RG 330 – Why This Successful PropTech Startup Investor Invested in Real Estate with Zain Jaffer

It’s always a blast having a fellow ex-pat share their experiences in investing in the US. Today, we have Zain Jaffer, a lifelong entrepreneur and successful investor, on the show.

Zain Jaffer started his first company at 14 years old and later moved to the US, where he founded Vungle, which was sold to Blackstone for a whopping $780 million in 2019. Today, Zain is an accomplished investor, a Partner at Blue Feed Capital, the host of PropTechVC, and the owner of Zain Ventures.

Zain shares what his business does, the challenges he had to overcome, and how he figured out the secret sauce to his operations. We also talk about how Zain pivoted from focusing on his gaming app to diversifying his portfolio with real estate investments, something that required a lot of learning from his end.

Interested in becoming an Investor with Reed? Click here to join his Investor email list.

Our interview with Zain is a jam-packed story of his experiences in startup and real estate investing. Let’s learn how Zain learned to let go of his biggest startup, transitioned into real estate, and built his ventures from scratch.

Key Takeaways

• Doing something different is sometimes the best way to introduce a business to the world.

• Diversifying your portfolio is one of the most effective ways to safeguard your wealth if something goes wrong with your primary source of income.

• You must start sourcing and delegating at certain levels of your business.

• Being intelligent in one field can be beneficial when you transition into another area of business.

LINKS
zainjaffer.com/meet-zain/
www.linkedin.com/in/zainjaffer/
zain-ventures.com/about/

Be Bold, Be Brave and Go Give Life a Crack!

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Reed Goossens (00:00):

Good day. Good day guys. Now, before we dive into today’s show, I want to let you know that some of you may aware that over the past eight years, I have built a substantial multifamily real estate portfolio here in the US worth over half a billion dollars. And in that time, my passive investors have received fantastic double digit returns. And now you two can invest directly into my deals for as little as $50,000. So if you’re an interested investor, head over to reedgoossens.com to find out more. That’s reedgoossens.com. Now, back into the show.

Zain Jaffer (00:41):

Yeah, so look, running this gaming advertising platform meant that my entire network was concentrated in one single startup. And it was wild cuz some days we really did think, you know, it’s gonna be huge. And other days we thought we were gonna go bankrupt and we were gonna be sued for whatever you could think of out there. You know, data privacy, valuations or Apple or Google are gonna come and, and crush you, or Facebook’s gonna crush you. Um, and so I remember when I was running Mongol, I was seeing other people in real estate and I’m like, wait, for years I didn’t take a salary on these guys. They’re getting like these renting comes, they’re, the assets are appreciating. They’re using leverage. They’re doing 10 31 exchanges, which is a great thing that the US offers. They’re getting the depreciation write offs. I want a piece of this

Speaker 3 (01:35):

Welcome to investing in the US a podcast for real estate investors, business owners, and aspiring entrepreneurs looking to break into the US market. Join Reed as he interviews go-getters, risk takers, and the best in the business about their journey towards financial freedom and the sheer joy of creating something from nothing.

Reed Goossens (01:56):

Good day Good day, a ladies and gentlemen, and welcome to another cracking edition of investing in the US podcast from Los Angeles. I’m your host, reed goossens. Good as always, Debbie with us on the show. Now, I’m glad that you’ve all tuned into to learn from my incredible guests and each and every one of them are the cream of the crop here in the United States when it comes to real estate investing, business investing and entrepreneurship. Each show I try and tease out their incredible stories of how they have successfully created the businesses here in the US, how they’ve created financial freedom, massive amounts of cash flow, and ultimately created extraordinary lives for themselves and their families. Life by design, as I like to say. Hopefully these guests will inspire all of my cracking listeners, which are you guys to get off the couch and go and take massive amounts of action.

Reed Goossens (02:42):

If these guys can do it, so can you. Now, as you know, I’m all about sharing the knowledge with my loyal listeners, which is you guys, and there’s absolutely no BS on this show, just straight into the nuts and bolts. Now, if you do like this show, the easiest way to give back is to give us a review on iTunes, and you can follow me on Facebook and Twitter by searching at Reed goossens. You can find the show wherever podcast on iTunes, SoundCloud, Stitcher, and Google Play. But you can also find these episodes up on my YouTube channel. So head over to reedgoossens.com, click on the video link and it’ll take you to the video recordings of these podcasts. But you can see my ugly mug for the beautiful faces of my guests each and every week. All right, enough outta me. Let’s get cracking and into today’s show.

Reed Goossens (03:31):

Turn the show of the pleasure of chatting with Zain Jaffer. Now Zain is a lifelong entrepreneur who first founded his very first startup back when he was just a teenager. He’s gone on to co-founder, mobile advertisement company called Vangel, which was acquired by Blackstone in 2018 for over 780 million. Shortly thereafter, he started Zain Ventures, his family office that boasts a diversified portfolio of both real estate investments and prop tech startups. And he’s also the partner of Blue Field Capital. I’m really excited to have him on the show today to share his incredible knowledge with me, but nothing outta me. Let’s get him out here. Good. Hey Zain, welcome to the show. How you doing today, mate?

Zain Jaffer (04:09):

Great, thank you for having me on the show. Excited to have a good conversation,

Reed Goossens (04:12):

Mate. Absolute pleasure. But tell me, that’s everyone. An 80 million straight out the gate. Like that’s an incredible valuation. Uh, we’re talking in the green room, you’re, you’re a couple of years younger than me. How did that all go down?

Zain Jaffer (04:24):

? You know, it always sounds like an overnight success when you read a headline, uh, that outrageous. Um, but it was failure after failure. I mean, it was just so hard to convince someone for my first couple that we were worth a million dollars, let alone in the end buying us all cash for almost a billion. Right. 789. Wow. Um, see, I would say decade of uh, trying, trying, trying and eventually with everything working out perfectly, we also got lucky. Things just don’t have to work out perfectly in terms of, you know, uh, execution and getting the right team and all of that. You also have to be lucky, um, to be in the right place at the right time percent that level of exit, I think.

