Uncapped with Jack AltmanVinod Khosla and Keith Rabois on Building and Investing in Enduring Companies | Ep. 40
EVERY SPOKEN WORD
70 min read · 14,321 words- 0:00 – 0:58
Intro
- KRKeith Rabois
I've invested a lot in AI, so I-
- JAJack Altman
Yeah.
- VKVinod Khosla
Yeah, I love your quote about AI and how you'd have done it differently-
- KRKeith Rabois
Okay.
- VKVinod Khosla
-if you hadn't joined-
- KRKeith Rabois
Oh, my God
- VKVinod Khosla
... Khosla Ventures.
- KRKeith Rabois
Yeah.
- JAJack Altman
I wanna hear it. I don't know.
- KRKeith Rabois
So before I joined KV, I joined KV literally two years ago, basically this week.
- JAJack Altman
Yeah.
- KRKeith Rabois
I had invested in zero-
- VKVinod Khosla
Rejoined.
- KRKeith Rabois
Zero-- rejoined, yeah.
- JAJack Altman
Rejoined.
- KRKeith Rabois
Rejoined.
- JAJack Altman
Yeah, I joined. That's what I did.
- KRKeith Rabois
And literally had invested in zero AI companies before.
- JAJack Altman
Interesting.
- KRKeith Rabois
Since then, in the last two years, I'd say it's about seventy percent of my investments are AI.
- JAJack Altman
Mm-hmm.
- KRKeith Rabois
And had I not rejoined KV, I think I would either have missed the whole wave and been completely irrelevant or been reckless.
- JAJack Altman
[upbeat music] Keith and Vinod, I'm incredibly excited. I got to do this with each of you individually last year. First thing I wanted to do coming into the new year was ask the two of you to come on together, so thanks for doing it.
- KRKeith Rabois
Pleasure to be with you.
- VKVinod Khosla
Yeah.
- JAJack Altman
Obviously, I follow both of you a lot, you know, sort of on- online and watching a lot of podcasts you've done and just knowing you over time, and I've never seen you together, um, in this kind of format, and so I was really excited
- 0:58 – 4:26
The working relationship
- JAJack Altman
to set this up. One of the first things I want to get into is, like, how the two of you work together, because I think, like, it's rare that you have two people who are both super individually accomplished at a venture firm, working side by side. You've done it for many years now, and you're obviously very different people, but there's, like, a lot in common. Like, I see you as this, like, Venn diagram with a lot, you know, in the middle, but you also have your own styles. So I guess just to start, like, what's the, like, texture of your day-to-day working relationship like? Like, how do you guys operate together? How do you communicate with each other? Like, what does it look like, just, like, all the time?
- VKVinod Khosla
You want to start?
- KRKeith Rabois
Sure. Well, we first started working together when, uh, Vinod joined the board of Square. So... and, you know, I learned a lot of things from him.
- VKVinod Khosla
Actually, Slide.
- KRKeith Rabois
Well, we worked together at Slide, but that was more-
- VKVinod Khosla
Yeah
- KRKeith Rabois
... intermediated through Max, and I would, I would hear about these meetings with Vinod and all these ideas and these grand theories about how we should reorient the business, but it wasn't, like, hands-on. I actually worked with another one of our partners, David, at Slide, uh, very directly. He told me my first revenue model was terrible, and [chuckles] so David's a little bit of an acquired taste.
- JAJack Altman
Sounds like David.
- KRKeith Rabois
[laughs] Yeah. He's like, "This revenue plan is very mediocre," was the exact quote.
- JAJack Altman
That's great.
- KRKeith Rabois
Which turned out to be right. Um, but in any event, while he was on the board of Square, he taught me a lot of things, including the most important precept of the team he builds, the company build. So when I was considering being a VC, it was a very natural fit because a lot of the contributions that Vinod had at Square resonated with me, and I could see the style of KV and how that translated through my brain and that I felt like it would be a really good pairing.
- JAJack Altman
What was it like for you-- so, like, you know, when you were starting to work with Keith, like, could you tell immediately that stylistically it was, like, what you like? Like, how did you know?
- VKVinod Khosla
For me, it's really one thing: it's first principles thinking.
- JAJack Altman
Hmm.
- VKVinod Khosla
If you can do first principles thinking, it's easy to know where you agree and where you disagree, that it isn't this hand-baby thing.
- JAJack Altman
Yeah.
- VKVinod Khosla
A, B, and C, then we can debate those three factors, and it's worked out v- uh, very smoothly. It's seldom we grossly disagree. We'll even come down to, "If X were true, then this is a good decision-
- JAJack Altman
Yeah
- VKVinod Khosla
... or a bad decision."
- JAJack Altman
Yeah.
