Uncapped #15 | Vinod Khosla from Khosla Ventures

Vinod Khosla is an entrepreneur, investor and technologist. In 2004, Vinod formed Khosla Ventures to focus on both for-profit and social impact investments that have included OpenAI, Stripe, DoorDash, Commonwealth Fusion Systems and many more. After graduating college, Vinod co-founded Daisy Systems, the first significant computer-aided design system for electrical engineers, which led to an IPO. He later went on to co-found Sun Microsystems in 1982, serving as its first chairman and CEO. After joining Kleiner Perkins Caulfield and Byers (KPCB), Vinod intubated the idea for Juniper Networks to take on Cisco System’s dominance of the router market, a company that would give KPCB a 2,500x return on its early investment. Vinod is driven by the belief that technology is a positive force multiplier to accelerate societal reinvention in food, health, climate, energy transportation, education, housing finance, media, retail and entertainment for billions around the globe. His greatest passion lies in being a mentor to entrepreneurs who are building companies to tackle society’s largest challenges. We covered: Uncanny ability to predict the future AI generating a new era of abundance Future of energy, transportation and medicine Increasing the consequence of success Khosla’s approach to venture Instigating change --- Timestamps: (0:00) Intro (0:26) Craziness of the current cycle (5:54) Predictions of the future (9:35) Role of humans with AI (16:20) Potential AI dystopia (23:18) Investing in OpenAI (33:21) Robotics being next (39:53) Incumbents not innovating (42:29) Mindset around risk (44:14) Bull case for energy (50:22) New transportation (54:18) Future of medicine (1:03:00) A different type of enjoyment (1:05:40) Approaches to venture (1:12:13) Khosla’s operating principles (1:16:17) Staying energized --- Linktree: https://linktr.ee/uncappedpod Twitter: https://x.com/jaltma Email: [email protected]

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  We're going to be in an era of abundance that's so large, it's very hard for people to imagine. The simplest way to say it is the need to work will go away. People will work on things because they want to work on things, not because they need to work on things to pay their mortgage.

• 0:19Jack Altman?

  All right, I am super excited to be here with Vinod. Thank you so much for doing this with me today. I really am looking forward to this conversation.

• 0:25Speaker 00

  Look forward to it.

• 0:26Jack Altman?

  When you first walked in here, before we got started, you were saying, well, you know, the world's crazy. And you've invested through many periods of time. Obviously, you know, there have been a lot of ups and downs, but you said the world's particularly crazy now. Can you share why you said that or why you're feeling that way?

• 0:45Speaker 00

  I've been doing venture capital for 40 years, so I've gone through every large innovation cycle.

• 0:52Speaker 00

  I've never seen a cycle like this to put an order of magnitude on it. Almost every job is being reinvented. Every material thing is being reinvented differently. With AI as a driver, probably the best way to describe it, if we look 15 years hence, and that's too far to look, we'd have to look back at least 50 years, maybe in the 1960s, to see the delta in change. And so we're going to see this large change in sort of such a short time.

• 1:39Speaker 00

  It's almost hard to imagine how society adjusts. And if I go even further, almost certainly within the next five years, any economically valuable job humans can do, AI will be able to do 80% of it, with a few exceptions like heart surgery or brain surgery. But by and large, 80% of 80% of all jobs can be done by an AI.

• 2:10Speaker 00

  And if that's happening in the next five years, the world is going to be a very different place. So I see this sort of like invention happening at a fanatic pace that is so large compared to even the dot com phase when the internet first came and there was Netscape and TCP IP and all that. It's almost hard to imagine, no matter where you look, everything's being reinvented in some fundamental way using often the the innovations from AI and the capability from AI.

• 2:54Speaker 00

  But also a few other vectors like stuff happening in biology, stuff happening in fusion and other areas. So everything's up for graft.

• 3:05Jack Altman?

  So, so I guess that's then leading to a frenzied pace of investment, companies being created, you know, new ideas getting tried all at once. Is your overall read based on, you know, on one hand, it's crazy and frenetic. On the other hand, everything you just said about, yeah, but like maybe a billion jobs are going to be, you know, done by an AI in the next couple of years or several years or something like that. Do you net out to being very optimistic about this moment in time for tech? Or do you think there's going to be a lot of carnage? Or how do you think?

• 3:38Speaker 00

  So my view, the next five years to 2030 will look like productivity improvements. The way economists would say productivity is going up, GDP is going up or accelerating on GDP, things like that. And then if I look to the 15 years hence, 2040 and beyond, we're going to be in an era of abundance that's so large, it's very hard for people to imagine. The simplest way to say it is the need to work will go away.

• 4:14Jack Altman?

  Yep.

• 4:15Speaker 00

  People will work on things because they want to work on things, not because they need to work on things to pay their mortgage.

• 4:22Jack Altman?

  Is that going to require us to change anything about like the social contracts to get there?

• 4:27Speaker 00

  Yes, I'll come back to that.

• 4:29Jack Altman?

  Yeah.

• 4:29Speaker 00

  What I want to say is somewhere starting in 2030, the changes are going to be so disruptive.

• 4:39Speaker 00

  That it's hard to imagine how it sorts out and sort out differently by country, by region. Different governments will play different roles in allowing it to happen or not allowing it to happen. And so we'll see this very, very disruptive, almost dystopic type of AI is taking all the jobs kind of thing. But we will have enough productivity, enough goods and services produced to share broadly.

• 5:10Jack Altman?

  Is what you're saying that basically the changes that are already happen, happening will compound to a point where it'll now just be this big disruption? Or are you saying the tech by the year 2030 is then going to be so disruptive that it's going to create all these changes? In other words, are we already on that trajectory or you're just saying the tech's going to get there in a way that will be that disruptive?

• 5:31Speaker 00

  What I'm saying is tech is disruptive in some areas.

• 5:34Jack Altman?

  And it will be everywhere.

• 5:35Speaker 00

  Yeah, and it'll be everywhere. But almost no corporation by 2040, these are Fortune 500 companies I'm talking about, should run the way it's running even remotely. I should say most Fortune 500.

• 5:54Jack Altman?

  Yeah.

• 5:54Speaker 00

  One of my predictions is the 2030s will see a faster rate of demise of Fortune 500 companies than we've ever seen. It's actually pretty high anyway, but we'll see a rate accelerate dramatically. So let me put it differently. If you're a healthcare company, and I speak to a lot of healthcare company boards, you look at AI and say it's an opportunity and will get more administrative efficiency or something like that. But if I said to you, which I've said to a couple of boards, if all medical expertise

• 6:34Speaker 00

  is free, you have an unlimited number of primary care doctors, oncologists, gastroenterologists, mental health therapists, you name it, how would you redesign the healthcare system?

• 6:48Jack Altman?

  Be crazy.

• 6:49Speaker 00

  Uh, that transition won't happen from existing companies. Almost somebody new will reinvent this. Now, there's the issue of regulation. The American Medical Association doesn't like the idea.

• 7:03Jack Altman?

  I was gonna say, there'll be a lot of people fighting against this.

• 7:05Speaker 00

  Yes.

• 7:05Jack Altman?

  Who have a lot of power, who will be good at fighting it for at least some amount of time.

• 7:09Speaker 00

  For some amount of time.

• 7:10Jack Altman?

  Yeah.

• 7:11Speaker 00

  But fortunately, we have a small part of our healthcare system, very small part, uh, where payments are capitated. What's called the capitated system or Medicare Advantage, where you get paid a fixed amount to take care of a patient roughly.

• 7:26Jack Altman?

  Yeah.

• 7:27Speaker 00

  That world will be so much more effective because they won't care about reducing costs, which AI can do.

• 7:36Jack Altman?

  Mm hmm.

• 7:37Speaker 00

  Reducing costs for a hospital system is reducing their revenue.

• 7:40Jack Altman?

  Of course.

• 7:41Speaker 00

  For a physician, reducing costs is cutting their costs down. Now, I, I think the, the general model, I think, for the next five years, when I talked about productivity improvements, you will see, uh, almost every professional start to get interns working for you.

• 8:04Jack Altman?

  Mm hmm.

• 8:04Speaker 00

  So every MD, a practicing physician, will get five fresh MDs, as if they are fresh out of Stanford Medical School. That work for them increases productivity, maybe provide a higher level of service to their patients, all that. But that then turns into something much more catastrophic over time. So by and large, the next five years, I think we should assume that every, all professionals start to get interns working for them, who can, who are trained in their profession, whether you're a structural engineer or a salesperson, who work for you, good-niced interns, behave well.

• 8:50Speaker 00

  But at some point, these interns grow up. They will have way more expertise.

• 8:55Jack Altman?

  Yeah.

• 8:56Speaker 00

  Than the physician. And then it's hard to roll this clock back.

• 9:00Jack Altman?

  It's gonna go fast, too.

