Vinod Khosla: freeing humanity from “servitude to survival”

Vinod Khosla is one of the most successful and contrarian investors alive, first at Kleiner Perkins and then at Khosla Ventures, where he wrote the first institutional check into OpenAI. Forbes ranked him #1 on its 2026 Midas List. Vinod previously co-founded Sun Microsystems and took it from zero to a billion dollars in sales in five years. In this episode of Summation, Vinod and Auren discuss: Why 40 years of radical innovation has come from startups, not big companiesWhy he has never...

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

• 0:00Speaker 00

  Experts are experts in the previous version of the world, not the world entrepreneurs are trying to create. Try radical things and then occasionally they fail very often, but when they succeed, they change the world. We might displace. It's not easy and we fail often, but I always say my willingness to fail allows me to succeed.

• 0:24Auren Hoffman?

  Hello fellow data nerds. My guest today is Vinod Khosla. Vinod co-founded Sun Microsystems and took it from zero to a billion dollars in sales in five years and then became one of the most successful and most contrarian venture investors alive. First at Kleiner Perkins and then founding Khosla Ventures. He wrote the first institutional check in OpenAI. He spent 20 years making long short bets on fusion biotech, robotics, AI. Forbes named him the number one investor in the world in the 2026 Mindless List. Vinod, welcome to Summation.

• 0:58Speaker 00

  Well, it's great to be here.

• 1:00Auren Hoffman?

  Super excited. I was actually thinking about this, like going back to like Sun, right? You guys started it in like 83-ish, right? I think his first year is eight million revenue. Second year, you five X'd it to 40. Next year, you three X'd it to 115. Next year, you two X'd it to 240. Then you two X'd it again to 500-ish, then you two X'd it again to a billion. And that's all in like $1988. Like today, like people go crazy when people go, you know, when things are growing so fast. But like, I guess we've seen the movie today before, like in the eighties. So there's a few companies like Sun that were kind of like the companies of today.

• 1:43Speaker 00

  In fact, Sun started in 82, very contrarian bet. Everybody advised me the people didn't buy big computers from startups. Of course, people didn't in those days and we said we disprove it and we, nobody believed in distributed computing. So nobody wanted a network. They didn't see any use for it. And we just jumped in and grew very fast in those 1980s dollars. Probably not only one of the fastest growing companies ever. The number of very large companies that spun out of Sun, Sun founders. The only other time I've seen that is the PayPal mafia.

• 2:28Speaker 00

  The Sun mafia started a lot of big companies and then it was the PayPal mafia. So there's, there's something about talent concentration that's really, really important and gives rewards for decades to come.

• 2:43Auren Hoffman?

  It's funny because we see like, there's just something, there were a few other companies like Sun that were growing like insanely fast in the eighties. We had Apple, we had a few others, kind of like growing in like insanely fast. We have a bunch of companies today growing insanely fast. There are just errors that like, where if you can catch the wave, like it's not like, what basically we're seeing today isn't new. Like we've seen this movie before.

• 3:07Speaker 00

  Yes, we have. There had been growth, though nobody's grown to tens of billions of dollars as fast as OpenAI and Anthropic have.

• 3:16Auren Hoffman?

  Yeah, yeah, that's right.

• 3:17Speaker 00

  Like that's a whole different level of growth, but even with the dollars adjusted timeframes.

• 3:25Auren Hoffman?

  You have said that 80% of all jobs, you think it's going to be done by AI in 2030. Like what, what does that transformation over the next few years look like?

• 3:35Speaker 00

  Well, so let me make clear, what I've said is capable of being done by an AI, which is different than being done by an AI. What percentage gets done depends on how fast it's adapted by the people who could use that. I think that piece, adoption is misunderstood and may take different amounts of time. It will also be a huge function of politics. So the technology will be capable of it. But if we elect AOC as president and she says you can't displace any jobs, you'll have some very different consequences.

• 4:20Speaker 00

  By the way, not all bad. If she says Amazon and Meta can't lay off people, guess what? It advantages startups. There'll be a new Amazon and new Meta with five kinds of revenue per employee because they have fewer employees and they will have a huge cost advantage. So.

• 4:43Auren Hoffman?

  Or it may, it may advantage a company outside the US or something like that.

• 4:47Speaker 00

  Yeah. So lots of configurations possible. My bet is with the jobs will be capable of being done. And then adoption will depend on who gets elected president in 2028 and 2032. And that will say, does it advantage startups who have no employees or big companies that have lots of employees and lots of customers? I'm betting startups will have awesome opportunity.

• 5:17Auren Hoffman?

  Yeah. Yeah. It seems like even in like the services businesses, it seems like startups are able to like attack everything nowadays.

• 5:26Speaker 00

  Yes.

• 5:27Auren Hoffman?

  What do you like, with all the things that are being worked on right now? Like what do you think is going to be the most impactful five years from now?

• 5:37Speaker 00

  Well, you know, the technology is going to be exponential. My bet is in two years, we see more progress in AI. A bigger jump between now and two years than we've seen between now and five years ago. So think 2021 when AI wasn't really a thing.

• 5:58Auren Hoffman?

  Yeah.

• 5:58Speaker 00

  You know, no, honestly, ChatGPT was less than four years ago. So AI wasn't a thing. We'll see more of a jump between now and two years from now than we've seen. Now we'll see it in various configurations. The models will get better. The models will become the best scientific researchers. Agents will do their things. Forms of agents will do their thing. So there's many, many dimensions in which we will see progress. Not only that, many of the assumptions may not be valid. My bet is if I look at 2030, we'll know how LLMs work.

