Conclave 2020 - Vinod Khosla in conversation with Mr Gaurav Chaturvedi

in between iitv folks thanks for having me we know the very good morning to you as an engineer who grew up hearing a lot about sun i am very excited to have this chat with you now we had a long list of questions and we could have gone on for hours and hours but given the limited time that we have we try to keep it short we have a few questions about your principles in general leadership business and life some of the questions about startup and investing your thoughts about technology trends and your key learnings from your personal journey should we get started can you hear me okay yes or no we can hear you loud and clear excellent um well it's great great to be here and to be talking to everybody uh so uh part of it questions uh great so let me start first with right and brings in a fresh perspective and you have successful examples of both of them you have somebody like one side and then you have uh elon musk on the other side what do you think about this you know my my general view and my opinions are quite surprising in this area people who know an area cannot innovate in that area um in a radical way when uh when you look at incremental innovation say if intel was to go from a 30 micron nanometer process to 16 to 7 that kind of innovation where the path is laid out existing players with expertise in an area can do when you look at the really large innovations in society i haven't come across any examples of large innovation you mentioned elon musk like you would think lockheed and boeing and uh would innovate space a startup spacex did you'd think general motors in volkswagen uh could innovate cars but frankly the two only two innovators in the last 50 years have been uh tesla and waymo now both with no experience in cars if you look at retailing when amazon started there was you know they had no experience you'd think walmart or somebody like that put in a wait but it wasn't the case uh when you look at media it wasn't the big media outlets it was twitter and facebook and youtube and netflix so um and it applies in other areas too in biotechnology none of the pharmaceutical companies did biotechnology it was a startup here called genentech so no matter where you know no taxi company did uber uh no hotel chain did airbnb so when you talk about really large innovation that spreads rapidly it almost always comes from people who don't have expertise in the area now they will hire expertise but the fundamental vision the driver of how they're running it is run by the innovator who is reinventing the space from first principles i think for logical innovation uh you have to have radical thinking in the software i was just talking yesterday to somebody who's building ai-based tools for business intelligence it's a big area plenty of companies and they kept talking about what they can do with ai for the business analyst and i asked a simple question i said why have a business analyst why not serve you or hire the manager directly and replace the business analysts they weren't thinking radically my own passion is you can help doctors with ai or you could eliminate the need for doctors and scale it to a much more consistent quality higher quality and frankly you know for in the context like india a much cheaper uh set of medical services that are always available so it's it's how radically you want to think makes a big difference totally agree to what of what you're saying totally makes sense for a radical uh change it requires first principle thinking and sometimes experience can be a burden but and frankly let me add one more thing um if you're in an area there's a related sort of issue not only do you have to think fresh you have to be in a fresh organization so people who have a lot of resources uh which is the large corporations almost never innovate why because they don't like to take risk um it's a very important principle that you can't do large innovation you can't do incremental innovation you know when you go from one semiconductor process node to the next process node the only risk is really how long will it take will it take three iterations of five to get it right get the yields up that kind of question if you're trying to do something really radical uh you have to take risks and to take risks you you sort of have to allow failure is very very possible and big companies managers for career reasons and other reasons not to look bad cake don't take a lot of risk so they don't allow for large innovation they they essentially reduce the risk to the point where the probability of success goes up but the consequences of success become mostly inconsequential so i like to say my willingness to take risk is what allows me to succeed a very interesting point without very interesting point in the same similar line if you have in the past talked about your preference for disruptive technologies as per you how important is timing for any disruptive technology to be successful in the market is timing really the key timing is not the key but it is important there's lots of reasons i'll give you an example long timeline time ago in the early 90s we were doing video conferencing systems which was very very rare then this kind of a zoom call was pretty rare and every video conferencing room cost a couple of million dollars and you know it took a long time we weren't getting market traction and then what happened was the iraq war in the 90s broke out and suddenly it took off so uh you have to get lucky in startups one thing i always say you have to get lucky uh just because you did all the right things doesn't mean you'll be the company will be successful so the way i put it if there's 10 factors that determine your success half maybe what you do a quarter maybe what your competitors do and the quarter last quarter is just luck can play a large role i just gave you a great example um we had a clinical testing company that was doing a few hundred thousand dollars a month they were automating with robots clinical testing uh and they were doing okay it was it was a very very low cost four thousand dollar liquid handling robot for the laboratory and very done in a very clever way and they were doing a few hundred thousand dollars a month and then covet happened and suddenly they're doing 15 million a month so luck matters but i do say luck helps with two things well if you're really prepared to take advantage of the opportunity in this case they were doing something very new and innovative and and luck happened the second thing i would say which is surprising to people is sometimes when your startup isn't working if you can hang on you give luck a chance so often tell my entrepreneurs the longer you hang on the more you'll give luck a chance uh so it does help it takes a random variable to be more precise a great great mental model for all our young entrepreneurs in the audience to really think of and your point about giving luck a chance really resonates with me i'd had somewhere that you have to have the return on luck is something that you should uh look for when you get a lucky break what you make of it makes a