- KRKeith Rabois
Which is incredibly helpful. Like, there's one specific investment I remember last summer where I couldn't actually decide what to do. It was close to the line, wasn't quite sure, and then Vinod said the key attributes of the founder that really matter for this are one, two, three. And then our, our junior colleague, John Chu, and I were like, "Well, on that, on those three dimensions, this founder is AAA." So it made the decision really easy because he was able to isolate-
- JAJack Altman
Hmm
- KRKeith Rabois
... the key variables for that particular company.
- JAJack Altman
Yeah. Do you guys, like, um, get into, like, strong debates over ideas, or have you mind-melded so hard at this point that you don't even need to as often, or... Because it's hard for me to imagine either of you shying away from a very-- like, you're obviously both going to say whatever you think all of the time, but-
- KRKeith Rabois
I think that helps the direct style, which-
- VKVinod Khosla
Yeah
- KRKeith Rabois
... you've talked about for years.
- VKVinod Khosla
I, I've always said I prefer hypocritical-
- JAJack Altman
Yeah
- VKVinod Khosla
... uh, brutal honesty to hypocritical politeness.
- 4:26 – 7:11
Pie chart on what’s discussed
- KRKeith Rabois
well.
- JAJack Altman
On you two working together, like, if you had to sort of, like, guess, like, I don't know, like, the pie chart of the time that you guys are spending talking to each other, how much of it is about existing investments, new companies, operating the firm, anything personal?
- VKVinod Khosla
So nobody ever discusses operating the firm very much-
- JAJack Altman
You don't discuss that?
- VKVinod Khosla
... inside Khosla Ventures.
- JAJack Altman
Interesting.
- VKVinod Khosla
You know, uh, there's almost no-- I would guess it's far less than five percent.
- JAJack Altman
Is that because it's so clear how it works, or because it's like-
- KRKeith Rabois
Yeah.
- VKVinod Khosla
Yeah.
- JAJack Altman
Okay.
- KRKeith Rabois
Maybe around, if you include hiring, like, then-
- VKVinod Khosla
Yeah
- KRKeith Rabois
... there's an allocation to assessing-
- JAJack Altman
Yeah, we'll call that separate
- KRKeith Rabois
... potential people.
- JAJack Altman
Yeah. Out of curiosity, is that because you think that it's like, uh, it's already so clear there's nothing left to discuss, or is it just so much relatively less important than the work of investing itself?
- VKVinod Khosla
Well, first, we have a lot more fun investing than managing, and the firm doesn't take much management. Uh, honestly, other than comp once a year, there really isn't a lot... and hiring-
- JAJack Altman
Mm-hmm
- VKVinod Khosla
... that we talked about. There isn't much in terms of... I can't-
- JAJack Altman
That's it
- VKVinod Khosla
... remember when we had a strong policy disagreement.
- KRKeith Rabois
It's also, you know, at the end of the day, Vinod is energized by investing in the future through technology and founders, and I'm energized by pairing with people who want to change the world, which is roughly similar, and so the management part is a distraction- [chuckles]
- JAJack Altman
Totally
- KRKeith Rabois
... to some extent from those two core activities, which are exciting.
- JAJack Altman
So what else then?
- VKVinod Khosla
We spend almost no time with LPs.
- JAJack Altman
Yeah, that's nice.
- VKVinod Khosla
Almost. I mean, I-
- KRKeith Rabois
They have to edit that. [laughing] No.
- 7:11 – 10:42
Ethos of investors today vs yesterday
- JAJack Altman
different do you see today, like, the sort of ethos of, like, new, young investors versus, like, when you were getting started? 'Cause, like, right now it is such, like, a thing to use.
- VKVinod Khosla
You know, they, th- this young and old doesn't matter as much. What matters is, have you built companies and earned the right to advise an entrepreneur? I think most people who advise entrepreneurs haven't earned the right to advise an entrepreneur. Almost all the senior partners in our firm have earned the right by helping build a company, being inside a company, having empathy for the founder. So I think that's a pretty distinctive feature of how we think of our role. A lot of firms just want to be nice to founders, and it hurts the founder. 'Cause, you know, it's like s- I, I say, it's like saying yes to your kids all the time, no matter what they want. You, you want that they know you love them, but you're trying to get them to be the best they can be.
- JAJack Altman
Yeah.
- VKVinod Khosla
And that includes pushing them to be the best they can be. And I think we both agree, our business is much more about helping the entrepreneur build a successful company than about investing.
- JAJack Altman
I'm newer to this, obviously, but it seems like there was some moment in time where, like, the dominant marketing strategy for VC firms flipped towards just, like, extreme founder-friendly, whatever that means. I don't know if that was ten years ago or-
- VKVinod Khosla
Yeah
- JAJack Altman
... fifteen, something like that, though. You guys probably experienced this going through being on one side of it and then the other. I kind of always lived in that world, but, like, was there, like, a moment or, like, a period of a few years where it just, like, became the strategy for some reason for VCs to just go full?