Reed Goossens (05:04):

Right? No, no. And I want to get into that, but let’s, let’s do what we do on every show. Let’s rewind the clock. Tell me how you made your first ever dollar as a kid and you’re growing up in a relationship to money, uh, in your youth.

Zain Jaffer (05:16):

You know, I grew up in uh, an area of London Hayes in Harton and it’s not the best area. My parents are actually immigrants, refugees. They fled East Africa. We were Indians or they were Indians, right? East Indian, uh, settled in Africa and then were booted out of Africa by the dictator. They came to the UK with no money whatsoever. And where I grew up, it was quite a rough neighborhood. And to avoid getting in trouble, I just stayed in my room and played computer games for very long. And one day when I discovered the internet, I just started hacking around and building things. And I realized, realized, wow, this is how you go to a website in HTML and eventually you can take these templates. Oh, and you can hire someone if you have some money in India for like 300 bucks a month.

Zain Jaffer (06:08):

Hmm. Let me think. Why don’t I convince someone that they need a website? So I started out by going to all these online platforms and trying to bid, you know, on projects and I made a bit of money like that, but the real money, and I joke here when I say real money, we’re talking hundreds of pounds, right? Or, or donors. I started calling up everyone I could find the yellow pages at about 13. My voice started to break. It probably didn’t sound and it does now. So people didn’t really know they were speaking to a, a little kid, barely a teenager. I’d call them up and I’d say, look, you guys don’t have a website. How are people going to find you? I can get one made for you. Um, would love to, you know, communicate. Most of the deals fell apart because they wanted to meet physically face to face.

Zain Jaffer (06:51):

I did not want that to happen because then they’d be like, what the hell? This is a little kid. But that’s how I made my money. I convinced a couple of people that they needed a website, you know, could have just been something like, uh, a bed and breakfast hotel or a restaurant or a massage place or whatever it could be. So that’s how I made my first, uh, few dollars. And then I got tired of building websites for other people. Do you know the math? I said, where you can hire someone for 300 bucks. Well you hire them full time in India, they can churn out like a website a day. So my thought was, how about I get the salary covered by selling one or two websites a month the rest of the time? Let’s ideate, let’s build, you know, websites for myself.

Zain Jaffer (07:32):

So I started to make money through ads and that was my first, I felt like real entrepreneurial dollar. Cause building websites was like a development shop. It was like a service. Mm-hmm. . And I always wanted to move away from your time is traded for money and move into the game where money comes even whilst you sleep. So that was my like, money comes whilst you sleep. I built websites per ads and then, and I’d wake up in the morning, check my dashboard and I made $50 or a hundred dollars or $250 or a thousand sometimes. It was just, you know, magnificent.

Reed Goossens (08:01):

That’s awesome. That’s awesome. I, how was the relationship being with mom and dad being immigrants? You know, I’ve, I’ve had other people on the show who had come from immigrant families, you know, particularly, um, from, from India who want, they want their sons to go off and become a doctor or an engineer or you know, something else that is not, you know, on computers and what the hell is this thing? You’re making money by building websites. Like what, what would, what, how did that, how did that conversation go down

Zain Jaffer (08:27):

Exactly like you said it, but with an Indian accent,

Reed Goossens (08:29):

,

Zain Jaffer (08:31):

They didn’t understand where is this money coming from? Can you stop? Like, what are you doing drugs, what was going on? And, and can you just finish your homework? And they pretty much, um, took the computer away from me many times. It really upset me cause it’s like, I’m not playing games now. I’m, I’m trying to make money. And they’d be like, no, you’re on the computer too much. They would literally take the power cable away and it was really, really annoying for me. I was really angry about that. But you know, I was just addicted to the computer, uh, as far as they could see. But it’s true as well. I was addicted but I was also addicted to the idea of making money. Right, right. I’ve always felt like for me, a lot of, uh, business ventures feel a bit like a video game cuz I just grew up playing so many video games and strategy games.

Zain Jaffer (09:14):

Fast forward, um, my parents, I would say forced me to go to university. I didn’t wanna go to give up a startup that I was working on, relinquish control, let the other founders sort of run with it. And they had raised some money in Silicon Valley, so I was really distraught when they moved to Silicon Valley and here I was going college, uh, or university in London. And um, you know, my identity was sort of like really struggling. But even at university, I, I couldn’t stop. I, my first at university, I, I, you know, I kind of went crazy, right? Because for me, a lot of Indian people, they’re sheltered. They’re brought up maybe in a religious or very conservative malice. So when you go to university, you’re like, whoa, what did this freedom?

Reed Goossens (09:56):

This

Zain Jaffer (09:56):

Is crazy. So I really went kind of crazy and we had sort of a house party in my kitchen and security came and we’re like, you’re not allowed to have parties in the student dorms. So I was like, alright, I’ve got like 40, 50 people here. Oh, maybe I can take them to a nightclub and I can get paid to do that. And so I started setting up a nightclub promotion business and I set up a student newspaper and then I just kept doing these little lifestyle businesses. I just couldn’t stop. It was just in, you know, I built some organizations whilst I was at, um, more non-profit organizations when I was at university. But yeah, you know, I, I always felt, I, and this is sort of the theme even to this day after selling my last company, once you a founder, us Phil, like one, and I’m itching to do another company like every day

Reed Goossens (10:37):

. Well it’s funny, I’m actually reading Richard Bran’s book, I think his old one Virginity, I think it’s that one. His bio He

Zain Jaffer (10:44):

By Virginity or something like that.

