In 1992 I was homeless in Silicon Valley.
Well, not homeless, exactly. I was working in a yogurt shop and had somehow convinced the owner of the shop to let me sleep, rent-free, in the attic above the store. Once, when I was letting myself in late at night, the police stopped me. They thought I was trying to rob the place.
I couldn’t blame them. I probably would have stopped me, too. But I was surviving.
A few months earlier, I had left my native Iran and landed in the United States with $700. I couldn’t speak English and knew handful of people in California. But I knew America stood for opportunity, and I was ready to seize it. I was also in love. In Tehran, I had fallen hard for a girl I grew up with. I spent the little money I had making phone calls halfway around the world. Soon I ran out of money.
In Tehran I had been a well-respected sports journalist — hosting the most popular sports radio show in Iran. But that didn’t carry any weight in America. I got a job at a car wash in San Jose and took English classes at a local community college. I went from the car wash to the yogurt shop.
Then one day, watching TV in my attic above the shop, I saw an ad for the Medallion Rug Gallery in Palo Alto. They were hiring salespeople.
Immediately, I picked up the phone. “Have you ever sold rugs?” the owner asked. No. “Have you ever sold furniture?” No. “Have you ever sold anything?” No. “Then what are you calling me for?”
Before he had a chance to hang up, I pleaded with him to give me a chance. “How can you say no to someone you haven’t even met?” I asked. There was a long pause. “Fine, come in,” he said. The next day, I went to see him. I got the job. And by the end of the week, I had moved out of the attic.
It was the beginning of my new life.
THE RUG SHOP
The first thing I learned as the newest employee at Medallion Rug Gallery was that Persian rugs are really expensive — tens of thousands of dollars apiece.
The second thing I learned was that most customers have no way of knowing whether they’re being taken advantage of or not. They can’t tell how a rug is made, or where it comes from. They have no idea what a fair price is, and they have no way of finding out. That’s why selling high-end rugs requires trust. It requires a strong relationship.
And over the next few years, that’s exactly what I set out to build. I became friends with my customers. I went to their homes. I spent time with their families. I got to know them. And I closed sales. A lot of sales: $8 million worth of rugs in my best year.
I was witnessing an amazing community, destined to change the world and I wanted to be part of it. And so, in addition to showing my customers rugs, I started asking questions.
Little by little, I learned about the world around me — the companies, the technology, the incredible growth. And then one day, I walked into my boss’s office — the owner of the rug store — and told him, “We need to start a tech venture fund.”
THE ADVENTURE BEGINS
My boss Amir Amidi was a great man who had built a business empire in Iran, and then started from scratch when he moved to the U.S. after Iran’s revolution. He was smart and truly believed in me and the opportunity. So I put everything I had saved into our fund and we began looking for promising young companies. I committed $200K but did not have the money and was paying my portion from my monthly rug sales commission
Our first challenge was convincing people we were serious. Most of the founders we met with were coming from appointments with top venture capitalists on Sand Hill Road. They expected the same kind of polished elegance when they met with us. Instead, we served Persian tea in the back of a rug store. That was our icebreaker!
Then our biggest challenge was how to discover great companies before anyone else did. The term “Angel investing” or “Seed investing” wasn’t fashionable. There was no Y Combinator and AngelList. So I invited venture capitalists and founders to networking events at the rug gallery. I spent a great deal of time educating myself. I went to every conference, met many investors and founders, and read books.
We made some bad investments early on, but then our luck started to change. We funded Andy Rubin in the year 2000, who went on to create Android. Meeting Andy was the turning point for me. I recognized the very rare characters of an entrepreneur in him, and after that, it was all about pattern recognition.
As word got out, more and more people came to the rug store to talk tech. Top-tier venture capitalists began taking my calls seriously. And over time, our investments grew. We became the first investors in Dropbox, Lending Club, SoundHound, Danger, Zoosk and others. Today, the companies I’ve invested in are worth more than $20 billion — and many of them started as pitches in the rug gallery.
ON MY OWN
In 2013, I struck out on my own, starting Pear Ventures, an early-stage fund. My partner was Mar Hershenson, an entrepreneur originally from Spain with a .PhD in Electrical Engineering from Stanford. She co-founded three startups in the mobile, e-commerce, enterprise software and semiconductor industries. The idea was to invest in people as much as technology. To find entrepreneurs working to solve problems in big markets and make them part of our family — sticking with them through good times and bad.
