♪ emily: he is known for shunning convention, taking massive risks that could win or lose billions, and investing in, quote, "black swans," companies with a near complete chance of failure. but if they succeed, the world will be changed forever. vinod khosla grew up in delhi, india, son of an officer in the indian army. his parents agreed he could explore his boyhood curiosity with no limits, as long as his grades didn't suffer. he began by founding sun microsystems. he then became a venture capitalist. he says helps entrepreneurs take the same risks he has no fear of

taking. joining me today on "bloomberg studio 1.0," khosla ventures founder vinod khosla. vinod, thank you so much for being here. it is really great to have you. vinod: great to be here. emily: so you are known for being an investor who not only challenges conventional wisdom, you explode it. how early did that start? vinod: you know, one of the privileges and the indulgences you get if you are successful early -- and luck counts a lot -- is the ability to do things others may not have the freedom to do. so i used it to my advantage very early. i was always interested in radical change, big ideas. and i got the opportunity to do that. emily: so you were raised in delhi, india. what might we find a young vinod doing? vinod: you know, i did not have anyone around me interested in either business or technology. i grew up in an indian army household.

i read a story about a hungarian immigrant coming to this country to start a company. i was 15. and the technologies, which was intel, sounded very cool. and i fell in love with the idea and have stayed with the idea since. i wanted to start a company and realized how hard it is to start a company in most parts of the world. emily: you now say technology is your religion. were you raised religious? vinod: my parents were sort of normal religious people. but i, very early, realized that at least priests in india were a scam. i was probably 12. and i decided that if the purpose of religion was to do the most societal good, technology was the most powerful tool to do it, so i adapted science and technology almost as a religion very, very early in life. emily: you are best known for cofounding sun microsystems. you were chairman and ceo but you founded a number of

companies before that. vinod: we started another company called the "data dump" about three months before we started sun. scott mcnealy and me were founders of both companies. and i love this story for the following reason. nobody remembers your failure. even though the probability of success was low on either. this is great about entrepreneurship. failure does not matter. but one's willingness to fail gives one the ability to succeed. if you are not willing to take risks, if you are not willing to fail, you are not going to do anything interesting. because most interesting things are new, and new things involve risk, and risk involves failure. emily: why did you leave when you did and what was your biggest take away? vinod: before sun and before data dump, i started a company called daisy systems. and daisy was quite successful in 1986, it went public. frankly, daisy made more money for me than i thought i needed

ever in my life. and so i then wanted the freedom. and i looked at careers like, what else should i do? so i joined kleiner perkins, who was one of my lead investors, to essentially mentor and help entrepreneurs. emily: how does the venture industry back then compare to today? vinod: there are many more venture capitalists now. many bad ones. a few good ones. and entrepreneurs should understand that. i get in trouble for saying that. but i think it is much more dynamic. entrepreneurs have many more options. and that is really great for entrepreneurs. and i love that. emily: you have got multiple degrees. an engineering degree at the indian institute of technology, biomedical engineering at carnegie mellon, an mba at stanford. and you wrote this "medium" post called "is majoring in liberal arts a mistake" for students. where you said "it does not neccesarily set you up for success." it caused some controversy, which i know you're not shy about. one commentor said, "the real

assertion here is that the purpose of human existence is fundamentally tied to the accumulation of wealth." how do you respond? vinod: that is a nonsensical response. what liberal arts has become is an excuse to do less work. that's not everybody. and i speak to the 80% of students who actually do it for the wrong reason. but bottom line, if liberal arts goals are the goal, then liberal arts as taught today and taken today is the wrong curriculum. emily: so what should they be studying? vinod: logic and philosophy should be an absolute part of any liberal arts curriculum. because otherwise you don't learn how to think. linguistics, economics. learning how computers work. because we live in the computer age. why require a second language that is french or some esoteric language when the most important second language is computing? not that most people ever need to code. but because it is a style of

painting. the critique is all from people who i feel fail to understand what i was saying, which was exactly the point i was making. so their comments like the one you mentioned reinforce the notion that they did not get a good education. emily: do you think college is important at all? should kids go to college? i mean, peter thiel is paying them not to. vinod: so i disagree with peter. i think college curriculum, even high school is very important. there are people who will do well without an education and people who will do well no matter what subject they take. leaving aside those people, the top 10%-20%, i think college gives you the grounding to be able to do things that adapt over time. emily: what do you think sets khosla ventures apart from the other top-tier ventures? andreessen horowitz, sequoia, benchmarks, kleiner? ♪

emily: you went on to found your own fund. what do you think sets khosla ventures apart from the other top-tier venture capitalists? andreessen horowitz, sequoia, benchmark, kleiner? vinod: we tend to be much broader.