• 6:42Speaker 00

  Interpretability will be a thing. We've seen some recent results there where people are starting to decode how LLMs work. So this ambiguity will go away. We are probably one or two tactical breakthroughs away from 10x the computer efficiency. If you're taking a billion or $10 billion to train a multi-trillion dollar parameter model, it may cost 100th or 1,000th as much because you got more efficient on compute. Same with inferencing. My bet is the cost of inferencing and the cost of training will plummet with technical breakthroughs.

• 7:25Speaker 00

  We are likely to see the next four, five years. So every assumption, every critique will go away.

• 7:35Auren Hoffman?

  Yeah. I mean, I recently just trained like a model on my home computer for a specific model for me. It was like so cool that one could do that. And I don't know what the cost was, but it was essentially free. I mean, it's unbelievable the things we can do today.

• 7:48Speaker 00

  Take a little company, we have this company called Prism ML. They can today put a 37 billion parameter model on an iPhone. Soon they'll put a hundred billion parameter model on an iPhone. So it becomes free. And I don't think a 500 billion parameter model is out of the question because they do a 15x reduction in the size while preserving something like 98% of the intelligence of say, an open source equivalent model. It's pretty stunning.

• 8:28Auren Hoffman?

  It's also just crazy. If you just think back just to a year ago, like how much has changed in a year? I have never seen change like this in my lifetime. Like just the amount of, of innovations that's happening. It seems like almost every day there's something new coming out. It's really even hard to keep up what's going on.

• 8:50Speaker 00

  And frankly, a year from now, you'll say 2026 was tame compared to 2027.

• 8:57Auren Hoffman?

  Yeah, I agree. So you have said experts are terrible at predicting the future. Kind of like they're just kind of like extrapolating the past, especially when we're dealing with these like insane curves that we're having right now. How do you personally like tell, like really make a real nonlinear bet?

• 9:20Speaker 00

  Well, there's two trends, you know? Experts are experts in the previous version of the world, not the world entrepreneurs are trying to create.

• 9:29Speaker 00

  In 40 years of doing innovation and innovation only, I can't think of one big example of a breakthrough that came from a large company or an expert prediction.

• 9:42Speaker 00

  Just doesn't happen. So it's people who try radical things and then occasionally they they fail very often, but when they succeed, they change the world. And I think that's the model that has caused almost all innovation. Could you imagine Walmart doing what Amazon did when they started?

• 10:07Auren Hoffman?

  Yeah.

• 10:08Speaker 00

  Could you imagine Lockheed, Boeing do what Rocket Lab and SpaceX have done in launches? Could you imagine a big pharma company doing a COVID vaccine like BioNTech and Moderna did? Could you imagine Hertz or Avis starting Uber? Or could you imagine Hilton or Hyatt starting Airbnb? It doesn't matter if we had technical things like rocket ships or vaccines or business model changes. It's almost all innovation that I've seen over the last forty years has come from an entrepreneur, people in your audience. They

• 10:49Speaker 00

  do all the big societally changing stuff. Big corporations are great at incremental innovation. Intel can go from, or Samsung can, or or TSMC can go from a seven nanometer process to five, to three, to two, to one and a half. But radical innovation only has come from startups the last forty years. Can't think of one example of a large innovation.

• 11:18Auren Hoffman?

  But that's happening and assuming like the rents go to the innovators, why are these mega cap companies just getting bigger and bigger and bigger?

• 11:27Speaker 00

  You know, because they they are taking advantage of the current opportunity. Everybody was surprised by how fast AI grew. Because of that, there was only one option for a GPU, which is Nvidia. So they can get eighty percent margins instead of their typical thirty percent in semiconductors. You're right. But when a chip like jalapeno from OpenAI comes along, and I consider OpenAI a startup, it's one-fifth the cost of a GPU because it doesn't have the markup. It's also better tuned to the OpenAI model. So it's probably

• 12:10Speaker 00

  effectively one-tenth the cost of running an open source model on an Nvidia GPU to run the proprietary model on on a jalapeno GPU. So one, and we can come back to it, open source will be way too expensive to run. A large proprietary model will be one-tenth the cost compared to a similar sized open source model to run. And then you can price it wherever you choose to. But there will be five or Nvidia competitors in five years. My bet is their market share will have to decline and their margins will have to decline.

• 12:55Speaker 00

  It just start chips take five years to dwell up, three, four, or five years to dwell up, and we haven't had time to respond. And and so AI, there'll be startups. People like Tognation growing as fast or faster on the coding side than Claude or Codax. So this game is very early and the response times are short, which generally favors startups.

• 13:24Auren Hoffman?

  Now, in some ways, you're an expert. You've been doing this a while. You you've seen so many of these movies before. How do you stop yourself from making the mistake that many experts make?

• 13:38Speaker 00

  Oh, I spend most of my time with entrepreneurs. I spend most of my time being relevant to a twenty, twenty-five or thirty years old. I can sit behind my desk and talk at them, or I can just mostly meet a lot of them and listen. I never speak at financial conferences. I only talk to entrepreneurs. I think I'm in the most rapid learning mode I've ever been in my life. Even when I was twenty and in college, I'm learning more every day, every month, every year today than I've ever done. And I think the key is not to assume, you

• 14:21Speaker 00

  know, it's to keep learning rapidly. And then that's what I do. So I would say I I spend most of my time with entrepreneurs.

• 14:34Auren Hoffman?

