20VC Pejman Nozad Tech's Most Unlikely VC From Yoghurt Shop To Investing In Startups Now Worth $20Bn+

In this episode of "20 minutes VC," host Harry Stebbings interviews Pejman Nozad, the founding managing partner at Pear VC. Nozad's remarkable journey from an Iranian immigrant living above a yogurt shop to a Silicon Valley power broker exemplifies the American Dream. With a portfolio worth over $20 billion, Nozad has seeded successful companies like Dropbox and Lending Club. His story highlights the importance of personal relationships, recognizing entrepreneurial talent, and the power of perseverance. Stebbings also discusses the value of messaging platform Intercom and the legal expertise of Cooley, emphasizing their roles in supporting businesses and startups. The episode underscores the human aspect of venture capitalism and the transformative impact of nurturing ideas and founders from the ground up.

• Harry Stebbings introduces Pejman Nozad as a kind and inspiring guest.
• Pejman is the founding managing partner at Pear VC and has an unconventional entry into the tech industry.
• He immigrated from Iran, lived above a yogurt shop, and worked at a rug store before making small investments in technology.
• Pejman has built a portfolio worth over $20 billion, with investments in over 200 startups, including Dropbox, Lending Club, Soundhound, and Gusto.
• His background as an undocumented immigrant turned successful VC is highlighted as an inspiring journey.

"I really want to start today by saying today's guest is one of the kindest, most genuine, and without a doubt the most inspiring guest I have had on the show so far."

This quote introduces Pejman Nozad as a highly respected and inspiring figure in the venture capital industry, setting the stage for his personal story.

• Pejman Nozad's background is unique in the VC world, starting from humble beginnings to becoming a leading investor.
• He grew up in Iran, faced challenges during the revolution and war, and played professional soccer.
• After moving to Germany for education and soccer, he was encouraged by his brother to pursue the American dream.
• He arrived in the U.S. with $700 and limited English, quickly spending his money calling a girl he liked in Iran.
• Pejman's first jobs in the U.S. included working at a car wash and a yogurt shop, and living in an attic to save money.
• He transitioned to selling rugs after seeing an opportunity on a Persian TV program.
• His passion and determination are evident in his willingness to take on any job and excel at it.

"I was once an undocumented immigrant, now I'm a VC. I've backed over 200 companies worth over 20 billion, and I've created thousands of jobs."

This quote encapsulates Pejman Nozad's remarkable journey from an undocumented immigrant to a successful venture capitalist, emphasizing his impact on the industry and job creation.

• Pejman Nozad's story emphasizes the importance of passion and commitment in achieving success.
• His dedication to being the best, even in menial jobs like car washing, showcases his work ethic.
• His ability to adapt, learn English, and save money demonstrates his commitment to his goals.
• Pejman's love story and his determination to marry the girl he loved without financial help from his family reveal his personal drive and passion.

"I was the best car washer the world has ever seen. I washed cars but nobody else has ever done it."

This quote reflects Pejman Nozad's pride in his work and his determination to excel, no matter the task at hand.

• Pejman Nozad's investment philosophy is influenced by his personal experiences and ability to recognize potential.
• His quick decision to invest in Josh at Gusto, without even seeing the product, indicates his trust in people and his intuition for identifying talent.
• Pejman believes that some founders are exceptional, likening them to being from Mars, highlighting his admiration for extraordinary entrepreneurial talent.

"It took me like 15 minutes to commit and I didn't see even one page of the product he's building. So I think, I believe some founders are from Mars and he's one of them."

This quote illustrates Pejman Nozad's investment strategy, which focuses on the founder's potential and vision rather than just the product or business plan.

• Pejman Nozad's success is partly attributed to his networking skills and the connections he has made in the industry.
• The introduction to Pejman by Josh Reeves at Gusto is an example of the significance of relationships in the venture capital world.
• Networking has played a crucial role in Pejman's rise from a rug salesman to a VC power broker.

"I'd also like to say a huge thank you to Josh Reeves at Gusto for the intro to Pesmond today, without which the show would not have been possible."

This quote acknowledges the importance of connections and networking in creating opportunities, as exemplified by the introduction that facilitated Pejman's appearance on the show.

• Pejman Nozad started as a rug salesman in a gallery in downtown Palo Alto.
• He grew the business from a small operation to a larger one with 25 employees.
• By visiting customers' homes, he built relationships with influential Silicon Valley figures such as venture capitalists, CEOs, founders, and lawyers.
• Inspired by the Silicon Valley community, he educated himself about the tech industry, venture capital, and startups.
• He proposed to the gallery owner, Amir Amidi, to invest in high-tech companies and created a plan to generate deal flow.
• They started with a $2 million fund, with Nozad contributing 10% by deducting from his sales commissions.

"After a few years, I managed to be a really good salesperson and I grew the business with the owner. We hired people and the operation went from four or five people to like 25 people."