- VKVinod Khosla
You know, our goal has always been what's good for the company, not what sounds good or s- get a, uh, what will get us more referrals for the founder next time they need to refer. So I think this hypocritical politeness, which is pervasive in our business, is really bad for founders, and when a founder selects for that, they're selecting... They're generally a weak founder.
- JAJack Altman
Mm-hmm.
- VKVinod Khosla
Strong founders almost always select for the best feedback they can get and also know how to say: "No, thank you. I disagree with you." I think that's a really, really important characteristic. One of my favorites is this-- some founders, I don't know the names, there are two founders did, uh, something called founderschoicevc.org or .com.
- KRKeith Rabois
Some survey of founders.
- VKVinod Khosla
Some survey of founders. And what I love is they wanted to avoid the hypocritical politeness, so they said, "Only the VCs that you've worked with can vote on you, on the VC firm." And you can't say, "We have these three investors, they're all great." They forced them to, to rate them h- head-to-head-
- KRKeith Rabois
Yep
- VKVinod Khosla
... like a chess Elo rating. And I'm very proud, we're sort of at the top of that list among four hundred VCs, firms, and hundreds and hundreds of awards. I think it's the most important survey for me to know that in retrospect, our founders prefer us.
- JAJack Altman
Mm-hmm.
- VKVinod Khosla
And we prefer backing the same founders again and again. Like, our LP decks always have a huge component of how many repeat founders have come back to us to work
- 10:42 – 12:46
Comparing FF and KV
- VKVinod Khosla
with us.
- JAJack Altman
Keith, I'm actually really curious, 'cause, like, obviously, Founders Fund is an amazing firm as well as Khosla, and the ethos is the same in the sense of, like, we want to do what's right for the company, but I think, like, the pathway to get there is, like, the opposite in some sense.
- KRKeith Rabois
Yeah, I think the goal of finding bold, ambitious founders and companies is very similar. I think the way we actually practice what we do is very different. Our craft is to be the partner in building the company. Like, I look at my role as being the consigliere to the founder, and, like, sometimes the consigliere tells you that's a bad idea, and sometimes they tell you that's a great idea. They, they help the principal, and they're not confused about who's the CEO and who's the consigliere. That's what-- how I think of my role. Founders Fund thinks their role is to provide the capital and get out of the way, and if you have an idea where they might be helpful, please call-
- JAJack Altman
Yep
- KRKeith Rabois
... and we'll do everything we can to try to help.
- JAJack Altman
Right.
- KRKeith Rabois
It's proactive versus reactive.
- JAJack Altman
Totally.
- VKVinod Khosla
That's exactly right. Very, very similar goals in betting on really bold ideas, whether they're popular or not. Yeah, whether they're on trend or not. They've done an incredible job of that, and we like to think we do that al- also.
- JAJack Altman
Yeah, it's almost like you can imagine the conversation would play out like, you know, on one side it's, "Well, we should back entrepreneurs that, like, don't need help," and then the other side of the conversation would be like, "Well, yeah, but even amazing people can still be helped."
- KRKeith Rabois
Of course, like, you mean-
- JAJack Altman
Like, even the best baseball-
- KRKeith Rabois
Even the best basketball players have, you know, coaches-
- JAJack Altman
I know, I've gone to sports school
- KRKeith Rabois
... or, you know, they have shooting coaches even, like, they're very dedicated, or f- or fitness coaches.
- JAJack Altman
Yeah.
- KRKeith Rabois
Like, there's almost no profession where the best at what they do doesn't have an advisor, coach, mentor.
- JAJack Altman
Yes.
- VKVinod Khosla
Yeah, look, take somebody, a really strong founder like Max Levchin.... I've never been on the board. The company's gone public. We've distributed. Great outcome. We are the first investor. To this day, Max and I do quarterly phone calls because he wants my help and advice, and second opinion, or something he's thinking about, or always looking for areas I'll prod him in to think harder, like, "You're ignoring this or that."
- JAJack Altman
I wanna talk about, like, so
- 12:46 – 22:56
What makes a great founder
- JAJack Altman
what this-- clicking into the source of, like, great founders, great companies, 'cause obviously that's, like, the center of, like, the work. I posted this, you know, that I was gonna have you guys on the podcast. Somebody said: "You know, we wanna hear about this, but Keith, you can't say the thing about comparative advantages." And, you know, you're like: "But it's true," and I think it is true, but, like, I wanna try to click in as closely as possible to, like, what makes a great founder. And I think one of the things that stuck with me was you both said that you guys are basically always aligned on, like, the read of the founder. You might disagree on a market or if there's some, a business you wanna be in, but, like, more or less, you think the same thing about if a person is a great founder.
