ABOUT THIS EPISODE

Today we have a great conversation with Silicon Valley Legend Vinod Khosla, co-founder of sun Microsystems and subsequently Khosla Ventures. 

 

Vinod has run Khosla ventures since 2004, prior to that Vinod spent time at the VC firm Kleiner Perkins. Vinod studied engineering in India and at age 20 failed to start a soy milk company. After receiving degrees from in Electrical Engineering from IIT New Delhi, Biomedical engineering from Carnegie Mellon, and an MBA from the Stanford Graduate School of Business Vinod started Sun Microsystems in 1982 which eventually sold to Oracle for over $7 Billion. 

 

Lets listen into Vinod Khosla interviewed in Silicon Valley by Startup Grind’s founder Derek Andersen. 

English
United States

TRANSCRIPT

00:00:00welcome to the start of crime podcast starting a company is not for the faint hearted always questioning questioning questioning tweaking tweaking tweaking where we talk to entrepreneurs venture capitalists and thought leaders about how to build a great company like my friends like it occur crazy I think you've
00:00:13got to be a little and change the world in the process we optimize for impact instead of profit it's never in a more exciting time to be an entrepreneur from started growing chapters across the globe the chance to direct Cape Town Boise Idaho London the mullah Palestine one
00:00:29Joe China it delivered to you every Monday and Wednesday it's a start grind a they're all going to Monday's episode of the starters ground podcast great conversation with silicon valley legend but no because like co founder of Sun Microsystems and subsequently Khosla ventures but it is wrong because
00:00:46the ventures since two thousand and four prior to that and it's been time at the VC firm Kleiner Perkins was studied engineering in India and in his early life at age twenty failed to start as formal company after receiving degrees in electrical engineering from I IT New Delhi
00:01:01biomedical engineering degrees from Carnegie Mellon in NBA from the Stanford GSB than it started Sun Microsystems in nineteen eighty two which eventually sold oracle for over seven billion dollars let's listen into Vinod Khosla interviewed in Silicon Valley by started grants founder Derek Anderson Hey good evening so I
00:01:22take care of stardom grind in New Delhi I'm the director there of I'm here to interview somebody of who needs I don't think any introduction he's every tech guys idle probably of a middle class boy from India who came to America way back in the eighties found co
00:01:47founded a company and you know turned it around and made it into I'll you know became the one of the biggest wench a capitalist firms he's been termed as the astute wench of capitalist in the in the world and he loves to ski please put your hands together
00:02:07for Mr Renault because a lot good evening everybody thank you for coming certainly your third time it started crying you're kind of becoming a staple here so thank you al I love coming to talk to on knows how many will you buy here last year anybody right every
00:02:33time I've interviewed I started with the question but then you always had different question do you want to start with so I'm gonna just let you start tell us I have a habit of not like like all on notes have a habit of not confirming but I like
00:02:50to ask a question surprise you let's talk about the relation between entrepreneurs and investors what what should be the expectation of the people that I'm taking money from an on letting come in to be part of my company UP I find this question on the nose give you
00:03:12less hot too and maybe one the most important early decisions they make and investors connect Iraq with you once a week are once a month or once in a board meeting every six or eight weeks are and they're gonna exercise what they think is a lot of pimples
00:03:38it's the most important decision you make in who you want to park no way and and and people are locked up for attention to who their co founder is but not who that investor money is the least important thing specially in early stage that you get from an
00:04:02investor advice networks all that but frankly I think the most important part in investor died ruled that can invest a place for non note yes first having them think hog so my job with any art note is to have them think about the things that have been part
00:04:30about bush then think about things I may not believe in but I think they should at least think about so I often take points of view that I actually don't believe it because I really believe a business plan gets better and non nor gets better if they're sensitized
00:04:52to other issues I dont their natural inclination are all your entrepreneurs know this to those innocent confusing it's like it's the note symbol is the same answer is the I mean I don't I don't care whether they believe I do or don't believe it and sometimes I'll tell
00:05:10them I don't believe it but here's why you should think about %HESITATION you want somebody who pushes you'll hardly makes you can call it pushes you to your limits and tries to explore every possible risk in your business black now some of those risks are real some of
00:05:35them are Percy but if you look hard about them you can handle them sometimes I died say too on the nose and occasionally on the will come to me and say I'm not really looking for money so I don't want to talk to a lot of recieves the