• 9:02Speaker 00

  It is, it'll go fast, except in some areas where there's regulatory or other constraint. Take the example of the Screen Actors Guild last year.

• 9:12Speaker 00

  Anybody who signed up for the Screen Actors Guild thing will go out of business. But that change will be slower. Outside that system, people will be producing movies for a hundred thousand dollars, not a hundred million dollars.

• 9:30Jack Altman?

  Yeah, right.

• 9:32Speaker 00

  The dynamics will be different by sector.

• 9:35Jack Altman?

  If this does play out even directionally, the way you're saying, and now it's 2040. What do you think is left for people to be doing? Like, there must be some things, like, are people going to be still all employed or employable via creating their own businesses? And pointing AI around? Or, you know, we have a lot of two-person billion-dollar companies. Does it go that way? Or does it actually just go to like, a lot of people are just gonna consume a lot of leisure? And that's it?

• 10:08Speaker 00

  I'm waiting for the first entrepreneur to call me and say, we can build a billion-dollar revenue company with 10 employees. You can definitely do it with 100 employees.

• 10:18Jack Altman?

  Yeah.

• 10:19Speaker 00

  We haven't gotten there yet, but we will. That company's already been started.

• 10:23Jack Altman?

  Yeah.

• 10:24Speaker 00

  And somebody will leverage it tenfold again.

• 10:26Jack Altman?

  Yep.

• 10:27Speaker 00

  There's a question of, will there be jobs that need people? If you have a billion bipedal robots by 20, in the 2040 timeframe. Could be five years later, could be five years earlier, but let's say that that was one of my dozen predictions I made when I spoke at TED last year. Almost certainly.

• 10:51Speaker 00

  They're doing more work than human beings do labor today.

• 10:55Jack Altman?

  Yeah, and they'll be smarter and they won't sleep, they'll never complain.

• 11:00Speaker 00

  And you won't have silly notions like a primary care doctor and oncologist.

• 11:05Jack Altman?

  Right, the same robot that like cleans your house is also your doctor.

• 11:08Speaker 00

  Yeah.

• 11:08Jack Altman?

  Yeah.

• 11:09Speaker 00

  It's this super intelligence idea. I think people will have lots to do, but it won't be because they need to work for a living. The first thing people forget, most of the jobs in this country or on this planet are not really jobs. There's what I call servitude. If you're a farm worker, working for eight hours a day picking ladders,

• 11:37Speaker 00

  and you do that for forty years, or you're an assembly line worker at GM mounting a tire on a car for eight hours a day for forty years.

• 11:47Jack Altman?

  Yeah.

• 11:49Speaker 00

  Those aren't jobs. They are servitude because you have to survive.

• 11:56Jack Altman?

  And what a great thing if we could give those people their lives back and the time, those hours of their lives back.

• 12:01Speaker 00

  What will people do? Humans will be humans. They'll still compete. We love sports. We love entertainment. We love being great at something. Whether you're even a mediocre artist loves painting for themselves, not because it can be recognized by a New York auction house, art auction house. So people will excel in what they do, you know, exporters, skiing, you name it.

• 12:33Speaker 00

  I love the idea of people have a lot more time to talk, care about their children.

• 12:38Jack Altman?

  Yep.

• 12:39Speaker 00

  Actually not be frustrated because children are a conflict with work requirements or career requirements, working a lot more with their elders, parents. So there is going to be a lot to do.

• 12:54Jack Altman?

  What's your confidence level that this is the future?

• 12:58Speaker 00

  High.

• 12:58Jack Altman?

  Eighty percent?

• 13:00Speaker 00

  Higher. I have very high confidence this world happens. I think greater than fifty percent that it happens by twenty fifty. The timing is hard to predict.

• 13:13Jack Altman?

  But like you're a hundred percent sure that happens before like twenty two hundred?

• 13:16Speaker 00

  Oh, no question about it. Yeah. So I I'd be shocked if it didn't happen by twenty sixty. Where we live in a world of abundance.

• 13:27Speaker 00

  Nobody has to prove they can buy a more expensive car than somebody else. That part, it may still be there. Humans like competing, including ego. But I do think something fundamental will change. A five-year-old kid going to kindergarten today is being told by their parents, go to school, study hard, get into a good college, and then you'll get a good job. That won't be the paradigm.

• 13:53Jack Altman?

  So my kid, my oldest kid's five, and then I have two other younger ones. If you're me, like, what are you thinking right now in terms of like what's important for like little kids right now?

• 14:04Speaker 00

  Curiosity. For me, when I'm in a position where I can do anything I want, I could go play golf, which I don't love, or go sailing, or you pick your favorite.

• 14:19Speaker 00

  I'm mostly driven by curiosity. You know, I want to learn new things. So anytime I can learn something, I'll take a meeting.

• 14:29Speaker 00

  And I'm fortunate people will teach me, but in the future, you won't need somebody to be willing to teach you. It'll happen. For me, it's that. For others, it'll be producing the best music they can relative to their own bar. Not, and clearly people will still want to be like Taylor Swift and.

• 14:51Jack Altman?

  Will there be like the last person, one of the places my head was going was somebody still has to build the AI, build the robots, program everything? Will we get to the last person who needed to do that at some point? And then that's actually even that job goes away?

• 15:07Speaker 00

  First, high degree of uncertainty with respect to the configuration of what people are doing. I don't believe they'll be working forty hours a week for meaning in their life.

• 15:24Jack Altman?

  Yeah.

• 15:24Speaker 00

  Unless it's something they really wanna do, independent of earning a living. Okay, so that we should be clear. And I just recently gave a talk last month on AI dystopia or utopia. And I, by the way, cover all the dystopian scenarios in it first.

• 15:42Jack Altman?

  Oh, God.

• 15:43Speaker 00

  Before I get to the utopian scenarios. And so it's on our website and it's on the internet, so you can, anybody can find it. What's very clear to me is the dystopian views will be a choice society makes. The utopian view is going to happen anyway. The world of abundance, only a matter of when, not if, and within our lifetimes.

• 16:11Jack Altman?

  It's amazing.

• 16:11Speaker 00

  And when I say my lifetime, I at least look at twenty five years. I'm seventy.

• 16:18Jack Altman?

  Easy.

• 16:18Speaker 00

  Really.

• 16:19Jack Altman?

  More. When you're talking about this dystopia, I think what was implied in what you just said was sort of a self-inflicted dystopia, where we just, you know, humans don't decide to organize correctly to take advantage of this amazing abundance.

• 16:32Speaker 00

  Absolutely.

• 16:33Jack Altman?

  Do you worry at all about like the AI dumerism version of dystopia at all, where like the AI goes awry? Is that something you think about at all?

• 16:42Speaker 00

  Yeah, so let me answer the question in two parts. Certain societies will choose not to do it. We saw it with the Screen Actors Guild. They essentially signed existing traditional studios up to a paradigm that makes them order of magnitude, less effective in content generation. Because we're building an AI videographer in our portfolio. You specify, you don't just generate video, you specify what the lighting angle is and what the, how you pan and zoom the camera and those kinds of things. So the people who resort to traditional means will not do well.

• 17:28Speaker 00

  People who do do movie production, today we can't do a full movie that way, but that's only a matter of time, right? Only a matter of time.

• 17:37Jack Altman?

  Yeah.

• 17:37Speaker 00

  Today, almost all commercials can be done by an AI.

• 17:43Jack Altman?

  Yeah, and the example you gave of, you know, reproducing a one hundred million dollar budget thing with a hundred thousand, of course that, you know, of course that's gonna go that way.

• 17:51Speaker 00

  And we know Coca-Cola got a lot of flack last summer, uh, last Christmas, because they produced some commercials with only with AI. And people were nitpicking anomalies and stuff. Most people didn't know it was done by an AI. And they did great. And I'm glad they did it, broke the ice. So there will be a flood of that. So there's that version of dystopia, displacement, disruption is always fun for the disruptor, very not fun for the disrupted.

• 18:31Jack Altman?

  Yep.

• 18:32Speaker 00

  And so one has to keep that in mind. We have to take care of people who are disrupted in this paradigm. The other end is sentient AI that kills us all.

• 18:44Jack Altman?

  Exactly.

• 18:45Speaker 00

  I wouldn't say I don't worry about it. I do worry about it. But I look at it as a complete basket of risks humanity faces. We've gone through an era where asteroid hit planet Earth and most life was destroyed. So we know that was a risk and risks still exist. An asteroid could hit the planet. More likely, a much worse epidemic than pandemic than COVID.

• 19:19Jack Altman?

  Yep.

• 19:20Speaker 00

  Uh, you know, COVID only killed seven million people. It's possible it could kill seven hundred million people.

• 19:26Jack Altman?

  Totally.

• 19:26Speaker 00

  Right? In fact, I would say that's almost likely.

• 19:35Speaker 00

  So there's a whole basket of risk. Do I worry about sentient AI killing everybody on the planet? Yes, but more than I worry about President Xi doing nasty things?

