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Vinod Khosla Predicting the Future | Ep. 15

(If you enjoyed this, please like and subscribe!) Vinod Khosla is an entrepreneur, investor and technologist. In 2004, Vinod formed Khosla Ventures to focus on both for-profit and social impact investments that have included OpenAI, Stripe, DoorDash, Commonwealth Fusion Systems and many more. After graduating college, Vinod co-founded Daisy Systems, the first significant computer-aided design system for electrical engineers, which led to an IPO. He later went on to co-found Sun Microsystems in 1982, serving as its first chairman and CEO. After joining Kleiner Perkins Caulfield and Byers (KPCB), Vinod intubated the idea for Juniper Networks to take on Cisco System’s dominance of the router market, a company that would give KPCB a 2,500x return on its early investment. Vinod is driven by the belief that technology is a positive force multiplier to accelerate societal reinvention in food, health, climate, energy transportation, education, housing finance, media, retail and entertainment for billions around the globe. His greatest passion lies in being a mentor to entrepreneurs who are building companies to tackle society’s largest challenges. We covered: - His uncanny ability to predict the future - AI generating a new era of abundance - Future of energy, transportation and medicine - Increasing the consequence of success - Khosla’s approach to venture - Instigating change Timestamps: (0:00) Intro (0:26) Craziness of the current cycle (5:54) Predictions of the future (9:35) Role of humans with AI (16:20) Potential AI dystopia (23:18) Investing in OpenAI (33:21) Robotics being next (39:53) Incumbents not innovating (42:29) Mindset around risk (44:14) Bull case for energy (50:22) New transportation (54:18) Future of medicine (1:03:00) A different type of enjoyment (1:05:40) Approaches to venture (1:12:13) Khosla’s operating principles (1:16:17) Staying energized Linktree: https://linktr.ee/uncappedpod Twitter: https://x.com/jaltma Email: friends@uncappedpod.com

Vinod KhoslaguestJack Altmanhost
Jul 1, 20251h 19mWatch on YouTube ↗

EVERY SPOKEN WORD

  1. 0:00 – 0:26

    Intro

    1. VK

      We're gonna be in a era of abundance that's so large, it's very hard for people to imagine. The simplest way to say it is the need to work will go away. People will work on things because they wanna work on things, not because they need to work on things to pay their mortgage. [upbeat music]

    2. JA

      All right. I am super excited to be here with Vinod. Thank you so much for doing this with me today. I really am looking forward to this conversation.

    3. VK

      Look

  2. 0:26 – 5:54

    Craziness of the current cycle

    1. VK

      forward to it.

    2. JA

      When you first walked in here, uh, before we got started, you were saying, "Wow, you know, the world's crazy," um, and you've invested through many periods of time. Obviously, you know, there have been a lot of ups and downs, but, um, you said the world's particularly crazy now. Can you share why you said that or why you're feeling that way?

    3. VK

      I've been doing venture capital for forty years, so I've gone through every large innovation cycle. Uh, I've never seen a cycle like this. To put a order of magnitude on it, almost every job is being reinvented. Every material thing is being reinvented differently, with AI as a driver. Probably the best way to describe it, if you look fifteen years hence, and that's too far to look, we'd have to look back at least fifty years-

    4. JA

      Hmm

    5. VK

      ... maybe in the 1960s, to see the delta in change. And so we're going to see this large change in, in sort of such a short time. Uh, it's almost hard to imagine how society adjusts. And if I go even further, almost certainly within the next five years, any economically valuable job humans can do, AI will be able to do eighty percent of it, with a few exceptions like heart surgery or brain surgery. But by and large, eighty percent of, eighty percent of all jobs can be done by an AI. And if that's happening in the next five years, the world is gonna be a very different place. So I see this sort of like invention happening at a frenetic pace that is so large compared to even the dot-com phase when the internet first came, and there was Netscape and TCIP and all that. It's almost hard to imagine. No matter where you look, everything's being reinvented in some fundamental way, using often, uh, the, the, the, the innovations from AI and the capability from AI, uh, but also a few other vectors, like stuff happening in biology, stuff happening in fusion and other areas. Uh, so-

    6. JA

      Yeah

    7. VK

      ... everything's up for grabs.

    8. JA

      So, so I guess that's then leading to a frenzied pace of investment, companies being created, you know, new ideas getting tried all at once. Is your overall read based on, you know, on one hand, it's crazy and frenetic, on the other hand, everything you just said about, yeah, about like maybe a billion jobs are gonna be, you know, done by an AI in the next couple years or several years, or something like that. Do you net out to being very optimistic about this moment in time for tech? Or do you think there's gonna be a lot of carnage, or how do, how do you think?

    9. VK

      So my view, the next five years, to, to twenty thirty, will look like productivity improvements. The way economists would say productivity is going up, GDP is going up, or accelerating on GDP, things like that. And then if I look to the fifteen years hence, twenty forty and beyond, we're gonna be in a era of abundance that's so large, it's very hard for people to imagine. The simplest way to say it is the need to work will go away.

    10. JA

      Yeah.

    11. VK

      Uh, people will work on things because they wanna work on things, not because they need to work on things to pay their mortgage.

    12. JA

      Is that gonna require us to change anything about, like, the social contract to get there? Like, are we-

    13. VK

      Yes, I'll come back to that.

    14. JA

      Yeah.

    15. VK

      But what I wanna say is, somewhere starting in twenty thirty, the changes are gonna be so disruptive that it's hard to imagine how it sorts out. And it'll sort out differently by country, by region. Different governments will play different roles in allowing it to happen and not allowing it to happen. And so we'll see this very, very disruptive, almost dystopic type of AI is taking all the jobs kind of thing. But we will have enough productivity, enough goods and services produced, to share broadly.

    16. JA

      Is what you're saying that basically the changes that are already happen- happening will compound to a point where it'll now just be this big disruption? Or are you saying the tech by the year twenty thirty is then going to be so disruptive that it's gonna create all these changes? In other words, are we already on that trajectory, or you're just saying the tech's gonna get there in a way that will be that disruptive?