  Yeah. And by the way, I think what you just said is really interesting, that you're learning more today than ever. Like, it's so much easier today to learn more than ever that if one isn't learning more today, like, you have a real problem. Like, you don't even want to learn if you're not learning more today than you ever have in the past.

• 14:49Speaker 00

  Yeah. Look, somebody asked me about a brain blastoma type of cancer yesterday. And within an hour, I knew more than their doctor had told them.

• 15:05Auren Hoffman?

  Crazy, yeah.

• 15:06Speaker 00

  Right? Within an hour.

• 15:08Auren Hoffman?

  Yeah.

• 15:09Speaker 00

  You know, it's just such an opportunity, such a wonderful time to be learning rapidly and expanding your horizons. And you have the best educators in front of you in ChatGPT, or Anthropic or Gemini, but any of these models are just fabulous at this.

• 15:26Auren Hoffman?

  No, to me, when I when I think of you, you're just like, you're just incredibly ambitious person. And when I go back to the nineties, and I remember the nineties, like, I remember there was like these two super ambitious venture capitalists, like Kleiner Perkins, it was you and John Doerr, both super smart, both super super successful. You've kind of just continued to be the best while like Doerr, who's like, you know, not that much older than you, roughly retired, and kind of lost the ambition. Why do you think some people like continue the grind?

• 15:56Speaker 00

  Well, John, John, John's a great thinker. Yeah, absolutely. He was a great venture capitalist. He stepped back from Kleiner Perkins some and is sort of worrying about other priorities, important priorities like climate and other things, which I also share. So I think the key to life is be interested in something and keep expanding. It doesn't have to be in the same dimension. I've chosen to do it in venture capital, but I've also done it in other areas. I still care a lot about climate. We, I think we are very close

• 16:38Speaker 00

  to solving the climate crisis from a technology point of view, not yet from a deployment and implementation point of view. But we can talk about that separately. I do want to come back to the question you asked earlier, AI capable of doing eighty percent of the jobs. I wrote a piece in The Information, which anybody can read a couple of weeks ago, three or four weeks ago, and it's not behind a paywall. So they thankfully put it outside the paywall. So anybody can get it. And it was about what happens in this

• 17:16Speaker 00

  economy. We might displace fifty percent of the jobs in this country by twenty thirty-five or twenty forty in that timeframe with unemployment or underemployment from those jobs. But I also define fifty million better micro entrepreneurship jobs in this blog that we can create. That's an opportunity where people are working for themselves. Most of the jobs in this country aren't very good jobs. You know, if you're a farm worker or an assembly line worker,

• 17:57Speaker 00

  you're doing one thing for eight hours a day, bent over in a field in hundred degree heat.

• 18:03Auren Hoffman?

  I mean, even if you're an office worker, you're doing like, you know, random, even something highly paid, like an investment banker or something, you know, it's not always that glamorous.

• 18:12Speaker 00

  But but look at more than fifty percent of the jobs of what I call servitude jobs to survival. It's servitude to survival, not a meaningful job, mounting tires on a car on an assembly line for forty years or till your back gives out. And that's a larger disability. So if we can replace them with people working for themselves as micro entrepreneurs, because AI takes care of everything except their one skill. It could be as ambitious as surfing or baking banana bread or wood carving. Artists would finally have a way

• 18:56Speaker 00

  to make a livelihood. So so many things get freed up. We could free humanity from the servitude of survival and make business much more efficient and abundance great. So I do want to stress that. I also want to, and I referred to it obliquely, I said, the adaption of AI will be a function of politics. So in this blog, I talk about how to address the politics. Today, you take somebody like an AOC, she says, let's protect the jobs.

• 19:34Speaker 00

  Wrong answer. I say, let's protect the people who might be affected by the job displacement. That's a very different thing. And I define how in a deficit neutral way, you generate four, five hundred billion and then a trillion dollars a year or more to protect the people who are displaced. Easy to go to three-year unemployment insurance if you have that much resources. At the peak of COVID unemployment, we are spending two hundred and fifty billion a year. We can do much more than that to protect the people who might be displaced

• 20:15Speaker 00

  and free up those people to do new things they're passionate about, not the cubicle servitude or the assembly line servitude or the farm worker servitude. So I get very excited of about the world that can be with great abundance and protection of the bottom half of the economic strata in this country.

• 20:42Speaker 00

  And that's where we can make the biggest impact. And we can make primary care free to everybody, education free to everybody. That costs almost nothing. For what it costs to hand the bill at CMS for a Medicare patient. Just the cost of handling the patient. My bet is you could provide free primary care with no billing for a whole year. Just for the cost of handling today's one bill. That's sort of the magnitude of change we are talking about.

• 21:14Auren Hoffman?

  There's so many things where AI could make things deflationary. And that would like especially help people who are like the bottom income in, in, in, in the US.

• 21:23Speaker 00

  I'm spending a lot of time thinking about the bottom half of the economic strata. There's seventy five million people who voted for Trump to get him elected. Those seventy five million people make less than seventy five K a year. It's, and they pay seventy five billion in taxes. That's roughly how the numbers work out. First, you should eliminate all taxes. Seventy five billion in the larger scheme is nothing.

• 21:56Auren Hoffman?

  Just to kind of stretch on that, you don't think it's helpful for everyone to pay like a little bit into the system or something? So you, you think we should have a scenario where like, uh, like an Abu Dhabi where like the vast majority of people are just like, don't, don't pay any taxes at all?

• 22:12Speaker 00

  You know, for seventy five million people to pay seventy five billion, you're collecting a thousand dollars a year. My bet is it's costing a couple of hundred dollars to process those taxes.

• 22:24Auren Hoffman?

