Vinod Khosla is currently enjoying a surge in popularity. The co-founder of Sun Microsystems and a prominent figure in the investment landscape—first with Kleiner Perkins and for the last two decades with his own venture firm, Khosla Ventures—has long been a favorite among founders thanks to his straightforward advice and his firm’s successful investments in companies like Stripe, Square, Affirm, and DoorDash. However, Khosla's decision to invest $50 million in OpenAI back in 2019, at a time when its future was uncertain, has amplified his visibility and influence in the tech space.
Speaking at the Collision conference in Toronto last week, Khosla shared that he has been engaging with the public frequently—whether on stage, in podcasts, or through TV appearances. When I asked if he felt overwhelmed by his busy schedule—having flown in just hours before our conversation—he dismissed the notion entirely.
Khosla has clear preferences in conversation topics, notably steering away from deal-making. "Honestly, the investment side is much less interesting to me," he revealed when I inquired about a rumor regarding his lack of management fees at Khosla Ventures, despite it managing $18 billion in assets. While he confirmed this is true for him personally, he noted it’s not a blanket policy for the firm.
Instead, Khosla is passionate about the startup potential unfolding in a rapidly evolving AI landscape. He discussed the "white space" available for innovation and expressed concerns over AI’s broad implications, citing FTC Chair Lina Khan's stance on regulation and critiquing Europe’s regulatory approach, which he believes has hindered its technological leadership.
We began our discussion with Apple’s recent partnership with OpenAI, which allows the integration of ChatGPT into Siri and other generative AI tools. Khosla views this as a significant endorsement for OpenAI. He mentioned, "When a company like Apple makes a technological bet, they typically don’t pivot the following year," emphasizing the long-term commitment behind such collaborations.
However, I posed the question of whether this dual-edged sword of opportunity and risk posed challenges for his portfolio companies. In particular, I was interested in Rabbit, a Khosla Ventures-backed AI device that promises to serve as an intelligent assistant. Khosla reassured me that Rabbit's versatility could make it valuable in various sectors, such as healthcare, suggesting it could adapt to meet specific enterprise needs.
Khosla remarked on the importance of avoiding investments that could become "roadkill" to evolving AI technologies. He specifically referenced Grammarly, a writing assistant valued at $13 billion, suggesting that as AI progresses, such tools will likely be integrated into larger platforms like Google Docs or Microsoft Word. "Half of these YC companies might become obsolete before their batch concludes," he noted.
Despite this caution, Khosla sees abundant opportunities in sectors where AI can offer expertise for minimal cost. “OpenAI or Google isn't going to become a chip designer or a physician,” he explained, highlighting areas where new startups could thrive by aligning their capabilities with future AI advancements.
On the topic of regulation, Khosla expressed his belief that while large language models like OpenAI should have protective frameworks, he remains an advocate for open-source initiatives. He pointed out that history shows valuable contributions to technology often stem from open collaboration, as evidenced by his firm’s early investment in GitLab.
Khosla addressed concerns regarding competitive threats, declaring, “The biggest risk we face with AI is from China.” He underscored the urgency of maintaining U.S. leadership in technology, warning that if the U.S. falters, it might soon see its political and economic values overshadowed.
In a more pointed exchange, Khosla critiqued FTC Chair Lina Khan, characterizing her as “not a rational human being” and suggesting her understanding of business is lacking. He articulated the importance of antitrust regulations while cautioning against overreach that stifles economic growth. “Europeans have effectively regulated themselves out of leading in technology,” he asserted.
Reflecting on discussions surrounding the potential of AI to create significant wealth, I asked Khosla about societal implications and wealth distribution. He acknowledged concerns regarding increasing income disparity and expressed hope that, should GDP growth accelerate in the U.S., it could enable wealth sharing.
As our conversation concluded, Khosla shared his gratitude with the audience before eagerly heading offstage to engage with aspiring founders, each hoping to glean insight from his vast experience and perspective on the future of technology.
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