• 19:47Jack Altman?

  No. Yep.

• 19:48Speaker 00

  So when it comes to AI, I want us to have the Western world to have the best AI so that we are not subject to President Xi or President Putin. That is by far the greatest risk.

• 20:05Jack Altman?

  That makes total sense.

• 20:06Speaker 00

  And this is what the people who call to slow down AI research miss. Putin isn't slowing down, not that he's very good at it, but Xi and China definitely can do this. You know, it's a world in which the, and you can't argue with it. They sort of say the end justifies the means.

• 20:28Jack Altman?

  Yeah.

• 20:29Speaker 00

  We in the Western world care more about the means.

• 20:32Jack Altman?

  Marc Andreessen made this point on the podcast too, which was basically the so much of culture and production is going to live in how the AI is, you know, programmed. And if, if it's our doctors and our teachers and our lawyers and everything like that, you really want it to be.

• 20:49Speaker 00

  Well, we've seen it with TikTok.

• 20:51Jack Altman?

  We did.

• 20:52Speaker 00

  Right? If you're on TikTok, you're more likely to be China inclined, favorably inclined towards China. That's culture. And President Xi had said in one of his speeches not very long ago, the next battle will be fought on the internet. It'll be a battle for people's minds. He was clearly thinking TikTok. So there is, you know, dystopic AI killing humans and all that, or AI in warfare, you know, weapons and robot soldiers and all that.

• 21:31Jack Altman?

  That seems very important, too.

• 21:32Speaker 00

  Yeah, that's very, very important. But it's even more important that we win the race to have social influence. If I'm giving all the entertainment. Uh, to the rest of the world. If I'm giving all the free doctors, if I'm giving all the few tutors, my philosophy, political philosophy prevails. So I do think by twenty forty, the biggest risk we might face that I worry about is China using both good AI, cyber AI, warfare AI, but also socially good AI, like free doctors to everybody on the planet

• 22:15Speaker 00

  and to embed their political philosophy.

• 22:18Jack Altman?

  Yep.

• 22:19Speaker 00

  Uh, I think that's a real, it's probably the single biggest thing I worry about.

• 22:25Jack Altman?

  In some ways, it seems like politics, both sort of the way we think about it normally, but also just sort of broadly socially, is gonna get even more important than it is right now over time.

• 22:35Speaker 00

  Yeah, look, we live in a capitalist system, but people forget capitalism is mostly by permission of democracy.

• 22:42Jack Altman?

  Yes.

• 22:42Speaker 00

  In our system. If democracy sustains, um, I, I, I think we will adjust easier. Now, China has the advantage of using what I call Tiananmen Square techniques uh, to enforce whatever they want. Um, so it's, it's going to be an interesting fifteen years. Uh, and, uh, you know, it's going to be interesting, but also critically important fifteen years to what philosophy starts to dominate the planet.

• 23:18Jack Altman?

  I wanna spend most of our time continuing to talk about the future, but I have one historical event I wanna ask you about. The tee up to this question is going to sound like, you know, just an opportunity to, you know, talk about being a great investor. But I specifically wanna ask you about your OpenAI investment. And, um, the angle I wanna ask you about it from is to try to figure out what, if anything, we can learn from how you did that, um, and how you decided to do it. I know that you were sort of like the first, you know, venture investor to, to do it. And you did it in real size in something that probably at the time, a lot of people. Didn't want to do, maybe thought it was a science project. There was a lot of lack of clarity on the whole thing. I think that like, you know, now it's, you know, it is what it is.

• 24:01Jack Altman?

  But at the time, it was probably an extremely hard bet to make. And so what I was hoping was to try to as much as possible, playback the tape inside your brain to see what we can learn from that.

• 24:13Speaker 00

  So it was very large investment, more than twice the largest investment, initial investment I'd made in forty years of venture capital.

• 24:22Jack Altman?

  Wow.

• 24:22Speaker 00

  So it was a conviction bet. But I want to go back to a different era and talk about this idea of people like to be in huts. The herd mentality was crypto and a couple of other areas. And by the way, I've never called myself an investor. In forty years, I always say I'm a venture assistant, helping entrepreneurs. It's a much better mental model for me. Not, the investing is a side effect, so I can keep doing it. I'll give you another example that relates to this. While people follow herd instinct,

• 25:08Speaker 00

  I like to think about what are the fundamentals and can they happen? Fundamentals don't always happen, but they can. And in nineteen ninety-six, I invested, I started a company called Juniper. We worked on a business plan in my office for six months with the founder, Pradeep Sinder. Why? Because the world was saying the internet would be a protocol called ATM, asynchronous transfer mode. So every major company had given up on TCP IP for the public internet and were only going to use ATM because the telcos were specifying ATM. I talked to the senior management of almost every telco.

• 25:54Speaker 00

  And every single one said to me they wouldn't use TCP IP. I talked to the CTO of Cisco, who said they have no plans to ever do TCP IP above one hundred and fifty five megabits, which is my home service. It's far below my home service for a public router. But I looked at the data. TCP IP usage had been climbing. And I said, this will scale. And every expert is wrong in the field. And we should come back to that if you remember this notion of experts.

• 26:34Speaker 00

  And the data said TCP IP was an exponential and we were the knee of the, near the knee of the curve. So, fast forward to today. And by the way, I'd invested in TCP IP and it was a core part of what Sun did in nineteen eighty two. And this was fourteen years later. You see the exponential in TCP IP as a communications medium. And, and we bet heavily. By the way, we made seven billion dollars on a three million dollar investment when almost no venture investment ever made even a billion.

• 27:11Jack Altman?

  That's crazy. It's twenty five hundred extra money. Yeah, I'd like one of those.

• 27:17Speaker 00

  Yeah, you only need one, but hopefully OpenAI for us will do better to go back to your question. But fast forward in the year two thousand, I gave an interview which is in the New York Times. So it's on the record. That said, AI will have us redefine what it means to be human. Which is this utopia thing we were just talking about when people need jobs. That was twenty, year two thousand or two thousand and one. Two thousand and twelve, I wrote two blogs. One was called Do We Need Doctors? Under the premise, AI will do.

• 27:54Speaker 00

  All the doctoring expertise that we need.

• 27:57Jack Altman?

  This is in 2012.

• 27:58Speaker 00

  2012, it's in TechCrunch, you can look up. And the second was called, do we need teachers? Idea that all tutoring will be done by an AI too. So those were 2012.

• 28:09Jack Altman?

  What gave you confidence at that point that that was gonna happen? Because this was before the breakthroughs with Transform, way before all of that stuff.

• 28:17Speaker 00

  So, and this is where I was getting to. What I looked at was the best talent was going into AI. You went to MIT or Stanford or Caltech, wherever, people wanted to work on AI. Toronto, of course, a pretty important place in this history. Best talent was going. In 2016, I gave a talk at the National Bureau of Economic Research. I should probably release those slides. My first slide was the top 20 occupations in the US by number of people. And I said, I can't see which ones of these can't be displaced.

• 29:00Speaker 00

  Now, this was to a bunch of economists, that was 2016. I was convinced, but in that talk, I had human performance and current AI performance. And most people were making fun of AI. Because you tell and ask an 83-year-old man if they were pregnant. It made silly mistakes. I looked at the rate of progress and the rate of talent influx. Those two things convinced me the moment for AI was soon. Now, this was 2016. So by 2018, when Elon backed off funding OpenAI.

• 29:45Speaker 00

  He'd committed a lot of money that he didn't meet his commitments for. And when Sam called me, I looked at that and said, I had the right team. I was very worried about China. I thought there was only two other teams. One was inside Google, which is moving very slowly. And another in Baidu, which was stealing Google's people by setting up an office down the hair and stealing their expertise. I'm very hawkish on China. And OpenAI needed to exist as a separate vector of AI progress. And it had the right team with Sam running it. When Sam called me, it was almost a no brainer.

• 30:24Jack Altman?

  Because you were such a prepared mind for this by that time.

• 30:28Speaker 00

  Yeah, I was convinced the impact could would be large. Now, I had no idea when there would be breakthroughs. Obviously, I couldn't predict transformer models, even though the paper was out, was gonna be that large an impact. In fact, transformers wasn't what OpenAI was working on. So I wasn't this, this technique works. It was more like talent and the rate of progress. And I actually thought it'd be multiple techniques. I remember talking to Sam as I have a Lego block model. The more different types of Lego blocks you do, the more the combinatorial possibilities explode.

• 31:13Speaker 00

  I think it was following the data and not the herd.

• 31:16Jack Altman?

  So was there a couple year period where you were basically very primed? That you were just waiting for the right team at some point? Like, it seems like between 2016 and 2018, you probably believed this pitch from just, you just needed the right team.