  Well, with AI, we can get that down to a couple of dollars, right? You're, you know, we can get that down to a hundred percent, I assume.

• 22:29Speaker 00

  Well, but that's now what we are doing. All I'm saying is they get an immediate bump in income.

• 22:35Auren Hoffman?

  Yep.

• 22:35Speaker 00

  And those are the people we want to protect. And then we create micro entrepreneurship opportunities because every one of those people is a human being with a passion, interest. Let them take advantage of that instead of being trapped in a job where they have to pay their rent. They probably don't even have a mortgage. So I, I think freeing up those people and generating enough income to, uh, or, or revenue. And I can get to in this thing I define how we do four hundred billion dollars of revenue generation in a deficit neutral way to protect all the people who might be displaced.

• 23:20Speaker 00

  Think about it. That's so awesome and it'll help the rich too, the upper half too. Because there'll be real less resistance to AI and faster economic growth. Well, so I propose, you know, today, AI is helping capital investments a lot. Look at the data center returns on trillions of dollars of investment. And hurting labor by suppressing wages and wages for young people. If we levelize all income taxes. Today, capital gains is a way to redistribute income upwards towards the rich.

• 24:03Speaker 00

  They get a lower tax rate, as Warren Buffett says, than the ordinary, than a secretary. If we said all income is the same, we're not going to favor capital gains over ordinary income. You generate enough money to pay for everybody's displacement and three-year unemployment insurance and a bunch of other things.

• 24:27Auren Hoffman?

  Just to jump in on that, so, uh, well, you know, one of the, the nice thing about people who pay capital gains is they only pay the gains when they take the gains. And, you know, for many of us, we rarely take the gains. So we don't pay the gains very often. Um, only when we need to, you know, buy something nice or something like that, do we do that? So how, how would you kind of like square that circle?

• 24:52Speaker 00

  Well, there's many, many ways to address that. But fundamentally, uh, and we don't have enough time on this podcast to go into the details. But fundamentally, we need to stop advantaging, advantaging the rich. Forty percent of capital gains is paid by people making more than ten million a year. They don't need that extra tax break compared to their assistants and secretaries and, uh, farm workers. They do not need that break and we ought to find a way. In fact, this is the way to do it. It's a deficit neutral way. So we don't increase deficits.

• 25:35Auren Hoffman?

  What you're saying is that like we lower the income tax and we increase the cap gains tax.

• 25:41Speaker 00

  I think we eliminate income taxes for people making less than seventy five thousand a year.

• 25:47Auren Hoffman?

  Yep.

• 25:48Speaker 00

  We leave the rest of the taxes where they are today for ordinary income. And create capital gains as ordinary income. Why should we give preference to one sort of income? It used to be when there wasn't enough capital and you wanted to encourage investment, you give capital a break. I do not think we are in that situation anymore. And many of the places capital used to go, like China, it's not going there anymore because it's not a safe investment.

• 26:19Auren Hoffman?

  Let's say you live in California. So like, you know, let's say income tax in California is like roughly fifty four percent. Um, and so, um, so if you have to pay the income, like you're a high-earning, you know, doctor or lawyer, you have to pay it. But if you don't have to pay the cap gains, if you can defer it, like you're almost certainly going to wait and defer. Like it's going to be like a less likely, you'll take the gain if it's at fifty four percent than if it's at thirty-ish percent or something like that, right? So you, you could see a scenario where like the government's going to make less money too, right? Or, or, or do you disagree with me?

• 26:55Speaker 00

  I don't think so. I think you can impute taxes. You can put limits on how long you can not liquidate capital gains. You can eliminate breaks like step up bases, which every rich person uses to pass stuff on to their kids. Their kids didn't earn the income, they did, so they should spend it. There's many structural things. But here's the important thing. The politics of it works if seventy five to a hundred million people vote for it. Capitalism is by permission of democracy. So what we are optimized for is what seventy five to a hundred million people would vote for.

• 27:39Speaker 00

  Not the rich people. What Trump did is one-on-one issue, immigration. Even stories like immigrants are eating your pets. This is a much more serious and better issue for society. That whether you're a Republican candidate or a Democratic candidate, you can say in a deficit neutral way, we can create this pool. And eventually a sovereign fund with a way to have enough income. If you're generating imputed income, you can borrow against it also. The federal government has low tax rates, low interest rates.

• 28:22Speaker 00

  So there's many ways to address this.

• 28:26Auren Hoffman?

  Okay.

• 28:26Speaker 00

  Sorry, I took you off on this other track, but I'm very.

• 28:29Auren Hoffman?

  No, no, interesting. I was very, uh, I didn't, I didn't, I didn't know we were going to have a touch to this. This is great, actually. Uh, it's kind of unexpected, eh?

• 28:36Speaker 00

  Let's go back to your questions.

• 28:38Auren Hoffman?

  Uh, speaking of, speaking of money, like, I mean, you've seen so many people who went from nothing to be just all of a sudden becoming insanely wealthy. How, how do you think money changes people?

• 28:50Speaker 00

  Uh, it depends on the persons. The fact is, I heard the number that at the Anthropic IPO, six hundred people will make more than a hundred million dollars of net wealth.

• 29:04Auren Hoffman?

  Yeah, crazy.

• 29:05Speaker 00

  You know, clearly they'll buy houses, there will be clear Reaganomics, trickle-down economics, they'll hire nannies and, uh, there will be a lot of that. I don't think that's a bad thing. Especially entrepreneurially driven value creation is a very good thing for society. Makes a society richer. As to individuals, some do it very well. Yeah, there's a couple of hundred people in the giving pledge who have said they'll give most of their wealth away, the majority of their wealth away.

