02x02 - Runaway Devaluation

How can Gavin Belson claim that he owns Pied Piper?

I mean, this whole lawsuit is insane, right?

Well, let me ask you something, Richie...

And I need you to be totally straight with me...

Was Pied Piper related in any way to what you were doing when you were working at Hooli?

No. No, not at all. I was doing quality assurance for mobile messaging.

It had nothing to do with compression.

They didn't even have a compression division at that time.

And did you work on Pied Piper on Hooli time or use Hooli equipment to develop it in any way at any time, Richie?

No, and no.

Great. And by the way, always tell me that... and tell yourself that.

Because if you believe it, a jury will, too.

Oh, I... I do believe it. It's the truth.

Great. That one was even better than the other one.

I love it. Always say it exactly like that.

Yeah, okay. Look...

(sighs) We're going to win this, right?

Richie, if what you just told me is the truth...

And don't tell me if you lied...

Gavin's got nothing here.

This is a classic intimidation lawsuit designed to freeze you until after Nucleus comes to market.

It's got all the usual boilerplate nonsense:

"Breach of contract," "unjust enrichment,"

"breach of non-solicitation" in the hiring of someone named Donald Dunn.

Jared. We call him Jared.

Changing his name to get out of it... clever but irrelevant, because all we care about are the intellectual-property claims.

And we will win this...

Good. but we're going to have to lawyer up.

What do you mean? Aren't you our lawyer?

I'm not a litigator. That's what you need.

Another lawyer? Really?

Lawyers, Richie. You don't want to mess around here.

A young start-up with an IP lawsuit hanging over its head?

(laughs) I wouldn't want to be a part of that team.

Well, but you are a part of that team.

I'm part of the team that team is on.

Yeah. It's... It just sounds really expensive.

Says the guy who just got bukkaked with fat term sheets.

Welcome to the business, Richie.

Look, wherever we're at with your funding, legal fees will be worked into the deal.

You've got Raviga. You're covered.

Relax.

"We're out"? What do you mean, "we're out"?

Was it not clear from the context?

We at Raviga are out of the business of funding Pied Piper, at least while the Hooli lawsuit remains unresolved.

That suit is total nonsense.

Nonsense is not a quantifiable metric, Monica.

Risk is.

Funding any early-stage company is a high-risk proposition, but compound that uncertainty with a legal cloud over the company's intellectual property, and it's untenable.

And that is just the financial risk. There is also a legal risk.

We could become embroiled in Gavin Belson's lawsuit for aiding and abetting.

And there is a political risk... for the firm, but especially for me as its new leader.

I'm being heavily scrutinized from both within and without.

I cannot have my first decision post-Peter be one with such dubious fundamentals.

It's a rudimentary decision.

How am I supposed to tell them this?

In my experience, it's best to look a person in the eye and deliver the information with warmth and compassion.

Okay.

One other suggestion...

Dress unattractively when you tell them.

I read a study. The less sexual interest they feel for you, the less perturbing it will be. It sounds strange, but it's credible.

May I suggest the... The beige ensemble in which you came to work... Tuesday?

Things are just really different at Raviga, and I had nothing to do with the decision.

Guys, I'm so, so sorry.

Wait, so the company that offered us the most until Richard talked them into offering us the least is now offering us nothing?

But the fact that you're so sorry makes it all better.

You guys will be fine. You'll find someone else.

We don't want someone else, Monica. The whole point of going with you guys was because we trust you guys.

Trusted.

We still have our 5% stake, and Laurie said that I can still sit on the board, which means I can still come to meetings...

Can I say something here?

First off, Monica, you're not fooling any of us for even a second with your dress-shitty- to-ease-the-pain routine.

It's a classic chick break-up move, and you're not very good at it either. You look great.

Yeah, beige is a good color for you.

You're a true autumn.

Secondly, who cares?

We have a three-foot stack of term sheets from the top VCs on the face of the planet.

So the top one fell out. As Jay Z says, on to the next one.

Jared, who's our next best offer?

Uh, between the numbers and the reputation, that would be Coleman Blair Partners.

I'm gonna go put my face on.

