Khosla Ventures
Vinod grew up dreaming of being an entrepreneur. He was raised in an Indian Army household with no business or technology connections. When, at age 16, he first heard about Intel, he dreamt of starting his own technology company.
Upon graduating with a Bachelors in Electrical Engineering from the Indian Institute of Technology, Delhi, he tried to start a soy milk company to service the many people in India who did not have refrigerators. He then came to the US and got his Masters in Biomedical Engineering at Carnegie-Mellon University. His startup dreams attracted him to Silicon Valley where he got an MBA at Stanford University in 1980.
In 1982, Khosla started Sun Microsystems to build workstations for software developers. At Sun he pioneered "open systems" and RISC processors. Sun was funded by long time friend and board member John Doerr of Kleiner Perkins Caufield & Byers.
In 1986 he switched sides and joined Kleiner Perkins where he was a general partner. There, he worked with Nexgen/AMD, Juniper, Excite, and many other ventures.
In 2004, Khosla formed Khosla Ventures. Khosla Ventures offers venture assistance, strategic advice and capital to entrepreneurs. The firm helps entrepreneurs extend the potential of their ideas in both traditional venture areas like the Internet, computing, mobile, and silicon technology arenas but also supports breakthrough scientific work in clean technology areas such as bio-refineries for energy and bioplastics, solar, battery and other environmentally friendly technologies.
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Last Updated: Thu, Oct 23, 2008
Where most entrepreneurs fail is on the things they don't know, Khosla says. The biggest problem is when you don't know what you don't know!
Khosla states that any big problem is a big opportunity. If there is no problem, there is no solution, and no reason for a company to exist. No one will pay you to solve a a problem that doesn't exist, he explains.
Vinod Khosla, partner at Kleiner, Perkins, Caufield & Byers, was bitten by the entrepreneurship bug early in life when he heard about Intel starting up. He was enamored by the idea of being able to start your own company. Intel served as as a great role model, he says.
Great CEOs are people who put great teams together. Scott Kriens at Juniper is one of the best CEOs Khosla has ever worked with, as well as Bill Campbell. There isn't always one definition of a CEO, Khosla notes, each situation requires a different kind of leader, and each stage of a company has different needs for that leader.
From an entrepreneurs point of view, it is a great time (2002) to assemble a team that isn't distracted by money, and is interested in building a real team, and developing a solid business plan.
Vinod Khosla, founder of Khosla Ventures, predicted that the emergence of free long distance phone calls would be free, and that the large telecoms' reliance on those profits would make them fall like a deck of phone cards. But Khosla also uses this turn of events as a case study in entrepreneurship, exemplifying it as a demonstration that forward-thinking business investment is the best forerunner of the future.
Khosla explains how to think big and act small. He reminds us that part of that process must be done on a belief system. Without a mission or belief system about how to change the world, one will not be successful.
Khosla feels that an MBA is not the only way to gain experience, it is a way to gain perspective. Real-world experience provides the depth of knowledge you need in a company.
It is important to use time to get deep expertise, Khosla notes. You need to go much deeper in understanding technology--a bachelor's degree is not enough and will be irrelevant in another 10 years. If you have a goal of entrepreneurship in mind, you must go deep in an expertise in order to advance your career.
In Kleiner Perkins perspective, Khosla argues, the traditional model of giving is broken. Social entrepreneurship and ways to leverage money are very important. Although there is not enough money in the world to solve the world's problems, if you apply and multiply, there are, in fact, solutions to some of these problems. Examples of companies providing these solutions include Gramine Bank and Aprotech.
Khosla claims that investors only have two emotions: fear and greed. He has seen the trend of investing, which bounces between cycles of fear and cycles of greed.
Take a big problem, apply the best minds to its prospects, add the fuel of entrepreneurial energy and a touch of capitalist greed, and one has the perfect recipe for solving any social, environmental, or cultural dilemma, says Khosla Ventures' Vinod Khosla. Mere good intentions are not enough to invoke real change. But the course of industry can only be altered when all angles of the problem-solving pyramid are in place.
Entrepreneurs are far less successful when they are trying to make money--they are much more successful when they have a mission to change the world. No matter what you do, Khosla says, you have to be foolish to do what an entrepreneur attempts. Whatever your value proposition is, it should have the goal of making the world a better place and you should feel passionately about your contribution. If you don't have this and you run into an obstacle, you get stuck. If you are passionate about your product and your message, you can power through problems more easily.
Forget every argument and industry lobby previously put forward regarding the evolution of green energy alternatives. For Vinod Khosla, founder of Khosla Ventures, if a technology doesn't meet the "Chindia test" - meaning that it is cheaper than the current status quo in China and India - then it is not a viable, scalable, and cost-effective long-term alternative. Anything that will uproot the global reliance on oil or coal must be less expensive, else it will never gain traction in the global marketplace.
Khosla talks about how Juniper Networks started, and the role of customer feedback in the product development. There was not one vendor thinking of building an OC48 router for the internet. Juniper perservered and took a risk in the technology, despite the majority of customer feedback.
Khosla shares his view on technology-driven entrepreneurship and predicts the growing impact of technology on life, society, and the economy.
The market is an unimportant, artificial system, says Vinod Khosla, founder of Khosla Ventures, and he encourages entrepreneurs and thinkers to stop paying attention to its crests and troughs. Though the Dow may be down, what's far more important is the flow of user demand, which historically, says Khosla, always remains constant, and is a far greater indicator of long-term success.
Things aren't ever as good or as bad as we think. Today (2002) is one of the best environments to be an investor. The last three or four years were not a lot of fun--if Khosla went to someone to build a reasonable business, the response he would get was that another company was willing to give more money for less work. He would have to explain that the role of a VC was to help companies develop a real economic model and to give an honest valuation.
What should innovators and financiers be reading to round out their education? Vinod Khosla, founder of Khosla Ventures, shares favorites from his library, some of which wrangle with issues of social entrepreneurship. Titles include The Black Swan</i>, The Purple Cow</i>, How to Change the World</i>, and Banker to the Poor</i>.
Khosla never intended to be a venture capitalist and still doesn't consider himself as one. He considers himself a venture assistant who has little interest in business other than its necessity for economics and its power to change the world. Khosla loves technology and believes that it drives most of the change that happen in the world.