Reed Goossens (10:45):

Yeah, yeah, yeah. And he, um, he actually, cause he start, he started a newspaper back in the day at his university and he also started a nonprofit about helping other people in the community access, uh, doctors, um, particularly LGBTQ people. And it, it, it’s, it’s quite, you’ve got very similar upbringings, probably just a couple of decades apart. Um, but, but let’s, let’s go on to talk about how you’re coming to America’s story and, and how you got such a big exit because you, you mentioned earlier, you know, it’s the overnight success that’s been going for 10 years. So what, what did that look like? And, and, and were you in the uk um, with, uh, fungal? Was it, was that, am I pronouncing that correctly before moving to the us?

Zain Jaffer (11:25):

Yeah, that’s right. So I’d started the company there and it was really just a video production agency, really, that’s all it was. We would build videos for you and we figured out let’s do software training videos. Yeah. It was a lifestyle business, right? And I wanted to build a platform. And I had read that there are these crazy investors in the US who don’t care about revenue. And I was like, oh, I need that. Cuz everyone in the UK is just just beating me up about your revenue and profitability. And when you achieve all the metrics that they want you to achieve, you just don’t need their money anymore. Right.

Reed Goossens (12:01):

. It’s so true. It’s so true. Why, why do I need your equity if I can raise it myself or, or I can go have my own equity, but yeah, keep going.

Zain Jaffer (12:08):

Exactly. So I read about an incubator y Combinator and then there was another incubator called Angel Pad. And so I’m like, alright, this is interesting. They give a hundred thousand dollars to every single participant in the program. That, that sounds insane. A hundred thousand dollars, right? And it’s, it’s for like a tiny percentage of your company. I mean, immediately at the gate you value its of dollars, right? Of course, you know, today some YC companies have valued it insane amounts, but, you know, um, so I um, figure out how do I get into this incubator and I’m reading Tech Crunch and they say, look, there’s only one spot left. Applications are closing and the incubator has decided to leave one spot open to get last minute applications in. Me and my cofounder were like, now we gotta get into that incubator. So we did some research and we discovered that there was, um, a few people that were like judges who would review applications and there were also LPs in the incubator as well, right?

Zain Jaffer (13:02):

So they had stake in incubator one of these guys as an Indian guy, right? His name is GOCO Roger. And he at that time, uh, wildly successful guy, uh, bought, started, you know, built the Google ad sense algorithms and, and the product at Google built a company, Facebook acquired it for like 50 million in pre IPO stocks. So he’s working at Facebook now helping Facebook figure out the number one problem, how do we monetize, right? So I’m like, alright, I gotta get this guy’s attention. So here’s what we do. Me and my co-founder record a video on our phones and we’re pitching GOCO and the video goes like this, Hey, look, I’ve got your attention. If you know, GOCO forward this messages to him, goco, if you’re listening, this is Zayna Jack, we’re from the uk, we wanna crush Facebook, we wanna destroy Google, right? We’re, we’re building like our own advertising platform.

Zain Jaffer (13:50):

Um, and we’re gonna take mug Zuckerberg down just crazy stuff like that. We said, okay, then we figured out, right, we built this video and we’re nuts to do this, right? Cuz he works at Facebook, right? Mm-hmm. . Then we, we, we take this video and we figure out how do we promote this like in a viral way? And we figured out how to hack around LinkedIn. We figured out that we could target every single colleague who he’s worked at, at Facebook, at Google. We figured out crazy stuff. Like, you know, when pretend we’re advertising a flower website and when LinkedIn approves it, we quickly change the image and the URL forwarding so it shows up with his face. So you’re browsing LinkedIn, you see this guy’s face, you’re like, I know him, I work with him. Well, why is it on LinkedIn? It’s like the title of the AB said urgent message for Goku Click. Now people were like, oh my God, what’s happened to him? Has he been kidnapped by the ISIS or Taliban or whatever,

Reed Goossens (14:42):

?

Zain Jaffer (14:43):

And they would click on that with insane click through rates. And there I am on video, Hey, I got your attention, you know, we wanna crush Facebook, please like, help us get into this incubator. That video went viral. Um, he got summoned to Mark Zuckerberg’s office apparently. And uh, was like, what the hell is this video about destroying Facebook? What are you involved with? Um, so that got his attention. We got a call from the incubator and we were like, yes, it’s work. And they were like, look, we’re gonna send you a C desist, literally take that ad down right now. And we’re like, look, we’re not gonna take the ad down. Like we, we want the last spot. You know, you’ve gotta give us a chance. And they were like, sorry, but most of our people are engineers. They went to Ivy League universities, they live in the US And I’m like, I don’t care.

Zain Jaffer (15:30):

Like we, we need this. This is like, this is what we need. We need some Americans to take a chance on us. And so after harassing women, pastor a man, they said, okay, you know, fine, jump on the next plane to the us. And that was history. I, I just booked the next flight to the us, told my family I may never be back, which turned out to be true. And we, we arrive in San Francisco and um, here I am over a decade later, you know, with a big exit behind me. But that incubator was very helpful for us.

Reed Goossens (15:59):

. That’s insane. That’s awesome. Well, it goes to show the value of persistence, right? And doing something different. But it’s interesting, you got that wall of, oh, you’re not American, you don’t tick this box, even go Ivy League, you know, sorry, you’re, you’re out. Like as a, as a, you know, another expat when I remember when I first tried to get my structural engineering job and it was just like my, my resume just, I didn’t have a American university on it. It was just like going knocking on doors until someone give you a chance. And it was a lot of no’s because of that exact same things. Like you didn’t go to a, you know, a school here in the States. I don’t know what your qualifications are. So I I definitely can, uh, can assimilate to that. But the, but talk about the found the, you know, the creation of this company that ultimately went on to be sold to Blackstones. So how did, did you take down Facebook? Cuz clearly if you didn’t, because Facebook’s still around today.

