This Real-Life Startup Story Sounds Like Last Night’s ‘Silicon Valley’ Plot

April 13, 2015

3:30 pm

While the premiere of the newest season of Game of Thrones was on the radar for most of the human population this past weekend, a sizable slice of that population was also on the lookout for another HBO series that returned on Sunday. Last night, Silicon Valley, the Mike Judge comedy about life as a tech startup in Silicon Valley, also premiered its second season. And, if you happened to watch last night’s episode of the show, then you know that last night’s plot line addressed a lot of very real issues regarding startup funding and valuations. Strangely enough, though, Business Insider reported on a startup earlier today whose situation seems to mimic that of things that happened in last night’s Silicon Valley. [SPOILERS AHEAD]

Business Insider reported on the story of Lane Becker and an online customer service startup he founded back in 2007 called Get Satisfaction. Last week, the company announced its acquisition by the social media management firm Sprinklr. You would think that this would be great news for a company that raised $10 million at a $50 million dollar valuation back in 2011, but Becker was hardly ecstatic, as he took to Twitter last week to express his frustrations over the acquisition and to discuss how he didn’t even earn a dime.


Currently the talent director at Code for America, Becker tells BI that he was pushed out of the company back in 2010 and believes that the acquisition was made in a fire sale – a situation during which the only option for a startup is to get acquired or completely shut down. According to BI Becker admits to losing control of the company to venture capitalists and having to face an overvaluation and a big funding round at the wrong period of their company’s development.

Doesn’t this all sound so familiar?

Some of the major themes highlighted in last night’s episode of Silicon Valley looked at the relationship between investors and high prospect, early-stage startups: the competition between VCs over an investment in potentially high-value companies, the problems associated with overvaluation, and the very real repercussions that affect the human beings behind those startups involved.

Becker’s tale sounds like a blend of what happened between Pied Piper and Gooley Bib’s former founder Javeed who was kicked out of the company. Last night, the guys from Pied Piper considered multiple offers from different VC firms in the Valley, until finally choosing the offer from Raviga – a $20 million investment at a $100 million valuation; in the end negotiated down to a $10 million investment at a $50 million valuation.

While no two startups’ situations can ever really be compared (especially when it’s between a real life and fiction), it’s not hard to predict where Pied Piper may end up after last night’s episode. With the same investment and valuation as Get Satisfaction, and at a much younger stage than that of Get Satisfaction, at this rate, it seems that Pied Piper may be screwing itself over unless they manage to get some major traction after launch; otherwise the fictional startup could find itself in a similar fire sale situation.

What’s more, though, last night’s portrayal of Javeed and his fall into a state of depression, anger, and frustration with Gooley Bib, is similar to that of Becker’s anger at himself and the company’s past decisions, and the very real implications that runaway valuations could have in the long term for those working at those same startups. The lesson from Silicon Valley and Becker: if you don’t take the time to really consider the true valuation of your startup before raising a round of financing, then you may end up screwing up your life and the lives the people you work with.

You can read Lane Becker’s story from Business Insider.

 

 

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Ronald Barba was the previous managing editor of Tech.Co. His primary story interests include industry trends, consumer-facing apps/products, the startup lifestyle, business ethics, diversity in tech, and what-is-this-bullsh*t things.

Aside from writing about startups and entrepreneurship, Ronald is interested in ‘Doctor Who’, Murakami, ‘The Mindy Project’, and fried chicken. He is currently based in New York because he mistakenly studied philosophy in college and is now a “writer”. Tweet @RonaldPBarba.

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