Today, PMV has invested in more than 30 startups — including Doordash, Guardant Health, Gusto and Branchmetrics. While every founder is different and there is no magic formula, we’ve identified a few traits that are common in all the best ones — traits you can spot early on.
1. GREAT ENTREPRENEURS DON’T CHASE BIG IDEAS, THEY SOLVE REAL PROBLEMS
I’m wary of founders who had a list of 20 ideas to pursue and narrowed it down to the one that felt feasible. I like founders who have a history with their idea. The best entrepreneurs aren’t just chasing interesting, “next big thing” ideas. They are very close to the problems they are solving and those problems tend to be specific. Like connecting people with cars to people who need rides. Or creating a better way for employees to talk to each other at work. Or storing data remotely. That’s how the Ubers and Slacks and Dropboxes of the world are born.
When someone truly understands the problem they are solving with great depth, they are less likely to burn out when the going gets tough, and are more likely to understand the structural issues in the market that have prevented others from solving the problem. There’s nothing wrong with big ideas, but if a company is founded on one, it’s more likely to fizzle.
The best companies set out to solve a smaller problem the founders have actually experienced and even obsess over. It’s that genuine connection to the problem that drives them to solve it, and beat the odds.
2. PERSEVERANCE MATTERS
Since building a successful startup is hard, founders can’t be easily rattled.
I tried to start my first business in Tehran during the Iran-Iraq War. Every night, Iraqi jets would fly over the city. And because Iranian anti-aircraft weapons kept them from getting low enough to drop their bombs, they settled for breaking the sound barrier at a higher altitude, so windows down below would shatter. This happened almost every night.
So one day before the sun went down, I had the idea to go door-to-door selling tape for shopkeepers to put on their windows to keep them from shattering. Unfortunately, nobody wanted to buy it. And after a few hours of unsuccessful sales pitches, I gave up.
A good founder would never have done that. He would have tried a different sales pitch. A different kind of tape. Even a different idea.
Years later, I remember talking to a young, dejected founder trying to get funding who said, “Silicon Valley…it’s a war zone out there.” Well, no, it’s not. I grew up in a war zone. But being successful here does require a healthy dose of tenacity.
3. THEY ARE CAPTAINS OF THEIR SHIP
A good captain knows directionally where the ship is going and will do anything to get it there. A good captain is also incredibly loyal to his or her shipmates as well as the ultimate mission. A great captain is willing to go down with the ship.
4. THEIR CO-FOUNDERS MATTER TO THEM
One simple red flag for me is when co-founders have had just a short history working together. The founding teams I’ve seen succeed have experience problem solving together before launching their first start up. They knew each other’s strengths and weaknesses, and how to navigate through the inevitable ups and downs of running a company. They gel in some way.
Their chemistry is crucial because in the early days of a company you can change your idea. you can raise more money, but it’s very hard to change your co-founder.
5. THEY DO IT FOR THE RIGHT REASONS
I look for founders who have a long-term vision instead of just a short-term goal.
Are they focused on getting rich quickly? Or are they focused on making users happy, creating jobs, building a long-lasting company and changing an entire industry? Founders shouldn’t bite off more than they can chew (see point #1) but they do need to look beyond the next big payday and think about what kind of future they want to build. That’s how real change happens.
6. THEY ARE PARANOID AND KIND
I like founders who are paranoid, but in a good way. I respond to founders who are confident with a clear vision of the future, but who are also careful enough to double and triple check every action and every decision. It’s only by thinking through every scenario and possible outcome that founders can know with confidence that they’re choosing the right path.
Being paranoid does not mean you have to be harsh or unkind. I look for people who put their company and their teams above themselves, and who are kind to others. I like founders with an unusual personal past.
LESSONS FROM THE ATTIC
For me, it all started in that attic above the yogurt shop.
I did not have much money then, but I had hope. Hope that if I could survive living there, I could survive anything. Hope that with enough sacrifice and enough hard work, I could make something of myself. Hope that this was just the beginning.
And remember the girl? The one I spent all my money calling? We celebrated our 22nd wedding anniversary in June with our two lovely children. Yet another reason why it pays to never, ever give up.