    17. VK

      What I'm saying is tech is disruptive in some areas.

    18. JA

      And it will be everywhere.

    19. VK

      Uh, and it'll be everywhere. But almost no corporation, uh, by twenty forty, these are Fortune five hundred companies I'm talking about, should run the way it's running, even remotely. I should say, most Fortune five hundred.

  3. 5:54 – 9:35

    Predictions of the future

    1. JA

      Yeah.

    2. VK

      One of my predictions is the twenty-thirties-... we'll see a faster rate of demise of Fortune five hundred companies than we've ever seen. It's actually pretty high anyway, but we'll see a rate accelerate dramatically. So let me put it diff- differently. If you're a healthcare company, and I speak to a lot of healthcare company boards, you look at AI and say it's an opportunity, and we'll get more administrative efficiency or something like that. But if I said to you, which I've said to a couple of boards, "If all medical expertise is free, you have an unlimited number of primary care doctors, oncologists, gastroenterologists, mental health therapists, um, uh, you, you, you name it, how would you redesign the healthcare system?

    3. JA

      Be crazy.

    4. VK

      Uh, that transition won't happen from existing companies. Almost somebody new will reinvent this. Now, there's the issue of regulation. The American Medical Association doesn't like the idea.

    5. JA

      I was gonna say, there'll be a lot of people fighting against this-

    6. VK

      Yeah

    7. JA

      ... who have a lot of power, who will be good at fighting it for at least some amount of time.

    8. VK

      For some amount of time.

    9. JA

      Yeah.

    10. VK

      But fortunately, we have a small part of our healthcare system, very small part, uh, where payments are capitated, what's called a capitated system or Medicare Advantage, where you get paid a fixed amount to take care of a patient, roughly.

    11. JA

      Yeah.

    12. VK

      That world will be so much more effective because they won't care about reducing costs, which AI can do.

    13. JA

      Mm-hmm.

    14. VK

      Reducing costs for a hospital system is reducing their revenue.

    15. JA

      Of course.

    16. VK

      For a physician, reducing costs is cutting their c- cost down. Now, I, I think that the general model, I think, for next five years, when I talked about productivity improvements, uh, you will see, uh, almost every professional start to get interns working for you.

    17. JA

      Mm-hmm.

    18. VK

      So every MD, a practicing physician, will get five fresh MDs as if they are fresh out of Stanford Medical School, that work for him. It'll increase his productivity, maybe provide a higher level of service to their patients, all that. But that then turns into something much more catastrophic over time. So by and large, the next five years, I think we should assume that every-- all professionals start to get interns working for them who can-- who are trained in their profession, whether you're a structural engineer or a salesperson, who work for you. Mm, good, nice interns, behave well. Uh, but at some point, these interns grow up. They will have way more expertise-

    19. JA

      Yeah

    20. VK

      ... than the physician, and then it's hard to roll this clock back.

    21. JA

      It's gonna go fast, too.

    22. VK

      It is-- It'll go fast, except in some areas where there's regulatory or other constraint. Take the example of the Screen Actors Guild last year. Anybody who signed up for the Screen Actors Guild thing will go out, out of business, but that change will be slower. Outside that system, people will be producing movies for, uh, a hundred thousand dollars, not a hundred million dollars.

    23. JA

      Yeah, right.

    24. VK

      The dynamics will be different by sector.

  4. 9:35 – 16:20

    Role of humans with AI

    1. JA

      If this does play out even directionally, the way you're saying, and now it's twenty forty, what do you think is left for people to be doing? Like, there must be some things le-- Like, are people going to be still all employed or employable via creating their own businesses and pointing AI around, or, you know, we have a lot of two-person billion-dollar companies. Does it go that way, or does it actually just go to, like, a lot of people are just gonna consume a lot of leisure, and that's it?

    2. VK

      I'm, I'm waiting for the first entrepreneur to call me and say, "We can build a billion-dollar revenue company with ten employees." You can definitely do it with a hundred employees.

    3. JA

      Yeah.

    4. VK

      Uh, we haven't gotten there yet, but we will. That company's already been started.

    5. JA

      Yeah.

    6. VK

      And somebody will leverage it tenfold again.

    7. JA

      Yep.

    8. VK

      There's a question of: Will there be jobs that need people? If you have a billion bipedal robots by twen-- in the twenty forty timeframe, could be five years later, could be five years earlier, but let's say that that was one of my dozen predictions I made when I spoke at TED last year. Almost certainly, they're doing more work than human beings do labor today.

    9. JA

      Yeah.

    10. VK

      And, and-

    11. JA

      And they'll be smarter-

    12. VK

      And-

    13. JA

      ... and they won't sleep. They'll never complain.

    14. VK

      And you won't have silly notions like a primary care doctor and oncologist.

    15. JA

      Right. The same robot-

    16. VK

      It's-

    17. JA

      ... that, like, cleans your house is also your doctor.

    18. VK

      Yeah.

    19. JA

      Yeah.

    20. VK

      It's this super intelligence idea. I think people will have lots to do, but it won't be because they need to work for a living. Look, the first thing people forget, most of the jobs in this country or on this planet are not really jobs. There's what I call servitude.

    21. JA

      Hmm.

    22. VK

      If you're a farm worker working for eight hours a day picking lettuce, and you do that for forty years, or you're an assembly line worker at GM, mount- mounting a tire on a car for eight hours a day for forty years...

    23. JA

      Yeah.

    24. VK

      I, I, those aren't jobs. They are servitude because you have to survive.

    25. JA

      And what a great thing if we could give those people their lives back-

    26. VK

      Yeah

    27. JA

      ... and the time, those hours of their lives back.

    28. VK

      What will people do?... humans will be humans. They'll still compete. We love sports.

    29. JA

      Mm-hmm.

    30. VK

      We love entertainment. We love, uh, being great at something. Whether you're-- even a mediocre artist loves painting for themselves, not because it can be recognized by a New York auction house, art auction house. Uh, so people will excel in what they do, you know, explorers, skiing, you name it. Um, I love the idea people will have a lot more time to talk, uh, care about their children.

