S02 - Whose Ratio Will They Measure Now?

[radishcake]

Thought I'd make a topic so we could speculate and chat before the season starts! 

[hincandenza]

This is something I'm curious about; what area of tech will they mine for season 2?  On the one hand, there's a lot of material in the complicated world of building a company itself, growing it, handling all the complicated legal and business issues... all things Monica explicitly mentioned at the very end of last season, causing Richard to puke.  And rightly so: a techie like him will feel even further afield dealing with the vultures and predators of the Valley, and fending off hostile and subtle efforts to basically steal his own company away from him.  Not to mention, how they will handle the in-show disappearance of Peter Gregory, given that the last thing PG would do after Richard's season 1 triumph at TechCrunch Disrupt is be less involved.

 

On the other hand... I mean, this is a no-brainer in the "real world", such that there isn't really much dramatic tension in PP's immediate future.  The compression algorithm itself is incredibly, incredibly valuable in ways the casual viewer might not truly appreciate.  PP will have no shortage of suitors, and after spending a small fortune in lawyers to properly lock up and secure the IP and patents left and right, you can get some quick wins in licensing the code.  For example, how much would Netflix or Youtube or Hulu or Spotify or similar sites pay per month to be able to stream video or audio that was losslessly compressed at even 2-3x?  At rates around 10c per gigabyte, bandwidth costs are often the biggest expenditure of any major web player; Youtube alone must spend tens of millions a month to host all those videos; so imagine how happy they would be if they could cut their overall streaming costs by 60-70% by licensing a single compiled library? 

 

Pied Piper would very quickly be pulling in tens of millions a month just idly licensing their property for a limited time to deep pocketed companies, while building a larger "compression play" for other types of storage and use cases.  Richard Hendricks and company are not beholden to anyone as the only shares they've sold are 5% to PG, which means they'd quickly have major cash flow for little effort; in theory, Richard and the rest should be cash millionaires by the time season 2 starts.

 

This is not a very dramatic story, unless Mike Judge can find some way to mine comedy from it without making the overall plot implausible or forced.

[chocolatine]

hincandenza, I think you're right that Richard will struggle with the role of CEO. Also, keep in mind that PP has completely used up their seed capital by last season's finale, and the $50k they won at TC Disrupt is a tiny amount. So I think they'll need another funding round before they can deploy the subscription service you describe.    We saw a Marc Andreessen lookalike (or maybe Marc himself) offering Richard funding in the S1 finale, so that will probably be fleshed out into a storyline this season. Plus there's the personal aspect of Richard wanting to date Monica - and I don't think Monica likes him "in that way", so that'll be a source of conflict as well.

[hincandenza]

Ah, I was saying not to deploy a "subscription service" like the original plan, but rather to code it up as a proprietary library and plug-in that can then be leased to existing web players for immediate, no-overhead cash to Pied Piper.  The $50K ("Not that you're going to need it!") is certainly enough to keep the lights on and the fridge well-stocked for the next two or three boring months where they- hopefully offscreen- pick and legally finalize the particular way or ways they instantly make a metric f***ton of cash for almost no work.

 

As an example, Netflix in 2014 actually did begin switching to a new codec (HEVC, aka h.265), in the hopes that over the next few years they'll eventually see as much as 16-20% efficiency gains; after some googling it seems their yearly video streaming bill is about $500M and growing rapidly.  Now, in our theoretical "Silicon Valley" TV universe, the PP codec would almost instantly save them about $330M a year, all for the cost of simply testing and then deploying via automatic update a new app/plug-in version.  In that world, Netflix CEO Ross Hastings would be one of the first in that inundation of meeting offers we saw Richard getting at the very end of last season, so I can see PP hammering out a quick deal where an eager and deep-pocketed company like Netflix pays them $100M for an exclusive three-year online video streaming license to the PP codec (a codec that likely saved them well over a billion dollars in that same time), and some cheaper renewable rate negotiated after that 3-year deal expires. 

 

This doesn't preclude PP from other types of revenue sources in this same time span such as

• Audio compression (the original product!) for sites like Spotify, or for a new file to replace the mp3 
• File compression, including Google and others with all their data storage on millions of servers
• All the license fees to help kickstart the 4K market!  If you can compress at 4x you can fit a 4K movie onto an existing bluray disc, which lets the existing bluray manufacturing lines be repurposed easily, and makes a seamless transition to 4K for consumers who don't lose compatibility with older disks and devices.  That's worth a fortune for the entertainment companies involved, from hardware to Hollywood; PP would be dipping a ladle into that grateful money stream.
• A dozen others I didn't happen to think of right now, for which I am sure you are thankful. :)

 

The startup part is basically over because the possibilities are endless.  First, they patent the f*** out of the algorithm, with reverse engineering clauses out the wazoo, then they crank out the codec for say that Netflix deal, and they are all rich.  They won't need new investors; the company will start having monthly income of several million dollars from just that first deal, and more coming in with each new licensing agreement, out of which they can ethically and legally award themselves each solidly seven figure salaries guaranteed for the next several years.  Sure, this will entail building up the company- new staffing, departments and VPs and managerial structures and in-house legal team- but there shouldn't be any financial challenge involved with this.  Not that they'd need to, but if they develop a plan for something other than just licensing a codec and go public the IPO will explode and will make Richard and Erlich, and possibly the others instant paper billionaires.  This isn't a company trading on some theoretical future earnings, they should have absurd profit margins mere weeks after Techcrunch Disrupt.

 

I hope they do a quick resolution of how they get those first huge stacks of cash so we can move on to a Pied Piper that is thriving, with our core cast all set for life, with only a seemingly brighter future ahead.   Then the show can mine that rich character humor we love, such as how an already megalomaniac Erlich explodes into a messianic Jobs persona now that he is legitimately going to be an honest-to-freakin'-God billionaire, or the newfound hedonism of an unleashed Dinesh, or I can't even imagine what fresh perversions will occur with Bertram, or Jared making comical fits and starts into trying to play the part of Titan of Industry, and of course Richard struggling with Monica personally/professionally like you describe while also being the newest most eligible bachelor in Silicon Valley.  Then there's the actual struggle of Richard adjusting as the CEO of a real company, with the new social and professional circles he'll be traveling in, and managing of large offices and and so many employee archetypes across the Silicon Valley gamut with all their possible sitcom quirks.  

 

 

I guess what I'm saying in my usual loooong-winded way is that Season 1 was the "How do we start something?" story arc, which is basically finished and on to the "What do we do now?" story arc for Season 2.  There's a lot of interesting new territory to mine, so I hope they don't linger on the actual "getting rich" part, which I think practically speaking should be seen as a foregone conclusion at this point.

[larapu2000]

I'm VERY interested in where PP will go  after their big debut.  I think Richard as CEO is a brilliant comedic setup in its own right-his awkwardness and development as a manager with authority is a gold mine.  It would be interesting if this season set up a conflict or feud between Richard and Erlich that shadows the now impossible to follow up feud between Gregory and Belson.  At any rate, I would watch hours and hours of television written by the people that wrote the brilliant, instantly classic, fucking genius level Episode 10.  I'm pumped!

[hincandenza]

From the "... in the Media" thread, the latest trailer.  As I said there, this is more than a little unsettling (to me) because now I'm worried we'll just re-hash the first season all over again with slightly newer jokes and one-liners.

 

[larapu2000]

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