This quote explains how Nozad's sales skills and business acumen contributed to the growth of the rug gallery, setting the stage for his transition into venture capital.

"So I started to really educate myself. What's going on? Who are the players? Who's a venture capitalist? How does the startup work?"

This quote shows Nozad's proactive approach to learning about the tech industry and venture capital, highlighting his ambition and drive to become part of the Silicon Valley community.

"He asked me to put, I exactly remember, we started with $2 million, majority of his money. And he said, you put 10% of it."

Here, Nozad recounts the financial arrangement he had with the gallery owner to start investing in tech startups, demonstrating his commitment to the venture despite personal financial risks.

• Pejman Nozad became the first investor in Danger, a company co-founded by Andy Rubin who later created Android.
• He met Rubin nine months after starting to invest in startups and was impressed by Rubin's vision, confidence, and problem-solving skills.
• Rubin's approach provided Nozad with a new perspective on the quality of founders.

"And I really loved how he was explaining, describing the product and the future."

This quote reflects Nozad's admiration for Andy Rubin's ability to articulate his product's vision and future, which convinced Nozad to invest early in Danger.

"I think Andy Rubin sees future before most of us, and that's why he created Android and now he's the playground and the other things."

Here, Nozad acknowledges Rubin's foresight and innovative thinking, which were key factors in his decision to invest and which he sees as qualities of a successful founder.

• Nozad hosted gatherings for entrepreneurs and venture capitalists at the rug gallery, which was unusual at the time.
• He built a strong deal flow and reputation for genuinely helping entrepreneurs, which caught the attention of Silicon Valley's venture capitalists.
• His networking skills led to notable investments, including being one of the first investors in Dropbox.

"I started to build that really close relationship with venture capitalists."

This quote highlights Nozad's strategic approach to networking, which involved building close relationships with key players in the venture capital industry.

"Silicon Valley and venture capitalists got to notice I have a very strong deal flow."

Nozad's ability to generate a strong deal flow became recognized in the venture capital community, establishing his credibility as a valuable connector and investor.

• Mike Moritz of Sequoia Capital respects Nozad's calls and networking abilities.
• Nozad developed pattern recognition to spot promising entrepreneurs by meeting many people and respecting venture capitalists' time.
• He capitalized on the opportunity presented by his location on University Avenue, a hub for tech innovation, to become an integral part of the Silicon Valley community.

"I developed a kind of a pattern recognition to spot entrepreneurs early on and this is by just meeting a lot of people."

This quote illustrates Nozad's method of identifying potential successful entrepreneurs through extensive networking and the development of pattern recognition skills.

"I didn't think that not having a tech background should stop me participate in this just amazing world."

Nozad's determination to be an active participant in the tech industry despite not having a traditional tech background emphasizes his belief in the power of networking, hard work, and continuous learning.

• Nozad values founders with a shared history and strong relationships.
• He looks for teams passionate and knowledgeable about the problem they are solving.
• Humbleness, talent attraction, and a healthy level of paranoia are key qualities he seeks in founders.
• Nozad emphasizes the importance of getting to know founders beyond a short meeting or presentation.

"We look at founders who have history together... It's very important for us."

This quote underscores Nozad's investment philosophy that a strong pre-existing relationship between founders can be indicative of a successful partnership in business.

"I think we like founders who are paranoid in a healthy way."

Here, Nozad reveals that he values founders who have a clear vision but also constantly question themselves and their decisions, as this can drive innovation and adaptability.

These study notes encapsulate the key themes and ideas from the conversation, providing a detailed and structured summary of Nozad's journey from rug salesman to a respected figure in Silicon Valley's venture capital scene. Each quote is directly tied to the themes, offering insight into Nozad's strategies, values, and experiences.

• Understanding founders' personal backgrounds and values is crucial for investment decisions.
• Building a company requires more than just technical skills—it involves vision and character.
• The process includes getting to know founders intimately, such as through dinners and personal conversations.

"We just invested in one company that had like 3 hours dinner with the founder over Persian food. I got to know him, I got to know his childhood, I got to know what he thinks about the world, how to raise families, the principle they have."

This quote emphasizes the importance of personal interactions and understanding a founder's life experiences, values, and worldviews, which are seen as critical components in assessing their potential for success.

• Dilution of shares is a significant concern for angel investors.
• Maintaining pro-rata rights and the ability to invest in growing companies is crucial for investment funds.

"So basically we got diluted after eight years had we participated and kept our ownership after the initial investment, we'd have made a lot of money through a half a billion dollar acquisition of danger by Microsoft."

This quote reflects on a specific investment experience with Danger, where dilution led to a smaller return on investment, highlighting the lesson learned about the importance of maintaining ownership stakes in successful companies.

• The advent of blogs and Y Combinator drastically changed access to information and the startup landscape.
• Personal connections and face-to-face meetings remain essential, even with technological advancements.
• Cultivating relationships through cultural connections can lead to successful investments.