• 29:45Speaker 00

  And others who wanna hold it or use it in other ways, which is fine too.

• 29:53Speaker 00

  But I mean, I do think they shouldn't necessarily be able to pass it on to their kids, which

• 30:02Speaker 00

  which, you know, they'll help their kids anyway. Their kids have a, their kids start on second base or third base. You know, if parents make a hundred million dollars, their kids do start on second base or third base.

• 30:17Auren Hoffman?

  Yeah, they've got all the things they need anyway to do well. Yeah. And also hopefully a lot of these people will live to hundreds of years old too.

• 30:26Speaker 00

  And to be honest, I'm not even talking about in inheritance taxes. Though I saw an estimate, something like over thirty years, seventy-five trillion dollars of wealth will be transferred from one generation to the next. I mean, that could pay off our deficit if we tax that.

• 30:48Auren Hoffman?

  Yep, yep.

• 30:49Speaker 00

  So, but we shouldn't take away the incentive to work. I think that's very key and most of what I suggest doesn't take away the incentive to work.

• 31:03Auren Hoffman?

  You've got this kind of like approach when you're, when you're betting on things, like kind of like a black swan approach where you're making these like massive asymmetric bets. A large portion of them fail. Every once in a while, one works in just an insanely great way. Like, how do you think about that as like a, as like a capital allocator?

• 31:24Speaker 00

  I don't think of myself as a capital allocator at all. I've never, in forty years, I've not even called myself an investor, venture capitalist.

• 31:33Auren Hoffman?

  Okay.

• 31:34Speaker 00

  Ever. Other people have called me that, but I haven't ever said I'm a venture capitalist.

• 31:39Auren Hoffman?

  You think of us more like a technologist and just kind of trying to understand the future?

• 31:43Speaker 00

  I'm a technology-based value creator. I like to create economic disruption with technology.

• 31:52Speaker 00

  And that's both fun and a real contribution to society. So, you know, take OpenAI and I tend to think very long term. I'm sitting in a house I built in nineteen, started bought in nineteen eighty-six and built it to my liking. I'm very long term. I planted trees I wanted to see in forty years and I'm seeing them today at home.

• 32:16Auren Hoffman?

  So cool.

• 32:17Speaker 00

  And I love trees.

• 32:21Speaker 00

  Outdoors is my happy place. But when it comes to take something like OpenAI, I sort of ask what is the right thing? People focused on it was a nonprofit. They didn't have a business plan. They didn't have a product plan. They didn't have a revenue plan. I focused on if AI works. And I was convinced it wasn't a question of if, but when. The what will be the impact? Whether I got a hundred or five hundred or a thousand extra return over five years or fifteen years, I'd still have an adequate IRR.

• 33:05Speaker 00

  So I didn't, I almost never calculate an IRR on anything.

• 33:11Speaker 00

  In fact, can't say I've looked at an IRR calculation in the last hundreds of investments I made. But I say, what's the impact if AI works? And then how can I make it work? And the same year, twenty eighteen, when I committed to Sam to invest in OpenAI, long before AI was a thing, before transformers were a thing, before LLMs was a thing, I just bet on a great team going after an ambitious goal to create AGI. And I could see the impact. In twenty twelve, in TechCrunch, I wrote about, do we need doctors? My bet is medical expertise should be free.

• 33:54Auren Hoffman?

  Yep.

• 33:54Speaker 00

  And it will be free and is almost guaranteed.

• 33:57Auren Hoffman?

  By the way, I read that in twenty twelve, like that was very inspiring, yeah.

• 34:01Speaker 00

  And I said, do we need teachers? Because I thought education would be super personalized to every kid and be free. And my wife runs an org, ck12.org, that makes education free. They're serving to personalized tutors for three million kids a month now. Three million kids a month, having free personalized tutors.

• 34:24Auren Hoffman?

  It's amazing and every kid should have that.

• 34:26Speaker 00

  Yeah, every kid in the world should have it.

• 34:29Auren Hoffman?

  Yeah.

• 34:29Speaker 00

  And, and every kid should have free primary care. So all this is possible. But the same year, twenty eighteen, I invested in Commonwealth Fusion. Mumguard was a fellow, senior fellow at the MIT Plasma Fusion Lab. There was no company called Commonwealth Fusion. Everybody told me, no, you shouldn't invest in AI. It's twenty years away, thirty years away. Everybody said fusion is fifty years away.

• 35:00Auren Hoffman?

  Yep.

• 35:01Speaker 00

  But you do it and make it happen. And I'd rather try and fail than fail to try. And I fail often. I don't care about failing. I only care about when you succeed. You get enough of a return to make up for your failures. So your LPs are happy, so you can keep doing it. It's very simple. I just wanna do these really interesting things. And Rocket Lab, we funded when it was four people. DoorDash was a ten million post money. Instacart was a ten million post money. Like,

• 35:39Speaker 00

  all these things were like true technology. It could happen kinds of projects and they're very fun to back and very challenging and very hard. It's not easy and we fail often. But I always say my willingness to fail allows me to succeed.

• 35:59Speaker 00

  So, you know, this is a wonderful world to create, makes a huge social contribution to. I think we will by in five years not be debating free energy or sustainable energy. Today we have steel that's cheaper when it's greener. We have cement that's cheaper than regular cement when it's greener. We, we will have fusion and super hot geothermal that's cheaper than natural gas and coal as power generation. It's not you pay more to get green. All this comes for free if you take a large enough technology risk. Where if it works, and I have lots of the green projects with egg on my face that fail.