if you are going to advise entrepreneurs, you should have started a company, known how hard and painful it is, how difficult the trade-offs are. it is painful being an entrepreneur. life is not easy. and unless you have empathy for an entrepreneur by having done it yourself, you don't have the right to advise an entrepreneur, in my view. so one rule i had -- in 30 years, i have never ever voted against an entrepreneur. they do not need hypocritical politeness from board members trying to be popular and be their friends and not helping

them think through the risks they are going to face and challenge them. and then the same board members want to vote on things as if they know enough to vote. they don't. emily: you also don't go to board meetings if you can help it. vinod: mostly i don't go to board meetings because i cannot stand to listen to other vc's talk about things that i actually think hurt entrepreneurs. emily: what is your advice to board members on how to be a ceo? vinod: first, don't take advice because it is from the board. just ignore the board to the maximum extent you can. but consider the input of people who have real experience as input to your thinking. emily: so -- and this is interesting because as you know we have talked about the lack of women in the venture capital industry. i know you are looking hard for a woman partner. but what do you think it takes to be a successful vc? do you need to have a stem degree? i know some of your top partners don't. do you need to have been a founder, do you need to have been a ceo?

vinod: you don't need to have a stem degree. it helps. because you are dealing with technology and speaking their language, so it does help. it makes it easier. but probably, and this is not even essential, the most important requirement is having been an entrepreneur. emily: is that why it is so hard to find women to fill these roles? vinod: i think there are fewer women who have been entrepreneurs, so i think as women play more of an entrepreneurial role, and that is increasing. and we have many, many entrepreneurs who are women, even in a really deeply technical area, they, when they get enough experience, they will be great partners. but you need the floor at the bottom to increase. we need to encourage more women to be entrepreneurs. emily: you mentioned you have a broad range of investments. rockets, food, ai, health, finance, energy. companies with a usually high failure rate. and you say, every four to five

years you go deep into an area you know nothing about. what has worked? what hasn't worked? vinod: first, all of them have worked in the sense that i have really enjoyed learning a new area. it will be five years before i know i am right or wrong. but independent if a company is successful or not, i think i will have learned a lot. i think the two most important things that can happen in technology that would really change humanity for the better is artificial intelligence and nuclear power, unlimited energy. i can't think of any two things that would impact humanity more than those two things. emily: you tweeted recently that "if ai scenario happens, we will have abundant gdp to take care of everyone, but great disparity. only people who want to work may need to work." paint the picture for us. vinod: if ai does what humans can do, or most of them, i think it is pretty likely in 40 years that of all the jobs that exist

today, the majority, more than 50%, will be done by machines. and it doesn't matter whether it is a farmworker, a hamburger flipper, a legal researcher, a radiologist, a psychologist, or an oncologist. so it is not just the low skill works. if that happens, we will have dramatic gdp growth, dramatic productivity growth -- all the traditional economic metrics -- and, because more people are out of work, more income disparity. it is hard to say whether it will happen in 30 years or 50 years, but i will, i am pretty sure, happen. emily: but what happens to all those people who don't have jobs? vinod: the critical question is, how do we fairly address the people who are left out of this? and it will be most of the people. the good news is we will have enough gdp to provide basic income to everybody.

i know it sounds horrific. but we will have the resources. if per capita income is $150,000, $200,000, $300,000, i think some sort of basic income as per capita income climbs above $100,000 will become very, very important. and that will be a social and political issue we have to address. emily: hampton creek is a company that so many people have been excited about. and now they are facing some serious allegations. when do you say it is time for new leadership? ♪

emily: hampton creek is a company that so many people have been excited about. and now they are facing some serious allegations. the sec is involved. the doj is involved. they are accused of buying their own product off the shelves. when do you say it is time for new leadership? vinod: let me flip this question around. there was a bloomberg article recently where the reporter believed ali partovi, an ex-employee, who accused the company of giving false information. i would have bought ali's stock. the company offered to buy stock. if he thought he was defrauded, why did he not sell the stock back and not lose a penny?

he could have gotten his money back and gone away. marc benioff did not feel defrauded. his wife is on the board. lynne is on the board. she looked at the details. maybe there's other stuff we will discover. and i cannot say what else i will discover. i personally went and talked to ali. he didn't have one credible allegation. he suggested i talk to three other people. i talked to those people. emily: do the allegations bother you? do they concern you? vinod: first, every company, anytime they have employees leave, have allegations. sometimes, probably 20%-30% of the time, they are right. 70%-80% of the time, they are just bitterness. we will look into them when they are serious. i won't comment on the specifics. but suffice to say we are always looking. entrepreneurs push the edges. is the buyback relevant? the $77,000 reported, that is

completely irrelevant to our investment decision. why is somebody investigating? ask the question. did you know, under a freedom of information request, the american ag board was plotting to destroy hampton creek because the egg industry hated them. unilever sued hampton creek for calling their mayo mayo, and then withdrew out the lawsuit when they realized how bad it was. so there are many, many enemies the company has, including using federal funds in the department of agriculture to target the company whose e-mails were discovered by a reporter in washington that said, how can we prevent them from getting distribution at whole foods? now why would a federal agency be trying? why? because there are interests involved here. people again who are being disrupted and will get hurt.

