Why did Pied Piper fail? — Key lessons to learn for a Tech Entrepreneur
Disclaimer: All the stories I share are my own hypothesis. I do not intend to harm or object any person, product, job, or community; intentionally or otherwise. Hope you enjoy a good read!
Not too long ago, a young entrepreneur in Silicon Valley set out to make the world a better place with his game-changing, once-in-a-lifetime Compression Algorithm. The entrepreneur name was Richard Hendricks from the TV Show Silicon Valley.
I just rewatched the entire series almost 10th time (yeah, I’m pretty obsessed with Silicon Valley), but this time I watched it from the hat of a Product Manager and I could decipher at each stage, why they failed even with the most revolutionary technology. If you haven’t watched the series, I recommend watching it first because major spoilers ahead!
1. Pied Piper never hired a Product Leader
This could be biased but they never hired a Product Leader in the company and this was one of the biggest reasons Pied Piper never succeeded as it should. Richard, Gilfoyle and Dinesh were hardcore coders. Jared was a Sales/Ops guy so no one in their team was actually fit to lead the product. You can clearly notice lack of user needs in the product and the product being too “engineered” at various times.
In the start of series, we see Richard building music copyright infringement application with a revolutionary technology. It seemed like a college project where market research, user needs and revenue were never considered. Later in Season 01, they couldn’t find a differentiator to compete with Hooli’s Nucleus. A good product leader here would find ways to strategically compete with Hooli by identifying other use cases and sectors.
As the series progresses, Richard launches the compression platform as he always wanted, but guess what happens next? It failed miserably. They made the product without keeping the user needs in mind and gave the beta to the engineers to test. The beta was already compromised with biased and unconstructive feedback from the Engineers. Ultimately, with over 500k installs, they were only able to hit 19k DAU. The platform was engineered and users failed to understand how to use it. A big red flag for an organisation without a good product leader.
Later in the series, Pied Piper launched the new decentralised internet but guess what happened again? It again failed. The reasons were far bigger than the user needs this time but a good product leader would help craft a strategy to launch MVP, raise finance, introduce other channels of revenue etc.
In the entire 6 seasons, Pied Piper just kept trying to find Product Market fit.
2. Richard was not a good CEO
Richard never played a good role as a CEO of Pied Piper. He lacked vision and leadership skills. He never had a business plan for Pied Piper and hired Jared to help with the business plan. He couldn’t communicate the vision directly to Peter Gregory (First VC of Pied Piper) and relied on Erlich for the same.
Laurie Bream (Pied Piper’s VC) even fired Richard as CEO of Pied Piper once because she knew Richard would do the best job as CTO. He interrupted the user interview session because the users couldn’t understand how to use Pied Piper. Instead of gaining insights from the session, he interrupted it mid-way and started explaining the bits and pieces of platform.
As the series progresses, he decides to build a new decentralised internet. He also got an insurance company as the first client but with no cap over data at a fixed price, they were about to go broke and then Richard decides to hack into Hooli Con users devices to get more devices to store data. The devices with their software (technically, a malware) started exploding and Richard was not apologetic at all for the unethical act. The new internet however was saved, thanks to Gilfoyle by hacking the smart refrigerator and Richard tried to fire Gilfoyle, the guy who literally helped save Pied Piper and the new internet because of the same incident after getting instigated from some COO outside Pied Piper.
3. Pied Piper never had a good VC
Let us look at the VCs of Pied Piper in chronological order — Peter Gregory, Russ Hanneman, Laurie/Monica. Except Peter, none of the others contributed much except for the money. Laurie backed out as a VC when Pied Piper needed them the most during the false allegation by Hooli that Pied Piper was made at Hooli.
Laurie fired Richard from Pied Piper and recruited Jack Barker for the CEO position. This was a good move until she fired Jack a couple of months later and left Pied Piper without a CEO. She didn’t value the product Jack was trying to build, the only product from Pied Piper that showed great promise, had a good strategy and brought in revenue. She valued the platform which had no strategy, user or market data to back and no channels of revenue at all. At her experience, she could have played a better role of a VC and mentoring them to build the right product.
Later in the series, Monica, one of the co-founders of Breamhall who were leading the series B round for Pied Piper got an argument with Laurie over the selling of ads on Pied Piper network and she left Breamhall only to lead the ICO (Initial Coin Offering) for Pied Piper, which miserably failed as well as PiedPiperCoin launched at $0.07 whereas the team had an expectation of $68 per coin. Series B down the rabbit hole.
4. Pied Piper never had sources of revenue
Richard and team always thought of fancy technology and getting the product out in the market. No one ever thought strategically about the runway, revenue, margin, and unit economics at all.
They never tried to build multiple channels of revenue, possibly a B2B version of the product for revenue while gaining growth on B2C. Jack Barker tried to build the product for businesses and got Product Market fit pretty early with a huge offer but that product was shut down and Jack was fired.
Another huge opportunity landed when Richard came with the idea of new internet. Although, technically the first client was an insurance company, which means they went the B2B route but again they shifted towards B2C for no particular reason. They could have scaled in B2B by getting more clients and offering a SaaS-based product.
In the end, Pied Piper network signed a huge deal with AT&T (finally, a ray of hope), but guess what? Another failure! The technology was too advanced for its time and no one could control it so they crashed it (intentionally), preventing a robot uprising. However, it led to the end of Pied Piper, almost leaving me in tears.
Well, Pied Piper is a cautionary tale for all the tech entrepreneurs trying to find Product-Market fit. Want to build a great product? Get a CTO like Richard, Systems Architect like Gilfoyle, Tech Lead like Dinesh, Ops guy like Jared and Product Leader like Peter Gregory.
Follow me, I’m the Pied Piper, follow me!
