Equity, Pivots, and Difficult Discussions:
An Interview with Arman Hezarkhani
“The accelerator wanted to know how we were dividing up the equity so we said, Let’s talk about it. The conversation was very interesting because we didn’t have a framework in which to talk about it, so a lot of it was subliminal attacking of each other,” explained Arman Hezarkhani, a student at Carnegie Mellon University and cofounder of Enkato, an online video education service. “There were communication issues because we didn’t have experience talking about things like this.”
At the time Hezarkhani was a sophomore, studying Electrical and Computer Engineering and serving as a Teacher’s Assistant (TA) for a programming class. He was already flat out, so the conflict with his two cofounders sucked energy he couldn’t afford to lose. It also made him question his self-worth as they debated the value of what each partner brought to the table. To make matters worse, one of his cofounders happened to be Hezarkhani’s mentor and was demanding the largest share, even though Hezarkhani had conceived of the business.
It was all about the power of coding. When Hezarkhani arrived at Carnegie Mellon, he enrolled in an introductory computer science class that he called “a coming of age moment” because he learned how to code. He realized that coding gave him the kind of power and control that the Mark Zuckerberg’s of the world’s must have experienced. Hezarkhani became friends with the class’s TA, and one day when they were shooting the shit, he told him about an idea he had come up with in high school: essentially online video channels for education. Passionate about education and related technology, he wanted to make a difference in that area. Turns out the TA was also interested in this space.
“We started ideating together sitting in that room, just bouncing ideas off each other just for fun. We eventually came upon an idea that was like a YouTube but for education.” Working together was “huge” for Hezarkhani because the TA had been such a role model to him that first semester. Come spring, they decided to make a business of it, and added a third cofounder adept at design. Hezarkhani, a freshman, had two cofounders who were juniors – the age difference would be an issue. Meanwhile, to gauge whether they were onto something, they took their ideas to Carnegie Melon’s incubator, Project Olympus. Receiving positive feedback, they plunged ahead.
The Trouble Starts with Good News
Hezarkhani had an internship lined up for the summer, but the TA and Designer convinced their freshman partner to drop it and focus on their fledgling company. “I had no money that summer so I lived in this house that was just $300 a month,” Hezarkhani recalled. “It was like cockroach infected, it was really gross, but it was really cheap so I could live there.” Then, about a month into the summer they got some funding from Alpha Lab, an accelerator in Pittsburgh that supports early-stage tech companies with both money and advice. “That was our saving grace,” said Hezarkhani. “We got a bunch of money for our company, we hired some interns, we got office space, and that’s when we became pretty legit and started believing in ourselves.”
That’s also when the trouble started. Alpha Lab wanted to know how the cofounders were going to divvy up the equity. The discussions boiled down to who brought the most value to the table. It was also about ego. “The conversation can lead to so many problems,” explained Hezarkhani, “because literally what you’re talking about is your value versus your partner’s value, right, and naturally that’s going to cause a lot of friction. So there are classes that I’ve now attended where you hear about how to do this, but at the time we had no clue.”
After much uncomfortable discussion, the TA ended up with a little more equity than Hezarkhani, and he had a little more than the Designer. “That was weird, I thought, because I just didn’t understand why that was the case, but after a few hours of struggling with that I just kind of gave up. I’m not too sure why I gave up.”
Questioning Your Self-worth
We asked Hezarkhani if the uneven distribution caused him to question his self-worth. While it was kind of a leading question, he was emphatic in his response:
“Oh yeah. I’m pretty confident in my own abilities. I was going into the conversation with one thought, I’m going to push for the most because I think I’m this and this and this. And I think they lack this and this. I had this clear picture in my mind why I deserve X, and then during the conversation all of that let out of my mind, and I would just listen to what everyone was saying. I would forget the things that I thought about, and after the conversation I would totally regret the things that I said and my actions, because it was so not in-line with what I had decided to say.”
Fall of sophomore year Hezarkhani had a full course load plus TAing (12 hours a week) whereas his two cofounders we’re seniors who had just one class each. “They were basically pushing me to drop out of school,” he recalled. “I thought about it for long time, but right as they were pushing me to do that, we pivoted. The decision to pivot was something I wasn’t sure I agreed with.” The two senior partners wanted a business that would kick off money right away as they were graduating and facing the real world. On the other hand, Hezarkhani wanted the business to evolve organically and was less concerned about personal income. “Also with me and the cofounders there were some problems going on with power struggles,” he added, “like power dynamics, so all of that together led me to leave the company.” Not long after the company folded.
