Of all the television shows that center around businesses, none feel closer to reality than HBO’s “Silicon Valley.”
The story of the fictional tech company Pied Piper and its many ups and downs is relatable to entrepreneurs that have gone through the hard knocks that come with trying to navigate the startup world. From fundraising meetings gone horribly wrong to terrible first iterations of a company logo, there is something that rings true to most people who have spent time in the tech world.
What we at Traklight often take note of is the many different intellectual property issues that the show touches on. Even from the outset, Pied Piper had problems related to IP, with the founder having to beg a local irrigation company for the rights to the company name.
Given that Pied Piper is both a startup and a tech company, the frequency with which IP comes up isn’t surprising—over 90 percent of a startup’s value is in its intangible assets. What sets the show apart as one of the funniest on TV is how they deal with those issues and how those early mistakes often have dire and hilarious consequences.
Bad business partnerships
In a recent episode, two characters run headlong into a business partnership that is poorly planned, ill-advised, and entirely one-sided.
The forever-failing-upward “Big Head” had just opened his own incubator with some of the $20 million he received as severance from tech giant Hooli, and is eventually talked into partnering with fellow incubator Erlich Bachman, who brings little to the table beyond his desire to glom onto the success of others. The loud and abrasive Erlich manages to convince the good-natured but dim Big Head to enter into a general partnership.
While this is a great arrangement for Erlich and his modest finances, it’s a terrible idea for Big Head, and probably for most business partnerships. A general partnership leaves both parties assets’ liable to the obligations of the partnership. In this case, it means that Erlich is free to spend Big Head’s money, which he does frequently and with great enthusiasm.
While the general partnership, in the case of “Silicon Valley,” was entered into with the intent of one party taking advantage of another, there are undoubtedly others that are created out of ignorance by two or more people trying to do it on their own.
Before entering into any sort of business partnership, it’s important to know about the different types of partnerships and what each entails; you can read more on different partnership types here and here. Considering how important a partnership agreement is to the foundation of any business, it’s advisable to speak with an attorney if you have any questions or doubts about which course you should take.
Violating non-disclosure agreements
Given how the writers of “Silicon Valley” often like to show the audience the price of hubris, the partnership between Erlich and Big Head isn’t as simple as one party funding the other’s ambitions. In this episode, we also see Big Head having to sweat the potential implications of violating the non-disclosure agreement he signed upon leaving Hooli.
In another example of people taking advantage of Big Head’s good nature, Pied Piper founder Richard used Big Head’s story about Hooli scrubbing the internet of negative mentions of its Nucleus project in order to convince a tech blogger to kill a negative story about himself and Pied Piper. The plan works, the story is killed off, and series’ nominal villain is left with a PR disaster.
Unfortunately, that gambit also has unintended consequences. The Hooli CEO wants to know who violated their NDA in leaking the story, and begins to exert pressure on the blogger to give up her source or face a lawsuit for libel. So, Big Head is left to wait and see if the blogger offers him up to Hooli for a lawsuit of his own. Erlich is able to buy the blogger’s loyalty by buying the company, but the purchase has an even greater price: his free-spending ways have left the partnership functionally broke.
Most NDA violations don’t end with a company acquisition, but they can be costly nonetheless. Companies have proprietary information that they want to keep in-house and out of the hands of the press or competitors. Having a former employee spill those secrets can cost your company millions of dollars, if not more.
That’s why having NDAs in place with all of your employees and contractors are an important part of hiring and exit practices. A good NDA will spell out exactly what former employees or contractors can and cannot say about the work that they did for your company or the inner workings and secrets of your business.
If you have sensitive information in your company—or even if you don’t—you should have everyone working for you or working with you sign an NDA. While an NDA isn’t a guarantee that someone won’t decide to break the agreement and spill the beans, it will certainly be a deterrent to almost all, and you will have recourse to take legal action against the few who go public with your information. You can learn more about non-disclosure agreements here.
Poor physical security
The episode’s failures weren’t limited to the partnership of Erlich and Big Head, however. In an effort to recoup as much money as they could from expenditures on an upscale office that was no longer needed, the Pied Piper team decided to sell off as much equipment and furniture as they could. Everything from office chairs to monitors and wiped hard drives was sold off.
Unfortunately, they learn too late that one of the programmers’ personal hard drives managed to get mixed in and sold, loaded with proprietary information. Once they are able to determine who the buyer was, two members of the team head out with a plan to take care of the problem, eventually posing as tech support and destroying the hard drive.
Online security is a major concern, and rightly so, but it’s important to not overlook the need for physical security. We spend so much time considering the consequences of someone stealing our information remotely that we can forget about the threat of thieves breaking into our offices and walking out with laptops and hard drives or even sensitive documents.
Just as you take steps to try and protect your information online with security, you should take reasonable steps to keep your physical information secure as well. Having a safe for documents can help protect against theft or natural disaster, and taking reasonable steps to ensure physical security at your office (and your home if you take work home) can keep you protected.
What makes “Silicon Valley” work is the truth behind the exaggerated situations. You may not find yourself having to buy a blog to avoid a lawsuit or posing as the Geek Squad to get your hard drive back, but every entrepreneur has made mistakes that they wish they could have avoided.
Almost no one knows everything when starting out in the world of business. That’s why taking the time and effort to make sure that you’ve protected yourself with the right written agreements and security measures can help insulate you from some of the mistakes you can make along the way.
You can use Traklight’s free Business Risk Assessment to learn more about your potential risks, and read Intellectual Property 101 for a more in-depth look at intellectual property as it impacts your business.
[include id=”18″ title=”Business Startup Checklist (HubSpot CTA)”]