Vinod Khosla: A Brutally Honest VC Tells Startup Weekenders to Make an Impact
Vinod Khosla admits he’s not really known as a polite guy. But he comes by it honestly.
“I sort of had a habit at age 12 of insulting priests in India, because it was fun for me. I was a troll,” Khosla said Friday. “There is fun in that. If there’s a lot of conventional wisdom, challenging it is fun.”
Khosla, a well-known venture capitalist and entrepreneur who co-founded Sun Microsystems, had the crowd laughing at an education-focused Startup Weekend event in Seattle, organized by TeachStreet. But Khosla also was giving out some serious advice for entrepreneurs.
He was interviewed by blogger, investor, and entrepreneur Michael Arrington, recently fired from AOL’s TechCrunch (which he founded) in a dispute over his investment activity. Arrington actually made a little news on that front Friday—he announced that Khosla was an investor in his new CrunchFund.
They got down to business soon enough, though, with the packed crowd in a University of Washington lecture hall eating up Khosla’s advice. His biggest takeaway: With your startup, with your money, or with your work, always try to have a big impact on the world.
“My philosophy in life is, I don’t mind failing trying new things. But it better be relevant if you succeed,” he said. Here are some more highlights:
Khosla said he doesn’t really view himself as a traditional venture capitalist—a job he equated with playing golf and taking rides on boats. Khosla said he thinks of himself more as a “venture assistant,” who wants to recruit for, challenge, and help grow companies he invests in.
“Most people who do well might go spend $100 million buying a yacht. I know lots of people who have done that,” Khosla said. “My yacht is 100 million-dollar startups.”
Arrington skewered Khosla a bit, however: “Do you have a G5?”
“I do have a plane,” Khosla said to laughs from the crowd. “I’m not embarrassed about what I spend my money on. It’s very, very functional … The only thing that limits the number of startups I can work with is my time.”
Khosla said he looks for disruptive new ideas from young people—preferably under 25. “I think after you work long enough, you get used to things the way they are supposed to be … and you forget that new things can be invented,” Khosla said.
“When you don’t have a clue, you try new things and you figure them out. And that’s what’s so great about this weekend. That’s why I’m here,” he said. “You have to try new things … people get old very fast knowing conventional wisdom. Everybody at Google knew how to do the Internet until Facebook came along. And everybody at Facebook knew how to do the Internet until Twitter came along.”
“When I started my own firm in 2004, I put out his particular phrase: I prefer brutal honesty to hypocritical politeness. And it’s still on the website today.”
That was a priority, he said, because of “the number of times I’ve seen entrepreneurs waste years of their lives because people have been giving them hypocritically polite advice … So I promised I’d never give anybody polite advice when I thought I could help them by being critical.
“Even after I’ve passed on an investment, I’ll often call them up and say, here’s the reasons. It’s much easier and convenient to come up with an excuse, like ‘Oh my partners didn’t go along,’ or ‘It’s a category we don’t invest in,’” Khosla said.
Don’t Always Listen
Even though he says he gives out unvarnished advice, Khosla said entrepreneurs he invests in shouldn’t always do what he says.
“If I invest in somebody and they listen to me all the time, I think it’s time for a CEO change,” Khosla said to laughs from the crowd.
“He’s tough. You’re like, ‘I have to listen to him, but if I listen to him too much, I’m going to get fired,’” Arrington replied.
“If you’re doing a startup, even if I’m a lot more experienced about startups than you are, you have to spent a lot more time on your plan than I have. I fly by every four weeks. I’m not going to know more than you do about your business,” Khosla said. “But it’s my job to ask you the questions that should be asked … then it’s your job to decide whether you should pay attention to me, and who else you should ask, and whose judgment you trust.
“The single biggest thing you do as an entrepreneur is you decide whose judgment to trust on what topic. Your roommate isn’t the best on every topic. Your dad isn’t.”