lot of difference yeah but you have beer to to do all the preparation give yourself enough chance to get lucky absolutely absolutely moving on and talking about entrepreneurship this is something that you've talked about uh earlier importance of building the right team for a startup in the initial days get a right co-founder get the first 10 hires right set up the right culture so on and so forth do you have any advice for the entrepreneurs on what should they should be keeping in mind while doing that anything that you've seen work or typical mistakes that you've seen often well so there's quite a few mistakes i said it really takes somebody really entrepreneurial and thinking from first principles to build a new startup uh on the flip side what you want to do as a startup is avoid all the mistakes that happen in an area this is where two things help adding diversity of experience uh to what your team helps a lot um two adding some of those experienced people who already know the space will actually they will keep telling you why things won't work and that's very very valuable questions the more questions you can get and so if you're building a car company and add somebody from the automotive sector on your team you're still letting your instincts drive decisions but at least somebody else is playing devil's advocate in getting the right questions in front of you so the more criticism you can get the more critique you can get the more good questions that can be asked on why it can't work that and if you consider them seriously in your plan and not ignore them those are really really valuable and diversity of thinking diversity of thinking also helps us there in a significant way diversity of team helps um you know we were doing a bio fermentation thing and they hired uh in new zealand because the talent pool was limited in new zealand they hired somebody who had destroyed experience and they came up with some ideas around the surface properties of materials which is what all disk drives are about that were pretty helpful so i you know if you have really smart people but with very different backgrounds and not group group thinking all with the same expertise um then it it can really help i have a document on our website uh on how you manage risk and there's a lot of entrepreneurial resources on our website but there's one called engineering the gene pool of a startup and it describes this process of if you think about all the risks you have and hire to those risks not the functions um then it's a very good start so great great point and i've seen that uh resource it's a great resource for anybody in entrepreneurs we've seen that when startups start to scale they tend to institutionalize everything which is the advice that everybody gives to them also right this is a good thing this is a good thing on one side but at the same time this can really hamper innovation because this can kill individuality how do you think about this how can an organization keep on institutionalizing and still keep the innovation going well so i have found that good managers are sensible people and they do sensible things big progress and big innovation comes from unreasonable thing thinking i'll give you two of my favorite quotes george bernard shaw said reasonable people adapt themselves to the world unreasonable people try and adapt the world to them their view hence human progress depends on the unreasonable person it is very very telling if you're a reasonable person if you're a good manager you're probably a reasonable person you will do sensible things and that's not how irrational in unbelievable things happen the startup gen journey is to start with something really people would say would be impossible and then say how do i make it not impossible uh just possible then i want to try and make it par not only possible but probable and then i want to make it happen so it's sort of a risk differently and that journey has to happen no matter whether you're an old startup or a new one now if you look at the big companies that have continued to innovate it's usually because the founder is the lead person so amazon's gotten to be a very big company but they've started to innovate uh in many many different ways i mean think about it the largest computing change aws came from somebody who was doing retailing not from ibm or son or somebody like that so veymo the car company came from google and even before then they went from the web to android one the large operating system why because the founders had the vision to say we'll take this risk so that makes all the difference so great founders can do that um you know it was i read a long time ago about five years ago that tata had an award in their company i don't know if they still have it but i read about it in the economist and i thought it was very very smart they had an award for the smartest failure of the year now that kind of thing where you encouraging risk and encouraging failure realizing that innovation and large success can only come from trying things that might fail is really good culture i don't know if they still have it but it'd be great to find out but that's cultural well that's a great point i'm also not sure whether they still have it but that's a great point moving on we all agree that it's very important for the startups to keep on iterating to keep on evolving to keep on pivoting some of the most successful startups in today's worlds are actually pivots off from whatever they started off do you see there's a risk when startups pivot or evolve a lot of going all over the place how can a startup keep on iterating and evolving but still stay true to its own core values and core mission is there a framework that you've seen work well there's a mental model i have which is i always tell people be obstinate about your vision be flexible about your tactics so if you can i use a lot of analogies to explain things if you sort of look at a shallow stream and there's rocks in it and you're trying to cross it you know you know you're trying to get across but it's almost never a straight line you'll step on a stone that you may zig left because there's a better foothold there then go right you zig and zag but your goal is still clear so that's sort of like one phase of it now you have to have the right goal and very often you can have the wrong goal and just completely miss the market so that's one kind of tactic um the second analogy i like to use is nobody got to mount everest without going to base camp first and so you have to have this large vision i'm going to get to mount everest but you sort of say here's my base camp i can get a foothold on and then you go for camp one and camp two came three came four and finally the sent to everest so from my point of view you have to keep this mental model your large vision and then all the zigs and zags you have to do if you go in a straight line to mount everest you won't succeed nobody's done that but the other flip side of that coin you know so what's base camp for for rest refuel get ready for the next assault but here's the thing very often people will have the right vision for everest but