- KRKeith Rabois
Very rarely is there significant divergence on the assessment of the founder. I can probably name two, three examples in, like, eight years.
- JAJack Altman
Yeah. What specifics can you sort of, like, describe?
- KRKeith Rabois
Well, I'll give you my formula and-
- JAJack Altman
Yeah.
- KRKeith Rabois
-feel free to, eh, you know, edit. [chuckles] So my, mine is one of two traits: either I meet a founder and on some dimension they're the best I've ever met in my life. It can be different. They can be the smartest person, they can be the most tenacious person, they can be the best assessor of people, they can be the most strategic, they can, they can... There's just like, "Oh, my God, top one basis point on some dimension." And it-- because what I'm trying to do is when you're-- we do mostly first institutional capital. We wanna be as bold and as early as possible. What I'm trying to find out is: is there a non-zero chance that this person can change a vertical or the world?
- JAJack Altman
Mm-hmm.
- KRKeith Rabois
Like, that's really it, is-
- JAJack Altman
One of those two things.
- KRKeith Rabois
Nine, ninety percent of the world-
- JAJack Altman
Either the world or, like, at least the legal industry.
- KRKeith Rabois
Ninety-nine percent of humanity is not gonna change or reinvent an entire, you know, industry, let alone the world, and so it's like, what's... Is there some probability? Usually, the people who succeed at that have some trait-
- JAJack Altman
Yes
- KRKeith Rabois
... that's just like, oh, my God, your ears, like, perk.
- JAJack Altman
Mm-hmm.
- KRKeith Rabois
The o- other exception is they have a Venn diagram overlap of traits that you don't see in common. So, for example, Max Levchin, I've talked about this before, but literally when I met him in December, two thousand, Reid Hoffman came up to me and said, "You're getting ready for your first one-on-one with Max. Max is a first-rate technologist and a first-rate business mind. There's less than five people in all of Silicon Valley that are that." Reid was dead on. Twenty-five years later, it's still true.
- JAJack Altman
[chuckles]
- KRKeith Rabois
There's less than five people, and Max is one of them.
- JAJack Altman
Yeah.
- KRKeith Rabois
And that's led to his trajectory. So if I see these traits, Jack Dorsey, who we've both-
- JAJack Altman
Yeah
- KRKeith Rabois
... worked with, ha- is actually pretty damn good design mind.
- JAJack Altman
Yeah.
- KRKeith Rabois
Pretty good technologist, and a very good business strategist. He has three, which is also why he's been very [chuckles] successful.
- JAJack Altman
So, okay, so you meet, you meet... Somebody that you trust refers somebody. "Great, I'm gonna meet them." You're in the meeting with them for an hour. Are you trying to pull that out in that meeting? Is this work happening outside the meeting?
- KRKeith Rabois
I'm usually pulling-- i- usually, if it's so strong-
- JAJack Altman
You don't have to pull it?
- KRKeith Rabois
-it usually shows up in three minutes. Like, literally, you meet someone who's the smartest person ever, you di-- like, like, you just feel this energy-
- JAJack Altman
Aren't there some less obvious traits than, like, super smart, though?
- KRKeith Rabois
Yes, there are.
- 22:56 – 30:05
Alpha in today’s market
- JAJack Altman
you, yeah
- VKVinod Khosla
... you know, have the wrong, the wrong prism. They don't-- unless you ask the question perfectly, and unless you can really retrain their eyes, it doesn't help. But, but, you know, there's other ways. Like to say, imagine you were in this business that you're not familiar with.
- JAJack Altman
Mm-hmm.
- VKVinod Khosla
How would you go about learning X or Y?
- JAJack Altman
Yeah.
- VKVinod Khosla
Yeah.
- JAJack Altman
Like, even see how they would start.
- VKVinod Khosla
Putting them out of context-
- JAJack Altman
Yeah
- VKVinod Khosla
... and having them think through, very easy to tell. One of my favorite questions, um, is it doesn't matter whether they're doing a startup or not. Let's say they're a candidate for a marketing job. If I gave you a seed amount of funding to investigate three ideas, which three would you pick? How would you go about evaluating them over the next six months?
- JAJack Altman
Yeah, that's good.
- VKVinod Khosla
It's a pretty simple test. Uh, you can tell a lot about a person, how they, uh, just based on how they answer that question.
- JAJack Altman
Yeah, that's good. Are there any things that a founder can't be completely deficient in?
- VKVinod Khosla
Ethics.
- JAJack Altman
Ethics.
- VKVinod Khosla
No question.