Call Coleman Blair. Tell them that Santa Claus is coming early this year, and he's bringing a big bag of Pied Piper.

Well, I'm going to leave this room without saying goodbye to you.

I'm sure you can find your way out with one of your two faces.

Sorry about that.

The guys are just a little emotional.

No, I... I get it.

And look, I probably shouldn't say this, but there are a lot of really great VCs in town.

You'll be fine.

I just...

Just what?

Just tell them that you're really excited to be in business with them and try to close quickly.

You know, while momentum is still on your side.

(theme music playing)

Well, it's gonna break a lot of hearts on Sand Hill Road, but congratulations.

We decided to go with you.

Uh, we were told that you were going with Raviga.

And I am happy to say that is no longer the case.

We're really excited to be in business with you guys.

Can I ask... Did you walk away from them, or did they walk away from you because of the lawsuit?

Ah, that lawsuit we know to be frivolous.

Yeah.

Is that a "yes" folder?

No.

So no pastries today, huh?

So both Raviga and Coleman Blair Partners passed because of the lawsuit?

Frivolous suit. It's nothing.

♪ Well, it's not nothing.

Look, before we start negging each other...

Negging?

It's a term used in sexual manipulation.

Maybe not relevant here.

We're really excited to be in business with you guys.

Hmm.

We actually see this lawsuit as a positive.

We will win, and it proves that we have something worth suing over.

And yet Raviga, Coleman Blair Partners, and Wood Opal Fund have all passed.

We're really excited to be in business with you guys.

Hmm.

(music stops)

You know term sheets aren't legally binding documents, right?

Of course not. They're just guidelines that people follow, unless, of course, they're pussies.

You came in here three days ago.

You were arrogant, condescending, and offensive.

Now you come in here, you call me a pussy...

Whoa, whoa, I did not call you a pussy.

I said that people who break term-sheet agreements are pussies, and that hasn't happened... yet.

Thus I haven't called you a pussy... yet.

You're in control of the situation.

Hooli has the unlimited resources to hamstring you until Nucleus comes out, at which point, they will be the market standard, and you will be irrelevant.

We're here to invest in innovation, not lawyers, so let me be perfectly honest with you.

Your behavior was boorish and juvenile...

You were rude, vulgar and uncouth.

You were course, graceless and puerile.

Obscene, insulting and ignorant.

Ignorant?

You called me a shit-riddled a**l wasteland.

You called me a chode gargling fuck-toilet.

We're really excited to be in business with you guys.

Uh, guys, I hate to panic you until I'm absolutely sure it's warranted, but Richard just texted me. We got our seventh pass.

f*ck.

f*ckin' Gavin Belson.

All the VCs turned on us.

Apparently, Erlich used some pretty assertive vaginal metaphors last round, so it's been a bit of an uphill climb.

I think we're going to have to crunch our burn-rate again.

Even with the $50,000 from TechCrunch, we're not going to last very long.

Wait, wait, wait. No, no, no.

Richard said we were going to split that money, right?

$10,000 each?

I don't think we can afford to do that anymore.

f*ck!

I just donated $5,000 to my cousin Wajeed's Kickstarter campaign.

He's trying to get an app called... Bro off the ground.

Bro?

It's a messaging app that lets you send the word "bro" to everyone else who has the app.

So it's exactly like the "Yo" app.

Yes, but less original.

Why don't you just cancel your credit card?

That way Kickstarter can't collect your pledge.

Well, I would love to, but he looks up to me.

I was always like the cool cousin of the family. You know what I mean?

Wait. Did you just say you were the cool cousin?

Yeah.

Please explain.

Well, when we were kids, I was the one getting good grades, I was the one who was planning for my future.

I would bring gifts for my teachers, 'cause they worked so hard.

You know, cool stuff. He was always getting in trouble, he got caught smoking opium in the tool shed, he crashed my uncle's motorbike.

And you think you're the cool one?

Yeah, it's different in Pakistan.

I've never been, but I know it isn't.

Oh, here it is... "Bro to Bro is a one-bit communication messenger, the fastest way to speak your mind."

As long as what's on your mind is the word "bro."

Well, he's still shy of his goal.