Zain Jaffer (16:46):

. Yeah. Facebook became our number one competitor. You know, here’s a little anecdote, right? Uh, suppose as we talked about my parents, we ended up raising money from Google, right? Google Ventures. And there was a time when I’d applied to Google and I was rejected. I had applied to McKinsey, cuz that’s what people do when they go to these good universities in the uk. And I was also rejected and I cried, you know, I was rejected cuz I was like, this was like my springboard, like McKinsey was my golden ticket out. And I remember just sitting there during the credit crunch. So, you know, we’re in like another recession at that point, right? And I’m thinking to myself, you know what, screw this one day I’m gonna compete with Google, or I’m gonna, I’m gonna, I’m gonna like work with them in a meaningful way. McKenzie like, man, I’m gonna be so successful and I’m gonna hire them.

Zain Jaffer (17:31):

Who would think years later, like, you know, Google would invest in us, would become a major competitor. We did have acquisition discussions with them, right? And then McKinsey did the due diligence of Blackstar and it’s like, wow, how, how the thoughts that you have today get projected into the universe and then materialize in some form or another. But I, you know, what turned out to at that point, to me was a really low point, actually turned out to be a great thing. Thank God I didn’t get a job at a job and I was forced to figure it out. And I think being in the deep end, learning how to sink or swim is really sometimes the recipe to just be creative and, and innovate. When we got to the US for example, we realized if we don’t raise enough money, we’re going back home, right?

Zain Jaffer (18:14):

I, I I’m gonna raise as much money as I can so I can afford to have an attorney to get a visa. Um, and I’m just gonna figure it out. And, you know, we worked harder than everyone else. All of our other colleagues we had, we had a few people that were just amazing in our class and they also built billion dollar companies. You know, there were like 20 companies or something like that. A few of those went on to become huge companies as well. Maybe two or three or those families did well. But most of those folks were like Google engineers who knew? Like, there’s one guy in my class, right? Who, um, the incubator who, uh, went on to become like one of the early employees at, um, uh, WhatsApp, right? And he did really well. So like, you know, folks like that, they don’t have to work as hard because they just know I’ve got the golden ticket. I’m American, I went to Google, I went to Stanford, I went to Harvard, I’m gonna get an amazing salary. Whereas us, we were like, man, I’m gonna go back to UK and I I I, I’ve gotta do this. Like, I would die if I must. I’m gonna figure it out when you’re that hungry, successful, some somehow comes.

Reed Goossens (19:17):

I, I will also agree with that because the, the, the thought of going home with a tail between your legs as a, again, as an expat, I, I’ve, that’s crossed my mind a lot of times, but I moved to this country just to be, just to chase a girl and just live for a couple years in expat and have some fun and go home. I, I never thought, you know, a decade later, probably the same with you as, you know, starting a real estate company and doing all this stuff, but it’s that, it’s that drive where your, your back’s against the wall that, you know, what’s my 65 year old self gonna say in my failure of, of do you wanna give this a good crack or not? So I can completely obviously we’re different. You, you’re at a much bigger scale than I am. But, but talk to just a little bit on the, on the product itself and, and, and how, how the, how did you pitch your heart out to, to, to raise the money and afford the lawyer and get the visa and all that sort of stuff?

Zain Jaffer (20:03):

Yeah. The way we did it was that, um, we kept pivoting and pivoting. We had a deadline, which was demo days coming up. It’s now 12 weeks, have turned into three weeks left. And we just dunno what we’re doing at this point. We can’t afford to build anything. We don’t even have an engineer. Actually, we’ve been like outsourcing this and we’re getting screwed by the dev shops we’re working with. We found some engineer where like, Hey, we will give you the title of cto. Um, he eventually went on to become like the founder of a web flow and, you know, did really, really well. Right? That’s another unicorn company. Uh, but he, he stayed with us for a little bit and um, I went to customers and I was trying to interview them and I was trying to figure out what do we build? And then I said to them, look, you say this is a big problem for you.

Zain Jaffer (20:45):

You’re trying to promote your app app, right? If I could get you say, a thousand users, how much would you pay me for that? The mobile will pay you 2000 will pay you two bucks, right? Okay, cool. Two, two bucks a download. All right. Can you write the down on a piece of paper? If I build this product and I get you 2000, right? Or, or I get you however many users write to be, right? You pay me two bucks, you will pay me, right? Can we turn this into a preor? I basically went, found a bunch of companies that needed help with user acquisition and came up with a bunch of pre-orders. And these pre-orders. Eventually I just got more and more bold. I’m like, Hey, theoretically, if I got you a user for a dollar and I got you a hundred thousand, would you pay me a dollar?

Zain Jaffer (21:25):

They’re like, sure. All right, I’ve got a hundred thousand dollars pre-order. Then I went to investors, I was like, look, I’ve got millions of dollars worth of pre-orders here. Okay, I can build this platform and I think I can deliver the goods to these, you know, customers. So what we did, we, we basically, had a bunch of orders and VCs can argue with us and our round was like insanely over subscribe. We were just trying to raise like a few hundred thousand and that turned into like seven 50 K to one point. It was a precede idea, right? Eventually raising 2 million on a pitch deck. And that was one of the largest seed rounds. And you know, this was 2010, 2011. So you can imagine, right? Like at that point I was like, whoa, we did it. But then the hard work really begins then it’s like, oh my God, what did I, I, I sort of, I hope the investors don’t think this is recognized revenue.

Zain Jaffer (22:18):

These are bookings and I dunno if I can deliver this. And for a whole year we struggled, man. Like, it’s like, oh my God, we, I hope our investors don’t sue us. You know, they’re like, where’s your revenue? You said you had millions of dollars in pre-orders. And I’m like, well, the product doesn’t quite work and it doesn’t, the economics don’t quite work yet. But you know, year year zero was $0 in revenue. Year 1, 850 k, year two 15 million, year 56 million. And we just kept like doubling in tripling till it was hundreds of millions of dollars. And at one point it was a hundred million plus EBITDA run rate ebitda, like, you know, our cash balance was growing.

Reed Goossens (22:56):

That’s

Zain Jaffer (22:57):

Insane. So yeah, it, it’s been a wide ride for sure,

Reed Goossens (22:59):

, but my question is, and if those listeners didn’t hear that, you didn’t even actually have the product figured out yet.

