This Billionaire VC Has Something Really Important To Say (And You Most Probably Missed It)
Dr. Ashish Bamania
I simplify the latest advances in AI, Quantum Computing & Software Engineering for you | Tech Writer With 1M+ views | Software Engineer
Vinod Khosla is an Indian-American entrepreneur and the founder of the Venture Capital firm Khosla Ventures .
At 68, he is younger and more enthusiastic than most young people I come across every day.
Khosla’s early days story is an interesting one.
His father was an officer in the Indian army and wanted him to join the army as well.
Instead, he pursued a bachelor’s degree in electrical engineering from IIT Delhi and later received a master’s in Biomedical Engineering from Carnegie Mellon, on a full scholarship.
After his engineering degrees, he applied for the MBA program at Stanford University.
However, he was rejected multiple times. This was due to a lack of work experience.
How did he solve it?
He took two full-time jobs to show two years of work experience while continuing his Master’s at Stanford. (Crazy!)
After his MBA, he became a part of a few failed startups but his first big financial success came when he founded 太阳计算机系统公司 .
Always being a contrarian, Khosla made billions investing his money in startups that most people thought were ridiculous and were bound to fail.
A famous example of it was 瞻博网络 , a company that developed equipment for the Internet.
At this point in time, even big players like 思科 thought that the internet was a ridiculous idea. (Just like Bitcoin today :) )
Khosla believed in the opposite.
He invested $275,000 in Juniper and ended up making a whopping 2400x return on his investment, his largest return to date!
Khosla went on the found Khosla Ventures in 2004 and continues to be a part of it.
The portfolio of the companies that Khosla Ventures invests in is the craziest I’ve ever seen.
To list a few:
Some others that you might be familiar with include:
Khosla’s recent presentation for Khosla Ventures is a super insightful one and it is one that completely blew my mind.
Here are some important insights from it that I feel that everyone should know about.
This is especially true if you’re an investor, entrepreneur or anyone who is curious about how the future might look.
Let’s start!
1. Don’t Extrapolate The Past, Invent The World That You Want To Live In
Khosla says that experts are the ones who extrapolate the past.
The larger the past data to extrapolate on, the better an expert is.
This strategy sucks big time for an innovator.
How?
Check this fact out.
In 2010, the experts in the Department of Energy in the U.S. projected that there would be 2,305 Electric vehicles on the road by 2035.
Were the experts right?
Not at all.
In 2014, Tesla shipped around 80,000 cars alone.
An underdog called Elon Musk had broken into the EV industry and totally smashed the expert projection by such a big factor that by 2014, there were more than 2,305 cars in Palo Alto alone.
Want more examples?
“Heavier-than-air flying machines are impossible.” — Lord Kelvin, president, Royal Society, 1895 (Wright Brothers smashed this opinion)
I’ve one more example to show.
“Internet — just a passing fad”.
Surely millions have given up on it, isn't it? ;)
Takeaway: Don’t rely on experts. Create the world that you want.
2. Individuals Cause Major Disruptions, Not Big Existing Players or Experts
Think about who disrupted the markets more.
For retail, Amazon or Walmart?
For media, YouTube/ Twitter/ Facebook or CNBC?
For space exploration, SpaceX or Boeing/ Airbus?
For electric vehicles, Tesla or General Motors?
For the holiday rental markets, Airbnb or Hilton?
Khosla says that in his 40 years of being a Venture Capitalist, he has never seen a large groundbreaking innovation come from someone one would expect from.
Generalists rather than experts, outsiders rather than insiders can dissect problems with a beginner’s mind and innovate from the ground up.
Takeaway: Individuals have the power to change the world. Never forget it.
3. Big Changes Can Happen Very Fast
There’s a common notion in society that change doesn’t happen very fast.
Khosla completely disagrees with this.
He puts up two photos of the same street in New York, taken 13 years apart.
Look at the left side image taken on 5th Avenue, New York in 1900.
One can notice that there’s just one car in view. The rest are horse carriages.
Fast forward to 1913, the right-sided photo shows a mere 1 horse carriage. The rest are all cars.
13 years is what it took to completely change how humans moved.
Take another example.
This is an excerpt from a conversation between Lex Fridman & Sam Altman, OpenAI 's CEO from Lex Fridman’s podcast.
Sam Altman: “We have been a misunderstood and badly mocked organisation for a long time.
When we started, at the end of 2015 and said that we we’re gonna work on AGI (Artificial General Intelligence), people thought that we were batshit insane.
I remember at the time an eminent AI scientist at a large industrial AI lab was DM’ing individual reporters telling — “you know, these people aren’t very good and it’s ridiculous to talk about AGI and I can’t believe you’re giving them the time of day.”
That was the level of pettiness and rancour in the field at a new group of people saying that they were trying to build AGI.
Lex Fridman: OpenAI and DeepMind was a small collection of folks who were brave enough to talk about AGI in the face of mockery.
Sam Altman: We don’t get mocked as much now.
Lex Fridman (emphasising): We don’t get mocked as much now.
Takeaway: Individuals can cause major disruptions and big changes can happen amazingly fast!
4. War In Ukraine & COVID-19 Were Two Most Positive Events That Happened On Earth
Khosla being an optimist feels that if we look back 20 years from 2040, we would realise something really bizarre.
It is that while the war in Ukraine and the COVID-19 pandemic were catastrophic events that caused significant harm, they had some really positive long-term effects.
The COVID-19 pandemic highlighted the vulnerabilities and risks associated with China’s control of global supply chains.
He feels that that is time that entrepreneurs create new opportunities that reduce this dependence on a single country.
Similarly, the war in Ukraine brought attention that a vast majority of countries relied on Russian gas and it was important to break this monopoly and focus on renewable energy sources.
The pandemic also demonstrated the speed at which innovation can occur and vaccines and treatments can be developed.
This breakthrough in medical innovation opens up possibilities for advancements in other areas as well — areas that today feel impossible.
Takeaway: We are living in the best times that Entrepreneurs can ask for. Don’t miss out on it.
P.S. At a personal level, COVID-19 gave me a chance to re-explore computer science. And here I am as a popular tech writer and software developer.
5. Artificial Intelligence Will Change The Structure Of Society, Sooner Than You Imagine
Khosla says that AI is making it possible for all of us to have personal physicians, tutors and financial advisors (and whatever you can think of).
According to his estimates, 80% of 80% of all jobs (64% overall) will become capable of being done by AI.
This will happen sooner than you think it to.
According to Khosla, AI will also create abundance for humans.
The estimated long-term GDP growth of the world is currently 2%. This can be increased to 4% with AI technology.
If this is the case, the need for us to work will be eliminated.
Khosla believes that there is no internal motivation in humans to work in assembly line non-creative jobs.
This is a big reason why most are unhappy.
AI creating massive economic abundance will lead to the following consequences:
Takeaway: Learn about AI. Embrace its essential role in building the future. AI is already here and it will become unimaginably massive very quickly.
This article touches on a very small part of what Khosla has to tell, overall.
Further Reading
For the interested ones who’d like to explore more, the following resources are highly recommended: