Dean Rich Lyons welcomes the audience to the Dean’s Speaker Series event co-hosted by the Lester Center for Entrepreneurship and Innovation.
-Upcoming event in the series featuring Mark Hurd, CEO of HP, on October 8.

Vinod Khosla’s Lifetime Achievement Award
Vinod Khosla received the Lifetime Achievement Award from the Lester Center for his commitment to innovation and addressing society’s biggest challenges. His firm, Khosla Ventures, focuses on emerging technologies and early-stage ventures.

Khosla’s Investments
Khosla invests in science experiments, both for-profit and social ventures. Recent example: Coastal Ventures raised $1.1 billion for green technology and information technology startups, the largest amount raised by a venture capital firm since 2007.

Khosla’s Background
Co-founded Sun Microsystems and Daisy Systems, among other ventures. Full-time investor since 1985, initially with Kleiner Perkins before starting Coastal Ventures in 2004.

Khosla’s Credentials
Bachelor’s in Electrical Engineering from IIT Delhi, Master’s in Biomedical Engineering from Carnegie Mellon, and MBA from Stanford.
Conclusion
Dean Lyons expresses his honor in introducing Vinod Khosla, an inspiring figure with numerous achievements in the field of entrepreneurship.

The Quotes:
“Reasonable people only do reasonable things. Anything extraordinary or unreasonable comes from unreasonable people.” “Crisis is the only time people make progress. So crisis is a terrible thing to waste.”

Pundits and Experts:
Pundits and experts often make erroneous predictions due to their reliance on past extrapolations and linear thinking. This is evident in the numerous inaccurate forecasts of oil prices and telecommunications bandwidth demand.

Linear Extrapolation and Precision:
Linear extrapolations of past trends often fail to account for disruptive innovations and non-linear dynamics. Society tends to place too much precision on numerical predictions, especially those generated by computers, without considering their inherent uncertainty.

Energy Information Administration Forecasts:
The Energy Information Administration’s 30-year oil price forecasts have consistently failed to account for significant price fluctuations. Despite large variations in oil prices within short timeframes, the forecasts remained largely unchanged, highlighting the limitations of expert judgment.

Telecommunications Bandwidth Forecast:
A large telecommunications company’s internal forecast of bandwidth consumption dramatically underestimated the actual demand due to its reliance on historical trends and failure to anticipate the impact of new technologies.

Conclusion:
Relying solely on punditry and expert judgment can hinder innovation and progress. It is essential to challenge conventional wisdom, embrace uncertainty, and encourage unconventional thinking to drive innovation and adapt to changing circumstances.

Model Accuracy:
Models are often precise but inaccurate. They have low standard deviation but high standard error.

The Limits of Forecasting:
Inputs to models are limited to measurable quantities. Major variables beyond five to seven years are immeasurable, making accurate forecasting difficult.

AT&T’s Mobile Phone Forecast:
McKinsey’s 1980 forecast for mobile phones in 2000 was wildly inaccurate. The forecast was based on the technology of the time, which could not predict the exponential growth of mobile phones.

Embedded Assumptions:
Models often contain hidden assumptions that can significantly impact the results. These assumptions are not always obvious and can lead to incorrect conclusions.

Corn Ethanol Controversy:
Studies by the Department of Agriculture and the World Bank attributed different levels of responsibility to corn ethanol for changes in food prices. This difference was due to embedded assumptions about the causes of commodity price speculation.

Experts as Poor Forecasters:
A study by Professor Philip Tetlock at UC Berkeley revealed that experts are generally poor forecasters. Over 80,000 forecasts from hundreds of experts across 20 years showed that experts were less accurate than dart-throwing monkeys. Even psychologists evaluating brain damage tests had lower accuracy than their secretaries.

Confirmation Bias in Experts:
Experts were more critical of information that contradicted their theories but were less critical of information that supported them. This confirms the concept of confirmation bias, where people tend to seek out and interpret information that aligns with their existing beliefs.