  5. 16:20 – 23:18

    Potential AI dystopia

    1. JA

      When you're talking about this dystopia, I think what was implied in what you just said was sort of a, a self-inflicted dystopia, where we just, you know, humans d- don't decide to organize correctly to take advantage of this amazing abundance.

    2. VK

      Absolutely.

    3. JA

      Do you worry at all about, like, the AI doomerism version of dystopia at all, where, like, the AI goes awry? Is that something you think about at all?

    4. VK

      Yeah, so l- let me answer the question in two parts. Certain societies will choose not to do it. We saw it with the Screen Actors Guild. They essentially signed existing traditional studios up to a paradigm that makes them order of magnitude less effective in content generation, because we are building an AI videographer in our portfolio. You specify-- You don't just generate video, you specify what the lighting angle is and what the, how you, um, pan and zoom the camera, and those kinds of things.

    5. JA

      Mm-hmm.

    6. VK

      So the people who resort to traditional means will not do well. Uh, people who do do movie production, today we can't do a full movie that way, but that's only a matter of time. They're right, only a matter of time.

    7. JA

      Yeah.

    8. VK

      Hmm. Today, almost all commercials can be done by an AI.

    9. JA

      Yeah, and the example you gave of, you know, reproducing a one hundred million dollar budget thing with a hundred thousand, of course, that does-- you know, of course, that's gonna go that way.

    10. VK

      And, and we know Coca-Cola got a lot of flak last summer, uh, last Christmas, because they produced some commercials with only with AI.

    11. JA

      Hmm.

    12. VK

      And people were nitpicking anomalies and stuff. Most people didn't know it was done by an AI, uh, and they did great.... and, uh, uh, I'm glad they did it. Broke the ice.

    13. JA

      Mm-hmm.

    14. VK

      So there will be a flood of that. So there, there's that version of dystopia, displacement. Disruption's always fun for the disruptor, very, [chuckles]

    15. JA

      [chuckles]

    16. VK

      not fun for the disrupted.

    17. JA

      Yep.

    18. VK

      And so one has to keep that in mind. We have to take care of people who are disrupted in this paradigm. The other end is sentient AI that kills us all.

    19. JA

      Exactly.

    20. VK

      I wouldn't say I don't worry about it. I do worry about it. Uh, but I look at it as a complete basket of risks humanity faces. We've gone through an, uh, uh, era where a pla-- asteroid hit planet Earth, and most life was destroyed. So we know that was a risk, and risks still exist. An asteroid could hit the planet. More likely, a much worse epidemic than a pandemic than COVID.

    21. JA

      Yeah.

    22. VK

      Uh, you know, COVID only killed seven million people. It's possible it could kill seven hundred million people.

    23. JA

      Totally.

    24. VK

      Right? Uh, in fact, I would say that's almost, um, likely. Uh, so there's a whole basket of risk. Do I worry about sentient AI killing everybody on the planet? Yes, but more than I worry about President Xi doing nasty things? No.

    25. JA

      Yep.

    26. VK

      So when it comes to AI, I want us to have, the Western world, to have the best AI so that we are not subject to President Xi or President Putin. Uh, that is by far the greatest risk.

    27. JA

      That makes total sense.

    28. VK

      And this is what the people who call to slow down AI research miss. Putin isn't slowing down, not that he's very good at it, but Xi and China definitely can do this. You know, it's a world in which the-- and, and you can't argue with that. Uh, they sort of say the end justifies the means.

    29. JA

      Yeah.

    30. VK

      We in the Western world care more about the means.

  6. 23:18 – 33:21

    Investing in OpenAI

    1. JA

      I want to spend most of our time continuing to talk about the future, but I have one historical event I want to ask you about. The tee-up to this question is going to sound like, you know, just an opportunity to, you know, talk about being a great investor. But I specifically want to ask you about your OpenAI investment, and, um, the angle I want to ask you about it from is to try to figure out what, if anything, we can learn from how you did that, um, and how you decided to do it. I know that you were sort of like the first, you know, venture investor to, to do it, and you did it in real size, in something that probably at the time, a lot of people didn't want to do, maybe thought it was a science project. There was a lot of lack of clarity on the whole thing. Um, I think that, like, you know, now it's, you know, it is what it is, but at the time, it was probably an extremely hard bet to make. And so what I was hoping was to try to, as much as possible, play back the tape inside your brain to see what we can learn.

    2. VK

      ... so it was a very large investment, more than twice the largest invest- initial investment I'd made in forty years of venture capital.

    3. JA

      Wow!

    4. VK

      So it was a conviction bet. Uh, but I want to go back to, uh, a different era and talk about this idea of people like to be in herds. When the herd mentality was crypto and a couple of other areas. And by the way, I've ne- never called myself an investor, uh, in forty years, always say I'm a venture assistant, helping entrepreneurs. [chuckles]

    5. JA

      That's better.

    6. VK

      Uh, it's a much better mental model for me. Uh, not-- the investing is a side effect, so I can keep doing it. I'll give you another example that relates to this. While people follow herd instinct, I like to think about what are the fundamentals and can they happen? Fundamentals don't always happen, but they can. And in nineteen ninety-six, I invested, uh, I started a company, uh, called Juniper. We worked on a business plan in my office for six months with the founder, Pradeep Sindhu. Why? Because the world was saying the internet would be a protocol called ATM, Asynchronous Transfer Mode. So every major company had given up on TCP/IP for the public internet and were only going to use ATM because the telcos were specifying ATM.

    7. JA

      Hmm.

    8. VK

      I talked to the senior management of almost every telco, and every single one said to me they wouldn't use TCP/IP. I talked to the CTO of Cisco, who said they have no plans to ever do TCP/IP above, uh, one hundred and fifty-five megabits, which is my home service.

    9. JA

      Hmm.

