The More Funds You Raise At First, The Less Likely You Are To Succeed: Vinod Khosla

With the mantra that “You don’t retire because you’re old, but you’ve grown old only when you retire” Vinod Khosla, the 64-year-old serial entrepreneur, and VC has lived an adventurous life which has had a fair share of successes, failures and controversy, along with textbook lessons for many entrepreneurs.

Khosla Venture recently led a $2 Mn Series A funding in Indian startup Veri5Digital. In a fireside chat with Nandan Nilekani moderated by iSpirt cofounder Sharad Sharma on Friday (August 2), the billionaire businessman said, “In my experience at least, the more money you raise initially, the less likely you are to succeed. There’s some beauty and elegance in very small amounts of money, because it forces you to think about your problem much harder.”

“If you get a lot of money, you start executing without analysing the problem as well. When you have to be hyper-efficient with your dollars, you’re much more creative with your solutions.”

Khosla said he believes having less funding actually makes creators and founders more creative and is more likely to create a large breakthrough, which will bring in more money later.“But more money early is a disadvantage in my opinion,” he added, just to be clear.

Startups Surpassing Corporates In Innovation 

The name Vinod Khosla is a legend in the tech world. Khosla, who cofounded Sun Microsystems in 1982 — besides pioneering RISC processors and being instrumental in Nexgen’s success and subsequent acquisition by AMD — has been active on the VC circuit in Silicon Valley since 1986, said that none of the big innovations is coming from large companies these days, but instead it’s startups that are changing the world.

He reasoned, “I’ll give you a couple of examples. I said earlier that none of the large innovations I could track came from an existing large company in any space. Further, I can tell you that most spaces, innovations came from somebody who had never worked in that area, right? Elon Musk hadn’t worked in automobile and the automakers sort of laughed at Tesla, a Silicon Valley, startup. It’s true, he made lots of mistakes, but he fixed them quickly and he figured out a better way than they (big companies) would have figured out. By applying conventional wisdom. You know, no fintech startup has come out of anybody who knew fintech.”

Khosla also pointed out that there have been no innovations in the US in the mobile internet space for the last five-six years. He said that If you look at Uber or Lyft or Airbnb or Pinterest, they’re all done. All these platforms emerged after 2007 when iPhone came (with touch interface) and before 2012.

AI, 3D Printing Will Drive Innovation: Vinod Khosla

Since the mobile platform has been there for decades now, Khosla observes only incremental developments in the area; however, if there is one area which has lots of potentials, he says, it is AI. “I do think AI is a new platform which offers lots and lots of opportunity,” he said.

“Fortunately other than ads, AI offers immense opportunity, could address lots of society-oriented issues. Among the areas, where it can be most impactful, medicine is my favourite.”

Besides, Khosla is also very positive about 3D printing. He said people aren’t using it enough. “One of my favourite startups in this space is trying to 3D print all houses. What’s the advantage of that? Much, much lower cost, 24 hours to print a house. But more importantly, it’s environmental footprint is much less.”