Alan Kay’s Quote on Predicting the Future:
“The best way to predict the future is to invent it” instead of forecasting it, as stated by Alan Kay, the inventor of the 3M post-it note.

Black Swan Theory:
The “black swan” theory refers to rare, extreme events with significant impact that are difficult to predict prospectively. The energy crisis is presented as an example of a black swan, similar to the financial crisis of 2008, which was a negative black swan event.

Emphasis on the Black Swan Concept:
Prior to the financial crisis, Khosla distributed Nassim Taleb’s book, “Black Swan,” to every CEO in his portfolio, highlighting the importance of this concept in understanding how change occurs.

Technological Solutions for Carbon Emissions:
Calera: transforming carbon dioxide into valuable calcium carbonate Converting biomass into crude oil in minutes (an experimental concept)

Black Swan Events in Energy:
Unexpected advancements that disrupt the status quo, like the 5% change in oil demand leading to a price drop SORA’s LED lighting reducing energy consumption Speculation about battery black swans and radical ideas that might revolutionize the energy landscape

Exponential Growth of Computing Power:
Ray Kurzweil’s chart showcasing the continuous exponential growth in computing power, driven by successive advancements from electromechanical switches to integrated circuits

Focus on Relevant Scale Solutions:
Targeting oil, coal, cement, and steel for significant carbon emission reduction Emphasizing relevant cost, adoption, and scale for practical solutions

Electric Cars and Carbon Emissions in Developing Countries:
The carbon nano car, costing $2,500, has higher adoption potential compared to electric cars in rapidly growing markets Even with battery advancements, electric cars may still be powered by coal in many parts of the world, including the U.S. grid

Optimism Rooted in Historical Technology Adoption Rates:
Personal computers, email, the internet, and mobile phones were all initially met with skepticism but later achieved widespread adoption The rate of new technology adoption is accelerating, suggesting that unforeseen advancements can solve the energy problem

Exponential Change and Forecasting:
Exponential growth leads to significant changes over time, with the next 30 years expected to see more change than the past several decades Forecasts based on linear growth patterns are unreliable, and innovation holds the key to shaping the future

Resource Constraints:
Solar power from deserts could potentially supply most of the world’s electricity, with enough land available to oversupply global needs

Overview:
Vinod Khosla presented his insights on innovation, technology, and the transition to sustainable energy sources. He emphasized the need for radical thinking, cross-disciplinary collaboration, and recognizing that technology opens up possibilities once thought unimaginable.

Land Use and Carbon-rich Farming:
A significant amount of land has been taken out of agricultural production due to degradation. This land could be converted into carbon-rich land with perennial crops, providing a sustainable source of biomass.

Geothermal Energy Potential:
Engineered geothermal energy has the potential to provide a vast amount of energy, comparable to the virtual billion acres of land available for biomass production.

The Nature of Innovation:
Innovation is driven by combining pieces of technology, not incremental improvements. Cross-disciplinary teams and scientists are essential for this process.

The Path to Disruptive Innovations:
More experiments and attempts are needed to find unexpected solutions. The “nine dots” problem demonstrates that unconventional thinking is vital for innovation.

Technology’s Role in Shaping the Possible:
Technology defines what is possible. What seems unimaginable today, such as PCs, email, and mobile phones, become commonplace in the future.

Stock Market Bubbles and Technological Progress:
Bubbles often accompany new technologies, but stock market behavior is not an indicator of real-life progress. The value of a technology lies in its utility and ability to find applications.

The Internet Bubble:
The dot-com bubble focused on stock prices but overlooked the actual usage and growth of the internet. A few Wall Street players’ distorted perceptions do not diminish the value of a transformative technology.

Economic Gravity and Environmentalism:
Pragmentalists, who consider economic realities, are needed to counter the “exons,” who believe nothing will change, and environmentalists who demand unrealistic solutions.

Critique of Lifestyle Sustainability Messages:
Messages promoting minor lifestyle changes, such as using one sheet of toilet paper instead of two, are not effective in addressing real environmental problems.