pick a base camp that doesn't lead there so you might say hey i'll get revenue traction get some revenue and that's my base camp in this business but if you pick a business that doesn't lead to the large vision you've picked another peak once you get there there's nowhere else to go on the way to everest so it's important i always say to startups sometimes slower growth paths or longer growth paths to a base camp base camps are very important get some revenue get prove your have a business prove your thesis is right but don't do it in a way just because you get revenue and it but it won't lead to mount everest so for example if you change your distribution strategy you might actually get to revenue faster say through a partner or something but not be able to do the things you want to do to build a much larger business and when people have done this well like jeff bezos he had his principles and his goals define we changed plenty of things zig zin zag but he didn't give up on how let me be a partner to walmart you know when you're a 50 person company it's easy to be tempted to be a partner of walmart in the case of sun for example when we started many many people said hey ibm digital equipment data general for those of you remember those companies are the biggest computer companies in the world why don't you partner with them why don't you be a graphics terminal add-on to deckwax and we were very very clear we wanted to beat deck and be larger than dak not be a partner to them and get a little bit of revenue because that wouldn't help us with that goal so goals are very very important and doing them the right way so um i think it's pretty important now there's another phase of startups where you don't know you're on the right track to basecamp it's uh very foggy at the base of the mountain you don't know and that's when it's also the time when you have the least money and the least thing to lease time it's really important at this foggy base to run lots and lots of experiments but do it in a way where no one experiment if it fails will kill you and so this is where founder instincts matter more than anything else uh you know this is why managers came to this phase the founders have to find the initial product market fed and try things they can't hire a salesperson to sell because it's not just selling it's feeling things out and say how do i need to change my product my strategy other things and that's the trickiest phase a lot of startups fail but it often depends mostly on the open-mindedness of the founder to explore ideas the more certain they are they are absolutely right about their vision the less likely they are to succeed because the less likely they are to do this exploration phase it has to be done with very little money and with with sort of a very open-minded but but still this conviction that i've i know where i'm adding value to something because in the end if you don't add value you're not going to build a large business so great great mental models i think choosing the right mountain choosing the right exact path right base camps great mental model you can help almost imagine a startup founder thinking in that way when you're very you know this foggy base at the mountain when you don't know whether customers want what you're doing and sometimes it's just twisting that a little and you get something else so i'll give you an idea most of you have heard of instacart when instacart first approached us they were in a very different business you know in the u.s of course you have the grocery stores and all that but you also have this chain 711 chain and 711 was a japanese chain built on the idea that we'll be have very small stores not large stores like grocery stores and will be very close to where people are so if you're sitting there watching a football game or a cricket match or something and you you run out of beer with your friends you want to quickly go get beer now 7-eleven charges very high prices but they're very convenient so instacart's original idea was we'll deliver things like that for when people need it in an instant you know you can't wait two hours or three hours if you run out of beer and that was the original pitch to us but they kept exploring and they found traction and found the right market because they were thinking about first principles like what's an interesting market how do we get started then how do we expand it pretty significantly a great great example great example of a of a good pivot a good zigzag journey going on to other things you talked about a few mistakes that the founders make and how it is important for the founder to have that founder instinct are there any other common mistakes that you have seen that and specifically i'm asking specifically for uh technology entrepreneurship founder who's primarily tech not from the business background that actually despite of having good technology they can't make a big large business well i i think very few people will admit they're wrong and i think the people who are open-minded in exploring and looking at what others are doing and learning from them will make a huge difference in your probability of success you know startups are probabilistic so what you're really trying to do at every step is increase the probability of success you know google was an interesting startup you know i knew these two students larry and sergey when they were phd students at stanford right and i met them then and what they had is this notion of links and the technical solution it wasn't a business solution they had two large things first they wanted to build a large company so when yahoo wanted to buy them they didn't sell out because they wanted to have a vision an obstinate vision of information for the world it's now of course expanded well beyond that but the second thing they did is didn't make a lot of assumptions about business models uh they looked around and there was a startup out of idea labs in southern california that was not really doing search but auctioning links on the side an advertiser can bid for a link and the founders saw that and said oh let's try that and that became that one adaptation became the core of their business it wasn't an original idea from google so this kind of adoption keeping an open mind sucking up other people's good ideas that's a really important characteristic if you're over confident if you're arrogant you know in some ways you have to be arrogant to believe you can change the world so it does need a level of arrogance and and really hubris to be a founder uh but at the same time you want to be really open-minded and say most of the good ideas will come from others so i i'll give you one more example of this sometimes somebody will say hey i i'm doing this startup i'm doing this retail thing i need a good vp of engineering here's a resume and i'll talk to the person i'll say and i have a document on our website called the art of hiring or something like that right and i will always say huh this person could do your engineering job really well build your technology stack but will they make your marketing person better that's a different requirement so people