so i will tell you it is a complex story but i can't go into specifics. emily: how would you describe your faith in the ceo, joshua tetrick, and your faith in hampton creek as a company? do you still think this will be a winner in your portfolio? do you still think this company can transform the food chain? vinod: hampton creek has already done a lot to change the food chain. all male chicks when they are born are crushed live in hoppers. it is just horrific. he is changing that practice. he's bringing visibility to it. are they making a difference? absolutely. even if they are not successful, they will have made a difference by bringing visibility to these real issues that the egg industry is trying to distract from. as far as the ceo is concerned, we normally talk to his team and see do the team support the ceo?

when they don't, we have to have a conversation with the ceo. do ceos make mistakes? absolutely. do we make mistakes? absolutely. it is a constant evaluation process. emily: you are very passionate about clean tech. you have made a lot of investments here. some people would say that investors like you and john doerr made a mistake by going too far into this field. what have you learned from it and what is your response to that? vinod: clean tech is an important area. climate change is an important risk. now i view climate change no different than i view homeland security, nuclear proliferation, terrorism. they are all risks society faces. we should insure against that. now, how much of our gdp do we spend insuring against foreign attacks, national defense, homeland security? we should treat climate change the same way. it is a business decision on how

much insurance to buy. we should encourage new competitive technologies to come up and then stop supporting them when they get to a certain size. it is time to stop supporting wind. maybe even solar, the subsidies should start to decline. emily: really? vinod: we have done ok in clean technology. we probably have six companies that could be worth $1 billion still. i would rather try and fail then fail to try something that is really important. emily: it is clear that you are caring deeply about the environment. you are incredibly philanthropic. you have pledged to give away half of your wealth. yet, one story that has been written about you most is a lawsuit you are involved in around public access to your beach. some people would say that is at odds. vinod: i normally don't like to talk about things under litigation. but you know, giving up half your wealth, it won't affect my lifestyle. so it is not a huge sacrifice to sign up for the giving plan. what i find is i can spend more of my time working on

technology. i will probably have way more impact than from my giving. the other half of that is having principles. having a point of view. having a belief system. it is amazing to me how many fortune 500 ceos read the press, read "wall street journal," and respond to it instead of saying, here is what we believe in as a company. passionate entrepreneurs like elon musk or larry page or mark zuckerberg, they have a passion that far exceeds their sort of desire for short-term profit. and because of that, they make more wealth and more profit over the long haul. in fact, wealth is just a tool to give you freedom to do what you want to do. and many people -- especially people like trump -- get trapped into this cycle of making more that is not that interesting. and doing all of the deals. he thinks it is smart to avoid

taxes. taxes. and that just blows my mind. i'm religious about my belief systems. so when i have a battle on the beach -- back to your question -- it is about property rights. and about a set of people who want to use coercion. in fact they told me they would like to embarrass me into giving up my rights. well, if you have a belief system, even though it is unpopular, even though the press all knock you for it, you want to live by your principles. whether it is that or protecting private property rights and fighting for what the law is -- and when it is not clear -- and there are clearly some things that are not clear in the law -- it is important to get them legally resolved. the courts are the way you resolve things. not somebody's opinion, not the press, not hyperbole. emily: what are the dangers of technology? vinod: you know, the way i look at it, maybe 7 million people on the planet have a rich lifestyle.

energy rich, resource rich, healthcare services rich, education rich. 7 billion people want it. technology can be good or bad. i can use nuclear technology to make a nuclear bomb or i could use nuclear power to provide great services and save hundreds of millions of lives because of the extra energy provided by it. and energy use correlates into less mortality. emily: do you worry about the dangers of technology? vinod: you know, every time you have a powerful technology, i think we as a society should worry about it. it has negative uses often, ai being one. there are things to worry about. the greater role technology plays in society, i think the more we will have to use it to service people at the bottom of the pyramid. emily: you have talked about the value of failure, the value of making mistakes. do you ever worry about overusing failure as a tool or

being too willing to fail? vinod: it depends on who you are. america, as a society, can't afford to fail. the world depends too much on us. if i am a mature company, if i am 100 people or 1000 people or 100,000 people, i shouldn't fail. that doesn't mean that i shouldn't encourage failure. i always say encourage 10 experiments that might fail where if they fail, you lose 5% or 10% of your assets, resources, your cash, your market cap. but if you succeed, if any of these ten succeeds, you double your market cap. i do think failure is key to innovation because risk is key to innovation. if you discourage failure or don't reward intelligent failure, then you are not innovating. you are not allowing yourself to succeed in the long run.

emily: vinod khosla, founder of khosla ventures, thank you so much joining us today. it has been great to have you. vinod: it has been fun to be here. ♪

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