Call for Action:
Khosla emphasized the need to focus on solving real problems rather than promoting superficial solutions.

Global Change Loci:
Differential rates of change will occur globally, and regions with the highest need and favorable local conditions will likely drive the adoption of technologies.

Global Technologies:
Vinod Khosla believes that most successful technologies will be global and achieve scale, regardless of their initial adoption locations.

Black Swan in Transportation:
While cars might remain dominant, Khosla acknowledges the possibility of a disruptive transportation technology emerging, such as holograms for remote work.

Infrastructure Innovation Cycles:
Khosla emphasizes the importance of innovation cycles in infrastructure. Nuclear technologies, with their long innovation cycles, face challenges compared to shorter cycles in other technologies.

Learning from Mistakes:
Shorter innovation cycles enable faster learning and adaptation, which is crucial in the rapidly evolving technology landscape.

Sun Microsystems Retrospective:
Khosla reflects on Sun Microsystems, acknowledging the influence of external factors, internal decisions, and missteps on the company’s trajectory.

Cost of Ownership:
Scott McNeely’s focus on reducing the cost of ownership was a strategic priority for Sun Microsystems.

Commercialization of Sustainable Technologies:
Khosla highlights the potential of commercializing sustainable technologies such as reusable rice sacks, particularly in regions where such practices are already prevalent.

Carbon Emissions and Green Technologies:
Khosla draws attention to the vast disparities in carbon emissions per capita across different regions, emphasizing the complexities of implementing green solutions in low-emission areas.

Carbon Emissions and Global Impact:
Vinod Khosla emphasizes the critical need to focus on reducing global carbon emissions. He highlights that the planet’s ultimate goal should be to minimize per capita emissions to 2 tons per year to ensure sustainability.

Scalability and Adoption of Alternative Fuels:
Khosla stresses the importance of considering scalability and relevant adoption when exploring alternative fuel options. He believes that the current focus on rice hulls as a fuel source is impractical due to limited availability and scalability.

Government’s Role in Energy Policy:
Khosla advocates for the implementation of a carbon price to regulate carbon emissions effectively. He argues that regulating carbon emissions is essential, similar to how other pollutants like SOx and NOx are regulated.

International Climate Negotiations:
Khosla criticizes the current structure of the cap-and-trade treaty as irrational, as it doesn’t account for differences in economic growth rates among countries. He proposes an alternative approach, the Global Carbon Caps Proposal, which focuses on improving the carbon efficiency of GDP as a common goal for all economies.

Global Carbon Caps Proposal:
Khosla’s Global Carbon Caps Proposal suggests that every economy should strive to improve the carbon efficiency of their GDP. This approach would allow countries to align their efforts on a common metric, regardless of their economic growth rates.

Historical Background and Potential Revival:
Khosla mentions that the Global Carbon Caps Proposal was originally proposed during the Clinton administration but was not adopted. He expresses hope that the proposal may be revisited and considered in ongoing discussions between influential nations.

Key Investment Goals:
Khosla’s primary investment goal is to achieve a fiduciary return for his investors, while also aligning investments with sustainability principles.

Technology Selection:
Khosla looks for a wide range of investment opportunities across sectors and technologies. He avoids investing in technologies that contribute to climate change, such as tar sands or enhanced oil recovery.

Uncertainty and Diversification:
Khosla acknowledges the difficulty in predicting which technologies will succeed in the future. He adopts a “more shots on goal” approach by investing in a diverse portfolio of companies and technologies.

Science Experiment Fund:
Khosla recently raised a fund dedicated to experimental science, with a focus on innovation and unconventional approaches.

Financial Bubbles and Success Ratios:
Khosla does not believe in relying on a single “black swan” technology to solve climate change. He expects multiple technologies to emerge, each addressing different aspects of the problem. He emphasizes the winner-take-all dynamics of the tech industry, with a few dominant players capturing the majority of the market value.

Market Cap and Company Success:
Khosla explains that as a technology market matures, the number of successful companies decreases while the market cap of the leading players increases.