Reflections on Picking Partners
Knowing the importance of picking the right partners or team members, with complimentary skill sets – and the old heterogeneous versus homogenous question – we asked Hezarkhani to reflect further on his experience:
“In terms of heterogeneous and homogenous, we were somewhere in the middle. We were all basically software engineers and our personalities were very strong, so we didn’t mind telling each other the way we felt. Soon, a few instances that really caused friction were between the TA and me. We had a lot of issues with power dynamics. I didn’t agree with a lot of things he did; he didn’t agree with a lot of things I did. He was CEO so technically he had more power than I did. Another conversation that really caused a lot of struggle that came up twice was the distribution of equity. Also, it would make me more upset when the TA would mess something up because he had more equity, and I would think he should never mess up. Also, whenever I would mess up I‘d be like, ha, I matter less so it doesn’t matter. So that created a weird dynamic. These different expectations were not too productive in the daily work we had.”
We asked Hezarkhani whether they all shared the same work ethic, which can be another point of friction among team members. “We all had the potential to work really hard,” he answered, “but there were many times when I would think, why is this person not here at like 9 a.m., and why are they showing up at 11 regularly? Or why did they just leave for the weekend when I’m here every Saturday? But I think we all had very strong work ethics. More of it was the way things were run. There are lots of decisions that have to be made naturally.”
And what about shared vision? “This is the interesting thing too. We actually pivoted a few times. A lot of it was what we valued. We always had a big broad vision that we all agreed with, we just cared a lot about educating people and that was really it, but that’s too broad I think. It should’ve perhaps been more focused on the product itself,” he concluded.
To better explain the pivots, Hezarkhani relayed his view of the West Coast versus East Coast attitude on entrepreneurship. “West Coasters are like, just get a lot of users and eventually money will follow. East Coasters are like, oh you need money as soon as possible. So we’re on the East Coast but I kind of have a West Coast mentality in terms of we’re an Internet company. I literally wanted to build the YouTube for education. YouTube didn’t make a lot of money at the beginning, and I wanted to take the same route, but the TA and Designer, I think, because they were seniors and at different points in their lives, they were focused a lot on the revenue, so a lot of the conversations we had on pivoting were centered around that. I was fine with the fact that no money would come in but the TA and Designer were not, again, because they were at different points in their lives.”
Outliers for the Better and the Worse
That next summer Hezarkhani worked at Google, where he made some great connections. “Right now I’ve founded a company called Ahez (first letter of first name and first 3 letters of last name), which provides consulting for Google. Already I’ve been able to hire some contractors to help me out with the work.” He’s also a lead TA, which means supervising other TAs. So, now in his junior year, Hezarkhani has yet another massive schedule all of which has contributed to a subpar 2.5 GPA (yes, the grades have taken a hit due to the businesses and other distractions).
The low GPA begs the question of whether he has any regrets to date? “I really didn’t decide to do any of the things I’ve done,” Hezarkhani answered. “While it was happening, I didn’t think at all. It was basically something that unraveled before me. Founding the first company and the second company and working for Google all just kind of happened to me. Looking back, it has all changed my life for the better and the worse. They’re outliers on the better side and they’re outliers on the worse side as well. On the worse side, I felt emotional distress more. I broke up with my girlfriend of over a year just because I didn’t have time to hang out with her. I also don’t sleep much so my health is on a roller coaster, like I can be sick for a long time or just about to get sick because I’m sleeping for two hours a night for weeks on end. So those are the worst things. Plus I do have the 2.5 GPA and I’m on academic probation right now.
“On the better side, I fucking love my life. Like today, for example, I have five hours of free time and I’m going to just sit down in my room with my laptop and just go through my Trello board, knock things off my To Do list, and I’m pretty excited about it. I think I’m pretty successful, looking at my resume makes me proud. It’s something I’m happy about. Two years ago I couldn’t say the same thing. So altogether I don’t regret a thing. If I had made conscious decisions to be where I am, I wouldn’t have made those decisions because logically nobody wants to sleep just two hours every night, nobody wants to not go to parties, nobody wants to lose girlfriends because they’re working too hard. But being here, I enjoy it.”
