Monday, March 26, 2018
‘Silicon Valley’ Fact Check: Pied Piper Just Got Pricey
Silicon Valley isn’t cheap, and you don’t need to spend $13 on a bad burrito in Palo Alto — like I have — to find that out.
But the “Silicon Valley” gang reminded us just how expensive the tech game can be on Sunday night, during the show’s season 5 premiere on HBO.
The episode kicks off with Richard showing off his choice for Pied Piper 2.0’s new headquarters — and Jared, Dinesh, and Gilfoyle aren’t feeling it. It’s bland, its lighting is uncomfortably bright, and it has barely enough room for the team of 15 engineers they’re planning to hire. The price, however, is “unbelievable,” according to Richard, and they need to move ASAP to lock it up.
Fast forward to the end of the episode. After some Machiavellian maneuvers from Richard to buy out a pizza delivery startup, Sliceline (“it rhymes with Priceline,” as its founder proudly explains), Pied Piper is now pushing 60 employees in need of an office. If Richard wants to keep it affordable, that’s not going to be easy.
“Depending on where they are in the Valley, I’d call it $45,000 a month to $90,000 a month [for rent],” Tucker Hughes, managing director of commercial real estate firm Hughes Marino, told TheWrap. “It can be really expensive.”
If you’re scoring at home, that’s upwards of $1 million each year for rent on the high end.
Hughes — who’s helped “dozens” of tech companies find their home in the Bay Area — broke it down like this: Pied Piper HQ would need 8,000-10,000 square feet for 60 employees. And to set up shop in Mountain View or Palo Alto, where companies like Google and Tesla are located, would run about $6-10 a square foot. You could look to a few cities that might be more “budget-friendly,” but working in the top Silicon Valley spots helps attract better talent. Some leases can be as short as 18 months for tech companies, according to Hughes, but they typically run about five years.
At one point in the episode, Richard mentions they have $13 million in financing for the latest iteration of Pied Piper, which looks like it’s still a data storage company. If rent was all Richard had to worry about, they’d be in pretty good shape. Unfortunately, it isn’t.
Let’s say Pied Piper is paying its new employees an average salary for software engineers, which is $123,000, according to Quartz. That’s about $7 million a year. Without factoring in insurance, technical costs, and other small perks tech companies like to throw at their employees to keep their mind off the drudgery, like bottomless cereal, and Pied Piper would have less than two years before it needs fresh funding.
Just something to keep in the back of your mind while watching this season.
Source: the wrap feed