    10. VK

      Today, uh, it's far below my home service for a public router. But I looked at the data. TCP/IP usage had been climbing, and I said: "This will scale, and every expert is wrong in the field." And we should come back to that-

    11. JA

      Yeah.

    12. VK

      - if you remember, uh-

    13. JA

      Yeah

    14. VK

      ... this notion of experts.

    15. JA

      Hmm.

    16. VK

      A- and the data said TCP/IP was an exponential, and we were the knee of the-- near the knee of the curve. Uh, so fast-forward to today, and by the way, I'd invested in TCP/IP, and it was a core part of what Sun did in nineteen eighty-two, and this was fourteen years later. You see the exponential in TCP/IP as a communications medium, and, and we bet heavily.

    17. JA

      Mm-hmm.

    18. VK

      By the way, we made seven billion dollars on a three million dollar investment, when almost no venture investment ever made even a billion.

    19. JA

      That's crazy.

    20. VK

      Yeah, I-

    21. JA

      Sounds good.

    22. VK

      Twenty-five hundred extra money.

    23. JA

      Yeah, I'd like one of those.

    24. VK

      Uh, [chuckles]

    25. JA

      Yeah.

    26. VK

      Yeah. You only need one, but- [chuckles]

    27. JA

      Yeah.

    28. VK

      Hopefully, OpenAI for us will do better, to go back to your question.

    29. JA

      Yeah.

    30. VK

      But fast-forward, in the year two thousand, I gave an interview, which is in the New York Times, so it's on the record, that said: "AI will have us redefine what it means to be human."

  7. 33:21 – 39:53

    Robotics being next

    1. JA

      so that's the perfect setup into now looking to the future. That construction got you to a big bet in AI. What are the other areas right now that you feel maybe like, you know, the same way you felt in twenty fifteen about AI? What do you feel that way about now? You mentioned fusion, but, like, what are a few of the areas that you feel this way about the future now?

    2. VK

      Well, first, related to AI, robotics will take a little longer, but I think we'll have the ChatGPT moment in the next two to three years.

    3. JA

      What could that look like?

    4. VK

      A robot that doesn't need to be programmed. It learns. It isn't programmed to do tasks.

    5. JA

      And it, and it's a generalized, you know, maybe physical robot in our-

    6. VK

      Yeah

    7. JA

      ... in our spaces.

    8. VK

      Well, the world is organized around the humanoid form factor.

    9. JA

      Mm-hmm.

    10. VK

      And so it's probably a humanoid. Humanoid is the only common enough form factor to get to high enough manufacturing volumes to get the cost down. Almost everybody in the twenty-thirties will have a humanoid robot at home. Probably start with something narrow, like do your cooking for you. It can chop vegetables, cook food, clean dishes, but stays within the kitchen environment. And, you know, your-- if you have a Prius, it costs three, four hundred dollars a month. The robot will cost three, four hundred thou..., uh, three, four hundred dollars a month. It won't matter in, you know, for anybody making more than a certain amount of money, they already have somebody helping, and so this is help.

    11. JA

      Yeah.

    12. VK

      I think that's how it'll start in the home, but factories, farms, uh, farm workers, is a massive area that's mostly unaddressed.

    13. JA

      What part of the humanoid intelligent robot are we most limited on right now? Like, is it about the robotics? Is it, like, the intelligence? Is it-

    14. VK

      It's the intelligence. Clearly, we've seen out of China many, many hardware form factors. They're pretty damn amazing. If you see them boxing or running a race or... It's pretty cool, but they're not learning robots. You change the environment, and they don't do as well.

    15. JA

      Yeah.

    16. VK

      I think this intelligence that learns and adapts, uh, and doesn't need to be programmed to do a task... You know, if you walk a human in here and say, "Clean up," they'll know what to do. Uh, a robot needs to do that.

    17. JA

      Why is this not gonna be like Apple? Like, and I know that, like, you know, I'm not saying I think it is, but, like, why do you think that we don't already have the sort of prototypes of this out from the biggest, most well-equipped hardware companies in the world?

    18. VK

      So I've been doing innovation for forty years, and innovation only. I can't think of very many large examples that were large innovation-... came from somebody who was large or in the business.

    19. JA

      Yeah. Can you, can we go through some of them?

    20. VK

      Yeah. Uh, retailing, you know, when we invested in Amazon, I was at Kleiner in '96. Uh, n- nobody thought you could compete with Walmart. You'd think Walmart would innovate.

    21. JA

      Yeah.

    22. VK

      Look at media. Was it NBC or CBS, or was it little things like Netflix and Twitter and YouTube and Facebook? And nobody even knew they were in the media business.

    23. JA

      Mm-hmm.

    24. VK

      Uber, did that come from Hertz or Avis car rental or taxi companies? No. Airbnb, did it come from Hilton or Hyatt?

    25. JA

      Yep.

    26. VK

      They have more rooms than Hilton and Hyatt now. Uh, SpaceX or Rocket Lab instead of Boeing and Lockheed, you'd expect to be able to do space launches?

    27. JA

      Yeah, yeah.

    28. VK

      Uh, m- you know, my own history, I got enamored with the fact that when, when I was at Kleiner, th- they talked about Genentech, started by an associate at Kleiner when nobody believed biotechnology was a field. No pharma company was doing it-

    29. JA

      Yeah

    30. VK

      ... all the biotech.

  8. 39:53 – 42:29

    Incumbents not innovating

    1. VK

      chance.

    2. JA

      What's the mechanic for what-- I, of course, agree, but what, what's the mechanic that's stopping them? Is it risk? Is it talent?

    3. VK

      Here's the f- uh, first thing I would say. In these forty years, in all the examples I've just cited for you, and I could give you more, none of them were done by somebody who knew the area.

    4. JA

      Mm-hmm.

    5. VK

      Experts are terrible at predicting the future. They extrapolate the past. Entrepreneurs invent the future they want. Uh, it's a bastardization of an Alan Kay quote, but, you know, so you imagine the world, and you try and make it happen. And you're not biased by... What is experience? Experience is a set of biases that prevent you from making mistakes, and that's what experts do, and that's why very rarely do experts innovate in their area.

