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How Hyperloop One co-founder Pishevar became a tech all-star

Shervin Pishevar
John Gurzinski | AFP | Getty Images
Shervin Pishevar

Shervin Pishevar has spent years cultivating his brand as a Silicon Valley insider and parlaying that success into political influence.

Best known as an early investor in Uber, the venture capitalist has backed more than 100 start-ups, has 78,500 Twitter followers and is pals with Elon Musk. He's donated about $370,000 to Democratic candidates and groups since 2011, according to the Center for Responsive Politics, and hosted recent fundraisers at his Bay Area house for President Barack Obama and Democratic presidential nominee Hillary Clinton.

But his name is now in the headlines for all the wrong reasons.

In a lawsuit filed on Tuesday in Los Angeles, Pishevar stands accused of turning his latest project, Hyperloop One, into an avenue for doling out favors and for personal gain.

Brogan BamBrogan, who co-founded Hyperloop One (formerly Hyperloop Technologies) with Pishevar in 2014, is suing the company, Pishevar and three other people tied to Hyperloop One for wrongful termination, breach of contract, defamation and assault, among other charges.

BamBrogan was forced to resign from Los Angeles-based Hyperloop last month, and is fighting back along with several former employees.

According to the complaint, Pishevar hired his brother Afshin, a personal injury and criminal defense attorney on the East Coast as the company's high-paid general counsel with more stock options than top engineers received. Pishevar, Hyperloop's executive chairman, also allegedly dated the company's outside public relations representative and raised her pay from $15,000 to $40,000 a month, more than any employee. (The woman's former employer, PR firm Pramana Collective, said that the payments were to the company, not the woman specifically, and that the complaint inaccurately portrayed the two companies' professional relationship.)

The suit claims Pishevar strong-armed Hyperloop investors into putting money into his fund Sherpa Ventures.

Worse, according to the complaint, several hours after a meeting last month between Shervin and Russian investors in Moscow turned to the topic of Hyperloop's internal problems, Afshin took it upon himself to put a hangman's noose on BamBrogan's chair, an act that was caught on Hyperloop's security camera.

Selection of Pishevar's political donations

Recipient Date Amount
DNC Services Corp. 6/19/2015 $66,600
Hillary Clinton 4/24/2015 $2,700
Kamala Harris 3/27/2015 $2,700
Ready PAC 2/18/2015 $5,000
Democratic Party of Iowa 10/28/2014 $10,000
Democratic Party of Colorado 10/23/2014 $2,400
Senate Majority PAC 10/20/2014 $100,000
CoryPAC 9/26/2014 $2,500
Source: Center for Responsive Politics

Then there's the partying.

"On multiple occasions, Shervin effectively forced Hyperloop One's engineers to stop work on the project and vacate Hyperloop One's headquarters so that he could host parties for his friends and acquaintances," the complaint said.

Pishevar didn't respond to requests for comment. His lawyer Orin Snyder, a partner at Gibson Dunn, called the lawsuit "unfortunate and delusional," and said the claims will be "met with a swift and potent legal response."

Pishevar, 42, was born in Iran and escaped to the U.S. with his family shortly after the 1979 Iranian Revolution, according to his website. He went to high school in the suburbs of Washington, D.C., and then studied at the University of California at Berkeley. He started his first company WebOS the year he graduated in 1997.

Pishevar helped start several more companies including Freewebs, which later changed its name to Webs and eventually sold to Vistaprint for $117.5 million in 2011. Pishevar left his operational role several years before the sale to build Social Gaming Network, an online gaming business. SGN emerged as Facebook was opening its platform to outside developers, giving the many millions of visitors to the social network more to do than just update their status and share photos.

Pishevar's charisma was a big reason why the company was able to attract investor dollars at a time when most venture capitalists were on the sidelines waiting out the financial crisis. So highly regarded was Pishevar that Founders Fund and Greylock Partners invested in SGN instead of Zynga, believing Pishevar would build the bigger company, according to a person familiar with the matter, who asked not to be named because the discussions were private.

Greylock and Founders Fund each knew a fair amount about what was happening in social networking. Greylock partner David Sze made a bold bet on Facebook in 2006, while Peter Thiel of Founders Fund had personally bet on Facebook (he remains a board member to this day) and Zynga.

Representatives from Greylock and Founders Fund declined to comment.

While Zynga has struggled mightily since going public in 2011, it's still valued at $2.5 billion. SGN, meanwhile, never gained much traction under Pishevar. He sold it in 2011 to a group led by MySpace co-founder Chris DeWolfe, who was building an online and mobile gaming conglomerate, a business that's now thriving under the SGN brand. The games that were included in the purchase have since been shut down.