- JAJack Altman
How do you figure that one out?
- VKVinod Khosla
Mostly through references.
- JAJack Altman
Even on that point, a lot of people that seem not so friendly are actually very ethical. And like, um, I've noticed that a lot of the, like, highly disagreeable, you know, intense founders actually have a very strong moral compass.
- VKVinod Khosla
Yes, that is absolutely true because they believe in their principles.
- JAJack Altman
And that, like, is the source of both. That's interesting.
- VKVinod Khosla
Well, you've seen this in the valley. We were talking about this earlier. People have changed their political affiliation at a whim.... not stayed with what they really believe in.
- KRKeith Rabois
Yep, we're definitely coming back to politics in a little bit.
- VKVinod Khosla
[chuckles]
- KRKeith Rabois
I have a lot there. Is there anything around, like, ability to, like, recruit-- anything around, like, yeah-
- JAJack Altman
Well, ability to recruit is a, is a very important dimension. Can you envision this person at mar-- it sounds like they gotta hire a thousand people at some point.
- KRKeith Rabois
Yeah, but can they hire the first ten-
- JAJack Altman
Maybe a hundred now.
- KRKeith Rabois
-is, like, really critical? 'Cause those people are gonna replicate themselves. You know, Patrick Collison talks about this at length, like, your first ten are gonna multiply by ten.
- JAJack Altman
'Cause you could imagine somebody who's really exceptional in some dimension, but you just don't think they could recruit well.
- 30:05 – 38:23
Themes within AI
- KRKeith Rabois
at all.
- JAJack Altman
Maybe just talking about, like, themes that you guys are interested in. I know that you're mostly focused on people, but, you know, you also care a lot about markets and technologies. Maybe to, like, start with AI, and then we can go outside of AI. So obviously, AI is, like, in the midst of playing out.... I don't know what inning it's in, but it's one of the early ones probably. You know, like, I think there have been, like, a lot of changes to, like, what, you know, the labs say that they're focused on, and maybe, like, the types of companies that are getting funded is adjusting a little bit if you sort of, like, just, like, kind of track every six months or so. I'm curious what you guys see as the lay of the land for, like, outside the labs, where you think most of the opportunity lives, what you're most interested in, what you think is gonna be, like, a big deal in the next year or two.
- VKVinod Khosla
Well, it's-- that's such a broad surface.
- JAJack Altman
Of course. Sorry. [chuckles]
- VKVinod Khosla
Um, I think I was counting there's thirty-some startups in our portfolio that are building an AI worker of some sort.
- JAJack Altman
Yeah.
- VKVinod Khosla
An AI oncologist, an AI mental health therapist, an AI chip designer, an AI structural engineer. As, as many professions there-- as there are, there's that many opportunities.
- JAJack Altman
Basically, to fully do the work.
- VKVinod Khosla
Do the work.
- JAJack Altman
Yeah.
- VKVinod Khosla
So one things we decided a couple of years ago, uh, probably three years ago, we wouldn't do a lot of copilots.
- JAJack Altman
Mm-hmm.
- VKVinod Khosla
Copilot had just come out, and we said, "Copilots, humans get in the way. Let's just do the work." So we love really-
- JAJack Altman
Yeah
- VKVinod Khosla
... people doing the work-
- JAJack Altman
Yeah
- VKVinod Khosla
- as opposed to helping a human do the work. Now, there's exceptions to that, but mostly that's true.
- JAJack Altman
Mm-hmm.
- VKVinod Khosla
Um, that's a big category, so we haven't invested in any competitor to OpenAI, obviously, and we should come back and talk about it. We are fiercely loyal to our companies. Uh, we, we, we can talk about loyalty. Well, OpenAI, yeah, I think I was the very first one when Sam got fired, to come out and say, "We'll fund Sam for whatever he wants to do next."
- JAJack Altman
Yeah. Is, is the loyalty-- does that stem from sort of like a business decision or idea, or does it stem from just like, uh, this is how it ought to be, like a more ethics kind of thing?
- VKVinod Khosla
I, I think this is how it should be. It's about ethics.
- JAJack Altman
Yep.
- VKVinod Khosla
And, and if I disagree with the entrepreneur, then my job is to sit down, tell them why, and agree that we agree or disagree-
- JAJack Altman
Yeah
- VKVinod Khosla
- before taking the right position publicly.
- JAJack Altman
Yeah, if we believe the-- on the principles, like, to the point, if you have principles and you believe you're on the right side, then we're willing to use our, you know, brand, capital, audience to help. Yeah.
- VKVinod Khosla
But along those, the AI question you were asking, we've invested a bunch in all the other approaches than transformer models that make sense. And we probably have four or five different efforts that are, uh... They, they don't have to replace transformer models, but they're different, because I think the big labs are doing transformer models really well and then doing some other things.