    6. JA

      Yeah.

    7. VK

      Look, even the Covid vaccine came from two startups.

    8. JA

      Right.

    9. VK

      Moderna and, mm, the BioNtech. You'd think the pharma was well-equipped to mobilize. Not a chance. So, uh, you know, it's, it's, it's, uh, it's why the US has done so well. People have permission to try. And if you try and fail, it's-- you don't ruin your career. In a big company, you'll ruin your career-

    10. JA

      Right

    11. VK

      ... to your question, right? You s- you can't afford to fail.

    12. JA

      Yeah.

    13. VK

      So you start with, "I can't fail," which means you can't take a large risk. My view is very simple: Most people reduce risk to increase the probability of success.

    14. JA

      Mm-hmm.

    15. VK

      I do the pos- opposite. Start with, "I want high consequences of success. I don't care about the probability of failure."

    16. JA

      I think that is, like, one of the best things about tech as an ecosystem is, and, you know, I think not everybody thinks quite like what you're saying, but in general, in tech, you can fail, and it's okay.

    17. VK

      Yeah.

    18. JA

      And I think even in other ind-- you know, I worked in finance in New York for a hot minute, and even there, it's just, like, it's just not how it works.

    19. VK

      Jack Dorsey's great, uh, on paper, but when we invested in Square in twenty ten, the following was the situation: He'd just been fired from Twitter. Twitter was a tiny company. He'd just been fired, and he had, like, four start-- failed startups, uh, his history on Wikipedia. Like, he had four failed startups. So, uh, you know?

    20. JA

      Yeah.

    21. VK

      Traditional wisdom would say, "Don't back him."

  9. 42:29 – 44:14

    Mindset around risk

    1. JA

      Was your mindset around risk always just increase the consequence of success, or did that evolve over time?

    2. VK

      It was very much that from... You know, my first startup was-... go on, take on the computer business. Everybody big is dumb.

    3. JA

      Mm-hmm.

    4. VK

      Uh, which is a little bit of an arrogant viewpoint, but if we hadn't had that kind of hubris, we probably wouldn't have attempted what we attempted. So I think hubris is an important ingredient of great entrepreneurship.

    5. JA

      Yes.

    6. VK

      We'll build an AGI, right? Like, that's hubris. It's arrogance. Only I can do it. Uh, so the- these are entrepreneurial characteristics that are very important, but also thinking from first principles, which is why experts do poorly in their areas, because they have too many biases of what works and what doesn't, or how to do things. While somebody new in the area reinvents the area, they figure it out from first principles in the new environment, and that's an essential characteristic. So, you know, one thing is I always get asked is: "What do you look for in entrepreneurs?" You know, I seldom look for deep expertise in their area. I do look for people who are thinking from first principles and learning rapidly. Even in YC batch, if I'm talking to a YC partner about some startup, the question that's most important to me is: how much have they changed their plan over the last three months?

    7. JA

      Yeah.

    8. VK

      Rapid evolution, rapid thinking, rapid learning, uh, is

  10. 44:14 – 50:22

    Bull case for energy

    1. VK

      what matters.

    2. JA

      So this went into a-

    3. VK

      I'm all over the map. [chuckles]

    4. JA

      No, it was-- This is... I, I love this, Eddie, but I want to keep getting sort of the other areas you're very excited about. Um, that was robotics, um, which I agree, humongous if, pr- you know, in some ways, that's like, that's like the final, you know, thing to figure out. Um, you mentioned fusion as a big thing.

    5. VK

      Yeah, I'm very bullish about energy.

    6. JA

      Well, certain many formats of energy.

    7. VK

      So, uh, I, I think there's two large formats. Fusion is one, and there's multiple approa- uh, uh, approaches to fusion, but, uh, I'm also s- very excited about super hot geothermal. Um, so again, this ties to this risk idea, right? In geothermal, completely uneconomic business. You buy power because it's green, not because it's cheap.

    8. JA

      Mm-hmm.

    9. VK

      And people like cheap stuff.

    10. JA

      Yep.

    11. VK

      Turns out, e- almost all geothermal in the US is at two hundred degrees or two hundred and fifty degrees max. If you increase the temperature to four hundred and fifty degrees, you get ten times the-- six to ten times the power, depending upon m- conditions, from the same well.

    12. JA

      That's surprising.

    13. VK

      For two reasons. One is Carnot efficiency goes up, but the heat content also goes up. So the energy content of the steam goes up and the efficiency percentage, so you get a multiplier effect.

    14. JA

      Oh.

    15. VK

      Um, don't need to get into technical details, but now it's cheaper than natural gas if you can get to four hundred and fifty degrees.

    16. JA

      Wow.

    17. VK

      Nobody has to worry about super hot geothermal is green. It's, it's just cheap.

    18. JA

      Wow.

    19. VK

      Right? And so, uh, why don't people attempt it? Because people have decided you can't drill at four hundred and fifty degrees because drill bits collapse.

    20. JA

      Got it.

    21. VK

      Um, so I sort of approached it differently. I said, "What would it take to drill at four hundred and fifty degrees?" Right? The-- If I can solve that problem, everything else takes care of it. And we know there's four hundred and fifty degrees the most parts of the Earth. It's only a matter of how deep you go.

    22. JA

      Mm-hmm.

    23. VK

      And so I set off on that problem. I think we are making great progress, so I think it's as powerful as fusion-

    24. JA

      Wow

    25. VK

      ... in supplying most of Western United States.

    26. JA

      Yeah.

    27. VK

      Uh, is, uh, you can get that. Uh, our location in Oregon, one location could produce seven gigawatts of power, and I hope this year I can prove we can, mm, do all seven gigawatts competitive with natural gas-

    28. JA

      Wow

    29. VK

      ... without worrying. It works in the Trump era, where he doesn't care, believe in climate change. It still works, and I love that kind of project. I'm also very bullish Commonwealth Fusion will do well. I don't know enough about Sam's project, uh, in Helion, but I'm glad diverse techniques are being allowed.