hire vertically a marketing person for marketing uh engineering person for engineering a finance person for finance but if these are people who ask really good questions from other areas they will make the whole team better and this exploration will go better much much better so open-mindedness encouraging a lot of challenge and questions and not sort of believing your own are really important kinds of criteria uh um that founders should encourage this is why i think more than one founder is all you will increase the probability of success because there's somebody to question you challenge you and challenging especially in the indian hierarchical context is really hard there's a good book recently written called willful blindness why don't people challenge uh opinions um a great point great point i think this is similar to what we've seen that when founders hire after picking the market area the quality of the team you build is the most important indicator of success now the hard part is it's hard to attract somebody who's really really good in an area when you're a small startup have no proof so it's a real conflict uh what do you do and that's when sales skills for an entrepreneur become really really important um you you have to sell everybody not just the customers but really overreach for employees and that kind of thing of course you have to sell investors you have to sell customers but you also have to sell every employee so sales skills become very important but the quality of the team you build and the openness of the culture you establish those are the critical factors oh absolutely absolutely your point of the founder being the salesperson is bang on either she is the salesperson or half of the time she's thatcher you have to straddle between these two absolutely how do you see at least in our experience my limited experience i've seen that people who come from with experience founders who come with experience have an easier time building a core team initial team because they can they can dip into their networks what would be your advice for somebody who's just starting out somebody a fresh iit bombay graduate well i i think it's what you do and how convincing you are it sells skills and how clear and ambitious your vision is yeah you know stripe is a good example patrick collison and we we you know we invested when he was very small almost no revenue he dropped out of college he didn't even finish college but what was stunning was the people he was able to convince to join him some very senior executives who would challenge him and discuss things and it was it was probably the highest initial valuation at which we've invested in any company with no revenue uh the highest um and he was able to hire for example an ai person who is now head of open ai where who's the president of open ai india where we are greg uh sorry where we are investors in opening eye too but he was able to attract that kind of person as a college dropout i don't know how old he was probably under 20. he hired claire miller who's still on his team very very senior exact from google she had a dozen offers and he was able to attract her so yes to joining um and conveying a large vision is always important uh but it is possible now what i would say is if it's not possible because it's not always possible and these things are hard and nobody's uh not everybody is a salesperson like patrick um you sort of don't hire mediocre people you may hire nobody the other trade-off i would make as a young founder you know if you're a five-person company it may be hard to get somebody really with 10 job offers to to join you right but what you can do is take another risk bet on people who are much less experienced or whose linkedin our resume is much less impressive but who have very high potential so hiring more high potential but really junior people and ferreting out who that is is is sort of another way to go at it when you know that five person company can't prove to somebody you'll be in business a year later because you don't have enough money um you know we had all those problems at sun too and so there's a business school harvard business school case written on on this idea of selling everybody to join you on sun also it's a very old case from the 80s but it's still taught even at stanford so i think look let me let me say something else entrepreneurship is not easy but those of you who've been entrepreneurs you know the press makes it very romantic but it is hard there's a presentation on our website that i first i actually did this presentation in 1986 when powerpoint didn't exist we used to do it on ac states for overhead projectors but it's called entrepreneurial roller coaster where the highs are high and the lows are low so any of you who's been around no knows there's really low lows when your gut is churning you're going through that trough you don't know how you'll make it it's a hard business you have to have resilience to be an entrepreneur it's not easy you you you stare death very often but you persist through it uh and and i think people have to realize it's not all romantic upside oh i agree 100 i think you made another very important point uh just now startups are hard it's a probabilistic scenario most of them end up failing what is the right time for a founder to acknowledge that the startup has failed and it's time to move on and how do you now deal with that what should be the way forward for that entrepreneur so first you know when we look at very early stage entrepreneurs but there's no way to judge whether something will work or not the key question we ask ourselves is what is how fast will this founder learn so i might ask a founder an odd question uh not because they're relevant to their startup but to examine how a founder thinks about a question from left field in a new space that they don't know much about because then you sort of see two things one will they be thoughtful will they how do they think from first principles or do they think from first principles but second do the an answer like well i don't know the answer but here's the three things i do to learn that'd be really interesting answer much more than confidently saying i do x or y it shows a thoughtful answer and an entrepreneur who knows how to investigate a new thing and how to experiment and learn so learning rate in very early so if there's any startup below 10 people which is most of the startups um the rate at which founders will learn and adapt and change is the single most indicated biggest indicator of how good they'll be so even if you look at yc startups and i hope most of you know what yc is the part question i always ask the partner at yc about who's managing that startup i'll say hey how much has the person learned or changed in the last three months even in three months you can tell clearly if they'll be a rapid learner rapid iterator or over confident and not willing to adapt not willing to adapt is a sure way for a founder to kill a startup um answering your direct question on when to give up it is a very very important question my partners always accuse me of never giving up early enough i tend