- JAJack Altman
So what else do you think is promising?
- VKVinod Khosla
Look, it's too early to tell. So I think any of us who pretends we know this technique or that neurosymbolic technique, um, we have bet on category theory in math. We have, um, bet on interpretability that leads to different models. We have diffusion models. Uh, there, there's plenty of others.
- JAJack Altman
Do you think that-
- 38:23 – 46:23
AI companies built differently
- JAJack Altman
Yeah. I'm actually curious on the topic of how the companies are built, and obviously, you're super involved with, like, company building. You've built companies yourself a bunch, and, um, it's just, like, something that you talk about a lot. Do you think AI companies are built in any substantially different way?
- KRKeith Rabois
I, I think fundamentally different. First of all, they, they are growing at rates that are unprecedented in the history of technology, and it's a little bit like-- to me, it's like running the four-minute mile. Once you see someone runs the four-minute mile, then no company should have an excuse for not growing rapidly [chuckles] . It's like you see all these enterprise companies going from zero to fifty million. You start asking questions, "Well, why? Why can't you, at least? What are the limiting factors?" And there sometimes are real reasons, but you start with the question of why, why not, you know, why not-
- JAJack Altman
Mm-hmm
- KRKeith Rabois
... versus like, "Oh, that's impossible." Like, if you had said, "We're going to start a company and have ten million dollars of revenue in year one from launch," you would have said, all of us would have said ten years ago, "That's impossible."
- JAJack Altman
Yeah.
- KRKeith Rabois
That is not, definitely not the right answer. Now, it doesn't mean every company should do that, but it is an open question. Then the question is, well, what do you do about that? I think the idea of, and borrowing from Peter Fenton here, the idea of PMs does not make sense in a rapidly emerging technology field. What do PMs do? They go talk to customers, and they create a sequential roadmap over the next twelve months. Well, if the field's evolving and the capabilities are evolving, like, literally every month, there's papers published. You probably read papers every week, let alone things that, you know, are launched live. You can't have a twelve-month roadmap. That makes no sense, and so you have to rethink that. Then also, how does sales work with your research team? Like, OpenAI, you know, actually pairs, as far as I can tell, like, the people doing customer acquisition with the research team, and that's a completely different model than how most technology companies were built.
- JAJack Altman
Yeah.
- KRKeith Rabois
Compensation, this is in the public domain.
- JAJack Altman
Completely different.
- KRKeith Rabois
Completely different. And people haven't even thought through the implications. Yes, there are so many companies like Meta that can afford because of how they mint money, or Google because of how they mint money, to pay things that only professional athletes could aspire to when we were growing up. However, if you're a startup, how you can afford that level of cash comp while you're not minting money-
- JAJack Altman
Well, you can't, right?
- KRKeith Rabois
Well, this is-- but then you still have to compete with people who can, so you have to think through-
- JAJack Altman
Does that go to, like, your diamonds in the rough type of idea?
- KRKeith Rabois
Either... Well, that's one possible solution, or you've got to hire people that don't care about short-term cash comp and have a different missionary zeal or different orientation, or you've got to take costs somewhere el<|diarize|><|top|><|transcribe|>
- JAJack Altman
<|agent|><|nolang|>
- VKVinod Khosla
... lots of people will do the normal extensions of LLMs to lots of applications, massive market, lots of people will do it. Every area will have ten startups.
- KRKeith Rabois
Mm-hmm.
- JAJack Altman
Keith, are you interested in hard tech as much, or do you invest more in, like, B2B, typically?
- KRKeith Rabois
Well, I've invested a lot in AI, so-
- JAJack Altman
Yeah.
- VKVinod Khosla
Yeah, I love your quote about AI and how you'd have done it differently-
- KRKeith Rabois
Oh, yeah
- VKVinod Khosla
... if you hadn't joined-
- KRKeith Rabois
Oh, my God
- VKVinod Khosla
... Khosla Ventures.
- KRKeith Rabois
Yeah.
- JAJack Altman
I want to hear it.
- KRKeith Rabois
So before I joined KV, I joined KV literally two years ago, basically this week.
- JAJack Altman
Yeah.
- KRKeith Rabois
I had invested in zero-
- 46:23 – 53:12
Excitement outside of AI
- SPSpeaker
Yeah. Outside of AI, are you guys... I mean, you said seventy percent is AI, so, like, there's other stuff you guys are interested in. I know we've talked about, like, robotics last year. We've talked about- Well, robotics is AI.
- KRKeith Rabois
Yeah, of course, but-
- SPSpeaker
Pretty big on robotics.
- KRKeith Rabois
Yeah. Well, one thing people know less about us, but we've been consistently excellent at across the history of the fund, is in financial services.