00:05:50nice guy it's okay to still talk to re sees because every time they still face a reason they don't like about your business plan yeah identifying a risk on a potential risks and if it just a potential risk and not a real rest you can dismiss it but
00:06:10only after you think about so somebody who pushes you to think about things even makes you a little uncomfortable I think there's real value in back to an on now the flip side of this and this is one of the reasons I don't go on boards anymore I
00:06:31seldom go on boards because all the V. sees one of work on this or that and I don't believe a board in a small start up company should ever walk on anything it should always be the founders decision hi show the job should be to push them hard
00:06:53make them paying and then let them decide not the board decide what to do it's a really important distinction more species do exactly the opposite they want to be nice they want to be polite they don't add any value because of bad if they have concerns they don't
00:07:11so first damn but then they won the Wharton this or that so are you are you saying I mean party going I'll tell you that in thirty some years of being on boards they never one that I have warded against what a management team walks even if I
00:07:33disagree with them there's one exception I'll come to even if I strongly disagree all argue with them all debate for them all pushed out but I've been locked ward against them and the only exception is hiring and firing of **** and sometimes and people who say they never
00:07:55do that are lying to you sometimes it's necessary I was working with somebody today and the board wanted to fire them and I talked a lot about all the things he could do the next nine months to award getting fired right and so my job and I wrote
00:08:19a blog on this ng techcrunch probably three years ago that I think all politics should read it's too far clog the first part is because how not to need a new CEO because this comes up a lot and a start up is almost always better off with the
00:08:40founder in the foundry in state driving the company is it is in that it is in that a to be finishing the pocket second blog I wrote if you want to do if you do need to see I'm no good I'm portant reading fall early stage found a
00:08:56sorry I didn't mean to interrupt you know it's okay %HESITATION but back to this question of what you should expect from a board member are you going to deal with it dead people around you book board members investors even co founder will gonna push you hard disagree with
00:09:22you but in a constructive way and not people who rubber stamping agree video and and then get people who like to make the decision not think that somehow the board mode no board member who comes in once every six weeks for a board meeting while you're working eighty
00:09:44ninety hours a week is qualified to make a decision any decision there are so many nuances to developing a start up that somebody who isn't in the trenches dealing with every small issue is never gonna be able to aggregate it into this is what we should do what
00:10:13do you think you can multi few off on if you show up every six weeks yes platitudes that every VC talks to everybody everybody else about what playing golf I don't play golf but the ski and I skate I can talk to the seas while skiing anyway sorry
00:10:32go ahead no it's fine I have a lot of opinions on start ups next year maybe we'll just %HESITATION will get it to move the chair just right here right now %HESITATION I'll talk to don no yeah %HESITATION I mean eat so I've heard you say this before
00:10:56that you always agree the management team but as an entrepreneur or the ability to hire to fire me is sort of a huge exception to like always agreeing with me right yeah so I mean I mean that's the biggest thing right boards can disagree boards can have this
00:11:14route but are you ultimately when you when I'm taking your money do I think with a high degree of confidence that you're not going to throw me out and kick me out of my own company so the best way to do I answer that question there's no one
00:11:27answer to that question we try really really hard to have the founder and CEO I spend a lot of time trying to courts that to be successful and build a team around them that will make them more successful fundamentally if the founder is not C. L. you've lost
00:11:52probably the most key element of a start up instinct and insight and a particular philosophical approach to doing tax good managers don't have belief system they know how to manage people absolutely critical in a start up not in the C. overall so what makes for a good manager
00:12:20makes for a really bad charter new territory be disruptive in the big gallery out approach it or talking only those two personalities are not similar the matron function is number two down the leadership function up here is our belief system here's what we want to do here is
00:12:43what you want to cry his the disruption we wanna call us when the founders have that that's why very few great managers can charter new territory and that's what you want to start up to do and so we try really hard to make a founder successful I'm I'll
00:13:07give you an example this public example John hearing but CEO off the cot kill the last weekend I tried really hard now he said he can lead that company without being CEO and I just kept saying to him John don't give up the CEO type you can ask
00:13:27it I fought really hard with him and he said I don't do any of the management and finally got it I said okay and it's worked out very well at look at this big company now but keeping that founded instinct is sold important back to us they investments
