Vinod Khosla: "I'm a Glorified Recruiter"

So I could run down the list of all of the achievements and things that you've done, invested in Juniper Networks, you know, incubated Juniper Networks, made Juniper Networks. You're also Daisy Systems, Sun Microsystems.

That's boring. Let's not waste time on that.

Yeah, yeah, yeah. There's not a lot of time, so we'll just get into it. I was also— your staff was very helpful and they gave me a list of things that we should talk about and they gave me a list of things that we shouldn't talk about. So let's talk about food, Vinod. What happened at Hampton Creek?

What do you mean? It's doing great.

What happened?

By the way, you can talk about anything you don't want to talk about. And I'm okay.

No, that's totally fine.

I haven't seen the list of things we shouldn't talk about because I don't like prearranged questions.

So.

But hi, everybody.

Hi. So I know it's— you say it's doing great, but there have been a lot of reports that have come out in our publication and others that seem to indicate Not so great.

You have said— There's a general principle we should talk about. We all love here to talk about disruption, right, and revolution and all that. The thing to keep in mind is if you're doing anything disruptive, you are disrupting somebody and somebody's getting hurt, right? Revolutions are hard on people. People get killed, people get hurt. And anytime somebody does, like the egg industry, right? And if you really want to understand the egg industry, just Google crushed chicks. That's how they treat half the chicks that are born— crush them alive.

Now, I don't want to— I don't want to get into this debate.

That's not the issue. I don't want to talk about food, right? I want to talk about this idea of disruption, right? If you're doing anything significant and important Somebody will oppose you. Whether you're making eggs or being Uber.

Right.

Or Airbnb. Right. Every major company has seen resistance, and it's just a part of being an entrepreneur. And probably the thing I'd advise people, because I mostly like to speak to entrepreneurs, is be cognizant about that. Understand it early and position yourself to take on these challenges.

Right, I completely agree with you. It's amazing advice. So let's, let's focus on entrepreneurship for a second. We'll put a pin in Hampton Creek, we'll get back to it. Um, you've—

by the way, the company is doing awesome.

You've— debatable. You've said on, um, on many occasions—

here's a journalist who doesn't know what's going on, has an opinion just like he does to make interesting stories.

Well, hopefully. Hopefully there'll be an interesting story that comes out of this. There'll be a story, certainly, Vinod.

I know a lot more about how they're doing, excuse me, than you do.

Okay, so please tell me. No, no, no.

We don't need to talk about anything. We did last year.

Yeah, and the year before that, and the year before that, which is one of the reasons why I bring it up. But moving along, you have started two very successful companies, wildly successful companies. The industry has changed incredibly since you launched those two. If you were an entrepreneur now, would you go to VCs for investment? You know, you and John were very involved in getting Sun off the ground. Would you go to a VC right now, or would you choose some other path?

Yeah, this is an important question. The world has changed a lot. By the way, I never look back.

Right.

I never keep a plaque. I never keep an award. I throw it all away. None of it my office or my home, just you always want to do the next interesting thing and not look back on what you've done.

Sure.

The question you asked, should entrepreneurs go to VCs? Absolutely. Because you writers like headlines, I'll repeat the headlines. From last year. I don't think 90% of VCs add any value, right? And 70% of them actually add negative value. That gets tweeted a lot, so it's good for your— for media.

It's a nice truism.

Okay, so entrepreneurs can benefit a lot from the right help and advice, and you can avoid costly mistakes You can get incredible leverage in hiring people you wouldn't even— who wouldn't even talk to you if you have the right help, right? And so an investor isn't about money, right? It's the help and advice you can get. And in fact, one of the troubling things to me about the current environment is people are focusing more on the money and the valuations.

Right.

Then on what do I need to make my startup successful. And I do really wish people would do that. I write a lot about it and I put a lot on our website, like how do you select your starting team.

Right.

I call it gene pool engineering the team. Really critical exercise.

And it's on your blog and everyone should check it out because those are wise words. Now you mentioned Uber and Airbnb, um, Palantir, Snapchat, SpaceX, Pinterest, Dropbox, WeWork, Theranos, Square. These are the biggest companies in the world right now. Um, are these companies overvalued?

You know, again, this is a question only writers like. Who cares whether they're overvalued or not? It creates an illusion of knowing to have an opinion. So I guarantee you, anybody who's given you an answer before on this stage doesn't have a clue.

So Bill Gurley doesn't have a clue.

An illusion. What I can say in general, and again from an entrepreneur's point of view, what should you do if it's a bubble and what should you do if it's not? That's the important question.

So what should you do if it's a bubble?