Zain Jaffer (23:05):

No, no, not at all.

Reed Goossens (23:06):

So you went and got, you pitched just really well, an idea that you thought may work and I want a problem

Zain Jaffer (23:13):

And a problem

Reed Goossens (23:13):

Too and a problem Problem, sure. A problem. But you didn’t have a solution to it. Like as a, as an engineer, I’m a structural engineer. I, I’m like, I need the solution cuz that’s the ticket, right? You talk about golden tickets all the time in this episode. So what was, what, how did you, what’s the, was that confidence that you knew you gotta figure it out? Like what was that? Well,

Zain Jaffer (23:31):

It was, the belief was that we were putting a video advertising platform and we thought that the current way people promote their applications are advertising on banner ads. Mm-hmm. and banner ads are not effective and full screen ads are just atrocious. We thought, why don’t we build this like video advertising format where we show people what the app does before they download it. It was a series of pivots. We started up as a video production agency. We pivoted all the way to being some platform where, you know, we distribute videos and we create videos that showcase your app. And if we do that for you, will you pay us? But I don’t want like a five, $10,000 agency like fee. I just want you to pay me each time someone watches a video and downloads your app. And so it was a big bet, right?

Zain Jaffer (24:17):

We had no idea, but it just, it just felt internally like, look, this feels like it should work. Like if someone sees a video of an app and they click on the ad, why are they clicking? If the video’s accurate, then they’re probably clicking cuz they wanna download the app. It’s a lot better than these banners where you are fat bomb accidentally, you know, presses download. And who would’ve thought like we were spot on with that In the end, we were charging 20, $30 a download sometimes, wow, forget a one or $2. That’s why revenue grew like crazy. We, we figured out this secret source, but definitely there were, most of the time when I was building the product, I was like, this is gonna fail. You know, maybe we can deliver users for a dollar, but we’re gonna be making huge losses like Uber and we’re gonna run outta money. I didn’t think we’d be getting like 50% gross margins and would be increasing the pricing continually, you know? So yeah, frankly I have no idea it would work. I just had an instinct that it would work. Yeah, it’s like building a spaceship, you know, like, sure you’re gonna get off the ground, you can build all these models and simulators, but when reality is out there and people are using your product, you know, does it hit and down? This one hit right on

Reed Goossens (25:30):

The bullseye.

Reed Goossens (25:33):

For those of you who are interested in staying up to date with all the latest happenings in my business, or to learn more about passively investing directly into my multifamily value add deals, then head over to red houston’s dot com and sign up for my monthly newsletter. By signing up, you’ll automatically be notified about my new up and coming investment opportunities. You’ll be able to stay up to date with all the latest real estate news here in the United States and much, much more. So head over to reedgoossens.com and sign up to date now back into the show. And so I’m, I’m a company cruising around. I’m a user cruising around and I’m just, again, I’m not a, I’m not a tech guy. I’m a real, I build stuff, but there’s a platform that I could trial an app or look at an app that I needed for my company or needed for my personal use that I could go to and sort of get a free drive, so to speak. That that’s essentially what it was.

Zain Jaffer (26:29):

Yeah. Essentially, I mean, rather than advertising on, um, YouTube advertising and newspapers and running TV ads, the idea was what if we can advertise on other people’s phones? What if we can show your game whilst someone else is playing another app you’re playing? Like, got it. You’re playing like Candy Crush Saga, you know, you see an ad and it’s for your app. Mm-hmm. , that’s what we built. We invented that and that now that is now seen by billions of people, you know, well over a billion devices a month is what the company was hitting. Um, most people in the world had seen our ad, even though we didn’t have a logo plaster on it Right. Would be powering that hundreds and hundreds of like, you know, millions of dollars in revenue every year. Just from that

Reed Goossens (27:12):

That just for that one idea that you thought,

Zain Jaffer (27:15):

One idea

Reed Goossens (27:16):

That that on on this game, there needs to be able sort of Yeah, yeah. Got it. That’s

Zain Jaffer (27:21):

Right. What if you can put an ad in a game in a way that is smooth? We’ve also figured out, you know, you’re playing a game and you die game’s over. So app developers started to charge you like, why don’t you buy a life or $5 99 cents? We were like, aha, what about why not watch a video ad and you get to continue playing where you died? And it turns out a small percentage of people that watch a video ad are like, that game looks fun. You know what, let me click and download. I’ll play that game later. And then they play that game and they’re addicted to that game. And Chi ching, we got paid . So, you know, we did a lot of the, that, that’s sort of how we figured it out. We were like, how do we take these videos, show it to people, and they’ll pay us for it? We’ve gotta like redesign the whole user experience on the product side to do that on the game side. That’s,

Reed Goossens (28:07):

That’s freaking awesome, dude. I I I love your user interface intelligence. I think it must be because you, you know, not the average person doesn’t just go along and be like, when you explain it as simple as that, everyone on this listening to the show be like, oh yeah, duh, let’s Yeah, of course. Yeah. But back in 2010 and 2011, it probably, no one got it. No one got it. Yeah. Yeah. But I,

Zain Jaffer (28:28):

In thousand 10, man, I’m pitching VCs and they’re like, wait apps, like the farting apps and the flashlight apps, and wait, you wanna do the videos? Reals, don’t even work on a mobile phone and like the, you know, we’re dealing with two G balance. Yeah. How is this ever gonna work? You’re trying to charge per download, why don’t you just charge per like everyone else, just show video ad and charge two or 3 cents. And I was like, no, no, no, I already promised all these developers that, you know, I’m gonna give them a user for a dollar. I’m gonna take the risk off. And that the time worked out, like the trends were enough in favor and we innovated on the product side and you know, we bought a huge cash power.