to stick with entrepreneurs i use the following criteria or their new experiments to run how much will it cost to run those experiments and even though the startup has failed in three different pivots is the entrepreneur still learning and asking good questions and saying here's reasonable things to try so that's the criteria i used and i tend to stick with our founders way longer than most people um and you know from a good sensible financial point of view that strategy doesn't seem to make sense but if you like an entrepreneur if they're learning a lot if they're in the right space then it's like doing another startup that's a low-cost pivot and so it also depends on whether the founder believes in it and wants to do it and sometimes they're tired and not energized and then you want to give up if they are energized then you don't want to give up a great point i can totally relate to it moving on to something similar you talked about how you approach as an investor how have you seen the vc or investing ecosystem evolved both in the valley and in india what would be your key advice to founder anybody who's listening to us today and they're going out for fundraising and getting a partner look when i started the vc ecosystem was very very different you know there was a few firms there were mostly older people managing money uh a few mavericks you know tom perkins like kleiner perkins for the maverick don valentine at sequoia art rock who funded intel um you know it wasn't 3000 vc firms or frankly there's many more now and probably ten thousand angel investors um so i think the a lot more is possible and you have a lot more choices as a founder of course there's a lot more startups too so they're being bombarded with more startups i woke up this morning and there was five new business plans in my email from last night when i finished and and i finished my work at 11 30 last night when i woke up there was five more plans there um so there are a lot more choices there are and i sort of said it depends on what you want to do i think it's perfectly reasonable um to have a goal for example do a startup and let it be bought out right and over the course of two or three years assemble a great team and then make three extra money make enough money to be comfortable uh that'd be very inappropriate for us if he got three times our money on a startup we'd consider it a failed startup uh i don't mind it failing so i like to say i at least for me the criteria is is there a five or ten percent chance this will make us a billion dollars how big can it be and does the founder want to do it so that would be a founder who's compatible with us somebody who wants to sell quickly probably isn't um so for example if somebody talks about exits in anywhere in their deck i basically don't look at it further if they're thinking about exits before they start but it's not a bad idea there's plenty of venture firms that much prefer that model to my model right and so for almost any preference you have as long as you know what your preference is there's some startup some care about enough ownership some don't um i would generally say startups because they're so hard to do pick somebody who's going to help you achieve your objectives whatever they are um so it may be an angel investor who helps you with some problems in your startup or helps you with a network of people you can hire if it's a large venture firm it better be a big market so and and all we realize all this changes people can build teams but i another thing i say is there's a huge difference between a zero million dollar startup and a zero billion dollar startup the revenue may be zero but the difference is how the entrepreneur is thinking about the team they need to build the markets they need to go after what peak is it mount everest they set their goals on or something else and they're all reasonable and when you haven't had your first success which is most founders it's reasonable to pick more modest goals but that may not be compatible with a firm like ours right um so you know building a 10 or 50 million dollar business could be really really great for your lifestyle so in my 1986 presentation i actually had a slide that i i would encourage all founders to look at which is if the slide was called even in 1986 know your goals and by that i mean it's perfectly e okay to say i'm going to do a startup because i want to be my own boss it's not to build the biggest company it's okay to say i want to do a startup because i want to work with my friends now that's not optimizing for financial success but it is optimizing for something that's really valuable to you you might say i want to build the biggest company and make the most money you might say i want to change the world of electric cars it could be any kind of goal you just have to be clear about that and higher to that all the goals i define i defined these in 1986 are reasonable goals and frankly if you're not clear then you will get incompatible employees incompatible investors uh that kind of thing so background it started impossible foods it's worth what four or five billion dollars um and he was very clear he'd been a professor his whole life no experience he said only one thing matters to me to change the world i don't care how much dilution i take how much equity i have i just want to impact the world it's become very very successful uh deep saying if you know quantum scape we had done three or four startups with him and he had made enough money and he said i want to do something that really makes a big difference that that makes a mark on the world and he took on electric car batteries and he literally said it doesn't matter if it takes six years or ten years to first revenue so he wasn't focused because he was well off enough and that's hard to do on your first startup but larry and sergey did that on their first startup at google you have to be clear uh so uh you you sort of now quantum scape had just filed for one of these pack offerings they'll be worth five to seven billion dollars um but it took ten years and they still don't have revenue but because they're very very clear they did a very long very hard technical development and they took on risks nobody else in the world has taken built the only solid state battery everybody else big companies small startup said hey i'll change the membrane separator i'll change the cathode or the anode or the electrolyte in a battery small component like things so the technical risk was can be handled jagdeep decided tilly innovated all of them together took all those risks which is a lot of risk compounding he's not going to get a breakthrough battery now he has a bake to battery volkswagen has invested hundreds of millions in the company and it's a hard problem but he wanted to do something that really changed things and we're very proud but hey electric cars will only be enabled if they're as cheap as internal combustion cars and this kind of a battery can do that so that's an example of taking a very very long view so you can set different goals for yourself i'll give you a funny analogy we were all in our 20s and people forget i was