• 31:31Speaker 00

  Well, I I was convinced of the following. AI would have a huge impact because the rate of progress I was seeing on these benchmarks against human performance, even though they were way down there and almost silly performance. But the rate of change was high and the rate of talent and flux was high. Elon backing off funding OpenAI was fortunate. I can't say I engineered it. I wish I had.

• 31:59Jack Altman?

  Yeah.

• 32:00Speaker 00

  But it is following the data and not the herd instinct.

• 32:04Jack Altman?

  Yep.

• 32:05Speaker 00

  And frankly, 2018, when we made the decision, it closed in early 2019.

• 32:11Speaker 00

  Everybody thought AI was not a real thing.

• 32:16Jack Altman?

  People thought it was a science project.

• 32:17Speaker 00

  It was a science project. OpenAI was not using transformer models. It was just my belief, you put the right resources and they'll figure it out. I told my partner, I have no idea whether it happens in three years or 10 years, but the R R would work out. It was too important to not try was the phrase I used.

• 32:40Jack Altman?

  Yeah.

• 32:41Speaker 00

  Some things are too important to not try and I often try those. The same time we invested in fusion at Commonwealth Fusion. Again, started it from practically scratch. Uh, because Bob was a senior fellow at the MIT Fusion Lab. This idea that some things in society are too important to not try. And I'd rather try and fail than fail to try. And most people, most of the time just failed to try. And so this combination of factors and knowing AI would have a large impact. Once we got it, uh, was what got me convinced.

• 33:20Jack Altman?

  Okay, so that's the perfect setup into now looking to the future. That construction got you to a big bet in AI. What are the other areas right now that you feel maybe like, you know, the same way you felt in 2015 about AI? What do you feel that way about now? You mentioned fusion, but like, what are a few of the areas that you feel this way about the future now?

• 33:42Speaker 00

  Well, first, related to AI, robotics will take a little longer, but I think we'll have the chat G P T moment in the next two to three years.

• 33:53Jack Altman?

  What could that look like?

• 33:54Speaker 00

  A robot that doesn't need to be programmed. It learns, it isn't programmed to do tasks.

• 33:59Jack Altman?

  And it, and it's a generalized, you know, maybe physical robot in our, in our space.

• 34:04Speaker 00

  Well, the world is organized around the humanoid form factor. And so it's probably a humanoid. Humanoid is the only common enough form factor to get to high enough manufacturing volumes to get the cost down. Almost everybody in the 2030s will have a humanoid robot at home. Probably start with something narrow like do your cooking for you. We can chop vegetables, cook food. Clean dishes, but stays within the kitchen environment. And you know, if you have a Prius, it costs three, four hundred dollars a month. The robot will cost three, four hundred, uh, three, four hundred dollars a month. It won't matter in, you know, for anybody making more than a certain amount of money.

• 34:48Speaker 00

  They already have somebody helping. And so this is help.

• 34:53Jack Altman?

  Yeah.

• 34:53Speaker 00

  I think that's how it'll start in the home. But factories, farms, uh, farm workers is a massive area that's mostly unaddressed.

• 35:04Jack Altman?

  What part of the humanoid intelligent robot are we most limited on right now? Like, is it about the robotics? Is it like the intelligence?

• 35:11Speaker 00

  It's the intelligence. Clearly, we've seen out of China, many, many hardware farm factories. They're pretty damn amazing. If you see them boxing or running a race or it's pretty cool. But they're not learning robots. You change the environment and they don't do as well.

• 35:34Jack Altman?

  Yeah.

• 35:34Speaker 00

  I think this intelligence that learns and adapts and doesn't need to be programmed to do a task. You know, if you walk a human in here and say, clean up, they'll know what to do. A robot needs to do that.

• 35:50Jack Altman?

  Why is this not going to be like Apple? Like, and I know that, like, you know, I'm not saying I think it is, but like, why do you think that we don't already have the sort of prototypes of this out from the biggest, most well-equipped hardware companies in the world?

• 36:05Speaker 00

  So I've been doing innovation for forty years and innovation only. I can't think of very many large examples that we had large innovation. Came from somebody who was large or in the business?

• 36:24Jack Altman?

  Yeah, can you can we go through some of them?

• 36:26Speaker 00

  Yeah, retailing, you know, when we invested in Amazon, I was a client in ninety six. Nobody thought you could compete with Walmart. You'd think Walmart would in a way.

• 36:39Jack Altman?

  Yeah.

• 36:39Speaker 00

  Look at media. Was it NBC or CBS or was it little things like Netflix and Twitter and YouTube and Facebook and nobody even knew they were in the media business? Uber, did that come from Hertz or Avis car rental or taxi companies? No, Airbnb, did come from Hilton or Hyatt?

• 37:05Jack Altman?

  Yeah.

• 37:05Speaker 00

  They have more rooms than Hilton and Hyatt now. SpaceX or Rocket Lab, instead of Boeing and Lockheed, you'd expect to be able to do space launches.

• 37:16Jack Altman?

  Yeah, yeah.

• 37:18Speaker 00

  You know, my own history, I got enamored with the fact that when when I was a client, they talked about Genentech. Started by an associate at Kleiner when nobody believed biotechnology was a field. No pharma company was doing it.

• 37:34Jack Altman?

  Yeah.

• 37:35Speaker 00

  All of biotechnology. We saw the cloud, we saw self-driving electric cars. Everybody had given up.

• 37:42Jack Altman?

  Right.

• 37:42Speaker 00

  On it.

• 37:43Jack Altman?

  How about cloud actually? Because that was Amazon. So you could kind of give them, yeah.

• 37:47Speaker 00

  Yeah, cloud is interesting. I think I should say founder-driven companies have permission to try try crazy things.

• 37:56Jack Altman?

  Like like Apple when Steve was there with the iPhone.

• 37:59Speaker 00

  It was Steve. When Steve was there, they tried the iPhone.

• 38:02Jack Altman?

  Yeah.

• 38:03Speaker 00

  And if you go back to the press in two thousand and seven, everybody said a phone at six hundred or seven hundred dollars that has no keyboard to dial.

• 38:12Jack Altman?

  Right.

• 38:12Speaker 00

  Like, what a silly idea.

• 38:14Jack Altman?

  Yeah.

• 38:15Speaker 00

  Right? So it's founder-led companies that in a way, no way more clear. Self-driving would be fifteen years away if Larry and Sergey hadn't said we're going to do self-driving at Google.

• 38:28Jack Altman?

  Yeah.

• 38:29Speaker 00

  Or Elon had said, well, I'll do electric vehicles.

• 38:32Jack Altman?

  Yeah.

• 38:32Speaker 00

  Right. So.

• 38:33Jack Altman?

  So basically Tesla should be much more likely on humanoids than Apple, for example.

• 38:38Speaker 00

  It is founder driven and Elon is paying attention to it. So they're definitely a good candidate, but so are a number of other companies that have.

• 38:47Jack Altman?

  Definitely.

• 38:48Speaker 00

  A lot of faith in the startup ecosystem of founders with very creative ideas.

• 38:54Jack Altman?

  Yeah.

• 38:54Speaker 00

  So that's an area of what delving into in a separate podcast.

• 38:58Jack Altman?

  Yeah.

• 38:58Speaker 00

  How, but, but that's an example of large innovation. So no matter where I look. So the cloud definitely.

• 39:08Jack Altman?

  Yeah.

• 39:08Speaker 00

  Happened. You know, when we, when I was starting Sun, everybody said that these deck wax computers and IBM mainframes and why don't you build a graphics terminal for them? I said, no, I'd rather just replace those companies. Neither of those companies are in the computer business anymore. And frankly, it took five years to get deck out of the computer business into mostly a customer support business after we started.

• 39:36Jack Altman?

  Yeah.

• 39:36Speaker 00

  Which is pretty stunning to me as a twenty some year old kid.

• 39:40Jack Altman?

  Totally.

• 39:41Speaker 00

  So repeating that pattern, right? There's zero chance a company like Siemens or GE could do fusion.

• 39:51Jack Altman?

  Right.

• 39:52Speaker 00

  Zero chance.

• 39:53Jack Altman?

  What's the mechanic for what? I of course agree, but what, what's the mechanic that's stopping them? Is it risk? Is it talent?

• 39:59Speaker 00

  Here's the first thing I would say. In these forty years, in all the examples I've just cited for you, and I could give you more, none of them were done by somebody who knew the area.

• 40:11Jack Altman?

  Mm hmm.

• 40:12Speaker 00

  Experts are terrible at predicting the future. They extrapolate the past. Entrepreneurs invent the future they want. It's a bastardization of an Alan Kay quote, but you know, so you imagine the world and you try and make it happen.

• 40:33Speaker 00

  And you're not biased by, what is experience? Experience is a set of biases that prevent you from making mistakes. And that's what experts do, and that's why very rarely do experts innovate in their area.

• 40:49Jack Altman?

  Yeah.

• 40:50Speaker 00

  Look, even the COVID vaccine came from two startups.

• 40:53Jack Altman?

  Right.

