Big Head, Big Dreams, Big Mistake?

At least on paper, Episode 23 was a heartwarming story of new beginnings.  Sure, Richard was subjected to an excruciating limbo during which Laurie interviewed other people for “his” job as CEO.  But it turns out that was only for Richard’s own good—to make sure Richard would be seen as the best choice after a rigorous selection process—not as the guy who got his job back because he was hanging around the office.  There was a smallish hiccup when the indignity of Laurie’s process caused Richard to snap and air all his pent-up grievances to a Code/Rag reporter, who could have ruined everything for Richard by printing his tirade.  But fortunately, Big Head saved the day by providing the reporter an even bigger story about how Gavin Belson “scrubbed the internet” of negative references to Belson or Nucleus.  By the end of the episode, Richard is reinstated as CEO and Pied Piper is relaunching work on the platform with a brand new batch of cheap, foreign engineers.

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Laurie & Monica Out-Action Jack…and Other Fiduciary Duties (Silicon Valley – Episode 22)

Episode 22 provides a decisive and satisfying showdown between Jack’s Box plan and Richard’s consumer platform option.  Richard’s not-so-secret skunkworks project is dead, and the team sets to work on the Box believing that as soon as they deliver a working prototype, they will be free to build the platform.  But when they deliver the Box, they find Jack is prepared to double-cross them.  As Jared explains, Jack has negotiated a contract “with ’90s-era tech dinosaur Maleant Data Solutions that **exclusively** licensed the Pied Piper algorithm to Maleant for five long years!”  Jack calls a meeting of Pied Piper’s board expecting it to approve the deal.

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Trade Secrets and Lies (Silicon Valley – Episode 21)

Episode 21 is a delightful maze of plots, plot twists and omens.  At Pied Piper, Richard fails in his attempt to go over CEO Action Jack’s head and have Laurie, the investor, force Jack to scrap his Box and build the consumer platform.  As a result of this failed coup, Jack warns Richard darkly, “if you’re going to shoot the king, you’ve got to be goddamn sure you kill him.”  Undeterred, the team opts for covert action:  they will build their consumer platform while pretending to build Jack’s box. They form a secret ‘startup within a startup,’ aptly/obviously codenamed “Skunkworks.” But before they can even get to work, Richard lets the Skunkworks plans fall into the enemy, sales team hands… and it seems like the entire scheme is blown! Continue Reading

Jack’s Box (Silicon Valley – Episode 20)

Episode 20 of Silicon Valley explores numerous classic conflicts: consumer-oriented v. enterprise business model; engineers v. sales; revolutionary vs. safe; long-term goals v. short-term profits; Erlich v. Jian-Yang … Richard’s plan has been to transform the world by giving away the basic version of Pied Piper’s revolutionary compression technology, rapidly building a huge user base, and hoping to charge for premium features one day (the consumer, “freemium” business model). However, CEO “Action” Jack Barker and his new sales team—preoccupied with implementing his “Conjoined Triangles of Success”—want an immediate focus on revenue and insist that Pied Piper make enterprise software they can immediately sell to big business customers. Worried even that won’t be easy enough to sell, Jack’s team strips away every cool and revolutionary feature until they’ve transformed Pied Piper into a business-facing appliance company selling Pied Piper Boxes that Jared deems “rectangular, glorified thumb drives that resemble nothing so much as old Betamax machines. ” Richard is horrified and dismayed.

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Success Is Not Always Founder Friendly (Silicon Valley – Episode 19)

HBO’s Silicon Valley is back, but Richard is still out as Pied Piper’s CEO.  To recap how we got here:  in the closing moments of last season, the Pied Piper team triumphed by successfully livestreaming its condor cam video to 200,000 viewers—including Laurie, the head of Raviga Capital, one of Pied Piper’s two investors.  Laurie was so impressed with the technology that  Raviga Capital immediately bought out Pied Piper’s other investor, Russ Hanneman.  By doing so, Raviga Capital gained control of three of Pied Piper’s five board seats, and promptly used its majority control to remove Richard as CEO. Continue Reading

Potential Revisions to the Definition of “Accredited Investor”

On December 18, 2015, the staff (the “Staff”) of the U.S Securities and Exchange Commission (the “SEC”) released a report on their review of the definition of “accredited investor” under the Securities Act of 1933. This review was undertaken in accordance with Section 413(b)(2)(A) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), which requires the SEC to review the accredited investor definition (as it relates to individuals) every four years to determine whether it should be revised.  This is the first such review. Continue Reading

FAST Act Speeds-Up Raising Capital

On December 4, 2015, President Obama signed into law the Fixing America’s Surface Transportation Act, or FAST Act. Although primarily a transportation bill, the FAST Act also made changes to the federal securities laws as described below. Overall, the FAST Act’s changes to the securities laws will help facilitate raising capital. Continue Reading

Far From The Madding Crowdfunding: A look at the SEC’s proposed changes to Rule 147 and Rule 504

On October 30, 2015, the Securities and Exchange Commission adopted the final rules for “Regulation Crowdfunding” nearly two years after issuing its proposed rules and over three years after the enactment of Title III of the JOBS Act. Since the publication of those final rules, many commentators have blogged about those rules, and many have not been kind, criticizing the final rules as, among other things, unusable by the very start up issuers for which they were supposed to be “the solution.” Lost in the shuffle that day was the announcement by the SEC of proposed changes to two other exemptions from the registration requirements of the Securities Act of 1933: Rule 147 and Rule 504.  Rule 147 is a “safe harbor” provision for intrastate securities offerings exempted from registration by Section 3(a)(11) of the Securities Act, while Rule 504 is one of the four exemptions provided by Regulation D. Both of these rules have been seldom used in the modern era. Rule 147 has proven to have too many requirements and restrictions to be useful, especially in the modern age of the internet.  Rule 504 has proven not to be attractive to issuers privately placing their securities, who have instead almost universally chosen to rely on Rule 506(b).With its proposed changes to these two rules, the SEC has taken positive steps toward creating more useful exemptions and alternatives to Rule 506(b) offerings. Continue Reading

The Days of the Vultures (Silicon Valley – Season 2 Finale)

This season’s finale of Silicon Valley provided Richard with only the briefest moment of victory before he once again faces losing Pied Piper.  First, the arbitrator rules that because Richard used a Hooli computer while developing Pied Piper, under the invention assignment provision of Richard’s employment agreement with Hooli, Hooli would have the right to Pied Piper’s technology.  However, because the employment agreement also contained unlawful non-compete provisions, the arbitrator held that the entire employment agreement was unenforceable, including the invention assignment portion.  Therefore, Hooli had no right to Pied Piper’s technology, and Richard won!  In the meantime, the Pied Piper team triumphs by successfully livestreaming the condor cam video to 200,000 viewers—including Laurie, the head of Raviga Capital.  Laurie is so impressed with the technology that once Hooli loses the arbitration, Raviga buys out Russ’s stake in Pied Piper.  Raviga now controls three of Pied Piper’s five board seats:  Russ’s two seats plus the seat filled by Monica as Raviga’s designee.  However, Laurie is also underwhelmed by Richard’s performance as CEO.  After gaining control of the board, Raviga promptly votes its majority control to remove Richard as CEO of Pied Piper.

Click here to read the full article posted on our Video Game blog, Law of the Level.

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