- SPSpeaker
Mm-hmm.
- KRKeith Rabois
We have this point we make to LPs, that in every single fund we've had, we've returned the fund solely on one, just on one financial services investment.
- SPSpeaker
That's a crazy stat.
- KRKeith Rabois
So we love things like, you know, Square, Stripe, Affirm, just examples in the modern stuff.
- SPSpeaker
We're the f-first investors in all of those, except Stripe, we were second.
- KRKeith Rabois
Uh, Af- like, we have Aven, which is a very excellent company. Um, you know, like, yeah-
- SPSpeaker
It'll be the next surprise, Stripe.
- KRKeith Rabois
Up-
- SPSpeaker
Aven.
- KRKeith Rabois
Upstart was incredibly successful. We did some of the seed, led the A.
- SPSpeaker
Has finance gotten, like, less AI-ified than other areas?
- KRKeith Rabois
People are using it, I'd say maybe not as strategically yet.
- SPSpeaker
You think it's 'cause people are, like, a little scared, like, or, or, like, rightfully scared because... 'Cause I do feel that the fin- the fintech companies of the last era seem more, they seem more insulated from the AI wave and threats, and, like, I haven't seen as many, like-
- KRKeith Rabois
Well, there is some hallucination.
- SPSpeaker
Aven is a good example of, uh, well-
- KRKeith Rabois
Well, some of them are hallucination concerns.
- SPSpeaker
Yeah. Yeah.
- KRKeith Rabois
But Aven is a good example of a company that's deeply using AI in every aspect of it. That's why you can get a home equity line of credit and consolidate all your credit cards onto a new credit card that you get that has ten points lower interest rate.
- SPSpeaker
And then you have a cred- and then they have your credit card.
- KRKeith Rabois
And-
- SPSpeaker
Actually-
- KRKeith Rabois
Well, they issue a credit card based on your home, home equity line of credit.
- SPSpeaker
Yeah.
- KRKeith Rabois
They can get it done in an hour.
- SPSpeaker
Wow. And AI-
- KRKeith Rabois
Normally, that's weeks and weeks.
- 53:12 – 58:24
Politically active on X
- VKVinod Khosla
Yeah.
- KRKeith Rabois
I guess, on politics, like, both of you are, like, pretty willing to, like, get into politics stuff on Twitter and stuff, X, and you have very different politics, obviously. But I guess my first question is, like, um, you both are, like, willing to just sort of, like, get into, I don't want to say fights, but, like, fights on X about politics and stuff like that. Clearly, it comes from, like, strongly believing in what you think. Why spend the cycles on it? Like, why do you- Well, I'll give you my answer. I don't actually know yours. Mine was like, yeah, through technology, I developed a following, and I woke up one day and said, like: "Look, I don't want to die one day and regret that I didn't use my audience to po- proselytize about ideas and things that I find important." So if I can surface new ideas or new-- or rebut bad ideas, I want to, you know, finish my life thinking I did the best I could to have influence, and I have a platform. So I started using it that way, particularly on, like, topics related to politics. Um, and so I was just like, "I, I don't want to regret having not tried to change people's opinion."
- VKVinod Khosla
Are you stressed at all when, like, when you're, like, getting into it on X with somebody? Are you, like, feeling anything about it, or are you just like, "Oh, I'm just saying what I think, but I'm-
- KRKeith Rabois
Well, there's times when-
- VKVinod Khosla
Or are you, like, worked up?
- KRKeith Rabois
-I wish I had more time to, like, research. Like, if I was doing nothing else, if I didn't have, like, a day job.
- VKVinod Khosla
Yeah.
- KRKeith Rabois
You know, there's times when, like, I know how to construct an argument. I know where all the evidence is. I don't have time to go do that. Um, like, my friend David Sacks, back in the day, hired a research assistant secretly before, you know, to help him. I don't, I don't have time to do that.
- VKVinod Khosla
Yeah.
- KRKeith Rabois
So there's times when I happen to know the answer. I used to be very involved in politics. I, I know a lot of details, but I do wish sometimes that if I wasn't doing a real job-... I would be spending more c- more care in marshaling more evidence and probably be more effective.
- JAJack Altman
Actually, one other bit that I'm now curious to ask, 'cause I think it's kind of funny, is you're, like, kind of harsh on Twitter, but you're, like, really friendly in person. Is that just, like, how you write, or, like, do you mean to? Like-
- KRKeith Rabois
Well, there's-
- JAJack Altman
Are you doing it for the bits?
- KRKeith Rabois
Well, I also had this crazy idea, this is a dumb idea, like a decade ago. I was like, "I'm gonna combat [chuckles] every bad idea on the internet."
- JAJack Altman
With a worse idea?