• 40:53Speaker 00

  Moderna and the BioNTech. You'd think the pharma was well-equipped to mobilize. Not a chance. So, you know, it's, it's, it's, it's why the US has done so well. People have permission to try. And if you try and fail, it's, you don't ruin your career. In a big company, you'll ruin your career.

• 41:18Jack Altman?

  Right.

• 41:19Speaker 00

  To your question, right? You, you can't afford to fail.

• 41:24Jack Altman?

  Yeah.

• 41:24Speaker 00

  So you start with, I can't fail, which means you can't take a large risk. My view is very simple. Most people reduce risk to increase the probability of success. I do the opposite. Start with, I want high consequences of success. I don't care about the probability of failure.

• 41:43Jack Altman?

  I think that is like one of the best things about tech as an ecosystem is, you know, I think not everybody thinks quite like what you're saying, but in general, in tech, you can fail and it's okay. And I think even another, you know, I worked in finance in New York for a hot minute. And even there, it's just like, it's just not how it works.

• 42:00Speaker 00

  Jack Dorsey is great on paper. But when we invested in Square in 2010, the following was the situation. He'd just been fired from Twitter. Twitter was a tiny company, just been fired, and he had like four failed startups. His history on Wikipedia, like he had four failed startups. So, you know, traditional wisdom would say, don't back him.

• 42:29Jack Altman?

  Was your mindset around risk always just increase the consequence of success? Or did that evolve over time?

• 42:34Speaker 00

  It was very much that from, you know, my first startup was go on, take on the computer business. Everybody big is dumb. Which is a little bit of an arrogant viewpoint, but if he hadn't. Had that kind of hubris, we probably wouldn't have attempted what we attempted. So I think hubris is an important ingredient of great entrepreneurship.

• 43:02Jack Altman?

  Yes.

• 43:03Speaker 00

  We'll build an AGI, right? Like, that's hubris. It's arrogance, only I can do it. So these are entrepreneurial characteristics that are very important, but also thinking from first principles, which is why experts do poorly in their areas. Because they have too many biases of what works and what doesn't, or how to do things. While somebody new in the area reinvents the area. They figure it out from first principles in the new environment. That's an essential characteristic. So, you know, one thing is I always get asked is what do you look for in entrepreneurs?

• 43:46Speaker 00

  You know, I seldom look for deep expertise in the area. I do look for people who are thinking from first principles and learning rapidly. Even in Y C batch, if I'm talking to a Y C partner about some startup, the question that's most important to me is how much have they changed their plan over the last three months?

• 44:08Jack Altman?

  Yep.

• 44:08Speaker 00

  Rapid evolution, rapid thinking, rapid learning is what matters.

• 44:14Jack Altman?

  So this went into a-

• 44:16Speaker 00

  All over the map.

• 44:17Jack Altman?

  No, it was, this is, I love this Eddie, but I want to keep getting sort of the other areas you're very excited about. That was robotics, which I agree, humongous. If, you know, in some ways, that's like, that's like the final, you know, thing to figure out. You mentioned fusion as a big thing.

• 44:34Speaker 00

  I'm very bullish about energy.

• 44:36Jack Altman?

  Oh, sort of many formats of energy.

• 44:38Speaker 00

  So I think there's two large formats. Fusion is one, and there's multiple approaches to fusion. But I'm also very excited about super hot geothermal. So again, this ties to this risk idea.

• 44:58Speaker 00

  In geothermal, completely uneconomic business. You buy power because it's green, not because it's cheap. And people like cheap stuff. Yep. Turns out, almost all geothermal in the US is at 200 degrees or 250 degrees max. If you increase the temperature to 450 degrees, you get 10 times, six to 10 times the power depending upon conditions from the same valve. That's surprising. For two reasons. One is carno efficiency goes up, but the heat content also goes up. So the energy content of the steam goes up and the efficiency percentage. So you get a multiplier effect. Don't need to get into technical details.

• 45:44Speaker 00

  But now it's cheaper than natural gas if you can get to 450 degrees. Nobody has to worry about superhard geothermal is green. It's just cheap. Wow. Right? And so why don't people attempt it? Because people decided you can't drill at 450 degrees because drill bits collapse. Got it. So I sort of approached it differently. I said, what would it take to drill at 450 degrees?

• 46:17Speaker 00

  If I can solve that problem, everything else takes care of it. And we know there's 450 degrees. The most parts of the earth, it's only a matter of how deep you go. And so I set off on that problem. I think we are making great progress. So I think it's as powerful as fusion. Wow. In supplying most of Western United States. Yeah.

• 46:39Speaker 00

  You can get that. Our location in Oregon, one location could produce seven gigawatts of power. And I hope this year. I can prove we can do all seven gigahertz competitive with natural gas.

• 46:54Jack Altman?

  Wow.

• 46:55Speaker 00

  Without worrying, it works in the Trump era where he doesn't care to believe in climate change. It still works and I love that kind of project. I'm also very bullish on well fusion will do well. I don't know enough about Sam's project in Helion, but I'm glad diverse techniques are being allowed.

• 47:14Jack Altman?

  But both of these are areas where you're like, the science is gonna work. The impact will be enormous.

• 47:18Speaker 00

  Yeah.

• 47:18Jack Altman?

  Yeah.

• 47:19Speaker 00

  It's worth doing.

• 47:20Jack Altman?

  Solar also, is that on your radar?

• 47:22Speaker 00

  We are doing solar. We probably have in the Western world that China has some great solar technologies. The next generation of solar called perovskite silicon, uh, perovskite, uh, solar cells. Uh, we're working on that, but there the impact isn't as large.

• 47:39Jack Altman?

  Yeah, right.

• 47:40Speaker 00

  Right? We are in, and that power is already so economic.

• 47:45Jack Altman?

  Hmm.

• 47:45Speaker 00

  That there's other uses for that power. So we are doing that, but, but look, I'm relatively optimistic. I see our path clear to getting to zero emissions by 2050. Uh, I think most of the technologies do that will be proven in the early 2030s.

• 48:09Jack Altman?

  Is there any sort of a countervailing force with the fact that we're gonna be consuming a lot more power via AI?

• 48:16Speaker 00

  People always ask me that, uh, I think if you get fusion right, I think very early 2030s, we'll get our first power plants.

• 48:25Jack Altman?

  And that power curve.

• 48:27Speaker 00

  That power curve just catches up.

• 48:29Jack Altman?

  Yeah.

• 48:30Speaker 00

  So there'll be this period between now and 2035 when these things aren't scalable yet.

• 48:35Jack Altman?

  Yeah.

• 48:36Speaker 00

  But beyond that, I don't think.

• 48:38Jack Altman?

  Yeah.

• 48:38Speaker 00

  We should, power will be cheap and plentiful and zero emissions and zero resources.

• 48:45Jack Altman?

  Hmm.

• 48:46Speaker 00

  By the way, if you're creative enough, you can do this in every area. Um, we're producing cement today. We are, we not only don't say like environmentalists do, let's go shut down, uh, cement plants every time. There's one in Cupertino that the environmentalists have been trying to shut down.

• 49:09Jack Altman?

  Hmm.

• 49:10Speaker 00

  My approach is very simple. They are emitting carbon dioxide, let's capture the carbon dioxide and turn it into carbonate.

• 49:18Speaker 00

  We get more cement out of the same amount of limestone mined at a lower cost per ton. Now, what's there not to like? Do you have to care about climate to have that work? No. And and we are in production on this now. So I'm I'm sure cement is solved. Steel is same way. I'm pretty certain we'll be able to produce steel with zero emissions or low emissions initially at a lower cost or similar cost to today's steel. I'm pretty damn excited. I I think this is mostly solved.

• 50:04Speaker 00

  So, you know, climate is a very solvable problem.

• 50:07Jack Altman?

  Yeah.

• 50:08Speaker 00

  Even without AI and AI will only turbocharge climate.

• 50:13Jack Altman?

  So that's energy, generally speaking.

• 50:16Speaker 00

  Energy, resources, steel, cement.

• 50:18Jack Altman?

  Yep, robotics we got.

• 50:20Speaker 00

  Robotics we got.

• 50:21Jack Altman?

  What else?

• 50:22Speaker 00

  Well, I'm super excited. So I was mentioning this talk I did. It's called plausible tomorrows, so you can Google that too. I have a dozen predictions that look really implausible unless somebody sits down with me and I walk them through each and they say, I see no reason this won't happen. I think by 2050, we can replace most cars in most cities.

• 50:49Jack Altman?

  Self-driving or just don't have cars?

• 50:51Speaker 00

  Public transit that meets the following requirements. It's always cheaper than cars and cheaper than today's public transit. Cheaper than today's public transit without losses for the transit agency. That's always faster than public transit.