• 36:44Speaker 00

  But those don't matter. Only the successful ones matter. Even when I started Sun, nobody remembers the other companies. Me and Scott McNeely started two months before Sun. It was called the data done. We failed, but who cares? Nobody ever brings that up. They just say, oh, you started Sun. So, telling it doesn't matter if you're not embarrassed by it. Success matters. If you give it a good shot and you take intelligent bets, not random bets. And then you work hard to make it come through. It's not just a investment, it's helping entrepreneurs. So I don't call myself a venture capitalist ever.

• 37:26Speaker 00

  I always say I'm a venture assistant to help an entrepreneur create their vision. And sometimes it's hard and I will have hard conversations like others won't.

• 37:38Speaker 00

  You know, to help an entrepreneur be as good as they can, to create as big a business, as impactful a business as they can create. That's sort of what's really fun for me. Why I'm learning so much at the age seventy-one, going on seventy-two. And I'm not slowing down. It's just too much fun, way more fun than playing golf or sailing.

• 37:59Auren Hoffman?

  Yeah. Let me, let me, let me kind of like, I wanna, I wanna double click on those hard conversations. Cause like, like the brand of Vinod Khosla is, to me, at least when I hear about, when people talk about Vinod Khosla, without you there, it's like, it's like all this like amazing coach that kind of the players don't always like, but who brings out like the greatness in the players and keeps winning championships. Do you think that's a fair comparison?

• 38:25Speaker 00

  Yeah, that is a fair comparison. And if I can help create, look, I don't wanna work with entrepreneurs who don't want honest, direct feedback. Since we started our firm in two thousand and four,

• 38:39Speaker 00

  I've had a phrase on there that's the highlight. I prefer brutal honesty to hypocritical politeness. Ninety-nine percent of the world only does hypocritical politeness. Oh, you're doing great. How does that help you? What's actionable? Hey, you're screwing up in this area. Do something about it is actionable. And here's what you should do. I'll give you a story. Around the year two thousand, I was on the board of a company, I won't say which one, with three prominent venture capitalists of that era on the board.

• 39:19Speaker 00

  After the dot com mania, they everybody had lots of cash. This company had fifty million dollars in their bank account and going on a path that I didn't think would work. I told them it wouldn't work and what they should do about it, how they should do things different. The other VCs just kept saying polite things, you're doing great, you know, you you have lots of runway. Four years later, after fifty engineers had wasted four years of their life, they sold the company for three million. At the same time, all four years, the VCs were saying to me, they agree with me, but never say it in a board meeting or to the entrepreneur.

• 40:03Auren Hoffman?

  So they let you kind of be like the bad guy or something like that?

• 40:07Speaker 00

  Yeah, I was the bad guy.

• 40:10Speaker 00

  I I I eventually told Antonor, I'm getting off the board. That was my solution.

• 40:17Speaker 00

  His next startup, he only did with me, not the other VCs. In retrospect, he liked the fact he was getting feedback others weren't giving him.

• 40:28Auren Hoffman?

  Yeah.

• 40:28Speaker 00

  It's the same thing with your kids. That's the other analogy. If I say yes to my kids on everything, they'll be really happy and be spot the spoilt brats. Go drink alcohol, go do parties, don't study, you'll drink all the coke and chocolate you want. Like, if you always say yes, you're doing a disservice to your kids. And every entrepreneur I treat like my kids, I give them the bad news, I'll be tough on them. It's not tough to be tough, it's to be direct with them and honest feedback they can do something about. But and address their risks early.

• 41:10Speaker 00

  So I I think that's a much more better way to be, to advise people, it's like a tough coach.

• 41:19Auren Hoffman?

  Now, I imagine when you're when you're meeting with someone, like, you're you're also assessing, like, are they going to be the type of person that's going to work? If if you call them at midnight with some, you know, tough news and stuff like that, how are they going to respond to that? Are they? Obviously, you don't want to, you don't want someone who who always does what you says, but you you do want someone who considers the feedback, right? Ideally, they consider it, and then they, if they disagree, they disagree, right?

• 41:44Speaker 00

  If somebody does what I say, I stop working with them.

• 41:48Auren Hoffman?

  Yeah.

• 41:49Speaker 00

  Because they're not evaluating my input, they're just taking my answers. That's a bad way to be, because I make CM every four or six weeks. They're spending eighty hours a week on their startup. They should know more, but they should take input and then evaluate it.

• 42:08Auren Hoffman?

  Like, to me, like, the best our best relationships to have with anyone is one where, like, you consider each other's feedback. You don't necessarily take it, but you always consider it.

• 42:17Speaker 00

  And what I have found is strong entrepreneurs really do that. And they love working with me. The the weak entrepreneurs don't. And so weak entrepreneurs aren't a great match. They feel like they should do what I tell them to do, and that's a really bad thing. It's dangerous for me and dangerous for them.

• 42:41Auren Hoffman?

  How do you assess that when you're meeting with them?

• 42:43Speaker 00

  When I challenge them, I often challenge people with things I don't believe in and see if they disagree with me. It's pretty easy test.

• 42:52Auren Hoffman?

  Yeah.

• 42:53Speaker 00

  You know, you say something wrong to a Patrick Collison.

• 42:59Speaker 00

  He'll reject it. You say something useful, he'll think about it and tell you a month later what he did about it. Max Levchin is the same way. I worked with all these guys, Jack Dorsey is the same way. Like all these guys, Sam Altman is the same way.