The outcome didn't much matter because Pishevar was establishing himself as a successful angel investor, which in Silicon Valley gets you into the A-list party scene. When Russian investor Yuri Milner had a gala to celebrate the opening of his Bay Area mansion in 2011, Pishevar was in attendance.

Pishevar has since credited Milner and Facebook's Sheryl Sandberg for encouraging him to become a venture capitalist.

A 2014 Bloomberg Businessweek profile chronicled a week in the life of Pishevar, which included calls with Justin Bieber's manager, DreamWorks CEO Jeffrey Katzenberg, Tesla's Elon Musk, the actor Edward Norton and U.S. Senator Cory Booker from New Jersey, the recipient of multiple donations from Pishevar.

"There are guys that can write big checks, and there are guys that can bring people together to write checks," Booker was quoted as saying in the story.

That larger-than-life personality played well for Pishevar when he was working on his own. He made successful angel investments in Aardvark (sold to Google), Dollar Shave Club, TaskRabbit and Milo.com (sold to eBay), and used that success to land a partner gig at Menlo Ventures in 2011.

Menlo was a storied $4 billion firm that had experienced some tough times, missing out on much of the explosion in the social web. Pishevar was supposed to bring in some of the pizzazz that would get young entrepreneurs excited to talk to Menlo, rather than just sticking to the usual suspects like Sequoia Capital, Greylock and Accel Partners.

There's no doubt he succeeded — he got the Uber deal within just a few months. In December 2011, Pishevar led Menlo's investment in Uber's $32 million Series B round, which also included capital from Jeff Bezos and Goldman Sachs. Uber's valuation was about $330 million, and it's now worth about 200 times that amount.

Pishevar also invested in eyeglass start-up Warby Parker while at Menlo.

Hyperloop tubes are displayed during the first test of the propulsion system at the Hyperloop One Test and Safety site on May 11, 2016 in Las Vegas, Nevada. Hyperloop One stages the first public demonstration of a key component of the startup's futuristic rail transit concept that could one day ferry passengers at near supersonic speeds.
John Gurzinski | AFP | Getty Images
Hyperloop tubes are displayed during the first test of the propulsion system at the Hyperloop One Test and Safety site on May 11, 2016 in Las Vegas, Nevada. Hyperloop One stages the first public demonstration of a key component of the startup's futuristic rail transit concept that could one day ferry passengers at near supersonic speeds.

Pishevar's style brought with it a major culture clash, according to sources familiar with the matter, who spoke on the condition of anonymity. PIshevar is a consummate networker and hustler, but that brand of work came at the expense of showing up on time to meetings or at all to many firm events, the sources said.

Just two years after joining Menlo, Pishevar left the firm to start Sherpa Capital with Scott Sanford, a career investment banker who'd spent 20 years at Goldman. They've raised $630 million for three funds.

In 2014, Pishevar teamed up with BamBrogan, who had previously been an engineer at Musk's SpaceX, to start Hyperloop One based on an open source concept conceived by Musk. The idea was to create an ultra high-speed transportation system — faster than air travel — using electric propulsion through a low-pressure tube with little environmental impact.

Hyperloop One tested its electric engine in an open-air demonstration for the first time in May, and full demonstration is slated for later in 2016, CEO Rob Lloyd told CNBC in an interview.

The lawsuit says that Hyperloop One was started in BamBrogan's garage and that Pishevar was "generally uninvolved in day-to-day matters."

It's actually pretty easy to track Pishevar on a day-to-day basis. Just follow him on Twitter.

Pishevar happened to be in Paris in June 2015, when taxi drivers took to the streets to protest Uber. He captured much of the action from his mobile phone, sharing it with his followers across multiple videos.

One day you'll see him tweet to Cory Booker about Black Lives Matter, and on another day there's a picture of him shaking hands with Hillary Clinton.

Last September, Pishevar joined other tech leaders including Facebook's Mark Zuckerberg, Apple's Tim Cook and Microsoft's Satya Nadella at the White House for a dinner with Chinese president Xi Jinping

Now Pishevar finds himself in a position that's starting to feel pretty familiar in Silicon Valley. He's a tech star, growing in fame and influence, but facing a crisis that threatens to tear it all down.

Of course, we've yet to hear anything from the defense except a nine-sentence statement from the attorney calling the lawsuit "bogus."

"Frivolous lawsuits like this one have become all too common against start-ups that achieve breakthrough success," the statement said. "It is almost a cliche."

Pishevar's spent his career convincing people to believe him. He may be facing his stiffest test yet.