• 51:09Speaker 00

  Because it's like Uber, it's hailed not scheduled. It's all personal. Yeah. It's two and four person vehicles, not, and it fits in a bicycle lane. Wow. Not only, by the way, public transit, Fusion, OpenAI, I invested in the same timeframe, roughly. Yeah. Around twenty eighteen. So I'm very proud of that vintage year. That's a good year. But people said, public transit startup, you must be totally crazy. And I said, Google suing Waymo is the wrong way to do transit. Because the vehicles are too big, or what? No, it just increased congestion, okay? So what should it be?

• 51:52Speaker 00

  So, and I think Waymo will have a great business for delivering people from transit routes to the last mile. There's only one question in a city when it comes to traffic. Can you increase throughput ten X for the same street width without redoing the street width? So we designed a public transit system of self-driving vehicles in bicycle lane width. So it's easy to insert in a city, has ten times the capacity of a light rail system or a car system, so more capacity than light rail system in a bicycle lane width.

• 52:33Speaker 00

  And it's on demand because the cars just, you hail them like an Uber. So turns out, every single project we have bid so far, we bid a, well, we bid a lot. Four have been decided. We won every single one for a public transit system from a startup. And the startup wasn't invited to bid on any of these projects because nobody knew about us. Yeah. Nobody invites a startup. San Jose invited thirty-two bidders to build a transit system from the airport to the Google campus and then to the Apple campus in San Jose.

• 53:14Speaker 00

  We bid over the transom because most of these bids are open and we want it outright. Think about it.

• 53:20Jack Altman?

  But is this, so what is the, what's the vehicle?

• 53:23Speaker 00

  It's a little pod, think Disney World.

• 53:25Jack Altman?

  It's like a little narrow car?

• 53:27Speaker 00

  Yeah.

• 53:27Jack Altman?

  Yeah, that makes sense.

• 53:28Speaker 00

  It fits in a bicycle lane.

• 53:29Jack Altman?

  Yeah.

• 53:30Speaker 00

  By the way, it can fit above a bicycle lane too.

• 53:33Jack Altman?

  Yep. If you can go twice as many as cars on a street or something like that?

• 53:37Speaker 00

  So it turns out it has way more capacity than cars in the street or even if everybody took buses, this would have more capacity in passengers per hour given for a given street width.

• 53:50Jack Altman?

  Are they also coordinating with each other so the cars are closer together? Is that part of it?

• 53:53Speaker 00

  Absolutely, you can coordinate.

• 53:55Jack Altman?

  Yeah.

• 53:56Speaker 00

  Yes.

• 53:56Jack Altman?

  Yeah, so you basically just have-

• 53:57Speaker 00

  And if you build a raised infrastructure, it's so simple, you can do prefab.

• 54:02Jack Altman?

  Yeah.

• 54:02Speaker 00

  You don't have to do the Boston tunnel dig for 20 years.

• 54:06Jack Altman?

  Right, wow.

• 54:07Speaker 00

  You just do a prefab, put it in place.

• 54:09Jack Altman?

  Yeah.

• 54:09Speaker 00

  So-

• 54:10Jack Altman?

  That's a good one.

• 54:10Speaker 00

  It is thinking from first principles.

• 54:13Jack Altman?

  Yeah.

• 54:14Speaker 00

  That matters and it leads to, and being ambitious.

• 54:19Jack Altman?

  Okay, and how about medicine? Cause that's like 20% or more of GDP. That's a huge one.

• 54:23Speaker 00

  Yeah.

• 54:23Jack Altman?

  Obviously has a big part of this, but you spend a lot of time in medicine separate from AI with AI.

• 54:27Speaker 00

  So, uh, so, uh, off, which is a big part of our GDP, a quarter of that spend is medical expertise. It's phys, think doctors.

• 54:38Jack Altman?

  Mm hmm.

• 54:39Speaker 00

  Okay, uh, almost certainly that goes to zero.

• 54:44Speaker 00

  Can go to zero. So what are we doing? We're building AI primary care doctors, AI physical, mental health therapists, AI physical therapists, AI oncologists, AI, you name it.

• 54:56Jack Altman?

  Actually, maybe just to like take, just to get specific on what you mean about that going to zero. If we have for every hundred doctors per capita we have today in like 2050, do you think we have like zero or 10 or like what, like what do you think this is?

• 55:11Speaker 00

  I don't know the answer.

• 55:14Jack Altman?

  But there are some.

• 55:15Speaker 00

  You will always have some to learn from.

• 55:19Jack Altman?

  Right? For the AI to learn from.

• 55:20Speaker 00

  For the AI to learn from, though the AI can boot itself to be much better.

• 55:25Jack Altman?

  Mm hmm.

• 55:26Speaker 00

  And I'll give you today's data of a multi-center study at Stanford. They took the best academic institutions and judged complex AI diagnosis.

• 55:41Speaker 00

  Physicians only, and these are academic learning centers with the best physicians. Seventy-three percent accuracy. So twenty-seven percent of the patients were getting the wrong diagnosis.

• 55:53Jack Altman?

  It's like a lot. It's like one in, yeah, that's a lot.

• 55:55Speaker 00

  It's wonderful.

• 55:56Jack Altman?

  Yeah, yeah, yeah.

• 55:58Speaker 00

  Think about it. And this complex means it was a serious thing. It wasn't just the flu. AI alone, eighty-eight percent.

• 56:05Jack Altman?

  Accurate.

• 56:06Speaker 00

  Accurate. But then they gave the AI to the doctors. The doctors improved from seventy-three percent to seventy-six percent. The AI got degraded from eighty-eight to seventy-six percent.

• 56:17Jack Altman?

  That's funny.

• 56:18Speaker 00

  And this is a serious multi-center study. I love medicine. What will happen is everybody on the planet, for less than a dollar a month, will get a free primary care, a free physician, initially called primary care, but they'll be, uh, do everything. My son's company, Q R I, is called Multi-Specialty Primary Care, because the AI knows enough gastroontology to provide that. And now the hard problem is the American Medical Association won't let the AI write a prescription.

• 56:51Jack Altman?

  Yeah.

• 56:52Speaker 00

  And so we, we have human physicians who approve the diagnosis and the prescription or testing recommendation or whatever.

• 57:01Jack Altman?

  Yeah, I was gonna say, I mean, if the humanoid at home plays out too, then it's probably also doing some amount, I mean, it's not gonna do surgery, but it might be doing some amount of giving you a physical or

• 57:12Speaker 00

  Yeah.

• 57:12Jack Altman?

  giving you an injection or whatever else you need.

• 57:14Speaker 00

  Watch your gate and say, hey.

• 57:16Jack Altman?

  Yeah. Something's up.

• 57:18Speaker 00

  Yeah, something's up.

• 57:19Jack Altman?

  Yeah.

• 57:21Jack Altman?

  So that's a quarter of medicine. What about the other three quarters?

• 57:25Speaker 00

  A quarter is pharmaceuticals. That we are seeing an explosion in AI in drug design.

• 57:33Jack Altman?

  Yes.

• 57:33Speaker 00

  Both small molecule and

• 57:37Jack Altman?

  Are you pretty bullish on that?

• 57:38Speaker 00

  I'm very bullish on that.

• 57:40Jack Altman?

  Do you think it will, um, speed up the rate of drug discovery slash make it cheaper? Or do you think it's more about it will help us discover undiscoverable things?

• 57:48Speaker 00

  Probably a little bit of both. The hard part in that is the regulatory cycle. We have a separate effort to say, could you trust, test anything against lots of human genetics and lots of human organs? So we have an effort to do 10,000 tests. And it could be a thousand different genetics of people, people and 10 organs each in one week in one untouched robot. So it just does the test, screens the drug and looks for effects and growth and all that. Maybe something like that would replace human trials.

• 58:31Speaker 00

  Most likely, at some point soon, it'll reduce the size and length of these trials. So I think drug discovery will see not only better molecules, the bigger problem in drug discovery is not to do what's called lead compounds for a disease, for a drug, but to increase the probability of success. The probability, once you have a lead drug candidate to actual FDA approval is so low, like out of 100, less than five will make it. Right? So it's increasing that probability because you're starting with a better candidate and you're managing the process better.

• 59:16Speaker 00

  So that's a quarter. I do think there is diagnostics imaging. And by the way, we had the most coolest self-driving for MRI machines, so you don't need MRI machines. Now, you need today technicians to run MRI machines, but if you have a self-driver, you don't need that. Cardiac MRI is so specialized, because the heart is moving, that you can't staff centers with cardiac MRI technicians. We turn an hour and 15-minute exam into 20 minutes, single button press. You can even do it remotely.

• 59:56Speaker 00

  Because. So we did the same for ultrasound, self-driving for ultrasound machines. An ultrasound machine might cost twenty five grand, but a technician to do a cardiac MRI will cost you a hundred and fifty grand. So why care about the machine? It's the person. If you have self-driving, we had this company that GE actually acquired from us. So all I'm saying is diagnostics and imaging is a quarter of the spend. It'll get cheaper.