    30. JA

      But both of these are areas where you're like, "The science is gonna work, the impact will be enormous."

  11. 50:22 – 54:18

    New transportation

    1. VK

      Uh, well, I'm super excited. Uh, so I was mentioning this talk I did, uh, it's called Plausible Tomorrows, so you can Google that, too. Um, I have a dozen predictions that look really implausible, unless somebody sits down with me, and I walk them through each, and they say, "I see no reason this won't happen."

    2. JA

      Hmm.

    3. VK

      I think by twenty fifty, we can replace most cars in most cities.

    4. JA

      Self-driving or just don't have cars?

    5. VK

      Public transit that meets the following requirements: It's always cheaper than cars and cheaper than today's public transit.

    6. JA

      Hmm.

    7. VK

      Cheaper than today's public transit, without losses for the transit agency. That's always faster than public transit, because it's like Uber, it's hailed, not scheduled. Uh, it's all personal.

    8. JA

      Yeah.

    9. VK

      It's two- and four-person vehicles, not... And it fits in a bicycle lane.

    10. JA

      Wow!

    11. VK

      Not only-- By the way, public transit, Fusion, OpenAI, I invested in the same timeframe, roughly.

    12. JA

      Yeah, yeah.

    13. VK

      Around twenty eighteen.

    14. JA

      Hmm.

    15. VK

      So I'm very proud of that vintage year.

    16. JA

      That's a good, that's a good year.

    17. VK

      But people said, "Public transit start-up? You must be totally crazy."

    18. JA

      Hmm.

    19. VK

      And I said, "Google doing Waymo is the wrong way to do transit."

    20. JA

      Because the vehicles are too big, or what?

    21. VK

      No. It just increased congestion. Okay?

    22. JA

      So what should it be?

    23. VK

      So, uh, and I think Waymo will have a great business for delivering people from transit routes to the last mile. There's only one question in a city, uh, when it comes to traffic: Can you increase throughput ten X for the same street width, without redoing the street width? So we designed a public transit system of self-driving vehicles in bicycle lane width. So it's easy to insert in a city, has ten times the capacity of a light rail system or, or a car system, so more capacity than a light rail system in a bicycle lane width, and it's on demand because the cars just, you hail them like an Uber. So turns out, every single project we have bid so far, we bid a, uh, well, we bid a lot. Four have been decided. We won every single one. For a public transit system from a start-up, and the start-up wasn't invited to bid on any of these projects, because nobody knew about us.

    24. JA

      Yeah.

    25. VK

      Nobody invites a start-up.

    26. JA

      [chuckles]

    27. VK

      San Jose invited thirty-two bidders to build a s- um, transit system from the airport to the Google campus, and then to the Apple campus in San Jose.

    28. JA

      Mm-hmm.

    29. VK

      We bid over the transom, because most of these bids are open, and we won it outright. Think about it!

    30. JA

      But is this-- So what is the-- what's the vehicle?

  12. 54:18 – 1:03:00

    Future of medicine

    1. VK

      ambitious.

    2. JA

      Okay, and how about medicine? Because that's like twenty percent or more of GDP. That's a huge one.

    3. VK

      Yeah.

    4. JA

      Obviously, AI is a big part of this, but you spend a lot of time in medicine, separate from AI, with AI-

    5. VK

      So-

    6. JA

      -about medicine

    7. VK

      ... uh, so, uh, of, which is a big part of our GDP, a quarter of that spend is medical expertise, is phys-- think doctors.

    8. JA

      Mm-hmm.

    9. VK

      Okay? Uh, almost certainly, that goes to zero. Can go to zero. So what are we doing? We're building AI primary care doctors, AI phys-- uh, mental health therapists, AI physical therapists, AI oncologists, AI, uh, you name it.

    10. JA

      Actually, maybe just to, like, take-- just to get specific on what you mean about that going to zero. If we have, for every hundred doctors per capita we have today-... in like twenty fifty, do you think we have like zero or ten or th-- like, what, like, what do you think this is?

    11. VK

      I, I don't know the answer, uh-

    12. JA

      But there are some?

    13. VK

      You will always have some to learn from. Right.

    14. JA

      For the AI to learn from.

    15. VK

      For the AI to learn from, though the AI can boot itself to be much better.

    16. JA

      Mm-hmm.

    17. VK

      Um, and I'll give you today's data of a multicenter study at Stanford. They b- took the best academic institutions and judged complex AI diagnosis. Physicians only, and these are academic learning centers with the best physicians, seventy-three percent accuracy, so twenty-seven percent of the patients were getting the wrong diagnosis.

    18. JA

      That's like a lot. That's like one in-- yeah, that's a lot.

    19. VK

      It's wonderful.

    20. JA

      Yeah, yeah, anyway, it's just-

    21. VK

      Think about it. And this complex means it was a serious thing.

    22. JA

      Yeah.

    23. VK

      It wasn't just the flu. AI alone, eighty-eight percent.

    24. JA

      Accurate.

    25. VK

      Accurate. But then they gave the AI to the doctors. The doctors improved from seventy-three percent to seventy-six percent. The AI got degraded from eighty-eight to seventy-six percent.

    26. JA

      That's funny.

    27. VK

      And this is a serious multicenter study. I love medicine. What will happen is everybody on the planet, for less than a dollar a month, will get a free primary care-- a free physician, initially called primary care, but they'll be, uh, do everything. My son's company, Curai, is called multi-specialty primary care 'cause the AI knows enough gastroenterology to provide that. N- now, the hard problem is, the American Medical Association won't let the AI write a prescription.

    28. JA

      Yeah.

    29. VK

      And so we, we have human physicians who approve the diagnosis and the prescription or testing recommendation or whatever.

    30. JA

      Yeah, I was gonna say, I mean, if the humanoid at home plays out too, then it's probably also doing some amount... I mean, it's not gonna do surgery, but it might be doing some amount of giving you a physical or-

  13. 1:03:00 – 1:05:40

    A different type of enjoyment

    1. JA

      As I'm listening to you talk about all of these different areas, and, like, you think on such a grand societal scale, but you probably also have a bunch of sort of, um, maybe seemingly boring, but, like, good ideas kind of come through Khosla Ventures all the time, too.