• 43:20Speaker 00

  I give him feedback nobody else will because I find it valuable. So strong entrepreneurs who want to build ambitious companies, we are a good fit for. Weak entrepreneurs who want to avoid direct debate and disagreement

• 43:43Speaker 00

  are not a good fit as entrepreneurs for us. People should have their point of view, but take lots of input and then synthesize their point of view and act on it. I've never punished somebody, even if they were wrong, for doing what they believed in after they took all the input.

• 44:02Auren Hoffman?

  Have you ever seen the movie Whiplash? Do you know this movie?

• 44:06Speaker 00

  I haven't.

• 44:06Auren Hoffman?

  I highly recommend it. It's like, it's a, it's a little bit of a Warshack test on whether people, what they think about, you know, like a coach and stuff like that. And you have some people like Daniel Gross, who just think it's like the best movie ever. Other people hate it, but I highly recommend watching the movie.

• 44:24Speaker 00

  Yeah, look, a tough coach is like that.

• 44:28Auren Hoffman?

  Yeah.

• 44:29Speaker 00

  It pushes you to be great.

• 44:31Auren Hoffman?

  Yeah, Vince Vince Lombardi or something like that is.

• 44:35Speaker 00

  They push you to be great, and that's sort of what I aspire to be. I can't say I do it perfectly. Sometimes I get emotional. But, you know, Bill Campbell used to do it really well. For those who don't know him, he'd push people be very direct and say you're full of shit and you still love him.

• 44:59Auren Hoffman?

  Now, you you've also said that seventy, eighty percent of VCs add basically negative value, not like they had no value, but they had negative value. What what do you mean by that?

• 45:09Speaker 00

  I mean the following. Let's say you're an ambitious entrepreneur and you want to climb Mount Everest. It could be a billion dollars of revenue or whatever your Mount Everest is. There's never a path in a straight line. You're to camp, go to base camp and then camp one and camp two, camp three, it's not a straight line. But you're always keeping what assets you need to make progress in mind on your way to Mount Everest. If you look at a picture of Mount Everest, if you wanted the fastest revenue, you'd sort of had the base camp go left

• 45:50Speaker 00

  instead of right. Right? And left is where is there more revenue or something like that. Chasing revenue that's bad revenue is a really bad idea. I'll give you a very specific example. Happened to me, we invested in a bridge. Before that, we were investors in another scribing company.

• 46:16Speaker 00

  I won't name it. The founders asked me to invest because they wanted help with technology. I invested and then the VCs said you should chase revenue. So they focused entirely on very low margin revenue with people in the Philippines doing the scribing. And I kept saying an AI scribe is what you need and you need to invest.

• 46:41Speaker 00

  So they had this short term optimization of revenue growth so they could get the next financing done at the markup. In the end, the company went bankrupt because they had lots of revenue and negative margins. And a bridge came along with real technology with very low cost structure for scribing. That happens all the time. Every kind of exact trade off is different, but people say, what do we need to do next year and the year after? Not what makes us sustainable and large in five years. Every startup I'm looking at, I ask the question, especially in this AI era.

• 47:26Speaker 00

  What's going to be your advantage in twenty thirty one or twenty thirty two?

• 47:32Speaker 00

  And if you're not building for that, then we're probably not a good thing. You can still make money, you know? Hugging Face got sold, lots of startups got sold for very high returns. And that's fine, but that's a financial business.

• 47:50Speaker 00

  You're you're building to transact. You're not building something to long last, last a long time as a business that is differentiated and with assets. And that's very hard to do in the AI era. What assets you build that AI won't eliminate. So most VCs focus so much on the short run that they are a real disadvantage to a company. I'm not popular with VCs because, one, I I don't have any dinners with VCs. I don't mix with VCs, I don't even go to board meetings much.

• 48:31Speaker 00

  I spend my time with entrepreneurs and I say things like this, and people don't like that. But, you know, there were prominent VCs in this scribing company that went under.

• 48:48Speaker 00

  It was called, I think it was called Robin. I've even forgotten the name. It was painful because they could have been a $10 billion company like a bridge with a three-year head start over a bridge. Now fortunately, we got to invest in a bridge. So all good. But we ruined a massive opportunity for some entrepreneurs.

• 49:15Auren Hoffman?

  One of the many things I admire about you is you have this kind of real ability to, even though you've got like very strong opinions, you've got your ability to really change your mind about things. What is something like important you've changed your mind about in the last few years?

• 49:31Speaker 00

  I would say a lot of things. Open source is one. And yeah, it's very clear. I talked earlier, open source. I used to think open source. Look, I started the open source movement in the eighties at Sunz.

• 49:48Auren Hoffman?

  And you guys did Java, obviously, you know?

• 49:50Speaker 00

  Yeah, but even before then, in the eighties, the NFS, well, the network file system was the first thing, major piece of software that was open source. There was Berkeley Unix and we hired the builder of Berkeley Unix, Bill Joy. Linux came later and then other things came. We invested in GitLab when it was four people because it was open source when GitHub was for open source, but it wasn't open source. And GitLab won because their product velocity was greater because it was open source for both open source and closed source. So I've been a believer in open source my whole life.

• 50:32Speaker 00

  But in the AI field, I think it's dangerous to have open source. If I try and design a great virus to infect everybody in the world for bioterrorism on Entropic or OpenAI or Gemini, they will not let me do it. I can take the biggest Jimmy Marvel, download it and take the harnessing off and design a virus. That is really dangerous for the world.

• 51:03Auren Hoffman?

  What does one do about that? Because like the genie's out of the bottle, there's plenty of open source models that are getting better and better.