Reed Goossens (29:11):

That’s awesome. That’s awesome. Well, I wanna pivot because everyone be asking, well this is investing in the US Reed, you’re a real estate guy, so how the hell is Zain on this show talking about apps and stuff like that. So I’ve read in the introduction, you have started your own family office, which is focused on tech startups, but also real estate. So what was, what was that pivot to this? You’ve gone from guy in England doing a viral YouTube video to take down Mark Zuckerberg to starting this crazy gaming app to now having a huge exit. And when was that exit 2019, right?

Zain Jaffer (29:44):

Cash came in 2019. The exit was probably in 2018 or some, something like that, you know, when the definitive agreement was finally done. Um,

Reed Goossens (29:52):

And, and now into pivoting into real, a diversified portfolio, both tech and real estate. So talk to us about that. Why did you decided to go into the real estate realm as maybe an anchor to your tech, to your tech investing?

Zain Jaffer (30:06):

Yeah, so that running this gaming advertising platform, um, meant that my entire net worth was concentrated in one single startup mm-hmm. . And it was wild cuz some days we really did think, you know, it’s gonna be huge and other days we thought we were gonna go bankrupt and we were gonna be sued for whatever you could think of out there. You know, data privacy, valuations or Apple or Google are gonna come and, and crush you, or Facebook’s gonna crush you. Um, and so I remember when I was running Mongol, I was seeing other people in real estate and I’m like, wait, for years I didn’t take a salary. And these guys, they’re getting like these renting comes, the assets are appreciating, they’re using leverage. They’re doing 1031 exchanges, which is great thing that the US offers. They’re getting depreciation write-offs. I want a piece of this.

Zain Jaffer (30:52):

I mean, these guys aren’t that smart, frankly. I mean, now more than half the people in real estate are dumb idiots. And that’s why it’s so easy to make so much money because you know, there are a lot of stupid people out there and there’s a lot of dishonesty out there too, on all aspects. Not just, not just investors, but, you know, contractors and property managers and, and ev everyone in the chain is just like, I have never seen so many competent people before in an industry as I have in real estate. Right? I know that’s a harsh extreme statement, but the fact is, yeah, there are a lot truth, there are a lot of stupid things out there and you know, you gotta make sure you’re gonna be taken for a ride. But at the same time, if you try hard enough, you can find opportunity. Anyway, the bottom line, I wanted a piece of that and I looked at real estate and I thought, okay, I, I wanna figure this out. And um, when you look at wealth, real estate’s a big part of people’s portfolios. Um, it’s minted more millionaires than any other asset class and self-made millionaires to may say. So it’s like, I wanna learn this game. It’s so different than startups. It’s brick and mortar, it’s physical. So yeah, that’s why I started getting interested in real estate and dive into it, you know, as my \only focus.

Reed Goossens (31:59):

That’s your only focus today? Right now? No,

Zain Jaffer (32:02):

That, that, uh, real estate and investing in technology companies that target the real estate sector. Interesting. So I, you know, I can’t just go in and try to compete with folks that are pure real estate. I have to come with something unique, which is my tech background. Yep. You know, I, I’ll look at real estate projects and I’ll think how do we bring technology in? How do we bring some amenities that are powered by tech? How do we automate things? And and that’s sort of why I, you know, I’ve been doing what I’ve been doing and uh, to a bit of background, when I started in real estate, didn’t really know what I was doing. Started off as an LP in numerous funds and then, you know, becoming the largest, you know, uh, investor in many syndications and taking like, you know, GP carry. Then I started to buy single family rentals. Then I started to do hard money lending. Then I started to buy multi-family buildings about hundreds and hundreds of units or cash. Uh, and then I teamed up with a larger firm. And that firm Bluefield, you know, has been great. We, we, um, you know, all over 10,000 units across multi-family, hotels, senior care facilities, industrial warehouses, I mean, so yeah, the whole gam out of real estate in the us.

Reed Goossens (33:08):

That’s awesome. And your why was the partnership needed with, with this other company? Just so to give you a bit of the operational mouse? Yeah.

Zain Jaffer (33:16):

To learn, but also I did not want to be a passive investor. I wanted to learn, but also I thought I could do it all myself. Here I am a founder who, you know, built something. When people told me it wasn’t possible, I thought I could do the same. Real estate got my butt handed to me, man. I mean, when I looked at my returns versus the returns of this syndications and, and um, the funds I invested in, I was like, I don’t get it. I I’m not paying. I’m paying them a carry. I’m paying them management fees, acquisition fees, all these hidden layers of fees. And yet the net return to me is way higher than anything I’m doing myself. I don’t get it. I’m, I’m putting in the sweat equity. I’m spending all my time doing these rehabs and, and you know, fixing up properties and yet just passively investing as an LP and making more, I need to learn the secret. So I joined up with Blue Feed Capital they had the best returns out of everyone I’d invested with. And I said, look, I wanna, I wanna see it at the table. I wanna be a GP with you guys and um, I’ll put in a significant amount of money right. And I’ll become a major investor in all your projects. Um, teach me everything I can learn. And then that’s what I did.

Reed Goossens (34:23):

That’s awesome. What is, talk to us about the Bluefield today. What you said, you mentioned, um, multi-family, you said hotels. Where else are you invested in warehousing?

Zain Jaffer (34:32):

Yeah, industrial warehouses. We’ve actually built some warehouses. Um, um, we’re talking millions and millions of square feet here as well. So, you know, potentially billions of dollars worth of value that we’ve been building. Um, and then we’ve also been doing some construction. Mm-hmm. , these are like your gun style town homes that have a garage and they’re in areas of the US that people might not necessarily pay attention to. Um, we’re sort of operating at a sub PE level, so acquisition sizes that are like 10 million to like 80 million mm-hmm. or more focused around, you know, like 40 to 60 million acquisitions, which is basically a little bit too small for large institutional players, but a little bit too big for mom and pop folks who have just been, you know, doing their own thing. Um, and then in, in relation to that too, I set up a venture capital fund because, you know, I like startups and we’ve got a great portfolio of real estate, so it’s fun to bring startups in and partner with them and we’ll invest in startups at the, the seed stage. We’ve done 20 investments now in startups. I’m on the board of a few companies too. Um, and that’s a way for me to live vicariously cuz I missed a founder lifestyle, you know,

Reed Goossens (35:47):

. But I think you’ve got such, so much more offer going through that exit. Um, now coming full circle. And it’s interesting you say, you know, it sound like you had a bit of a shiny object syndrome. He was like, what? All these guys do it where like, you’re hearing your story. So many people would be like, oh, I wanna do what he did, you know, I want to go take on the Mark Zuckerbergs, lord, I wanna go get like a a billion dollar exit. Like it’s, it’s funny how the grass will always be greener somewhere else. And so my question, my last question to you before we wrap up the show is how have you as a founder, as you know, you mentioned earlier about you thought you could do it all. How have you let go of that sort of stuff to just be I know where my value is and and just be okay at that level, not just continuing to push and push and push and, you know, into the future.