there at one point we used to say at sun let's drive the car with two wheels off the road which is take a lot of risk but we never want to get three wheels off the road and and we should try and reach this very ambitious orbit all analogies but if we don't reach orbit we didn't want to be a small success you're very clear even in our 20s and not a lot of resources if we failed we used to say we want to be the best best belly flop in the pool create the biggest splash in our failure or reach orbit and that was and run with two wheels off the road like i think if you're an entrepreneur and sort of gone through it you know these trade-offs and i've always enjoyed these trade-offs because they were very early philosophies and this is the kind of willingness to fail that let us succeed but it also increased the probability of failure if we had built a graphics terminal our probability of success would have been higher the consequences of success would be much lower great great analogy at your point your statement about zero million and zero billion dollar company it's just superb it's probably the best way to articulate the initial vision and audaciousness of uh the vision of the founder yeah and by the way you can have an audacious vision but find a pack that is small steps on the way so stripes started with a script a dropout could write to do payments it was just a copy and paste script it was no more than a few lines you paste it into your website e-commerce website if you wanted to take payments patrick didn't say i want to be the big brand he didn't say but he was very clear where he wanted to be he wanted to change the financial system from the inside out and he's been doing that just before we move on to uh to sort of closing and taking some questions from the audience couple of things about technological trends what are the technological trends today that are exciting you are there enough disruptive technologies which you feel are going to change the world and i'd love to get your thoughts specifically on two of them artificial general intelligence and medtech given your experience as an investor in both of them yeah okay great for those people uh who haven't seen it there's a document i've written it was on medium called reinventing societal infrastructure with technology if you google that with my name it should come up it's on medium it's on our website one of the things that surprised me in the last 10 years is 10 years ago or 15 years ago technology investing technology startups were about technology it was the enterprise software it was internet and mobile it was that kind of thing what has surprised me is now the startup ecosystem is going after every part of the world economy so it doesn't matter if it's construction or food or those weren't areas startups operated in transportation that's all opened up the amount of world where technology will allow an economic disruption and lets you build a business in so many more areas than was open to technology entrepreneurs before so almost no area is out of bounds this document i did when i turned i started thinking about it when i turned 60. you know almost everybody i knew was talking about golf and retiring and i said this is a great fun world where else can i innovate and keep innovating for the next 25 years i figured i'd work till 85 at least health permitting um of course health is not something you can control but if if you stay healthy i used to tell myself you grow old when you retire you don't retire when you grow old was my other saying to myself so i looked at us in global gdp and fundamentally started reading about where could i innovate in a radical way not a 10 20 50 percent improvement but uh hundreds of percent to a thousand percent improvement in an area and i figured i'd find one or two interesting areas i'd ask myself this question in the year 2000 when i was about 45 before i started turning 50 and i said i'd focus on climate and poverty which is why microfinance and climate became important to me as i turned 50. um and even before you know at 45 i started thinking spent a lot of time with professor eunice in bangladesh and started addressing microfinance trying to learn it and then a few years later i started addressing climate um and by the way the heart of the problem and these are all hard problems poverty and climate are hard the more fun i have because i know the odds are more against stacked against you you know these are really hard problems but anyway what i realized at like that the gdp components of gdp level i couldn't find an area i couldn't find the innovation so i wrote this blog which was for myself it's 50 pages long covers education covers health care covers entertainment covers uh transportation housing uh every financial services legal services every area of society and i could see how could make a 5 10x difference in those areas and so i laid it out and then i wrote it for myself but then i just put it out there for others so short answer no area is out of bounds for innovation if you think clearly enough now ten years ago nine years ago um we invested in square when it was four people just a hardware dongle for payments but the vision was how do you change the small business ecosystem around the same time we invested in impossible foods and people said vcs invest in hamburgers that's crazy inventing a better hamburger that's sort of like really odd um and and so uh you know we did that you know five years ago we invested in rocket labs to go after space and we're doing a lot in space my you know what are other really really exciting things today recently we invested in something to 3d print whole buildings it's a very hard problem but we've already delivered a couple of small houses and i think three to five story buildings will be built without cement or steel that's a radical change to the world and i'm really excited and if you fail i won't feel bad because it's worth trying 3d print hold buildings make them half the cost and one fifth amount of tonnage of material in which case you can't use cement and steel and cement can't be 3d printed it it takes too long to harden you can't print a roof without putting scaffolding up if you put scaffolding for a roof it's going to be too expensive so we have a microbot uh something about the width of a human hair that you can insert in your spine or body and will travel anywhere nothing tethered to it uh take a sample say a brain tumor can travel in your brain find a tumor guide it from the outside magnetically or deliver a drug locally and come back out this sounds like science fiction but frankly it's more fun and more entertaining than golf for anything else i could do um and and so i the basic message i want to say is there are no limits to what you can do we've just done a effort called kernel in brain mapping can you take an fri machine and put it inside a standard bicycle like helmet so you could do a full brain map while doing any activity whether it's learning to play music or learning to play baseball you're doing an fmri where you're doing uh playing a game or e-sports or others so my son's done a startup to build a primary