Vinod Khosla (Khosla Ventures Founder) – Interview with Bryce Roberts (part 3 of 3) (Jan 2013)

Chapters

Abstract

2012 Review and 2013 Outlook: Insights from Vinod Khosla

In a comprehensive review of 2012 and outlook for 2013, Vinod Khosla, a luminary in the venture capital world, shared his multifaceted insights spanning from his investment strategies and family-work balance to the broader impact of technology on industries. Khosla’s candid acknowledgment of failing to prioritize team diversity at Coastal Ventures, despite a diverse investment portfolio in health-focused startups and tech firms, underscores a nuanced approach to entrepreneurship. Additionally, his reflections on personal life, especially the balance between family and work, and the significant role of his wife in his career, offer a rare glimpse into the human aspect of a venture capitalist’s life. Khosla also delved into the broader financial landscape, critiquing the valuation methodologies in tech IPOs, exemplified by Facebook’s IPO, and envisioning the future of various industries through the lens of technological innovation, particularly in healthcare, manufacturing, and emerging sectors.

Failed Goal: Diversifying the Team

In a candid reflection, Vinod Khosla admitted his oversight in not prioritizing diversity within his team at Coastal Ventures. This acknowledgment, despite the firm’s diverse investments in health-focused and tech startups, highlights the often overlooked aspect of team composition in venture capital. In 2013, Khosla plans to rectify this omission by seeking out diverse perspectives and incorporating them into the firm’s investment decisions.

Investment Highlights:

Khosla’s investment strategy in 2012 was marked by a diverse portfolio, including health-centric ventures like Unreal Candy, a healthier alternative candy brand, a company reinventing ground beef, and another developing low-sodium salt. The portfolio also featured tech investments like Big Switch Networks, signaling a keen eye for both societal impact and technological innovation. His venture firm, Khosla Ventures, expanded its investment range beyond its traditional focus on security and technology. New investments included Unreal Candy, a company reinventing candy without GMOs, artificial coloring, or ingredients, and half the sugar; Salt, a company producing salt with 50% less sodium; and Big Switch Networks, a new router company for the internet.

Key Takeaway:

Khosla emphasized the need for venture capitalists to balance immediate tasks with broader goals like team diversity, reflecting a deep understanding of the multifaceted nature of entrepreneurship. In 2013, Khosla plans to focus on addressing global challenges and creating positive impacts through investments in areas such as renewable energy, food, and healthcare.

Balancing Family and Work as an Entrepreneur

Vinod Khosla emphasizes finding a balance between work and family and believes it is possible with proper planning and measurement. In his early years as an entrepreneur, Khosla set a rule to have dinner with his kids 25 nights a month, which he achieved by prioritizing and working around his schedule. Khosla’s wife also gifted him a jar containing marbles representing his daughter’s remaining weeks before high school, which served as a reminder of the limited time he had and influenced his decision to leave Kleiner and focus on more meaningful pursuits.

The Influence of Khosla’s Wife on His Career

Highlighting the instrumental role of his wife, Khosla credits her unwavering support, from their early days of financial struggles to his success, as a cornerstone of his journey, providing a touching testament to the personal sacrifices behind entrepreneurial success. Khosla credits his wife’s patience, understanding, and support for his success as an entrepreneur. He believes that a supportive spouse is essential to navigate the ups and downs of entrepreneurship. Despite financial constraints and challenges, such as getting evicted from their apartment, Khosla’s wife stood by him and encouraged him to pursue his passions.

Facebook’s Impact on the Financial World

Zuckerberg’s Facebook faced criticism for its high valuation during its initial public offering. The media focused on this valuation rather than Zuckerberg’s significant innovation in creating Facebook.

Vision for the Future of Industries

Khosla envisions a transformative impact of technology on various industries. He predicts machine learning revolutionizing healthcare, possibly replacing many tasks currently performed by doctors, and anticipates significant shifts in traditional industries due to innovations like 3D printing. This vision extends to emerging sectors such as toys and car racing companies, underscoring the endless possibilities of technological disruption. In 2013, Khosla plans to focus on investments in companies that are not only technologically innovative but also socially and environmentally conscious.

Envisioning a Flexible and Innovative Global Economy

Khosla advocates for a global economy adaptable to technological advancements, emphasizing the need for flexibility in labor laws and industry norms to facilitate the emergence of new industries and the decline of outdated ones. His insights suggest a future where innovation and disruption are not just embraced but are central to economic progress. He emphasizes the importance of addressing global challenges and creating positive impacts through investments in areas such as renewable energy, food, and healthcare. Khosla remains optimistic about the potential for disruptive technologies to solve major problems, highlighting the example of electric vehicles as a promising solution to reduce carbon emissions and improve air quality.

Machine Learning’s Impact:

– Machine learning and data enable new capabilities, including improved diagnosis by machines, potentially replacing physicians.

Endangered Industries:

– Lettuce pickers, box handlers, and potentially doctors are at risk of job displacement due to automation and technology advancements.

Innovations in Food Production:

– Robotic solutions for packing and unpacking trucks.

– A Stanford professor is revolutionizing animal husbandry in beef, aiming to replace cows due to their inefficiency.

Issues in Healthcare:

– Healthcare cost reduction efforts may result in revenue loss for healthcare providers.

– A new consumer-driven healthcare industry, driven by mobile phones, may emerge.

3D Printing and Supply Chain Innovations:

– 3D printing enables new jewelry designs and possibilities.

– Innovation in the supply chain is needed, allowing customization and eliminating obsolete inventory issues.

– Apparel, furniture, and toys are areas poised to benefit from manufacturing innovations and customization.

The Challenge to the Traditional Economy:

– Economists emphasize flexible labor laws for reallocation, but Vinod Khosla argues for flexibility across industries.

– The emergence of new industries, such as Google, Facebook, and Apple, requires a fundamental rethink of capitalism.

– Incumbent capitalism, where incumbents dominate, is challenged by the constant emergence of new industries.



Vinod Khosla’s insights from 2012 and his outlook for 2013 present a rich tapestry of entrepreneurship, investment strategies, and visionary thinking. His holistic approach, encompassing personal life balance, team diversity, investment diversity, and technological foresight, paints a picture of a future shaped by innovation, adaptability, and a profound understanding of both the financial and human elements of the entrepreneurial journey.

Notes by: datagram