Zain Jaffer (36:34):

I really struggled when I ran my own startup because I was a control free and I micromanaged everything and I had a really hard time letting go and building a team and you know, we had hundreds of employees eventually and I just had to realize like, look, I am, I’m the wrong CEO for this job. If I’m the one who’s basically doing, you know everything, I need the company to survive without me. And so I had to build an executive team and I quickly learned at certain levels you need to start delegating and outsourcing. Right? And it depends, like there are some things where you need to be really hands on, but if you wanna build something that scales, you need to partner. And then if you’re gonna do something small, you probably have to be more hands on. But don’t be foolish and think you can do everything yourself.

Zain Jaffer (37:19):

If you’re building a new company, go find some co-founders. Um, cuz it will allow you to focus on your superpower. I really believe everyone has a superpower. It might be marketing sales, it might be finance, legal, whatever it is, right? Engineering, development, design. Find your superpower and outsource everything else. Okay. And bring bringing on people that compliment your weaknesses and you’ll have a killer team. Everything is about team in real estate and startups. This is something I can generalize with. Like finding a team, building a team around you is something that works in every asset class and it’s, it’s a true strength of a leader.

Reed Goossens (37:54):

That’s awesome. No, mate. Look, I, I could chat to you for hours my friend. I’ll have to fly up to the Bay area and, and take you out for a drink. But I do wanna be respectful of your time. Just quickly before we get into the lightning round, what, what do you see yourself in the next 10 years now, now you’ve, you know, the last 10 years have been fricking awesome and I always say to people, when I moved here in 2012, I didn’t have a lot of money to my name, didn’t have a job, and I was coming here to chase a girl 10 years later, you know, I’ve got 3000 units, you know, I’m, you know, building it from scratch. What, what, what, what is your next 10 years gonna

Zain Jaffer (38:22):

Look like? It’s not retirement. I tried that for a bit and um, it gets kind of boring and you get restless. Um, I think I’ll be running outta the company cuz that’s in my DNA and that’s my true strength. Um, investing has been fun and is fun. But I see, right. I’m, I’m looking at a couple of potential startup ideas right now actually. And um, because the market’s so horrendous, I’m actually quite excited cuz I am quite contrarian, you know, I like to do things that others don’t do. I feel like this is the best time in the world, uh, ever to launch a company. So I’m deviating right now. I haven’t jumped into it yet, but if I do something, I’m taking a 20, 30 year outlook mm-hmm. , this is the next thing I do. Of course if, if, if I build it and um, you know, an exit opportunity comes, I have to consider that rationally.

Zain Jaffer (39:11):

But the great companies have built, um, over a long time span and you know, today it was announced, um, as of this podcast, like when we’re talking, right? Adobe just bought Figma. Figma was found in 2012, I believe, and 10 years later, 20 billion exit, right? You, you have got to take a 10 year plus outlook when you’re building a company because year 5, 6, 7 A, if you’re growing fast, your revenue sometimes every um, quarter is more than the cumulative revenue of your entire history. So why tap out early? So I’m thinking I’m looking for that type of company that I think I could run could become the next Amazon or Google, right? Wow. That’s what I’m thinking about. If I do something next, that’s awesome. In 10 years I do see myself, uh, being at the helm of another company for now I’m, I’m investing but also ideating cause investing sort of helps you, a lot of founders. Um, I think the stats for like a third of founders that have um, you know, exited company go on to invest as an angel will start their own VC fund. Yep. Third probably retired and do another company, you know

Reed Goossens (40:18):

Yeah, yeah.

Zain Jaffer (40:18):

There’s a tiny percentage that are just dead because it’s too much

Reed Goossens (40:21):

.

Zain Jaffer (40:22):

I was almost in that category.

Reed Goossens (40:24):

. Well mate, look at the end of every show. I like to dive into the top five investing tips. You ready to get into it?

Zain Jaffer (40:29):

Yeah, let’s

Reed Goossens (40:30):

Do it mate. What’s the daily habit that you practice to keep on track towards your goals?

Zain Jaffer (40:35):

Uh, daily habit I say is I, uh, read a book, um, before I go to sleep because if I’m staring at my phone before I go to sleep, it affects my sleep. And reading a book is a really good way to sort of, you know, quiet your brain and I read very fast, um, sort of speed read. So that allows me to get through volumes of books quite quickly. I think I did a hundred books last year.

Reed Goossens (40:58):

Wow. That’s awesome. That’s awesome. Question number two is, who’s, who’s been the most influential person in your career to date?

Zain Jaffer (41:05):

Most influential person. Um, it really, uh, there’s a lot of people, it’s really hard to pinpoint one, but I’d say that guy I told you about earlier in the show, the Indian guy, right? Mm-hmm. . What was the point where everyone was telling us just a pivot, this is an awful idea. And he sat down with us and he said, look guys, I’m not Facebook, obviously I’m privy to some things in the advertising space, but I think, I think you’re onto something here. I can’t say anything more cuz you know, know I don’t want a conflict of interest with what we do at Facebook, but you probably would be, it’s probably a good idea to build this. It’s not the first time I’ve heard of this idea actually. I was like, oh, maybe Facebook’s gonna buy it. Simply do this. No, he, he gave me that hope, um, to follow right? Put in Facebook on the side. He really said to me, if you believe in that screw of everyone else, cause you’re gonna hate yourself working on something someone told you to build. You are too stubborn and most founder are, do something you enjoy. And if people are like puking on your idea, it’s probably a good idea. That’s everyone telling you the idea is good. You should be worried.