"I think then Y Combinator started to do an amazing job to change ecosystem on the ground zero. And Paul Graham in particular, and Jessica Livingston built an amazing practice to get really talented people and that was pretty amazing."

This quote acknowledges the transformative impact of Y Combinator and its founders on the startup ecosystem, emphasizing the value of nurturing talent and the human aspect of the investment process.

• Successful investors take a personal interest in the growth and development of founders.
• The relationship between investors and founders is as important as the financial investment.
• Investors bring diverse backgrounds and expertise, contributing various values to startups.

"They make sure these founders grow as a human being, as a CEO, as a vp of engineering, you name it. And that to me is phenomenal."

This quote highlights the role of investors in supporting founders not just in their business endeavors but also in their personal growth and development, which is a hallmark of top-tier investors.

• Recognizing a gap in early-stage funding and support led to the creation of Pair.
• The decision to start an independent fund was driven by the opportunity to leverage personal expertise and relationships.
• Partnering with someone with complementary skills and experience is key to building a successful investment firm.

"I thought, given my background, the network, the deal flow, the know-how, the relationship I have, there's an opportunity to build an institution."

This quote explains the rationale behind starting Pair, which was to fill a perceived void in the venture capital ecosystem by providing more hands-on support to entrepreneurs, drawing on the speaker's own background and connections.

• Pejman Nozad and his partner Mar Hershenson founded a venture capital fund called Pear.
• The first fund raised was $50 million, followed by a second fund of $175 million.
• Their goal is to invest in companies at a very early stage.
• They chose the name "Pear" to symbolize nurturing entrepreneurs, comparing them to fruit that needs care to grow.
• They wanted a name that would last for decades and not be tied to their personal names.

"We started this fund, we raised, the first fund was 50 million. We just closed our 2nd 175 million. And the whole goal is just investing in companies very early."

The quote indicates the scale of the venture capital fund and its focus on early-stage investments.

"But we always wanted to build something long lasting. We want pear stays for decades here and we need to bring exceptional people."

This quote highlights the long-term vision for their venture capital firm and the desire to attract exceptional talent.

"I think helping entrepreneurs, entrepreneurs and ideas are like fruit, they need water, they need soil, they need farmers. And we are pairing with entrepreneurs."

The metaphor used here explains the fund's philosophy of supporting and nurturing entrepreneurs like farmers do with fruit.

• Pejman Nozad is inspired by normal people who exhibit passion and dedication in their work.
• Bobby Azdani, a successful entrepreneur and investor, has been a significant mentor to Pejman.
• The barista at a coffee shop and his child's teacher are cited as sources of everyday inspiration.

"Bobby Azdani has been an amazing friend and mentor to me. He took Sabah from his garage public and then he was a seasoned investor in Google, Dropbox, Uber and many others."

This quote highlights the mentorship and success of Bobby Azdani, who has been influential in Pejman's career.

"The way he puts so much love and effort to make the best coffee possible is just so inspiring to me."

Pejman is inspired by the dedication and care the barista puts into his work, drawing parallels to his own work ethic.

• Pejman views having a happy, healthy family as his biggest achievement.
• He does not see any particular low points in his life, considering challenges as part of the journey.
• He expresses gratitude for his health, family, and friends.

"I think the biggest achievement is just having a beautiful, healthy, happy family."

This quote signifies that for Pejman, personal achievements, particularly family, are more important than professional success.

"I don't know any low point even living in that yogurt shop, it just made me who I am today."

Pejman reflects on past challenges not as low points but as experiences that shaped his character and life.

• Pejman's favorite book is "The Power of Now" by Eckhart Tolle, which encourages living in the moment.
• He also enjoys "Leading" by Sir Alex Ferguson and Mike Moritz, which relates to his interests in football and technology.
• He does not have a specific favorite blog or newsletter but reads widely about technology and soccer.

"Power of now. I love that book because it always remind me to look into moments and it's just really amazing book."

Pejman appreciates the book for its message of mindfulness and staying present.

"I read everything related that I need to know about tech every day."

This quote shows Pejman's commitment to staying informed about the technology sector, which is crucial for his work in venture capital.

• Pejman's most recent investment with Pear was in a company called Jiffycat, founded by Richard Rabbit.
• Richard Rabbit's background and journey to entrepreneurship, overcoming obstacles like the civil war in Lebanon, impressed Pejman.
• Pejman values the unique qualities and resilience of the entrepreneurs he invests in.

"Jiffycat is the company that was founded by an amazing entrepreneur by the name of Richard Rabbit."

The quote introduces Jiffycat and its founder, highlighting the significance of the entrepreneur's personal story to the investment decision.

"He grew up in Lebanon. He was such a good student that could have gone to MIT, but he was in the middle of civil war so there was no plane coming out of Lebanon."

This quote provides context to Richard Rabbit's challenging circumstances and his determination to succeed despite them.