    2. VK

      Yes.

    3. JA

      Do you still enjoy making those kinds of investments, uh, as well? Is that more where you have, like, a partnership, and there's other people on your team who are more interested in-

    4. VK

      Well, one, there are other people in the partnership who enjoy just successful startups.

    5. JA

      Yeah. [chuckles]

    6. VK

      I do, too.

    7. JA

      Yeah.

    8. VK

      Hey, look, I, I enjoy winning. You know, when I do a GitLab, that's, that's a win. When we do cognition, it's a win. When we do Replit, it's a win. I mean, the growth rates for some of these companies are stunning.

    9. JA

      Shocking, yeah.

    10. VK

      So, um, yeah, it's still fun to be disruptive.

    11. JA

      Yeah, it's just, like, sort of a different bucket of enjoyment.

    12. VK

      It's a different bucket.

    13. JA

      Yeah.

    14. VK

      I would say in the more societally, su- societally impactful technologies, I will go through actually starting the company.

    15. JA

      Mm-hmm.

    16. VK

      Like fusion. Bob was a senior fellow, um, at Commonwealth Fusion. Bob was a senior fellow at the MIT Plasma Fusion Lab when I met him, and he had ideas, and, and, and I got him sort of, like, instigated-

    17. JA

      Yeah

    18. VK

      ... so to say.

    19. JA

      Yeah.

    20. VK

      He's done all the work, and then he instigated the field of fusion.

    21. JA

      Mm-hmm.

    22. VK

      So whether he succeeds or not, there's so many different startups now. One will succeed.

    23. JA

      Yeah.

    24. VK

      So Commonwealth Fusion or Helion don't have to succeed for fusion to succeed. So I like instigating things. The same thing we did... Yeah, it was very profitable to make twenty-five hundred times your money-

    25. JA

      Yeah

    26. VK

      ... and, and having the world be TCP/IP instead of ATM. It's interesting to look back at the press from nineteen ninety-six. Just assumed-

    27. JA

      Yeah

    28. VK

      ... uh, it was gonna be, the Internet was gonna be ATM. So I'm actually, uh, you know, I always tell Pradeep, the founder of that-

    29. JA

      Yeah

    30. VK

      ... if we hadn't done that, the Internet wouldn't be TCP/IP, which is horrific to think about.

  14. 1:05:40 – 1:12:13

    Approaches to venture

    1. JA

      You, um, you used the word instigating when you could have maybe used a word like incubating. I also heard earlier in the conversation, I think you, you know, you talked about, like, not being an investor, you know. Um, I think also, like, the way that you work with founders, and I've heard you talk about not being founder-friendly, or that there's a different way to think about being founder-friendly. What I'm curious about is, there's a lot of sort of, uh, new ways to describe what VCs do and how they describe themselves and mindsets around it. Do you think that in general, the role that venture investors see themselves playing, do you think we're trending in a direction where it's getting better all the time, or do you think that in any ways the industry has lost its footing on some of these concepts?

    2. VK

      Look, there's all kinds of VCs with all kinds of approaches. Some are marketing labels. Founder-friendly is a real disservice to founders. It's like if you said to your kids, w- if you told your five-year-old-

    3. JA

      Do whatever you want

    4. VK

      ... "Do whatever you want, I will always say yes."

    5. JA

      Yeah.

    6. VK

      That's-

    7. JA

      You wanna-

    8. VK

      You pay the price.

    9. JA

      You wanna go swimming without me? Yeah, like, whatever.

    10. VK

      Yeah.

    11. JA

      Yeah.

    12. VK

      Or eat as much candy, or eat as much Coke. Mm, and by the way, my kids, when they were growing up, at age five, they could eat as much candy and as much Coke as they wanted, as much junk food. Uh, we always had it laying around. They could-- They didn't have to ask us.... but we taught them how to measure themselves on how much Coke, uh, they drink, whether it's good or not. So I would say we taught them control, not gave them yes, no permission.

    13. JA

      Yeah, but the most important thing is that you set those parameters for a kid.

    14. VK

      Yeah.

    15. JA

      And, yeah.

    16. VK

      Right. And in literally, um, at age twelve, I thought of, they can make ten percent of the important decisions.

    17. JA

      Mm-hmm.

    18. VK

      By age eighteen, they have to make ninety.

    19. JA

      Yeah.

    20. VK

      And my job is to teach them how to make the leash longer.

    21. JA

      Right.

    22. VK

      But the s- same is true of entrepreneurs. Look, a brilliant engineer from DeepMind starts a company. What do they know about finance? What do they know about marketing? What do they know about even hiring or managing? Our job is to teach them, just like I taught my kids. By eighteen, my kids were pretty independent. I didn't worry about what they did in college. All four went to college, uh, five miles from our house at Stanford.

    23. JA

      Yeah.

    24. VK

      None of them had this, "I want to get away," because they felt they had enough leash. They had enough permission. They didn't need to, quote-unquote, "get away."

    25. JA

      Can I put up a, like, a steel man argument that, uh, of the other side to hear your reaction to it? Basically, it would be something like the, the sort of the strongest entrepreneurs, which is where all the returns are, don't really need much help or much management, and so better to just invest in the people who didn't need help in the first place.

    26. VK

      I disagree. That is very much the founders fund argument.

    27. JA

      Yeah.

    28. VK

      They do very well with that. Great founders do well, whether you like it or not-

    29. JA

      Yeah

    30. VK

      ... uh, whatever you do. Where I will disagree is they can do even better if they have a debating partner.

  15. 1:12:13 – 1:16:17

    Khosla’s operating principles

    1. VK

      Yeah.

    2. JA

      By the way, on that topic, I'm curious, like, I... I read that as one of the sort of, like, generationally great sort of recruiting or re-recruiting, um, you know, moves that has happened, and, um, I think he's an amazing investor, obviously. Did you know for a while that you wanted that to happen?

