Richard was never going to take the Hooli buyout. There wouldn’t be a show if he had. Though to compete against Nucleus with a multi-million dollar intellectual property lawsuit hanging over its head, Pied Piper still needs a big chunk of money.

Big chunks of money are everywhere for a hot startup in Silicon Valley, but they never come without strings. Richard finally found US$5 million in Series A funding, but it came with bigger strings in the form of one-hit wonder billionaire Russ Hanneman (Chris Diamantopoulos).

The man who “put radio on the Internet” 20 years ago is, as several characters throughout the episode state, possibly the worst person in America.

Hanneman is painted as a bearded caricature of Sean Parker if he’d peaked after Napster and never had another original idea. He’s a man who drives a shiny sports car with Lambo doors in a custom burnt-orange color that he promptly scratches with his “really cool pants” and curses when he fails to nonchalantly put the car in drive. A man who stops Richard from walking into Hooli and woos him with dinner at a Japanese restaurant, where he’s happy to pay $800 to cook his own tiny piece of beef on a little grill because “he wants that meat.” Hanneman is, as Monica puts it, a boorish, pompous womanizer who got lucky 20 years ago and hasn’t done anything since.

A man who’s proud of turning his $1.2 billion buyout from AOL two decades ago into a cool $1.4 billion, and whose $5 million “loan” can be repaid in equity while he gets immediate seats on the Pied Piper board. As Dinesh put it, “He’s the worst man in America, and now he owns us.”

(Last week’s Silicon Valley: Pied Piper is frozen in legal limbo)

But Richard took the money, which he now has to turn into a viable product and a profitable business. Half the funding goes to legal fees to fight the Hooli lawsuit right off the bat, before even turning Pied Piper’s compression algorithm into a usable piece of software, for which the show’s developer audience gets its first shout-out of the season.

Dinesh lays out his proposal for hiring a dozen developers (he ends up settling for three): Four Web app developers, two on the front end and two on the back end; a “guy to turn your reference code into a production-quality library”; two more guys to do impression libraries and code Pied Piper’s iOS and Android apps; and a couple more guys to build out all of Richard’s APIs.

Actually coding a revolutionary piece of consumer software takes a lot of manpower.

Yet just as Richard begins laying out a proposed subscription revenue model to offset the large hosting fees of scaling up Pied Piper, the startup’s new “hands-off” investor interrupts with his own ideas for ROI… which actually don’t sound all that crazy.

“If you show revenue, people will ask how much and it will never be enough,” Hanneman said. “If you have no revenue, you can say you’re ‘pre-revenue,’ and then you’re a potential pure play. It’s not about what you earn, it’s about what you’re worth. Who’s worth the most? Companies that lose money. Pinterest, Snapchat… Amazon has lost money every quarter for 20 years, and [Bezos is the king].”

For a moment after a speech peppered with legitimate insight, Hanneman seems like a half-decent business mind… until he promptly appropriates more than 30,000 of the money he just gave Richard for “brand awareness,” or another way of putting up 15 generic billboards that say “We are Pied Piper” in between Hooli CEO Gavin Belson’s home and office.

Pied Piper has its backing, but there’s a long season of new Hanneman shenanigans and a protracted Hooli lawsuit ahead before we get to CES and see if it pays off.

Odds & Ends

  • Jared has a Julia Roberts thing. He uses “Sleeping with the Enemy” to explain how working at Hooli made him feel (i.e. Hooli acts as Jared’s abusive spouse) and how Pied Piper is Richard Gere to his Julia Roberts in Pretty Woman.
  • Tech site Re/code and its founder Kara Swisher got a cameo in this episode. Where’s the love for SD Times?
  • Belson, quickly becoming the most cartoonish Silicon Valley character, attempts to defend his “billionaires are people too” argument by comparing his “persecuted minority” with the Jews in Nazi Germany without blinking an eye. By episode’s end, he is showing a coalition of orthodox Jews around Hooli where a scale replica of the Hall of Names from the Yad Vashem Holocaust museum will reside to ”hardwire sensibility” on the campus. Not your most subtle skewering of Silicon Valley egocentrism, Mike Judge.
  • Richard really has a tough time quoting people in context.
  • Hanneman, basically an older, dumber, even more arrogant version of Erlich, refuses to acknowledge Erlich; this quizzically confuses Erlich. Stay tuned for what should be an entertaining subplot.
  • Hooli’s lawsuit is still coming, and to prove the false claim of Pied Piper being developed on Hooli property, the company has brought out its secret weapon: Big Head. So continues Big Head’s rise to money and power by doing absolutely nothing, simply to make it seem as if he’s so important to Pied Piper he must have been integral to its inception. Rough life, Big Head.