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| Vinod Khosla
Khosla Ventures
Vinod grew up dreaming of being an entrepreneur. He was raised in an Indian Army household with no business or technology connections. When, at age 16, he first heard about Intel, he dreamt of starting his own technology company.
Upon graduating with a Bachelors in Electrical Engineering from the Indian Institute of Technology, Delhi, he tried to start a soy milk company to service the many people in India who did not have refrigerators. He then came to the US and got his Masters in Biomedical Engineering at Carnegie-Mellon University. His startup dreams attracted him to Silicon Valley where he got an MBA at Stanford University in 1980.
In 1982, Khosla started Sun Microsystems to build workstations for software developers. At Sun he pioneered "open systems" and RISC processors. Sun was funded by long time friend and board member John Doerr of Kleiner Perkins Caufield & Byers.
In 1986 he switched sides and joined Kleiner Perkins where he was a general partner. There, he worked with Nexgen/AMD, Juniper, Excite, and many other ventures.
In 2004, Khosla formed Khosla Ventures. Khosla Ventures offers venture assistance, strategic advice and capital to entrepreneurs. The firm helps entrepreneurs extend the potential of their ideas in both traditional venture areas like the Internet, computing, mobile, and silicon technology arenas but also supports breakthrough scientific work in clean technology areas such as bio-refineries for energy and bioplastics, solar, battery and other environmentally friendly technologies. |
| Author: |
Vinod Khosla - Khosla Ventures |
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Sujatha |
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| Lectures |
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| The entrepreneurship bug grabbed me very early in life. I was probably 14 when I read about Intel starting up. I was born in '55 so you can figure it out. It was probably in the late '60s that I first read about Intel starting up in these trade rags that you used to get and they reached India generally a year late and you could rent them. I just was enamored by the idea of having to start your own company and I have pursued that dream since and never regretted it. The corollary is role model is really an example and Intel served as a great role model for me. |
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| Learning from failure
Being honest about it, I first tried to do a start-up in India. In having finished my Electrical Engineering degree, I tried to do a milk equivalent from soybean kind of extract company. Because most people in India didn't have refrigeration, so I tried to create a milk substitute. It didn't get very far. When you're twenty and had no resources it's hard to do a start-up in India. At least back then it was, so I came to Carnegie. I was very interested in bio-medical engineering. I had done some specialization in that as part of my electrical engineering. But the real fact is they agreed to pay for me and that was the only way I was going to get anywhere. So, they offered me a full scholarship and that's what got me to Carnegie. It sounds very strategic. Now that was very strategic. So once I came to this country, my hope was to come to Stanford and be here and close to the Valley because the legend of the Valley is much of a draw as anything else about the United States for me. And so when I came to Stanford, I actually applied for business school the first year and Stanford turned me down. So first lesson, don't give up. They told me to get a little bit of work experience, which I did in Pittsburgh, Pennsylvania. I landed a couple of jobs and did that and applied the gain. And of course, they turned me down again. Wow. And I talked to the Director of Admission and I yelled and screamed at him. So he agreed to put me on the wait list. And I was later convinced that he did that just to get me off his back, no intention of letting me into Stanford. So I actually also applied, but then I was getting disheartened as most entrepreneurs do, and applied to Carnegie Mellon and had gotten into the business school there. And I said I'd go to business school there and then come to the Valley but I didn't stop trying to get into Stanford Business School. And over the summer, I got to know everybody in the Admission's Office. There were some really nice ladies there. I talked to them every day. They became my friends. They became my advocates. And evangelism is really important when you're trying to get anything done, especially if you had no right to have it. So it's a key characteristic of any entrepreneur. And I evangelized my way in, made friends, started with the Admissions Director. But then that time, he had gotten to be friends. Though he still wasn't going to let me in, but sympathetic to me, so he'd always talk to me. Came the week before registration, I was already three weeks into my semester at Carnegie Mellon. And I said, look it's getting late you've got to let me in now. And he just made polite excuses every time. It was Thursday before registration. And I said I've got to come now. I'm just leaving tomorrow morning and whether you like it or not, I'm showing up. Believe it or not, he said call me back. Friday, he called me and said, OK I can come. And I left within a few hours. I packed up everything and just left. I didn't have any place to come. Actually, those nice ladies in the Admissions Office put me up for the first month here. |