First, you should take money and have plenty of money fuel in your tank. But probably more importantly, money becomes dangerous if you assume it's going to keep flowing. I advise entrepreneurs to make sure they can get their burn rate to a sustainable level if you hit the brakes hard within 90 days, right? So how you run your business is very, very different if you say, I don't know what's going to happen, I don't know if the valuations will sustain or the money will keep flowing or not. I'm not taking an opinion on that, and anybody who does I think is creating an illusion of knowing, but From your point of view, what's important is in any 90-day period, indefinitely in 180 days, hit the brakes, be able to hit the brakes. I call this if-then planning. Don't build a plan, build a plan, multiple plans based on what you see happening both to your own business, your own risk, but external risks like will the money keep flowing.

So when you think about external risks, uh, for the portfolio companies that you're in— and you're in an amazing array of portfolio companies— what is the thing that you worry about the most with them? What, what advice do you give them?

Look, I don't worry about one thing for all companies, right? Each company is different. If there's a common theme I'd say the biggest problem companies have and probably the biggest limitation to their success is hiring talent. Now, getting the right talent outside of the Bay Area is generally hard in many areas, not in all areas, but in many areas. But in the Bay Area, it's really hard to— excuse me— retain talent. And fight for talent. The best people have so many offers. And again, I probably spend— my real job is a glorified recruiter. I spend more of my time recruiting than any other single activity I do. I'm constantly interviewing people.

So who are you recruiting for right now?

The question I should ask is, who am I not recruiting for? I spend an incredible amount of time with my partners on LinkedIn like a recruiter would, right? Right. I spend incredible amount of time making phone calls, sending emails, actually interviewing people, right? And not just the senior management, but sometimes it's critical engineer needed for a company, I'll go help recruit.

What is the best piece of advice you've given to an entrepreneur in the past month?

What's the best piece of advice? I'd say, I don't know what entrepreneurs think, each one's a little bit different. So let me start by saying I'll offer I often say to an entrepreneur things I actually don't believe in for them. And here's why. If I'm agreeing with them 100%, I'm actually not adding a lot of value.

Right.

Right? So if I think they're missing a perspective— so let's say there's a very technical founder who's doing a lot on technical development. I'll ask him about branding, even if I don't think that's as important, because— but because I think he's missing that perspective. It's a little bit like sailing. You don't aim where you're going, right? You look at where the wind is blowing, right? You aim such that you end up where you're going while aiming somewhere else. So I try and bias entrepreneurs, right? And try and challenge their thinking to add elements that make up for what I think their biases are. Now, sometimes I'm wrong, but I try and make up for their own biases.

So if you were to give some advice, telescope out, let's move from the granular to sort of the more universal and talk about some of the general trends in technology that are going on right now. Where is the wind moving? Where are things going in technology? What should investors, what should entrepreneurs be thinking about?

Can you hold that question? I want to add one quick thing to the last thought.

Do your thing, Vinod.

Yeah, I don't pay attention to his questions anyway.

Right. And people shouldn't pay attention to many of your answers. They're kind of platitudinous. But go on, sir. Please continue.

OK. Hopefully I'm more useful to entrepreneurs than he is.

I'm sure you are. You have the money, sir. You have the money.

Here's what I would say. Experience in your business is important, but experience is a bias, and much of the biases people have from being— understanding a business is not useful. And I was going back to what's useful advice to give, right? No. So I always say, have some people on your team who understand the industry you're entering or attacking, but be driven by original thinking. And what's more important than experience is the rate of learning, right? Uh, some entrepreneurs I find respond negatively to critique. I think entrepreneurs should look for critique, and people who agree with you are not being useful to you.

I think that's absolutely right.

So I just wanted to add that part. True for any business. So back to your question, what's interesting? You know, there's so many interesting things going on in virtual reality, augmented reality, 3D printing, drones, robotics, machine learning, AI.

Right.

CRISPR, if you're in genomics.

Telling—

deciding which ones are most impactful, yeah, very hard to do. Almost certainly, if you look at the recent surprises, right, an Uber, Airbnb, or, you know, any of these kinds of things, right, WhatsApp, these things will keep happening with more frequency, and that's the That's the reason entrepreneurs are essential.

So, a question about that just for a second. You mentioned Uber, you mentioned Airbnb. These are all companies that have done phenomenally well. Going down the list, you're an investor in Square, you're an investor in Stripe. What is it about those firms, or those companies, do you think? Was it a matter of timing? Was it a market?

So timing matters, right? Luck matters a lot, but probably the vision of the entrepreneur matters. And what's really important for entrepreneurs is to have a very clear vision. I like to say, be obstinate about your vision, be flexible about your tactics. That means your instincts on the vision are often right, but how you approach it— because you're approaching a new area is often wrong, and the people who learn the fastest, who keep learning and experimenting and iterating, but don't give up the vision in the process. It's not completely random, and yet it's not this set your vision and don't—

So it's about commitment, right? It's about following the vision.