If he doesn't get there, none of the pledges get collected.

I feel horrible for what I'm about to say, but I really hope he fails.

That is the first cool thing you've ever said.

(phone buzzing)

You know what? This may not be an issue.

Richard and Erlich are heading into their last stop.

I trust Erlich can be diplomatic and pull it off.

A few days ago, I came in here, I did some things and said some things that I should not have.

Also we would like to be open about the fact that Pied Piper is involved in a complicated legal matter that could affect our potential value.

And that being said, we are open to renegotiating the funding terms to reflect that.

But most of all, I want to thank you.

Thank you for allowing me to come in here today and be vulnerable and to apologize.

(scoffs) Mr. Bachman, I didn't have you come all the way back here today just to apologize to me.

Uh, please, it's Erlich. And... you didn't?

Of course not. I... I asked you back because three days ago I sat right here, and I watched you put your testes on this reclaimed Brazilian Koa wood table, and now you're going to sit there and you're going to watch me do the same goddamn thing to you.

What? What?

My turn.

No... but it's your table!

Yes, it is my table.

Richard: Oh, man. Please don't do that.

Erlich: Good god!

I think you should cancel your Kickstarter campaign.

Whoa, what?

Listen, I love your idea.

You know I do, right, bro?

Yeah. Bro?

Bro? Like, it lets you send the word "bro" to anyone else that has the app.

I know what it is. You've explained it to me so many times.

I love it, but you know, I'm not saying...

Other people are, like, saying horrible stuff.

I'm supporting you, and they're saying, like, "Oh, he couldn't get funding, so he had to go to Kickstarter like some charity case collecting money from strangers, like a street beggar who sits on the ground, eats trash."

Really?

Yeah.

Look, just between us, I was thinking about canceling, anyways, because we're way, way under our goal.

Really? Really?

Like, embarrassingly low.

Hmm. You know what?

That sucks.

It does really suck.

But I think it's the right thing to do.

Well, you're right.

'Cause you don't want bad word of mouth to kill such a great idea.

Yeah, like with what happened to your app. Yeah.

What do you mean, what happened to my app?

Everybody started talking about how bad it was and you ended up giving up.

I didn't give up. I left to go work on Pied Piper.

So you're saying, then, that if Pied Piper didn't happen, you would still be working on your app?

Even though all those people just sh1t, like, all over...

Like all of them. (speaking Urdu)

You know what? You're right, you're right. That's what makes you so cool, that you have the f*cking backbone to say that.

f*ck those people.

Yeah, f*ck 'em all.

f*ck those people.

f*ck them.

I'm not going to cancel my Kickstarter campaign. f*ck 'em.

Wait, hold on one second.

Yeah, no, you know what? You're right. f*ck them.


I'm not going to cancel it, and I'm going to throw a huge Kickstarter party.

I'm gonna invite everyone that I know, and we're going to put Bro over the top.

Everybody, this guy is the coolest cousin!

Thank you for the $5,000, eh? (laughs) Whoo!

At least I have the common decency to shave mine.

Before you pull them out in public?

So you're complaining about the guy's sense of decorum?

Absolutely. We live in a society.

I can't believe we are this f*cked.

Guys, something interesting just happened.

So I downloaded Wajeed's Bro app out of curiosity and found it very sticky.

I've never felt like I was anyone's bro before.

The only people who have used that term with me were assailants, but, um, I started bro'ing people and getting bro'ed back.

This is my nightmare.

And all of a sudden, I'm bros with all kinds of people, including a guy from Branscomb Ventures.

Branscomb? That's a solid shop.

Yes. So we bro'ed about this and that, and then when he heard I worked at Pied Piper, he got excited, he triple-liked my "bro," and asked about meeting us.

Okay, but does he know about the lawsuit?

Yeah, I told him. I mean, you know what they say, "Bros disclose." No one says that.

Wait, doesn't Branscomb already have its own compression play?

Yeah, but not a good one, apparently.

I mean, they want to sit down with all of us, engineers included.

That only happens in a second or third meeting.

Technical due diligence. That's good.

Okay, Jared, what... What did you tell him?

Um, I was waiting a bit to "bro" him back, so that I don't seem over-eager.