Reed Goossens (42:06):

That’s awesome, mate. That’s a, that’s a big badge of honor getting that, that, that nod from, from him back in the day. I think you would’ve been grinning from ear to ear leaving that meeting. I could imagine. . Oh yeah, yeah. . Uh, question number three is, in your business there’s, you know, there’s a tool that you use every day that you can’t run the business without. It could be a physical tool like a, a journal or a phone or a computer, or it could be a piece of software that you just can’t run the business without. What is it?

Zain Jaffer (42:31):

Oh wow, that’s a great one. Um, when I was running, uh, so on the VC side, um, I found that, um, you’re just bombarded with a lot of emails, right? And scheduling is a really big headache. So cataly for me is really powerful, but I set up automated workflows. What that basically means is that when someone sets up a meeting with me, they get an automated email that says, hi, thank you for booking a meeting. This is what I do, this is what we invest in, right? These are our criteria. And then a few days before the meeting, like, I’m excited about the meeting, can you please make sure you’ve sent me your pitch deck? Can you please make sure you feel this and that? And then after the meeting it’s sort of like, look, here’s sort of what next steps look like. And a lot of photos were like, wow, this is the most informative thing ever and I can’t believe you put the time to write that. I’m like, obviously I did it and I just did it once and then I automated it, right? But I must have spoken to a thousand founders since I’ve been running this VC fund and I’ve looked at hundreds of startups, hundreds of startups, right? Um, so those emails being automated have been like amazing. I, scheduling has been such a headache that I like think Catalyst is fantastic to handle that. The automated workflows especially,

Reed Goossens (43:44):

Uh, definitely calendar is something that I think another tech company that was pretty smart when it came around. Again, I’m not a tech guy, but I use it in every single day of my life. Uh, question number four has been, what’s been the biggest failure in your career and what’d you learn from that failure?

Zain Jaffer (43:58):

Oh, um, I would say when it came to real estate, specifically as an Indian person, I’m a bargain hunter. , I got obsessed with metrics like cap rate or price per square foot or whatever. And I really should have focused more on, look, the, the numbers need to just work on the back of a napkin. You don’t need all these models to convince you it’s good. And the location is probably the most important thing. And I didn’t realize the importance of good location. Um, you can buy a building for dirt cheaper sometimes, man, you buy a building and then you spend more than the build than you bought the building for just on renovations it. And here, here’s the hardest thing that took me a while to understand. You put 2 million bucks into a building in some rural area, right? That 2 million bucks could do the exact same thing in a much better location. You’re adding a lot more value now, right? If you bought something in, in Austin, Huston or, or you know, a top tier city, right? 2 million bucks there is much better than 2 million bucks in like Louisiana or whatever. And I’ve made the like that sure where I kind a wish I should have just paid up for a better property cuz then when I do the rehab, the rents are gonna be way higher. I just got too focused on getting a bargain for the sake of getting a bargain.

Reed Goossens (45:16):

Yep. I love it. Love it mate. Look, last question is, where can people reach you to continue the conversation that’ll be in your sphere? Where do they go?

Zain Jaffer (45:23):

Yeah, um, Zain@PropTechvc.com. PropTech vc.com is sort of my, uh, website newsletter. Um, post some of my thought leadership articles on there and I’ve got a podcast as well.

Reed Goossens (45:36):

Awesome. Awesome my friend. Look, I wanna thank you so much for jumping on the show today. I just wanna reflect some of the things that I took away from today’s show. I think your underlying, um, never say die attitude as a, as a true expat, you know, coming from very humble beginnings to be honest, um, you know, uh, a son of of immigrants and then coming to the US with that, that, that never give up attitude. You know, you’re gonna do everything you can to get people’s attention and to really rock the boat. And I think that has put you in such an incredible, um, position today, uh, to, to to to to now, you know, really, uh, what’s the word? Like harness what you’ve built in so many different ways. And what I mean by that is that you’ve been able to see opportunities that the average person would be able to see.

Reed Goossens (46:17):

Like if you’re playing a game back in 2011, who the hell would’ve thought to put a freaking ad on the bottom of that whilst you’re playing the game to, you know, you’ll die. Hey, if you just watch this ad, you know, you’ll get another life. Like I’m not a gamer, but even I know that’s a freaking brilliant idea. You know, like I, I could see that, you know, with, with looking back on time. But then as you, what I did find quite interesting in this conversation is that the, the, the grass is always greener. You, you want to get into real estate, you wanted to have a, a physical element of an under underpinning your foundation, your investment portfolio. So it wasn’t just with all these very high octane type of tech investments that may or may not be there tomorrow because you know how hard it is to build one. So with all that being said, I wanna thank you for coming on the show. Did I leave anything out there?

Zain Jaffer (47:00):

Yeah, this was a great final. I think you did a great job with the summary.

Reed Goossens (47:04):

Awesome, brother. Well look, thank you so much and we’ll chat very, very soon.

Zain Jaffer (47:07):

Thank you.

Reed Goossens (47:08):

Well, they have another cracking episode. Jam back with them. It was incredible advice from Zain. If you do wanna check him out, please head over to zain@proptechvc.com. He’s got a lot of stuff going on over there. And just to get in his space, listen to his podcast, download everything that he is doing. If you do like this show, you can give it a five star review on iTunes. I wanna thank you all for taking the time outta your day to continue to grow your your financial iq. Cause that’s what we’re all about here in this show. And we’re gonna do this all again next week. Remember, be bold, be brave, and go give life a.