care ai doctor very easy to do telemedicine right it's just putting a doctor in video conferencing but we decided we wanted to eliminate the resource of a doctor now that's a much harder job revenue will come much slower it'll take much longer and so you wanted me to talk about ai i actually think there are no bounds to what ai can do when it comes to replacing any economically valuable human function i don't worry about the fact question can an ai be a philosopher that's for academics to do um i care that everything that's economically valuable can be done by an ai which is why we are the largest investor in openai we have an agi investment in a company called vicarius that's doing robotics can you teach an ai to change why do people go to china for a lot of applications but not all if you're building cars and you're going to build 10 million cars you can build a robot because you take six to nine months 12 months tooling up and you don't mind putting a billion dollars in the line and then you start making cookie cutter cars if you're assembling something on the assembly line that needs to change rapidly what you're assembling it needs rapid learning and humans do that really well so cheap labor in china can learn how to assemble our alarm clock and then go to assembling a toaster the next day that's the key to agi artificial general intelligence and and we think that can be done it's a big bet so while everybody else is betting an ai which is a much uh simpler bat and and we are too much bigger bet to transform the world is agi it's so very large bets i think this very very promising area primary care doctors and ai will do much better than any human doctor no question my mind within 10 years so if you take the long view uh that that'll happen so our my most recent start startup is to reinvent what public transit is you'll say can't be done by a startup with a small company called glidewise that we've just funded and it was i defined it three years ago in my document called reinventing societal infrastructure because transit is a big part and transit would only be popular if it's far more attractive than cars and it's very easy what's attractive you can leave when you want to arrive come back when you want to not stop along the way can you do that in public transit yes if you ask the right questions and think from first principles those of you interested can go back to my societal infrastructure document my point is no area all of these areas are are going to be not all many of these areas are going to be driven by ai but but there's other causal technologies 3d printing is a very causal technology whether it's for houses or we are actually printing micro vessels with uh blood vessels with the [Music] 3d printing in fact the best effort in covid right now clovered monoclonal antibodies is something where we just printed human organs artificial lymph nodes and challenge them with the virus to produce monoclonal antibodies it's just a wide wide world and a lot of innovation is possible so just just great to hear i think you're sitting very close to so much of so much of innovation so much cutting edge technology which is pushing the boundaries you know i just didn't even realize it has been so engaging that we have totally overshot our time i apologize yes i wanted to take a few questions from the audience but we'll be respectful of your time uh and i'll take a few questions that's okay yeah so first question is this could be very relevant how must one balance family conditions and new venture in their twenties given that most of the audience here is very young startup founders well so it's a very good question um it's much easier to do startups when you have lower responsibilities you know i used to say when i started up that if the startup failed i could still it was just me and my wife no kids i was living in a rental month-to-month rental apartment i didn't have a lot of financial responsibilities on the flip side if you can't choke those responsibilities you can't live without a salary uh that was easy for me to do or very very low salaries um it it's a trade-off when you take risks and i always say take lots and lots of risk but don't take the risks that'll kill what's important here a startup you can um take 10 20 of your budget and do a lot of wasteful risk taking like in this exploration of other options but if if you take a risk with something that kills you and if it doesn't work then you're dead the same applies i always valued family life more than others but i gave up a lot of other social things and golf and everything else people do here in the us i cut all of that out so i could focus on the family too through most of the 90s i had a technique i strongly advise people set your goals and measure them so one of my goals was have dinner with the kids and so every month i got a report on how i spent my time my assistants gave me a report and one of the lines was how many times i had dinner with the family dinner with the kid it was always there and if i wasn't making my goal my assistant was allowed to say switch it from a 5 pm flight to 11 pm flight so i could have dinner and i'd suffered the consequences of a red-eye and fly all night but i would meet my goal because it was a priority i think that's really important and this is why that slide i mentioned earlier knowing what your goals are is very very important and i should have said that includes business goals and it's it's mostly personal goals and so you know sometimes you can't take the risk but most of the time people uh think they can't take the risk because they have perception they want to look good have a better car show it to their neighbors or a better house or better furniture in in that external driving of um what your goals should be people like others drive their goals there's a 2015 talk i gave like this one at the stanford business school on having your goals come internally not driven by external social pressures get a promotion get a big title get a bigger house you should what you're expected to do is what 95 of the people do uh entrepreneurs are the five percent who do what drives them internally and they're very very clear about those goals so i would say be internally driven that's very important so great advice and great actionable advice i'll say and specifically for to the folks who are listening here young entrepreneurs the next question would be very relevant from an indian perspective indian society perspective the question is how do we address the dilemma between the fact that technology replaces tedious human jobs but also takes away a lot of employment and in a country like india that is definitely an issue you know my general view uh of course uh i wrote a blog about five years ago called ai specifically will cause great gdp growth great productivity growth and abundance which is how economists measure progress but the might uh others the rest of the title of this blog was and it will cause great inequality and that's a big responsibility all of us have but i do think distribution of wealth is probably one of the larger problems and equality you know when in india you marginalize