Bro him back! Bro him back.

Bro him.

We're not dead yet, guys.

Well, get some sleep, my bros.

I'll set the meeting, and, um, then I'll go find some hoes to prioritize behind you.

Are you trying to say "Bros before hoes"?

It's sexist, but it's about friendship.

Middle-out is based on a completely new probabilistic model.

It finds long-range structure that's hidden even to domain-optimized algorithms.

I'm sorry, is... Is this too in the weeds?

Not at all. Take us into the weeds.

Wouldn't you rather hear our go-to-market strategy?

You mentioned something earlier about stacking middle-out on top of another compression algorithm.

How does that even work?

I mean, you can't compress something that's already compressed to entropy.

Right?

Wow.

Uh, I don't really get too many of those questions in meetings like these.

But, uh, it's actually easier if I... if I show you.

May I?

Absolutely.

Okay, great. Here... here I go.

Stacking middle-out is actually very real.

Let's take...

Do you have to pee, Jared?

Because I have to pee.

Richard: So, when you unpack...

I would love to pee.

Down to the symbolic level.

There. When you stack middle-out...

They're brain-raping us, right?

They definitely are.

sh1t. All right, wait here.

(door opens, closes)

What are you doing?

I told you I didn't have to go pee. What is happening?

Those guys are never going to fund us. We need to leave now.

What are you talking about? This is going great.

I mean, VCs are never interested in how middle-out actually works.

Of course they're interested, because they want to steal it.

This is a classic brain-rape.

What?

We did it at Hooli all the time.

We'd schedule meetings with companies, so they'd explain their technology, then we'd use their ideas in our products.

Like what happened to Yelp.

Yes.

It's like when somebody says they want to go birding with you, but really they just want to get you alone in the woods, so they can take your binoculars.

Look, those guys aren't doing technical due diligence.

They're not even consultants. They're a compression company.

One of them has braces, for f*ck's sake.

Braces! sh1t.

Dinesh and Gilfoyle are still in there.

Middle-out doesn't restrict itself to H.264's two-dimensional grid or time-bound patterns at all.

This is great. Great.

You know, they usually don't bring us to these things, and I think I know why.

It's 'cause we steal the show.

(snaps) You guys are really helpful.

All right, shut it down. Meeting over. We're out of here.

No more pictures, assholes.

I could email you... Why is this not coming off?

No, you're not emailing anybody.

(clanging) Damn it, Jared.

We were bros. We were bros.

Wajeed: Yo, yo, yo, just want to thank everyone for coming out to this Kickstarter party for Bro, the app that proves that you can change the world in just one word! (applause)

Actually, it's just half a word.

I know. It's so efficient.

As you can see, we're just $5,000 away from our goal.

But we got a whole hour left, people.

So let's get those "bronations" going.

Donations are funny, right?

I mean, why would anybody donate to something like Bro and not a homeless shelter or schools?

Cancer? That's still out there.

Any of us could have it.

Food for thought... which a lot of people also don't have.

Have a great party, guys.

You could donate if you want, but he's throwing away half the world's market.

You know what "bro" means in Mandarin?

It means "asshole."

You know what "bro" means in Portuguese? "Rapist."

In Latvian, it roughly translates to "one who beheads the messiah."

In Finnish, "bro" means "a baby's erection."

In Urdu, "bro" is actually short for... (speaks Urdu) which means "a dildo for a man."

A man's dildo.

"Fecal eclipse."

It loses something in translation.

We don't have a word for it. They do.

It's "bro."

You know what "bro" means in Navajo?

A really joyful person with mental disabilities.

All right, less than a minute to go, people.

And we're just two grand away. Come on, you can do it, come on.

(dings) That's that I'm talking about!

$500 from "Gilfoyle-underscore-Luci4."

Where you at, bro? wherever you're at, you're my bro.

(sighs)

Looks like I got here just in time, bro.

What the f*ck did you do that for? Do you know how this works?

If you put him over the edge, we both owe him money?

But you have to pay a lot more.

Wajeed: 30 seconds left! I'm effectively leveraging your misery.