00:13:49worth a lot less with the manager at CEO or founder CEO so it is necessary sometimes so you'd be I'd be lying if I said it's never necessary but you try really hard to avoid it and you want three season one and cottage style what metrics to measure
00:14:09yourself by on a weekly monthly yearly basis I thought like I said I don't go to board meetings but I need wet founders and sometimes take teams regularly and I twenty eight and measure each meeting I'm gonna take up two or three dollars a found as time and
00:14:34his team style I always say did I walk out of the meeting with questions that are really important to their business if I haven't made them think I've wasted that if it just an update to me it just a financial review if it's just sales reporting I've wasted
00:14:55their time if they walk out of a meeting saying his two or three things I need to think about hard or two or three people I need to case that's to me a matrix overall I sort of say if I haven't doubled the potential of a company the
00:15:14markets they're going after the way they're approaching it the revenue that getting the business model innovation that value doubles the value of the company then I as an investor haven't added enough bad that's all I every year or every what over the course of an investment okay I'm
00:15:34to me very few people look at it that way very few people even believe you can do that with founders Elwood companies I've completely believe it and I can give you ten names of people to talk to say yeah we talked about our company differently all we wouldn't
00:15:55have done this or that the other thing is and you're talking about this outside I had this view that what a company plaque is largely irrelevant I've talked about plans not being that valuable business plans a company in my view becomes the people that hires because they are
00:16:19the people in the trenches video for eighty hours a week influencing your decision so I spend an incredible amount of my time recruiting at every level in the company whether it's a key technologist for that's a product manager what level down to the product manager level I've done
00:16:40individual engineer so I've talked to some of the seas about this by you specifically because you're the only person that I know that does this and %HESITATION and some very smart people said the note for note is way too smart to spend his time doing this and they
00:16:56and they do completely different things so what what is your response to that why do you keep why do you why do engine why do you interview engineers so if I can avoid a hiring mistake or get a great resource on the boat now you're recently competing for
00:17:13a engineer in one of five start ups against Google Republicans lost that particular about the Google was offering I'm millions of dollars in our seats but it was such a key person that they could change this company in it's well worth my time joke I can tell in
00:17:36order to know what to do that's not going to be a factor I can raise questions but unless their team is complete and and and desperate enough to have multiple points of view diversity in that team they're not gonna be able to take a question and handle it
00:17:57well because it's not just the dialogue with me all the conversation that goes off on after they go home yeah getting the right team is the best way to help a company think broadly I think better think higher so I spend incredible amount of time doing that because
00:18:23the best way to help yeah you can be on the board and say no you're going to pursue this business plan that's silly for a board to walk on guided the founder don't believe it they're not gonna do it or do it what a quick break from the
00:18:36note for some reason started headlines Insterburg about reporting started his recently raise one point seven million dollars in its seed round led by excel Insterburg provides an SDK that lets apple users initiate bug reports by shaking their phone this tool is reportedly in twelve thousand applications already which
00:18:52includes twenty six of the top one hundred iOS apps anywhere has launched an indiegogo campaign for it's smart home monitoring system the device attached to a light socket application that allows users to manage their lighting and monitor the other connected devices anywhere is raised forty four thousand dollars
00:19:08of its thirty thousand dollar goal T. mobile has announced a free stock initiative for its post paid customers team mobile's main account holders would receive one share with more stock awarded for additional users and recommendations account holders get up to one hundred shares a year the stock is
00:19:23currently trading around forty three dollars T. mobile has also announced rewards program offering a new gift each Tuesday such as movie tickets and says let's get back to the interview with and what's that you know that the values of a company become this like magnet of people right
00:19:38now in that they they become who the company is and who it attracts almost in this on natural way right yeah and so how do I as an early stage %HESITATION %HESITATION entrepreneur how do I determine what the values of my company are what those core tenets are
00:19:55when I'm just I'm so early I don't even really know what I'm really I'm I'm actually building so look it's an evolutionary process sometimes founders know exactly what they want to do but when they do they often start changing it as they get Mike Tyson I think that