• 1:00:24Jack Altman?

  I'm shocked it's a quarter of the spend. I didn't realize that.

• 1:00:27Speaker 00

  Testing of all sorts.

• 1:00:28Jack Altman?

  Yeah.

• 1:00:30Speaker 00

  And then a quarter is in hospital care. These are very rough numbers, but in hospital care, and that'll improve too.

• 1:00:39Jack Altman?

  So the net of all of this is like a multi-trillion dollar retrofit?

• 1:00:44Speaker 00

  Yes.

• 1:00:44Jack Altman?

  Yeah.

• 1:00:45Speaker 00

  But if expertise is free and you can give somebody ten times the amount of care, the average US citizen gets one primary care visit a year, roughly. In Australia, it's four or five times that. So we are poor anyway. If you provided way more care upfront, you'd reduce disease burden downstream. Fewer people would have heart surgeries, which are super expensive, or emergency room visits, because you took care of them at the beginnings of the detection of their disease.

• 1:01:29Speaker 00

  So whether you, every expensive disease, whether it's cardiac, Alzheimer's, Parkinson's, we are well on our way to discovering them ten years before the symptoms manifest. So I argued a piece I did called Twenty Percent Doctor Included in 2016. I said symptom-based medicine will disappear. You don't detect disease from symptoms. You detect disease based on what's going on in the body. So that's medicine.

• 1:02:00Jack Altman?

  Yeah.

• 1:02:01Speaker 00

  I'm pretty excited about it. The level of precision that's possible, I think in the next five years or ten years. Biological intervention will approach computer programming in being able to precisely program things, design molecules. So we are starting to, we have a couple of startups looking to do drugs for one patient at a time. So the whole drug only applies to one patient for one genetic.

• 1:02:29Jack Altman?

  Wow.

• 1:02:30Speaker 00

  Anomaly.

• 1:02:31Jack Altman?

  And that's because that includes like the patient's DNA is factored in or something?

• 1:02:36Speaker 00

  Yeah, their disease, their specific mutation.

• 1:02:39Jack Altman?

  Yeah.

• 1:02:40Speaker 00

  Can be addressed for them.

• 1:02:42Jack Altman?

  Wow.

• 1:02:42Speaker 00

  There's also broader categories, like a single shot treatment for sickle cell disease, right? Massive problem.

• 1:02:54Jack Altman?

  Yep.

• 1:02:54Speaker 00

  If you can do a genetic treatment, one shot, I think that'll happen in the next 10 years.

• 1:03:00Jack Altman?

  As I'm listening to you talk about all of these different areas and like you think on such a grand societal scale, but you probably also have a bunch of sort of maybe seemingly boring, but like good ideas kind of come through coastal ventures all the time, too?

• 1:03:16Speaker 00

  Yes.

• 1:03:16Jack Altman?

  Do you still enjoy making those kinds of investments as well? Is that more where you have like a partnership and there's other people on your team who are more interested?

• 1:03:24Speaker 00

  Well, one, there are other people in the partnership who enjoy just successful startups.

• 1:03:30Jack Altman?

  Yeah.

• 1:03:30Speaker 00

  I do, too.

• 1:03:31Jack Altman?

  Yeah.

• 1:03:31Speaker 00

  You look, I enjoy winning, you know, when I do a GitLab, that's, that's a win. When we do Cognition, it's a win. When we do Raplet, it's a win. I mean, the growth rates for some of these companies are stunning.

• 1:03:45Jack Altman?

  Shocking, yeah.

• 1:03:46Speaker 00

  So, um, yeah, it's still fun to be disruptive.

• 1:03:50Jack Altman?

  Yeah, it's just that sort of a different bucket of enjoyment.

• 1:03:52Speaker 00

  It's a different bucket.

• 1:03:53Jack Altman?

  Yeah.

• 1:03:54Speaker 00

  I would say in the more societally, societally impactful technologies, I will go through actually starting the company.

• 1:04:05Jack Altman?

  Mm hmm.

• 1:04:05Speaker 00

  Like Fusion, Bob was a senior fellow, um, Commonwealth Fusion, Bob was a senior fellow at MIT Plasma Fusion Lab when I met him. And he had ideas and, and I got him.

• 1:04:20Speaker 00

  Sort of like instigated, so to say.

• 1:04:23Jack Altman?

  Yeah.

• 1:04:23Speaker 00

  He's done all the work. And then he instigated the field of fusion.

• 1:04:27Jack Altman?

  Mm hmm.

• 1:04:28Speaker 00

  So whether he succeeds or not, there's so many different startups now. One will succeed.

• 1:04:34Jack Altman?

  Yeah.

• 1:04:35Speaker 00

  So Conwell Fusion or Helion don't have to succeed for Fusion to succeed. So I like instigating things, the same thing we did. Yeah, it was very profitable to make twenty five hundred times your money.

• 1:04:48Jack Altman?

  Yeah.

• 1:04:48Speaker 00

  And in having the world be T C P I P instead of A T M. It's interesting to look back at the press from nineteen ninety six. Just assumed.

• 1:04:59Jack Altman?

  Yeah.

• 1:05:00Speaker 00

  Uh, it was gonna be, the internet was gonna be A T M. So I'm actually, you know, I always tell Pradeep, the founder of that.

• 1:05:07Jack Altman?

  Yeah.

• 1:05:07Speaker 00

  If we hadn't done that, the internet wouldn't be T C P I P, which is horrific to think about. It'd be in the hands of A T and T, engineering the protocols.

• 1:05:18Jack Altman?

  Yeah.

• 1:05:18Speaker 00

  Which they've done. And this is why Lucent went out of business practically, they're still around. Alcatel, Newbridge, Nortel, all the telecom players sort of gradually disappeared because they didn't win place or show in the race for the internet. And the same will happen in other areas.

• 1:05:40Jack Altman?

  You, um, you used the word instigating when you could have maybe used a word like incubating. I also heard earlier in the conversation, I think you, you know, you talked about like not being an investor, you know. Um, I think also like the way that you work with founders and I've heard you talk about not being founder friendly or that there's a different way to think about being founder friendly. What I'm curious about is there's a lot of sort of, uh, new ways to describe what V C's do and how they describe themselves and mindsets around it. Do you think that in general, the role that venture investors see themselves playing? Do you think we're trending in a direction where it's getting better all the time? Or do you think that in any ways the industry has lost its footing on some of these concepts?

• 1:06:25Speaker 00

  Look, there's all kinds of V C's with all kinds of approaches. Some are marketing labels. Founder friendly is a real disservice to founders.

• 1:06:38Speaker 00

  It's like if you said to your kids, if you told your five year old.

• 1:06:44Jack Altman?

  Do whatever you want.

• 1:06:45Speaker 00

  Do whatever you want. I will always say yes.

• 1:06:48Jack Altman?

  Yeah.

• 1:06:48Speaker 00

  That's you pay the price.

• 1:06:51Jack Altman?

  You wanna go swimming without me? Yeah, like whatever. Yeah.

• 1:06:54Speaker 00

  Or eat as much candy or eat as much coke. Hmm. And by the way, my kids, when they were growing up at the age of five, they could eat as much candy and as much coke as they wanted, as much junk food. We always had it laying around. They could, they didn't have to ask us. But we taught them how to measure themselves on how much coke they drink, whether it's good or not. So I would say we taught them control, not gave them yes, no permission.

• 1:07:27Jack Altman?

  Yeah, but the most important thing is that you set those parameters for a kid.

• 1:07:31Speaker 00

  Yeah.

• 1:07:31Jack Altman?

  And yeah.

• 1:07:32Speaker 00

  Right. And in literally, at age 12, I thought of they can make 10% of the important decisions. By age 18, they have to make 90.

• 1:07:43Jack Altman?

  Yeah.

• 1:07:43Speaker 00

  And my job is to teach them how to make the leash longer.

• 1:07:48Jack Altman?

  Right.

• 1:07:48Speaker 00

  But the same is true of entrepreneurs. So a brilliant engineer from Deep Point starts a company. What do they know about finance? What do they know about marketing? What do they know about even hiring or managing? Our job is to teach them, just like I taught my kids. By 18, my kids were pretty independent. I didn't worry about what they did in college. All four went to college five miles from our house at Stanford.

• 1:08:19Jack Altman?

  Yeah.

• 1:08:19Speaker 00

  None of them had this, I wanna get away because they felt they had enough leash. They had enough permission. They didn't need to quote unquote, get away.

• 1:08:28Jack Altman?

  Can I put up like a steel man argument that of the other side to hear your reaction to it? Basically, it would be something like the, the sort of the strongest entrepreneurs, which is where all the returns are, don't really need much help or much management. And so better to just invest in the people who didn't need help in the first place.

• 1:08:46Speaker 00

  I disagree. That is very much the founder's fund argument.

• 1:08:50Jack Altman?

  Yeah.

