Vinod Khosla says what worries him the most?


Vinod Khosla is more popular than ever right now. The Sun Microsystems co-founder turned prominent investor – first at Kleiner Perkins and for the past 20 years at his own venture firm Khosla Ventures – has always been sought out by founders, as his advice and his firm’s track record, which includes betting on Stripe, Square, Affirm and DoorDash, is stellar. But a $50 million bet on OpenAI in 2019 – when it wasn’t clear the outfit would succeed at this scale – put Khosla Ventures and Khosla himself squarely in the spotlight.

He’s thoroughly enjoying himself. I sat down with Khosla at the Collision conference in Toronto last week, and before we took the stage, he told me he’s been making public appearances several times a week lately — either on stage or in podcast or television interviews. Asked if he’s exhausted by the schedule — for example, he arrived in Toronto only hours before we sat down — he dismissed the suggestion.

Sure, there are things he loves to talk about, and the art of dealmaking is not among these things. “Frankly, the investor side is much less interesting to me,” he said when I asked him about a recent tidbit he heard, which is that he hasn’t taken a single dollar in management fees since starting Khosla Ventures, despite it now having $18 billion in assets under management. (He confirmed this, but said it’s only true about him and not a corporate-wide policy.)

He’s more passionate about startup opportunities in a landscape changing daily by advances in AI, so we talked about this empty space. We also talked about what worries him most about the ripple effects of AI; FTC Chair Lina Khan; and why, in his view, “Europeans have priced themselves out of being leaders in any technology sector.”

We first talked about Apple’s groundbreaking new deal with OpenAI, which allows Apple to integrate ChatGPT into Siri and its generative AI tools. Apple may strike similar deals with other AI models, including Meta, but naturally, as an OpenAI investor, Khosla is excited about this alliance, which is the only one Apple has publicly announced so far.

Khosla called it “validation” for OpenAI; by announcing its deal with OpenAI during its high-profile developers conference, Apple was also “expressing the confidence I believe it has in (OpenAI CEO) Sam (Altman) to lead (developments in AI) over the next five or 10 years,” Khosla said. “When a company like Apple makes a bet on a technology, they don’t usually change it the next year.”

But was this good news and bad news for Khosla, we wondered? As we noted in TechCrunch, some of Apple’s latest features are likely to threaten the survival of many startups, and it seems Khosla’s portfolio companies are not completely untouched. I was particularly curious about Rabbit, whose AI-powered hardware promises to be a kind of AI assistant for device users and is backed by Khosla Ventures.

When asked if Apple could make the device obsolete, Khosla suggested the device is more flexible than people imagine and could be used by enterprises such as hospitals, including emergency room environments. He placed it in a growing series of things that will “track what you do, see what you do and respond automatically.”

In fact, Khosla suggested that his team has actively avoided anything that could become “roadkill” as it moves forward with big language models like OpenAI. And he highlighted at least one company that is not in his portfolio: Grammarly, a writing assistant startup that was valued by its backers at $13 billion not long ago.

“If you’re using Grammarly, it’s a thin wrapper by today’s model, and Grammarly won’t be able to sustain that; it was never meant to be an app. It shows the need for that capability, but it will be part of Word or Google Docs. That’s very clear. When we talk to YC companies or others,” Khosla added, “I can usually say, ‘Half of these companies will be obsolete before the YC batch is over.'”

Khosla sees a lot of opportunity in areas where expertise would be nearly free, though it’s not clear to me how these companies would make money sustainably (even after asking them to). Think tuition or even oncology.

Khosla said: “Open AI or Google are not going to create a chip designer (to be on your smartphone). OpenAI and Google are not going to create a structural engineer. They are not going to create a primary care doctor or mental health therapist,” he said. “So there are lots of areas (for founders). But they have to look at where the models are going next year and five years from now, and say, ‘We want to leverage that capability.'”

We also talked about regulation. I noticed that Khosla had previously said that closed large language models like OpenAI should be kept safe, even if there should be a regulatory framework around them. I wondered if this meant that Khosla would forever renounce other, “open source” AI.

That’s not the case at all, he said, adding that he’s a “huge fan” of open source. He said Sun was one of the first companies to embrace “open source,” open-sourcing its file system. He also said Khosla Ventures was an early investor in GitLab, whose software invites people to work on code together.

But he suggested that open source in the context of large language models is a different matter entirely. He said that “our biggest risk with AI is China” and that “powerful Chinese AI” that competes with America’s “liberal values” means that “we need to make sure that China stays behind us.” Otherwise, he warned, it will be China that provides “free doctors and free oncologists” to the rest of the world and when they do, they will “export both AI and the economic power that comes with their political philosophy.”

On stage, I mentioned to Khosla my recent conversation with FTC Chairwoman Lina Khan, who doesn’t see the national champion model as a reason to promote entities like Google or OpenAI as driving the development of AI.

Khan always hears from executives and investors who say that government intervention will lead the U.S. down a dangerous path. But when I spoke to her, she argued that time and again, the U.S. has chosen “the path of competition” and that this “has fueled many of these breakthrough innovations and the remarkable growth our country has achieved and helped us stay ahead on the global stage.”

“If you look at some of the other countries that have opted for the national champion model, they are the ones who have been left behind,” Khan said at the time.

However, I had barely mentioned Khan when Khosla dismissed his statement, calling him “not a rational person” and accusing him of not understanding business.

“It should not be in that role,” Khosla said. “Antitrust is a good thing to have in any country, any economic system. But antitrust (that is) overly enforced or overly executed is bad economic policy. One thing the U.S. has is a much more rational business environment than its European competitors. That’s why the Europeans have controlled themselves from being leaders in any technology sector; they’ve basically locked themselves out of AI, all social media, all internet startups.”

Of course, if some antitrust enforcement is good, but too much is not good, then the question is where to draw the line. On this point, before we parted ways, I mentioned the “abundance” that Altman predicts will be created by AI. During one of TechCrunch’s StrictlyVC events last year, Altman said that the “good case” for AI is “just so unbelievably good that you sound like a really crazy person to start talking about it.”

Khosla has said he believes so, too, but I’ve long wondered how society will be able to enjoy all of this if regulators aren’t more involved in the trajectory of these companies. After all, I told Khosla on stage, we’ve already seen a massive concentration of wealth and power in the hands of a small group of companies and individuals. When will enough be enough?

Here, Khosla said the issue worries him deeply. “I think 25 years from now, when I hope I’m still working … the need to work will have virtually disappeared.” Still, while AI should create “great abundance, great GDP growth, great productivity — all the things that economists measure,” he said, he worries “more than anything” about “growing income inequality.” How can we ensure an equitable distribution of the benefits of AI?

He has an idea of ​​where the tipping point might be. “If (U.S.) GDP growth goes from 2% today — which is less than 1% in Europe right now — to 4%, 5%, 6%, we’ll have enough prosperity to share the wealth and the benefits.”

How and how this will happen is an even bigger question, and for all his brilliance, Khosla, a self-described tech optimist, didn’t have an answer.

Instead, after his remarks on GDP, he thanked the crowd for their time, stood up, then walked down the stage and toward at least a dozen young founders who had gathered backstage, all hoping to listen to him speak for as long as possible.


Please enter your comment!
Please enter your name here

Share post:




More like this

How IT departments coped with the CrowdStrike chaos

Just before 1:00 a.m. local time on Friday, a...

Alphabet will invest an additional $ 5 billion in Waymo

Alphabet will spend an additional $5 billion on its...