every little feature they introduce. Tech execs are hoping Hunter S. Thompson, tech media is thinking Seymour Hersh. To paraphrase Oscar Wilde, the one charm about this marriage is that it makes a life of deception absolutely necessary for both parties.

Now, let's be honest.

Venture capitalists have started to crash into this marriage and made it into a threesome. Getting coverage and visibility has become a career prerequisite for a VC as much as having a great investment track record. Some firms probably have more PR and marketing folks than associates. It has even caused people to review TV shows (poorly, I might add.)

This marriage (threesome) has been critical for the rise of Silicon Valley startups. When you compare similar start-ups across multiple geographies in the U.S. (Silicon Valley vs. Seattle vs. New York), the one in Silicon Valley is almost always able to generate more "buzz" and early attention than the other. This early "buzz" allow these Silicon Valley companies both to raise more capital and get more free media than their non-Silicon Valley counterparts.

This media attention is a double edged sword. On the upcycle its virtuous in its ability to anoint the company a leader and put the founder on the cover independent of the facts on the ground e.g. Theranos and on the down cycle it can be brutal and relentless on its negative coverage, e.g. Yahoo, giving the company very little space to execute a turnaround. It is worth remembering that the media like a mirror can only show us what we look like but not who we really are. If we don't like what we see, the problem is not with the mirror.

Here's where to go to be seen (or not).

Best place in Silicon Valley to have a meeting so that everybody else knows you are having that meeting: (1) Drinks at Madera in Rosewood Hotel (2) Coffee at Coupa Café (3) Breakfast at Bucks.

Best Place in Silicon Valley to have a meeting which no one will know: (1) Stacks in Menlo Park, (2) Hobees in Mountain View, (3) Konditorei in Portola Valley.

Best failed start-up reference on the show: Clinkle – the infamous mobile-payments company that was excessively hyped



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.

For more insight from CNBC contributors, follow @CNBCopinion on Twitter.