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| How old were you, 27? Yes, 27. And how old was Bill and Andy and Scott? We were all about the same age, all within a year of each other. Yeah, okay. So it's says, "We had big dreams." When I was hang gliding, I remember seeing this motto "Success comes to those that dare to dream dreams and are foolish enough to try and make them come true." You have to try to do something extraordinary because unless you try something extraordinary, you won't ever do anything extraordinary. Did you really say that or is that... Absolutely. Yeah. No, no... Do you still believe in that philosophy or... I absolutely still believe in that. All of that by the way is, I don't hang glide anymore... Let's just say you still hang glide. I don't hang glide anymore though I am going to pick it back again this summer or at least pick up sky diving if not, the hang gliding. My wife, I'd make a mistake of taking my wife skydiving and she forbid me from ever going skydiving again. I just like to see the Kliener Perkins partners faces when you tell them that. Well, I have a stronger reason. My daughter just going 12 now, who's just going 12 wanted to learn skydiving and 12 is the minimum age so I promised her I'd take her. My wife can't say no. You always want a good excuse to do what you really want to do but that quote is really important because you really need to stretch, you know, like I said, entrepreneurs don't have the right to do what they get. It's not a right. It's not even reasonable and so trying something extraordinary is really important. And then what's equally important is this level of foolishness that that quote talks about. That's not my word. It was at the end of this movie on hang gliding because if you sort of do the rational thing, you won't doing a start up as 4 or 27 year old trying take on IBM and that. It's just not reasonable. You just have to have that belief in yourself in a level of naivete because, you don't really need to know what you can't do because once you become within the reasonable domain you will be constrained by your belief about what's reasonable. It's really important. |
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| First, I never intended to be a VC and I actually still don't think of myself as a VC. So we have much debate in our partnership because I never in the interview of other things ever say I'm a venture capitalist. I say I'm a venture assistant; a term John Doerr doesn't like. John Doerr was my boarded son and he recruited me into Kleiner Perkins. It was actually for a very simple reason. I was hoping to do something quite different than VC and quite different than business. I actually don't like business very much. I have no interest in business other than it's necessary to make economics work for everybody who's involved for something to be sustainable. And so you use that way, the sustainability of the economic model to do what you really want to do which is change the world in some way. I love technology and I think technology causes most of the change that happens, and so I love taking nascent level things. My favorite little startup right now which is only about 15 people, two PhDs out of MIT that we funded and we can talk about it at some point. But the whole goal is to achieve something and there's a big difference between investment and investment is a buy and a sell transaction because you don't get a rate of return on your investment till you sell whatever you buy. Company building is a whole different thing. It's not about buy and sell. It's a one-way street. It's about a passion and a mission to do something large and significant and change the world in some way. That's what I'm most interested in. That's why basically the Kleiner Perkins' philosophy has been about building companies, not about doing deals. In fact, deal is considered a dirty word around Kleiner Perkins. We don't want to do deals. We don't want to do transactions. The normal lingua franca of sort of the financial world is not something that's very well; people cringe when you talk about a deal inside because the very notion... |
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| And entrepreneurs are generally I believe far less successful when they try and make money. They're much more successful when they have a mission to change the world. The reason is, and maybe this is the wrong time to go into it but I'll go into it anyway since I have the mic, no matter what you do, I said you have to be foolish to try and go do what most entrepreneurs do. Part of that is this religious belief in whatever your value proposition, whatever your mission is. When you don't have that, you run into an obstacle, you stop. When you're religious about your belief system, you power through seemingly unsurpassable obstacles because you have this belief, this religion. You want to propagate your message. You want it to go through. It's not the right financial decision. It's not even the logical decision but you power through problems and you're more likely to be successful when you do that because nobody gets through building a company without lots and lots of black Mondays or black days. Sunday is a day we call black Monday. I was talking to Mark Leslie who founded Veritas and he asked me how many black days did you have, because every successful entrepreneur has lots and lots of really black days they can look back on when the world seemed to come apart. |
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| The fact is things aren't ever as good as the number one venture capitalist in the world - there is no such thing, and that things are never as bad. Today to answer your question more directly, it's one of the best environments to be an investor. The last three or four years was not a lot of fun. And it wasn't a lot of fun for the following reasons: If I went to somebody and said, "Here's what you need to do to build a reasonable business." The response I almost always got was, "That other venture capitalists willing to fund me for 10 million dollars." There was a small group called Centroda. They won the MIT 50K competition entrepreneurship competition came to me and I said, "You don't have a plan. You're doing peer-to-peer which is a terrible area from a business model point of view. But I like some of the things you're doing and the way you guys work. So, we'll fund you but we'll fund you with a million dollars which you have to make last a year." And in the process developed, they came back to me and said - but in another VC offered them 10 million dollars. And so I had to sit down with them and explain. I wasn't going to give them 10. I wasn't going to give them a 10-million dollar valuation. I was going to put them to the ringer in developing a real economic model for a year, before he even knew what he got funded and he have to make his choice. And he could go take the 10 million dollars. He agonized over it for a long time. Actually, this is a small group, the team agonized over it and finally decided they'll work with us. Today, I think they'll tell you, if they've taken the 10 million, they wouldn't be in business today. But I've seen 90 percent of the people take the 10 million dollars. It was hard to argue they shouldn't. |
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