    3. VK

      We're a different kind of firm, and I said earlier, we are not in-- I've not called myself an investor ever.

    4. JA

      Hmm.

    5. VK

      Right? I always say I'm a venture assistant. If you look at our website, since we started the firm in 2004, the first tagline is "venture assistance." By the way, another phrase that has stayed on our website since 2004 is: "I prefer brut- uh, brutal honesty to hypocritical politeness." And when most VCs give polite feedback to an entrepreneur, they're doing a disservice. They're basically saying: "You're doing great."

    6. JA

      Mm-hmm.

    7. VK

      "Don't examine anything."

    8. JA

      Mm-hmm.

    9. VK

      You know, makes you feel good as an entrepreneur, but doesn't help you build a better company. And the only things that make you feel better are things that change your thinking or challenge your thinking. So it's an important characteristic for founders to keep in mind. What are they looking for? The best help or just people who will go away?

    10. JA

      Yeah.

    11. VK

      Um, so it's a style that's different.... we don't think of investments. We've never calculate, uh, never means not in the last ten years I can think of it. I can't think of a single instance where we calculated an IRR.

    12. JA

      Mm-hmm.

    13. VK

      Not one.

    14. JA

      Mm-hmm.

    15. VK

      An investment firm that never calculates IRRs, because we want to build something significant, and then-

    16. JA

      It will work out.

    17. VK

      -the economics will work out. So that's our approach. But we do want to make-- increase the probability of success of the founder, and we want to m- increase the magnitude of the potential success also, by thinking about, should you do X or Y? Founders underestimate that.

    18. JA

      Mm.

    19. VK

      So let's say a founder is selling ten percent of a company, um, ten million at, uh, a hundred million post. The founders forget they're keeping ninety percent. And what happens to the price per share of that ninety percent, whether it's-- they give up ten percent or twelve percent, ninety, keep ninety or eighty-eight-

    20. JA

      Yeah

    21. VK

      ... trivial compared to the five hundred percent swing you can get by taking one path or a different path. That's where the opportunity for maximization is.

    22. JA

      Mm.

    23. VK

      That's where it's not about investing, but getting the best help building a company.

    24. JA

      Yeah.

    25. VK

      And that's what I sort of spend all my time doing.

    26. JA

      Yeah.

    27. VK

      Just yesterday, I was talking to this founder. It's, it's a very cool company, self-driving for these heavy machines-

    28. JA

      Mm

    29. VK

      ... bulldozers and loaders.

    30. JA

      That is cool.

  16. 1:16:17 – 1:19:55

    Staying energized

    1. VK

      too.

    2. JA

      I know you're, you're going to have to go in a minute, so I just want to ask you, uh, there's one-- I mean, there's a million more questions I want to ask, but there's one I really wanted to ask, which is, um, you've been not just, like, doing venture, but you've been doing it, like, really successfully and in a super relevant way for a long time, through a lot of cycles. Before we started, you said, you know, you're turning seventy, or you turned seventy this year. You feel twenty-five. This is kind of like the dream, and do you know what you attribute all of this to, like?

    3. VK

      Yeah. Uh, very importantly, I gave a talk at Stanford in twenty fifteen, the Stanford Business School in twenty fifteen. I said, "I'm internally driven. I don't care what others think of me," so it's feels obnoxious sometimes because I'll do my thing-

    4. JA

      Mm-hmm

    5. VK

      ... independent of what others think. I'm doing this because it's fun. You know, I get somebody teaching me about con-- mining and constraints in construction or self-driving an MRI machine or a big loader. They're the same thing. Clever ideas like public transit, or can we make fusion happen? So I'm in it because it's fun for me. And most of the people at Khosla love what they're doing and would do the same thing if they didn't get paid. And so we do it for a different reason than making the most money. Because we focus on larger impact, the returns really do well or take care of itself. You know, it, it's sort of like what's motivating you?

    6. JA

      Mm-hmm.

    7. VK

      Uh, in fact, this was conversation I had, Sam, when we invest- invested in OpenAI. He knows I care about the impact. Something happened, um, uh, making something happen. Fusion is too important to not try.

    8. JA

      Yeah.

    9. VK

      I want the impact of fusion.

    10. JA

      Yeah.

    11. VK

      There's nothing I could do in making money that would impact me more, saying-- other than saying, I played this tiny part in getting fusion to start and hopefully happen.

    12. JA

      Yeah.

    13. VK

      Even if Commonwealth Fusion doesn't do it, almost all the companies have been enabled, and investing in the field has been enabled because people looked at Commonwealth Fusion.

    14. JA

      Mm-hmm.

    15. VK

      So this idea of instigating change is very motivational. It's way more impactful and also fun and way more learning than almost anything else. I say I'm, like, totally-- I have one addiction, which is to learning. I can't learn enough new things, whether it's about biology or an AI algorithm or hypersonic flight. We are doing Mach Five flight, too, and w- we haven't talked about national defense. We are spending a lot of time there.

    16. JA

      Would love to.

    17. VK

      But all these areas are just fun.

    18. JA

      Yes.

    19. VK

      And, and that's w- why I don't mind. I still work eighty hours a week, and I hope, uh, twenty-five years from now, I'm w- working eighty hours a week, health permitting, touch wood. But that's-- I think it's a very different motivation of why we do things. I tell our LPs, I'm probably the only one foolish enough to tell my LPs, "If I can have more impact and less return, I'll pick more impact every single time."

    20. JA

      Yeah.

    21. VK

      As long as they get a minimum return-

    22. JA

      Yeah

    23. VK

      ... that they're comfortable with-

    24. JA

      Yeah

    25. VK

      ... so they can.

    26. JA

      Well, you seem to be getting both. Um, Vinod, thank you so much. This was amazing, and I am super appreciative of your time and all that you've, uh, done for, for the industry.

    27. VK

      Great. Thank you. It's a lot of fun. [upbeat music]

Episode duration: 1:19:55

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