• 51:11Speaker 00

  Yeah, my recommendation to the White House is allow open source only to be run in contained environments where they can be monitored. They can be come to open way, they can be changed, all the things, except you can't take off the safety harnesses. So you can monitor them. And this is an area where a treaty with China is very, very possible. Because it's in their interest. This then doesn't design a virus in China. It's the same problem, whether you're in China, in India, in the US, you don't want this capability in a terrorist's hands.

• 51:55Speaker 00

  So we have shared the interest and we should do that. Generally, I'm hawkish about our competition with China.

• 52:01Auren Hoffman?

  But when I think of like, when I just, when I just mentioned that, that thing that I trained myself, like I took an open source model, I trained it, I trained it for something very specific for me. It was super cool and super fun and nice. Like, would I not be able to do something like that in the future? Would it like slow innovation? Because now I'm like, I get to build on those things?

• 52:22Speaker 00

  Oh, no, you would be absolutely able to do it. Except remove safety harnesses to design, say, a bioweapon, a nuclear weapon or a virus. Today, we don't allow people to build bombs at home.

• 52:38Auren Hoffman?

  Yeah, yeah.

• 52:39Speaker 00

  Like there are constraints that are for the benefit of society. You know, you don't have complete freedom. So I know we are running up on ties.

• 52:49Auren Hoffman?

  A couple more personal questions before we leave. Like, you are a deep, ambitious person. And usually when I see someone who like buys an NFL team, it kind of means they're like, I don't know, calling it in, as you said, playing golf. Um, you know, I wouldn't have expected like the deep, the deep technologists like you to go buy, you just bought the Seahawks. Like, you know, I wouldn't have, I would, I just don't expect like an Elon Musk or Peter Thiel, Marc Andreessen to go buy a sports team. But you did, like, what was your reasoning behind that? Just because it's fun or was there some other type of thing? Yeah.

• 53:25Speaker 00

  Me and my son have probably attended at least half of all home games for the last 25, 30 years here. So we have real passion for the NFL and football. And, and, you know, I, it's, it's fun. It's also a great investment, but really, passion, passion was the reason to do it.

• 53:52Auren Hoffman?

  Okay, how are you personally using AI like on a day to day?

• 53:56Speaker 00

  Almost all my driving is done by my Tesla.

• 53:59Auren Hoffman?

  Yep, of course, yep.

• 54:01Speaker 00

  I have agents working for me, handling, helping me with my email. I use it, ChatGPT 10, 15 times a day. Uh, so if I need to research geoblastoma, I can do it while sitting in a meeting.

• 54:20Auren Hoffman?

  Yeah, yeah.

• 54:22Speaker 00

  Like, so I'm constantly getting educated in new areas. I'm, I'm self-driving, I'm using agents, I'm, I'm building a harness for myself that can scan podcasts like this and reduce it to a five-minute summary. Podscan does that really well. So look, there's, it's pervasive everywhere.

• 54:47Auren Hoffman?

  All right, last question we ask all of our guests. What conventional wisdom or advice, and you've already given us a few, do you think is generally bad advice?

• 54:55Speaker 00

  I used to say the advice given to most kids by most educators, follow your passion was really, really bad advice. I, I used to say, follow your passion if you want to be a Veda for the rest of your life. Um, so you had to take responsibility for your family, income, mortgage, car, kids' college. I've reversed myself. Uh, I've sort of said, suddenly, uh, you can follow your passion because AI will take care of your minimum standards of living.

• 55:37Speaker 00

  In, by 2040, we'll have great abundance where you don't have to worry about your mortgage or food on your table or your kid's college to a.

• 55:47Auren Hoffman?

  I don't think people should even know what that passion is. Because sometimes it's just like, there's like a trendy thing to follow, like I want to be a DJ as opposed to a, like a real passion.

• 55:58Speaker 00

  You know, people will do multiple things and then they fall in love with one thing. It's also okay to keep changing what you're passionate about. I think AI gives humanity real freedom to be who they want to be, when they want to be that. I do think education should be very broad. You should no longer be a PhD in electrical engineering or physics. You should be a broad, broad learner. You do computer science and you do neuroscience at the same time. So you learn to learn anything. That's what a kid should do. Learn to learn anything new, especially with the help of the AI.

• 56:43Speaker 00

  You should learn about initiative and, and, and, uh, agency. So you can do things and have AI do what you decide to have it do. So agency is important, initiative is important, breadth is important. Curiosity is super important. That's what I would cultivate in a 15-year-old today. I get asked this question of what should my kids do in college or high school? That's my answer. Those are the characteristics that make you participate in any world that the AI world leads to.

• 57:24Speaker 00

  And be a productive participant and do well for yourself and be happier. If you become an accountant and are in a cubicle for Coca-Cola for 30 years, I don't know if I'd recommend that.

• 57:38Auren Hoffman?

  This has been incredible. Uh, you're a legend, you're someone I admire. I'm so happy that you're here on Summation. Thank you, Vinod Khosla, for joining us. By the way, I follow you at VK, VKosla on X. I definitely encourage our listeners to engage with you there. Thank you so much.

• 57:55Speaker 00

  And go Seahawks.

• 57:57Auren Hoffman?

  Absolutely. One more thing before we go. I read a blog called Summation. It's the same as this podcast. The blog is about non-obvious idea sharing on business, talent, data, longevity, and random contrarian takes. If you like the conversations on this show, you'll probably like the blog. It's free, new content comes out twice a month. You could subscribe at orin.substack.com. That's orin.substack.com.