• 1:08:50Speaker 00

  They do very well with that. Great founders do well. Whether you like it or not. Yep. Uh, whatever you do. Where I will disagree is they can do even better if they have a debating partner. Mm hmm. So my view is very simple. I almost never vote at a board. So I don't even go to boards now. You won't show up to a board meeting? Uh, I don't uh. He just won't show up. Get on boards. Yeah, I see, yeah. And Square is a great example. I uh, I got off the board uh, the, the week before the IPO. And everybody was like, hey, this is sexy IPO. Why are you getting off the board? I, I don't like the burden of. The governance.

• 1:09:35Speaker 00

  The governance and all that. My responsibility shifted from having Jack do better

• 1:09:44Speaker 00

  to governance for the public market. Mm hmm. It's, it's, it's not very fun. Mm hmm. It sounds glamorous, but it's not. You know, Jack and I would do uh, regular monthly dinners. And I'd always challenge him and always push him. And he loved that, so he took the time to do these dinners. You, you talk to Max Levchin at a firm. It's a public company. We long ago distributed stock. I still do quarterly meetings and challenge him for an hour every quarter. Mm hmm. Right? Even the strongest founders like Jack and Max and need this. It's like even a pro sports player has a coach. Yes. Uh, you, you want people to challenge you

• 1:10:28Speaker 00

  and debate you, but not make decisions. I find it silly that boards want to take a vote. I won't even take a vote on the acquisition. Mm hmm. Uh, I'll just say I'll, I'll support whatever management wants to do, even if I disagree strongly. Mm hmm. But I do want to have the opportunity to debate it with the management team. Yeah. So Jagdeep Singh is a founder, one of our robotics companies. I've done six companies with him. There was a company uh.

• 1:11:00Speaker 00

  I'm forgetting the name called Light Something Optical Company. The team wanted to sell. I only asked to give me two hours with the whole team to make. And I did over the weekend, the presentation I gave to them on why they should not sell. But before that presentation, as long as I had the two hours. I signed the papers and said, you have my vote anyway. You can choose to use it or tear it up.

• 1:11:27Jack Altman?

  I love that, yeah.

• 1:11:28Speaker 00

  So I will always give the final say to the management team.

• 1:11:33Jack Altman?

  Yeah.

• 1:11:34Speaker 00

  But I do want to debate it. And I think every strong founder loves feedback that challenges them.

• 1:11:42Jack Altman?

  Yes.

• 1:11:43Speaker 00

  And it's the only thing really valuable to a strong founder. Great founders love that. Not so great founders are so uncertain of themselves. They don't like that. And there, I prefer to teach them how to be a great founder.

• 1:11:59Jack Altman?

  Yeah.

• 1:12:00Speaker 00

  But almost every strong founder loves feedback.

• 1:12:04Jack Altman?

  I had Keith on this podcast and what you're describing is a big part of, I think this, you know, what drew him back to Khosla.

• 1:12:13Speaker 00

  Yeah.

• 1:12:13Jack Altman?

  By the way, on that topic, I'm curious, like I read that as one of the sort of like generationally great sort of recruiting or re-recruiting. You know, moves that has happened. And I think he's an amazing investor, obviously. Did you know for a while that you wanted that to happen?

• 1:12:31Speaker 00

  We are a different kind of firm. And I said earlier, we are not, I've not called myself an investor ever. Right? I always say I'm a venture assistant. If you look at our website, since we started the firm in 2004, the first tagline is venture assistance. By the way, another phrase that has stayed on our website since 2004 is, I prefer brutal honesty to hypocritical politeness.

• 1:12:58Speaker 00

  In when most VCs give polite feedback to an entrepreneur, they're doing a disservice. They're basically saying you're doing great. Don't examine anything. You know, makes you feel good as an entrepreneur, but doesn't help you build a better company. And the only things that make you feel better are things that change your thinking or challenge your thinking. So it's an important characteristic for founders to keep in mind. What are they looking for? The best help or just people who will go why? Yeah.

• 1:13:30Speaker 00

  So it's a style that's different. We don't think of investments. We've never calculated, never means not in the last 10 years I can think of. I can't think of a single instance where we calculated an IRR. Not one. An investment firm that never calculates IRRs because we want to build something significant. And then the economics will work out. So that's our approach. But we do want to make, increase the probability of success of the founder. And we want to increase the magnitude of the potential success also. By thinking about should you do X or Y? Founders underestimate that.

• 1:14:14Speaker 00

  So let's say a founder is selling 10% of a company.

• 1:14:20Speaker 00

  10 million at 100 million post. The founders forget they're keeping 90%. And what happens to the price per share of that 90%? Whether it's they give up 10% or 12%, 90, keep 90 or 88. Yeah. Trivial compared to the 500% swing you can get by taking one path or a different path. That's where the opportunity for maximization is. That's where it's not about investing, but getting the best help building a company. Yeah. And that's what I sort of spend all my time doing. Yeah. Just yesterday, I was talking to this founder.

• 1:15:02Speaker 00

  It's, it's a very cool company, self-driving for these heavy machines. Bulldozers and loaders. That is cool. Yeah, right? And we had an interesting session. And I reframed his business from automating big caterpillar machines.

• 1:15:20Speaker 00

  To, I'll just rent you the driver. You have trouble staffing drivers. Most of these are in mines and remote places. Equipment, a multimillion dollar piece of equipment sits idle because you don't have an operator. I said, just do rental by the hour and guarantee you will always have a driver available. Always have a driver. This reframing, Don, I was pretty excited about. It's the same thing, but it's not.

• 1:15:50Jack Altman?

  Yeah.

• 1:15:51Speaker 00

  He's, it's a much easier sell. It's not saying change your equipment. It's saying, hey, you can't keep your equipment running all the time because you don't have operators. I'll run it for you. You're paying operators, I'll do it better, faster, more hours. You get more of your equipment. It's a simple framing change. But you could have a similar technology discussion too.

• 1:16:17Jack Altman?

  I know you're, you're gonna have to go in a minute. So I just want to ask you, uh, there's one, and there's a million more questions I want to ask, but there's one I really wanted to ask, which is, um, you've been not just like doing venture, but you've been doing it like really successfully and in a super relevant way for a long time through a lot of cycles. Before we started, you said, you know, you're turning 70 or you turned 70 this year. You feel 25. This is kind of like the dream. And do you know what you attribute all of this to like?

• 1:16:46Speaker 00

  Yeah. Uh, very importantly, I give a talk at Stanford in 2015, the Stanford Business School 2015. I said, I'm internally driven. I don't care what others think of me. So it feels obnoxious sometimes because I'll do my thing, independent of what others think. I'm doing this because it's fun. You know, I get somebody teaching me about mining and constraints in construction or self-driving an MRI machine or a big loader. They're the same thing. Clever ideas like public transit or can we make fusion happen? So I'm in it because it's fun for me.

• 1:17:29Speaker 00

  And most of the people at Kosta love what they're doing and would do the same thing if they didn't get paid.

• 1:17:40Speaker 00

  And so we do it for a different reason than making the most money. Because we focus on larger impact, the returns really do well or take care of itself. You know, it's sort of like what's motivating you.

• 1:17:57Speaker 00

  In fact, this was a conversation I had Sam when we invested in OpenAI. He knows I care about the impact, something happened, making something happen. Fusion is too important to not try it. I want the impact of fusion. There's nothing I could do in making money that would impact me more saying, other than saying I paid this tiny part in getting fusion to start and hopefully happen.

• 1:18:23Jack Altman?

  Yeah.

• 1:18:24Speaker 00

  Even if Commonwealth Fusion doesn't do it, almost all the companies have been enabled and investing in the field has been enabled because people looked at Commonwealth Fusion. So this idea of instigating change is very motivational. It's way more impactful and also fun and way more learning than almost anything else. I say I'm like totally, I have one addiction, which is to learning. I can't learn enough new things, whether it's about biology or an AI algorithm or hypersonic flight. We are doing Mach 5 flight too, and we haven't talked about national defense. We are spending a lot of time there.

• 1:19:06Jack Altman?

  Would love to.

• 1:19:07Speaker 00

  But all these areas are just fun.

• 1:19:11Jack Altman?

  Yes.

• 1:19:11Speaker 00

  And that's why I don't mind, I still work 80 hours a week and I hope 25 years from now I'm working 80 hours a week, health permitting, touch wood. But that's, I think it's a very different motivation of why we do things. I tell our LPs, I'm probably the only one foolish enough to tell my LPs, if I can have more impact and less return, I'll pick more impact every single time.

• 1:19:36Jack Altman?

  Yeah.

• 1:19:36Speaker 00

  As long as they get a minimum return that they're comfortable with, so they can.

• 1:19:41Jack Altman?

  Well, you seem to be getting both. Vinod, thank you so much. This was amazing and I am super appreciative of your time and all that you've done for the industry.

• 1:19:49Speaker 00

  Great, thank you. It's a lot of fun.