00:20:14everybody has a pre fight plan but when the first plane lands that plan goes out of the window I quote wait founders know this right and you can pretend to your investors in your board members and others that you have this business plan it's largely irrelevant we got
00:20:35back to the value of a business plan because there is some value to doing one but not much value to following one you don't mean if you don't mean it tangible business plan you're just saying that the plan you put a year you're not you don't you're not
00:20:54still seeing business plans at this stage are you not business finds a deck yeah yeah yeah to me it's the same kind but what a founder to go back to your original question be can come back to the business plan question has to do is evolve a belief
00:21:16system and when people talk about MVP and fail quake what they're really saying is run lots of small nonlethal experiments in in retail plaque because if you try to do something new applying conventional visit if you're trying to do something healthcare you had a big healthcare name what
00:21:41you're gonna get is healthcare traditional beliefs and you're not going to be able to make any changes so now how can a company that performed not too high anybody out of healthcare in the lead roles you just they do the traditional thing as opposed to new things so
00:21:59of how good then it's not like that learning isn't important and they can get one of those guys out of five in their senior team just to say somebody %HESITATION doesn't this look this way and you as a founder go figure out why it doesn't look back way
00:22:13as opposed to accepting but it a rating and running lots of small experiments and feeling in small whites is exactly how you evolved a plaque I call it a plan to plan or a flexi plan you're not doing a plan and executing on and that I can help
00:22:37a lot very often I argue with people Fonda's pretty hard about why they should follow advice they get it I'm not telling them what to do I'm mostly telling them what not to do so they can figure out what to do because I can tell them figure out
00:22:57what people tell them what to do because I am not in that eighty hours a week working on one tank does anyone says that become part of figuring it out this is a fairly nuanced arguments and so it's it's a hard one to understand but you almost always
00:23:17have all good plans you never make that that raises two other related questions one why is the plan import a planned Wharton because when you start out ordered that you want to think hard about all your wrists and in doing that and talk to as many people on
00:23:39how you might fail once you know that those opinions as you learn you can bend the plans again so firewall to gain from makes maximize the probability of success but also minimize the probability of failure so that's why planning or thinking about your dad core business plan is
00:23:59important but you also have to realize as soon as you get in the fight you want to start changing it and changing it and I hit board members who say what did you say a year ago that's largely irrelevant and CEOs who are founders who start sticking to
00:24:18trying to deliver what they promise generally end up in the wrong place because that's based on the assumption you knew a year ago everything you know not that's wrong it raises another really important question all of you will face how much money to race not a question you
00:24:37asked but it's a really critical question the more money you raise the more people you hire and the more you start executing on your initial plan as opposed to saying I actually this is my first gas and every two or three months I'm gonna change my plan and
00:24:58I'm not going to start executing I'm going to start discovering my black much easier to do when you have small amounts of money not a high burn rate not a lot of rest and so I generally say people who raise more money read use their probability of success
00:25:17because of this fact the higher team to hire experienced people and their start executing on the wrong plaque or on the rigid class it's a common danger I see this is exactly what's been happening in last year's though and this is been driven by venture capital this has
00:25:37been driven by this kind of madness that we've been around right now so upset with feces who one act do large findings for companies that aren't ready with their plan isn't big enough you all don't do that you'd never done that we try not do that okay I'd
00:25:55say we seldom do that once in a while we've done it for some particular reason but then I spend all my time pushing founders to think much harder about what they're trying to do this is very hard and since I'm talking about this issue one way to reduce
00:26:20the risks used to engineer governor scene to your the gene pool in the company and the founder sat in the kitchen cabinet or the senior team whatever you want to call it Joe a couple of years ago I wrote another long blog about engineering the gene pool off
00:26:39a company many of you would be looking focal founders or partners please read this blog it'll help you think about who you want as a co founder how do you build that team the number of times I get initially teams coming to me early and they have hired
00:27:02a VP of marketing or VP of sales and they exactly the wrong people very often I performed an incomplete teams who are wrong complete and most often look if your technical for Fonda in Europe Vizard in physics you made some big discovery or done something in intact two