For Hezarkhani to say he didn’t really decide to do the things he’s done is kind of funny, because it’s scientific fact that the 20-something male brain has yet to mature, therefore, a young man’s decision-making can be suspect.
Caught in a Loop
We asked Hezarkhani whether there are any things he might do differently going forward to improve personal relationships and his physical health. “I go through phases here, different ways of caring about this and not,” he admitted. “Currently I care a lot about it because I lost a few friends recently and lost this girlfriend, so I need to fix something before I’m the only person on earth who cares about me. So I’m thinking a lot about it. I get caught up in this loop that I’m so busy, I’m so busy. I look at my calendar and it’s full. I just can’t fit people and friends into this. It’s not that I don’t want to. Like obviously I want to go rock climbing with my friends or watch a movie or just sit down and talk, but I feel like I can’t. Any free half hour or hour that I do find I feel like I need to put it into work rather than people, and I find myself prioritizing work in front of people. When in the middle of it, I’m okay with it because I’m not thinking of the people, but then, for example, right now I have a little more free time so I start thinking about the people. I think, Oh crap, I wish I dedicated a little more time two weeks ago.
“Right now I feel compelled to make concrete changes. I started putting ‘going to the gym’ on my calendar to be healthy. At the beginning of the week I will text people and say, Hey let’s get lunch on this day or that day and I would start scheduling that. So I do want to make concrete changes but I find it difficult to stick to that because I then start prioritizing my work over people, and all of a sudden like two weeks later I’ll be like, Crap I didn’t do that. Ever since I founded that first company my priorities have shifted. So my freshman fall I had a high GPA, I hung out with my friends a lot, it was pretty good, everything was in order. Then when I founded that company I stopped sleeping, I stopped thinking about friends, started working a lot and ever since then that trend has continued, so that’s an interesting realization.”
Bottom line: Hezarkhani knows he should make changes in his life, wants to make those changes, but can’t help but pursue the entrepreneurial thing and prioritize work over everything else. In fact, he has no doubt that he’ll found yet another company, only do things a little differently. “I’m going to do it again, I know I am,” he declared. “I’ve thought a lot about this. I think the one problem we had was the way we built a team the first time. We really didn’t define roles, which I think was a big problem, like the whole stepping on each others’ roles and power struggles. That is something I would focus a lot on. And when taking people on, I would define roles right at the bat. Not only define roles but pick people based on roles that are necessary. I don’t want to start a company with people just because I like them. I need people who have this attribute, or this trait in this person fills that role … and I also like them. I think those two things are very important.
“The thing that I want to focus on more than anything, that I focus on more right now with every idea that I have and everything that I pursue, I just want to bring value to people. That’s like the one main thing I want to do: Build a product or service that will provide just a lot of value to somebody. And I think that once that happens money will come. I don’t like thinking about money because often times when I have an idea and I start thinking about money, I immediately change the idea, but then take a step back and say I don’t like that idea – it was just tainted by the thought of how I will make money.”
Tainted by the thought of how I would make money … hmm.
Leaving Iran and an Injection of Entrepreneurship DNA
It’s safe to say entrepreneurship is in Hezarkhani’s DNA; it starts with his parents. Both mom and dad were born and raised in what was then Persia, now Iran. “My dad came here when he was 18 to go to school,” he said. “He has told me horror stories about what was going on in Iran (the Shah had been toppled in January 1979 and replaced with an Islamic Republic). His parents couldn’t send him money so he had to live in horrible places.” His mother also left Iran and eventually went to college, only it was when young Hezarkhani was in middle school, so they would sit around the table doing their homework together. “I guess my parents are like entrepreneurs,” he explained. “What I learned from them is that they both really work hard to provide. My mom worked a full-time job while raising two kids and going to college.
“Ever since I was a kid the signs were there. When I was five or six, I’d say take me to the art store and I would make jewelry that I’d would sell to my family,” Hezarkhani recalled with a laugh. His parents would ask him where he wanted to live when he grows up, and he’d say China because everything is made in China. “So if I want to make money I have to go there. So ever since I was a little kid a lot of my thoughts were about making money and being an entrepreneur, even though I didn’t really know what it meant at that time. In high school he and a few of his friends pretended to make a company. It was also about the time he saw his first line of code. “It was like Hello World … All of this stuff together has led to me being where I am.”