You have to be religious about your commitment, be obstinate about it, and then keep changing your tactics as you learn. Having said that, what's surprising to me is how many areas are interesting now. So forget Hampton Creek and eggs, we're designing a better hamburger which would improve the land area used or the environmental footprint of a burger dramatically. Right? 30% of the world's land area, usable land areas used for animal husbandry, right? If you could cut it by 80%, that's a huge interesting problem and a very big business.

That I think—

at the other extreme, you have this company in New Zealand that's launching rockets.

Which one is launching rockets?

It's called Rocket Labs. Sounds creative name.

That is a very creative name.

But within all that, right, if I say you mentioned Square, right? The investors in Square In Affirm, Stripe, there's other companies like Swift and Dwelle and Fundbox. Financial services going through a revolution, right? Add the blockchain company called Chain or Blockstream doing really interesting things with the blockchain. Really interesting area to innovate, right? Healthcare, both in fundamental science to say, could we do lab tests differently? Could we characterize the human body differently? Why shouldn't a pinprick of a laser printer-like device at home that costs less than a laser printer give you hundreds, if not thousands, of biomarkers of a finger prick every week, right, instead of just one glucose reading like your home glucose meter is? That's a really interesting problem, and that's fundamental science.

Right.

At the other end, companies like Ginger.io completely reinventing psychiatry and mental health.

Through big data, right? It's all big data.

It is big data-based.

Right.

But what they're doing is saying a psychiatrist can handle 10 times as much work.

Right.

A live course saying a cardiologist can do 10 times as much because 80% of what the cardiologists do systems and machine learning can do, right? So another company is doing blood glucose the same way, diabetes. So every major disease, whether chronic disease especially, whether it's cardiac disease, mental health, diabetes, hypertension, are really interesting opportunities. So financial services, healthcare.

A lot of investors have talked about genomics as, as being sort of the next breakthrough. So genomics is the new software. Is that something you ascribe to, or is it more incremental than that?

I'd say it's a very narrow view. Genomics is a small part of healthcare. I would venture to guess that epigenomics is more important than genomics. Okay. That proteomics is even more important than genomics. All metabolomics, as it's called, So let's not just take one little technology, that's technology-driven. If you look at the problem of healthcare, then all these other things become very important. So if you ask me if I'd rather know my genome, yeah, or my proteome, my proteome is way more important.

Why so?

Why? Because it actually says what's going on my body right now, okay, not what I inherited as software code 60 years ago.

Again, it's this focus on the now that you have. Don't look back.

Yeah, it's this focus on new and frankly a little bit of focus away from the fashion.

Right.

Genomics is important, but it is fashionable to talk about. Why people don't talk about proteomics being more influential to disease? And genomics is one element of proteomics.

We have time for one last question. I'd like to talk a little bit about sort of, you talk about the talent pool that you need when you're starting a company.

Can I just finish the areas?

Oh, sure, sure, please.

Maybe make that the last thing?

Sure.

Robotics, incredibly interesting companies in robotics. In machine learning and AI, incredibly interesting applications and actually fundamental platforms. Both are really interesting. So 3D printing, really exciting areas.

This is, this is a list. Is there anything that's your favorite right now? You seem to be doing a lot more in healthcare these days. Is there—

actually, we've done some really interesting things in 3D printing.

What's the— what's— which one?

The problem of metal-based printing and low-cost printing has not been solved. Yeah, there's a couple of new technologies coming along in fundamental printing that are interesting, but the same is true of robotics, right? Some very fundamental problems and profound, right, being solved. And so really interesting things from— let me give you one example, and let— this is a good way to end. I know we are out of time. Yeah, we have a company that can do robotic weeding of fields. Yeah, on fields. If you did that, you could eliminate herbicides, right? Because you could read with machine vision and robotics. If you eliminated that, you would eliminate certain companies' locks on seed genetics. So you could completely change the agriculture system by doing one thing here and affecting things at the other end. This is what I love about technology. If you add Uber to Google's driverless car, it might actually start to replace public transportation because the cost cost per passenger mile might be cheaper in a scheduled service that's with driverless cars, electric cars. So it might change the future of the automobile because cars would go from gasoline to electric because they used 100,000 miles a year instead of 12,000. You might actually go from owned cars to shared cars. And you might go from long-term public works projects, like to build the rail system from San Francisco to LA, to these self-driven cars that are so much cheaper to operate and so much flexible— so much more flexible. And this notion that you can predict where traffic will be in 20 years is silly.

And with that vision of the future of automation and robotics, I'm going to let you go. Thank you so much for the time, sir. It's always a pleasure. Always a pleasure. Thanks.