Somebody! Anybody! I'm like the Warren Buffett of f*cking with you.

$1100! Come on, bros. You're a dick.

Only $1100 left. I might be good for that.

Gilfoyle, please.

I'll tell you what.

You pay me $500, and I won't pledge anymore.

For 500 bucks, you save $5,000.

I'm not giving you a dime.

Nine, eight, seven...

Okay, I'm pledging.

No. Stop. Let me...

Stop it. 500. It costs 500. 500.

Okay.

Three, two...

It doesn't matter. It's not like he's going to make his...

(dinging, alarm blares)

What the f*ck?

Yes, yes, yes! We did it! Who was it?

That's not how that was supposed to go.

Mika! Mika, I love you, you Mika!

(all cheering)

Who is that... tall Asian woman?

Some woman that Wajeed is f*cking.

She was in the Olympics.

Huh.

He really is the cool cousin.

Even with the 50 grand we got at TechCrunch, we've only got a few weeks left of runway before we crash and burn.

Richard, if it makes you feel any better, I put that Branscomb guy in his place.

I dropped him from Bro, but not before I sent one final angry "bro."

What do you mean? You can make them angry? You can make "bros" angry?

Well, he made this bro angry.

But technically, no, The "bro" I sent was identical to the previous "bros" I sent, but I think he'll infer the anger from context.

(phone buzzing) This is Ron on the phone. I gotta take it.

Yeah, okay. (beeps)

Hello, Ron.

Hey, Richie.

I gotta bounce on over to my mind-body thing, but I just wanted to give you the good news.

I got you a top-shelf litigator.

Yeah, uh, we should probably discuss that.

You're gonna sweat me about the cost, right? Don't.

I hammered them on their fee. They're going to bring it way down.

Okay, so how much?

This whole thing is going to cost you 2, 2.5 million tops.

What?

I know, right. It's like it's free.

I told you, I pay for myself.

So I'm going to need you to head on down to their offices tomorrow at 10:00 AM. You slap an 80K retainer on them, and we are good to go.

(call waiting beeps) Oh, sh1t.

I... okay, I actually have another call, so...

I'll get out of your pubes.

I'm emailing you intros to the guys you're meeting tomorrow.

Later.

(beeps)

Hello?

Oh, uh, hello.

Yes, uh-huh.

Sure, just me?

Okay, what time?

Hello.

Richard. Thanks for coming.

(clears throat, sighs)

What are we doing, Richard?

Lawsuits and lawyers?

You out there getting rejected by every VC in town?

Neither of us want this, but maybe together we can find a way out.

Yeah, easy... Drop the lawsuit.

You know I can't do that. I didn't steal Pied Piper from you, and you know it.

Well, that's up to the courts to decide.

And until they do, you're frozen.

Meanwhile, my best engineers are working around the clock to get me a middle-out algorithm that surpasses yours.

And in January when we have it and we come to market, you won't just be frozen, you'll be dead.

You played your best hand, Richard, and you lost.

It's just business. So... wouldn't you rather get something out of Pied Piper while you still can?

Let me acquire you.

What? No way. Are you kidding me?

We should have just done this the first time.

I know you thought about it. It's the perfect fit.

You get my infrastructure, I get your speed, and I get it today rather than in a month or two.

What's the downside?

The downside is that everything I'm building becomes the property of your giant, soulless corporation.

And what exactly do you think you're building?

You're out there trying to get funding so you can hire people, scale up, roll out a product, IPO, and eventually become a publicly-traded what?

Corporation.

We would be different.

I see. I suppose once Pied Piper is a billion-dollar company, you'll seek out your competitors and help them.

Please. Let's face it.

What is Hooli if not the best possible future version of Pied Piper?

You think you're building something different? No.

You're building something that's exactly the same as what I've already built, except with you instead of me, but that's not possible now, Richard.

But you know what is? We could build something together, you and me.

Something great. Something the world needs now.

Look, I don't have to do this.

I'm just trying to do the right thing here.

So what do you say?

You want to know what I say?

(deep sigh)

Okay, here's what I say.

(mariachi band playing)

(singing in Spanish)

(singing continues)

(light instrumental music)

(Music fades)