- KRKeith Rabois
I'm gonna respond. Like, I was like, "Well, if someone puts a bad idea or something wrong-
- JAJack Altman
Now, we're gonna fight it.
- KRKeith Rabois
-and nobody responds, people think it's true."
- JAJack Altman
Yeah.
- KRKeith Rabois
Like, LLMs are gonna pick it up and think it's true.
- JAJack Altman
Like-
- KRKeith Rabois
This is before LLMs.
- JAJack Altman
Like, I'm gonna fight. [chuckles]
- KRKeith Rabois
I was like, "I'm just gonna respond, so at least there's a written record." [chuckles] But, like, there's so many bad ideas, there's so many dumb ideas in the world, that this is, like, the worst idea I've ever had in my life.
- JAJack Altman
Yeah.
- KRKeith Rabois
But you get addicted [chuckles] to trying to fix every mistake on the internet.
- JAJack Altman
I like the ones where you don't even, like, explain what's the problem, though. You're just like, "Wrong." [chuckles] And then you just-
- KRKeith Rabois
Yeah, well, that was a funny Square joke.
- JAJack Altman
That was-
- KRKeith Rabois
An old Square... We had this critic at Square, named Rakesh, and he used to just, like, constantly complain about, like, "Square, Square was never gonna be successful. We need new payments for twenty years." He's a canonical expert in payments. And so sometimes I'd engage and write back, like, substantively, but sometimes he'd be, like, so far off, [chuckles] just so wrong. So it became, like, this internal Square joke to Rakesh, [chuckles] and it became like a meme.
- 58:24 – 1:05:02
Evolution of political leanings
- JAJack Altman
It's too much
- KRKeith Rabois
... maybe not the best.
- JAJack Altman
You were, like, ten years ago, maybe, let's say, you were, like, sort of, like, one of the first sort of, like, vocal conservatives.
- KRKeith Rabois
Maybe the only one. [chuckles]
- JAJack Altman
Maybe the only. And I think now you're maybe, like, one of the only vocal, like, at least, like, liberal leaning. Maybe that's, like, too strong.
- VKVinod Khosla
I'm an independent-
- JAJack Altman
You're an independent
- VKVinod Khosla
... for the record.
- JAJack Altman
Yeah.
- VKVinod Khosla
I've never been a Democrat.
- JAJack Altman
Oh, yeah, so, uh, what, so what, what, what, what was the political journey?
- VKVinod Khosla
So I used to be a lifelong Republican over fiscal issues, and switched to independent over climate issues.
- JAJack Altman
Mm.
- VKVinod Khosla
And I've stuck with that pretty consistently. Um, my-- a-and then principles matter a lot.
- JAJack Altman
Mm-hmm.
- VKVinod Khosla
So, you know, my fight against Trump is his values. He has none.
- JAJack Altman
Yeah.
- VKVinod Khosla
Um, we can disagree, or he tries to go to extremes to get his constituency rallied around him. Either way, I don't like the idea that people don't mind lying about things.
- JAJack Altman
Yeah. When you watch that, and like, so it's, it's like violating your principles, you're seeing, like, everybody around you... Like, what's your, what is your, like, assessment or read on the situation? 'Cause, like, obviously, ten years ago, this wouldn't have been the dynamic, and then it, it all flipped.
- VKVinod Khosla
Clearly, people have changed their affiliation to be for convenience.
- JAJack Altman
Mm-hmm.
- VKVinod Khosla
Doing things for convenience is a bad idea. Now, I realize some CEOs have responsibilities to other than, to others than themselves, but some are just, will change political affiliations, and if the next president is Bernie Sanders, they'll become liberal again. Uh, that I hate.
- KRKeith Rabois
So I agree. By the way, I don't like the convenience. I believe in principles. I think a reasonable fraction of people, I think that's true. And then I think there are some who, like, watch the evidence of just, like, there's a lot of things, let's say, the last administration did badly and made-- jeopardized the country in some ways. And then some things that Trump has done have clearly worked or seem to be working, at least, you know, et cetera. And some people, it is fine to change your mind-
- JAJack Altman
Yeah
- KRKeith Rabois
... based upon evidence.
- JAJack Altman
Mm-hmm.
- KRKeith Rabois
I would say there's a, an element-
- JAJack Altman
Yeah
- KRKeith Rabois
... of convenience, too. There's probably a mix. It's hard to sometimes, you know, who's who and what camp and all that stuff. And then there are some who have customers and employees that they have to represent, absolutely. And, you know, that's an important consideration. Like, so for example, if you have a significant government contracting revenue, you know, you have, you do have to think about, like-... you're fueling your families, your com- your-
- JAJack Altman
Yes
Episode duration: 1:05:02
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