00:27:25machine learning you won't know what a good marketing person and anybody your heart is probably good on the resume and credentials but not be able to think critically about your problem so get help in doing that if you hire Oscar VP of marketing in a big company they
00:27:49won't know what the VP of marketing enough five person company needs to do and how much is uncertain they know maintenance marketing not disruptive marketing so those kinds of things become really important and that's what I push fungus to do sometimes it makes them uncomfortable because I'm questioning
00:28:10a lot of things but if they feel comfortable I'm never going to war one way or another I'm gonna let them make the decision most of them get pretty comfortable after awhile most most people that I have met %HESITATION that our schools called in at peers of you
00:28:29%HESITATION and they have had the success you've had most of them were just kind of take it easy and one thing that I I find very interesting unique about you is you seem like you still have this real chip on your shoulder about making things happen and fighting
00:28:48and and kind of like and they are making a change to you what you want to make whatever is but I wonder like for so what why do you still have that do you've proved so much you have nothing to prove at this point %HESITATION you've been so
00:29:03successful how wide you saw that and how do you still have that because they are you still have the energy to okay I've been through so many more let me answer that question but I'm going to start with a question that directly relevant to find this if you
00:29:18had success before I'm not talking to find guys get out and out trying to make everything I say rather wing to fundraiser that's why the big fight for techcrunch the last time I spoke there it's a funny interview because the press hated it because they kept trying to
00:29:36ask me questions about valuation being a higher low I said that's not relevant to find out if it's relevant to the press to write articles and not here why I look at you as an arch better I don't know I don't I I mean yeah I there there
00:29:53there are a few people you know somebody like a trip Hawkins who's who started EA in the early eighties has started two or three company sent with varying levels of of success he still fighting right and there are very few people that hit these levels of success along
00:30:08the way you founded cofounded Sun Microsystems you know you could have done anything you wanted and yet here you are still fighting says as of through let me explain that but first let me say the more success you had in the past the less critically you examine your
00:30:25own assumptions at the founder so if you had a great success your probability of success in your new start up actually goes down unless you really critical of yourself not so just a word of caution the more credentials somebody has the more assumptions they make the last state
00:30:48passed them the last they do the MVP paying and the more likely they are to fat that's why Vissi founders who generally first time founders do so while and and I love that mod I have a history of not looking at history so I was telling gag I've
00:31:09never captain award I got I don't take on as I turned them all down not throw them all out I don't do I PO tombstones I told them away I never looked back to me this is not about a chip on my shoulder I'm very happy I'm very
00:31:27satisfied I'm internally driven I'm very internally driven and I gave a talk in there the YouTube video I did that one died he conferences back pocket for an all about this issue most people get externally driven what's expected of you I'm internally driven and frankly I'm sort of
00:31:49selfish I'd what's fun fun rating a disruptive new start up is a lot of fun mentoring the founder is a lot of fun helping them expand the scope of their start up or help them build a team that's a lot of fun looking at spreadsheets and no fun
00:32:07for me I got off the border square just before the IPO because I feel so no fun for me you know being in the board room status is a waste of time to me working with on the notice is a lot of fun that's why I do it
00:32:29and I do it because I'm motivated to it I'm also very motivated for the most impactful start ups that can actually have an impact full future that can make a difference inside that's way more important a role I can play helping them succeed then state spending my time
00:32:51like a lot of retired people on an on off on philanthropy on a foundation of something now Bill Gates tuna amazing job at that he's that he's a rare exception yeah okay but most people sort of going to this retirement mode but they want to play golf right
00:33:08I find looking at the start of way more interesting and playing golf it's much harder to write alright I prefer brainstorming a new idea of a more interesting than watching a movie it's just more fun specially if it can be socially impactful I don't spend a lot of
00:33:28time on things that I actually don't think a socially impactful there are other partners enough firms that do that and that's great I just like making a difference too but sometimes I do it just because something's a really cool technology would just what do we you know because
00:33:47like thank you for being here everybody

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