say muslims you're really creating a permanent problem for the country i actually think that maybe the largest problem uh isolating minorities and focusing on hindu or that that that's a huge problem and it will stay for decades and i hope we can solve those problems of both social economic inequality and social inequality so i think it's pretty important the economic inequality is a solvable problem i think in 40 or 50 years we will have enough abundance that everybody can have universal income without working having our products housing and i talk about all this in my social reinvention paper let me warn people it's a hundred it's 50 pages long but these are critical problems to solve and frankly using technology to solve them is possible while maintaining consistency with climate change and not pulling out more resources from the earth just for our convenience um i think those are solvable problems the social problems the the sex the christians and the non-christians and the progressives and the conservatives and the hindus and the muslims or the sunnis and the shias these are the problems that you know are the hard ones to solve and need to be solved or society will pay a large price and if you want the best progress we should really focus in on these two good point great one i'll just take last two quick questions and then we'll move on to closing uh the first one is why do startups cluster around one major location like silicon valley for attack or bangalore in india and that really puts somebody who wants to work on say social innovation which is largely in the rural areas in a in a soup yeah well there's a number of reasons first it is possible to innovate anywhere and i mentioned professor eunice he did radical social innovation maybe the sing single motorola areas of bangladesh but if you're trying to scale things you generally need people around you and teams the people you hire you know when i started it was hard to get somebody to leave their job at a big company and join the startup you know getting somebody who was senior vice president at ibm to join a startup was near impossible and that culture changed over time but i suspect that still the culture in india if you're in the ecosystem where it's socially acceptable to leave a big job at google and do join a startup you're more likely to get it now if you want that same person to also relocate from silicon valley to bangalore or or hyderabad or phoenix arizona it becomes harder so there are more people around investors in certain ecosystems like silicon valley will take much larger risks it's not the entrepreneur's fault but the investors will take less risk in most parts this is why europe has been quite unsuccessful in startups with only isolated pockets of success so you need a whole ecosystem to innovate in and the ecosystem can make innovation faster it's not government programs it's like-minded people who want to take these risks join startups want to set ambitious goals which they may fail at and so it's investors it's managers it's entrepreneurs it's colleges that encourage encouraged this but these things develop because you need role models of success i used to say the world's role model to be basketball if you're in high school you you looked at basketball players and say hey that's my role model that's who i want to be now everybody wants to be like jeff bezos or larry page and so role models are very important and i think india started to see its own role models to emerge in successful really large successful companies and i think that'll help a lot absolutely i can totally relate to that that is changing 15 years back things in india were also very very different the way we talked about and the last class into a very quick question if you have to give finally a book or a movie a recommendation to the audience here what would that be well uh let me just say that i every year i put out a book recommendation list and why i recommend the book so instead of going through i go through about 15 or 20 books every year i mentioned uh i think one earlier so let me answer your question directly there's a good book on the culture that results in startups called loon shots i'd recommend that um there's a very good book on why we don't see obvious errors when they're happening why don't we see why don't somebody speak up why don't we see child molestation by priests why didn't nobody speak up if the book is called willful blindness it's a good book why people don't disrupt common assumptions in ecosystems it's very very helpful culture in the startup to get people to speak up and to challenge whatever you're doing and to encourage that challenge and this is why i said it's nice to get people in your startup of people who say this won't work and here's why it won't work those questions are critical so that's a couple of book recommendations but i have a much more extensive list of book recommendations i put out usually in early january every year but you can look up my 2019 book recommendations it's on me medium or my earlier ones too so i've started doing that great great recommendation i think this will be added to a to-do list of quite a few folks now without i think this has been a wonderful session uh totally awesome session i thoroughly enjoyed it thank you for being so patient with our questions and so thoughtful with your answers i think well now we want to close this session over to you the alcohol team yeah thank you as you can tell i love talking to entrepreneurs i never talk to anybody else but i love talking to entrepreneurs thank you so much mr koslan mr gaurav with this we come to the end of today's session i would like to thank mr kosla for taking his time out of his schedule and inspiring us all with his wisdom and knowledge to summarize the session the discussion started off with the importance of an outsider perspective in bringing radical changes to a field by quoting examples of how no taxi company did uber and know how hotel changed no hotel chain made airbnb further we explored the effect of institutionalization of startups on innovation which mr kosla beautifully explained using the examples of innovations by amazon and tata's award for this smartest failure of the year continuing the speaker emphasized on the quality of funding team and an initial vision being the differentiating factors between a zero million dollar and zero billion dollar startup finally sir enlightened us on the increased relevance of technology in entrepreneurship by a reference of one of his own documents reinventing societal infrastructure with technology before opening the floor for questions thank you sir once again for your time and your wonderful insights we are grateful to you and i would also like to extend our sincerest gratitude to mr gaurav for being such a great host tonight with his great set of questions uh thank you mr gaurav finally i would also thank all of you today for joining us hope this was a great experience for you thank you thank you thank you everyone thank you vinod you

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Length: 84min 24sec (5064 seconds)

Published: Wed Dec 09 2020