20VC: Vinod Khosla on What Venture Assistance Really Means, Why Many VCs Are Not Qualified To Advise Founders & Why Startups Can Innovate So Much Faster Than Incumbents

Vinod Khosla is the Founder @ Khosla Ventures, one of the valley’s most renowned firms of the last decade with a portfolio including Square, Affirm, DoorDash, Impossible Foods and OpenDoor just to name a few. As for Vinod, he started his career as a Founder, founding Daisy Systems, a company that went on to IPO. Then in 1982, Vinod founded Sun Microsystems where he pioneered open systems and commercial RISC processors. In 1986, Vinod joined his longtime friend, John Doerr and became a General Partner @ KPCB where he helped incubate Juniper Networks and helped transform the telecommunications business with Cerent Corporation, which was acquired by Cisco Systems in 1999 for $7.2 billion. In Today’s Episode You Will Learn: 1.) How Vinod made his way into the world of startups with the founding of Daisy and Sun Microsystems and how that led to his entry into the world of venture with KPCB and ultimately founding Khosla Ventures? 2.) How does Vinod feel about the term "venture assistance" today? Where does Vinod believe VCs can really drive value? How does Vinod allocate his time to drive as much value for the portfolio as possible? How does Vinod get involved when it comes to talent acquisition for the portfolio? 3.) Why does Vinod believe that most board members are not qualified to advise entrepreneurs today? Why does Vinod believe that most value is driven outside of the board? What can founders to do make their boards as efficient as possible? How does Vinod advise founders to determine which advice to take vs which to disregard? 4.) How does Vinod assess his own approach and attitude to risk today? What does Vinod believe are acceptable vs unacceptable risks in startups? How does Vinod believe the very best founders think about risk management? Does Vinod agree time is the biggest killer of startups? Why does Vinod believe startups are so much quicker to innovate than incumbents? 5.) Why does Vinod believe that tolerance for failure has gone down in Silicon Valley? How does Vinod determine between the realism of when something is not work and to give up vs the visionary persistence to see a project through to the very end? What experience of his own have really led his thinking here? Items Mentioned In Today’s Show: Vinod’s Fave Book: Life on the Edge: The Coming of Age of Quantum Biology, The Third Pillar As always you can follow Harry, The Twenty Minute VC and Vinod on Twitter here! Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.

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

• 0:00Harry Stebbings?

  This is the 20 Minute VC with me, Harry Stebbings. And if you'd like to see all things behind the scenes here, you can on Instagram at H Stebbings 1996 with two Bs. We have some big travels this week and so there'll be some fun content there. But to the episode today, and my word, I've wanted to do this episode ever since I started the show over five years ago. He's a legend of the industry and a true pioneer and I couldn't be more honoured to welcome Vinod Khosla to the show today. Vinod is the founder at Khosla Ventures, one of the valley's most renowned firms of the last decade, with a portfolio including the likes of Square, Affirm, DoorDash, Impossible Foods and Open Door, just to name a few. As for Vinod, he started his career as a founder, founding Daisy Systems, a company that went on to IPO. Then in 1982, Vinod founded Sun Microsystems, where he pioneered open systems and commercial risk processors.

• 0:45Harry Stebbings?

  In 1986, Vinod then joined his longtime friend John Doerr and became a general partner at Kleiner Perkins, or KPCB, where he helped incubate Juniper Networks and helped transform the telecommunications business with Suren Corporation, which was ultimately acquired by Cisco Systems in 1999 for $7.2 billion. I do also want to say a huge thank you to his wonderful partner Samir for providing some fantastic question suggestions today. I really do so appreciate that. Before we move into the show today though, I wanted to take a moment to mention HelloSign, a great example of a company that found success in building a product focused on user experience. HelloSign is an effortless e-signature solution used by millions to securely send and request legally valid digital signatures and agreements.

• 1:27Harry Stebbings?

  I have to say, I absolutely love their design and workflow, it's just so intuitive. And they've raised a total of $16 million in funding and recently got acquired by Dropbox for an impressive $230 million. Check out HelloSign.com/20vc to join thousands of companies and founders who value fast, secure and simple e-signatures. And if HelloSign saves the day for signatures, Hims saves the day for wellness as the wellness brand for men. Did you know that by the age of 50, 85% of men have significantly thinning hair? And don't think I'm immune to this with my youth, as approximately 25% of men begin experiencing effects of male pattern baldness before they turn 25. So we need to get our act together, hence Hims, the one stop shop for hair loss, skincare.

• 2:10Harry Stebbings?

  And other wellness supplements for men. We mentioned the 50 year old and 25 year old there, and that's where Hims are great because they recognise that there are very different kinds of hair loss. So Hims offers various treatments to help men find effective solutions that really work for them. And for 20 VC listeners, you get the first month free. Go to forhims.com/20vc5. That's forhims.com/20vc5. Disclaimer, prescription requires an online consultation with a physician who will determine if a prescription is appropriate. Offer valid only if prescribed. Three month minimum subscription. Additional restrictions apply. See website for details and important safety information. Remember, that's forhims.com/20vc5.

• 2:53Harry Stebbings?

  And this episode is also brought to you by the stalwart of Silicon Valley banking, Silicon Valley Bank. For over 35 years, Silicon Valley Bank has been the bank for visionaries of all kinds, people and businesses who've revolutionised everything from software to social media, from workspaces to wine. With nimble banking services and solutions, Silicon Valley Bank helps startups adapt to the changing needs of a growing company. Learn more at svb.com/next. That's Silicon Valley Bank, ideas bank here. But that's enough from me. So now I'm very, very honoured to hand over to Vinod Khosla, founder at Khosla Ventures.

• 3:32Speaker 01

  You have now arrived at your destination.

• 3:36Harry Stebbings?

  Vinod, what many do not know is that when I started 20 VC four years ago, I wrote a list of three people that I most wanted to have on the show, and your name was absolutely one of them. So I couldn't be more excited to have you on the show today. So thank you so much for joining me today.

• 3:48Speaker 02

  Well, it's exciting to be here. I was wondering what took you 2,800 episodes to get here.

• 3:55Harry Stebbings?

  Vinod, I'm going to be honest, I wanted to ensure that A, we had a substantial enough audience, and I wanted to ensure that you would do it. And so I'm thrilled that you have agreed to do it. But I do want to start today on a little bit of context about you. So tell me, how did you make your way into the wonderful world of venture? Let's start with just that as an entry.

• 4:12Speaker 02

  Well, I was 15 or 16. I'm 65 now. But I was 15 when I first read about Edie Grove, a Hungarian Immigrant moving to the US and starting a company and I fell in love with that idea. I'd never known anybody in business, anybody in technology, didn't on the TV or telephone at home, but fell in love with the idea. And interestingly, I read about it in the pre-internet days in a two-year-old issue of Electronic Engineering Times. And just it's been my mission since to really be and only work with entrepreneurs in entrepreneurial world.

• 4:48Harry Stebbings?

  I absolutely love it as a starting point and as a mission. I guess the first question on that is really when it comes to working with those founders and venture assistants. What does this really mean to you, I guess? And how does this differ from other firms, do you think?

• 5:01Speaker 02

  There's investing, which most firms do. And they make good sensible decisions about rates of return and financial projection. Our firm and I am much more focused on how do you build company, not on returns. And if we build a big, successful company, then the returns take care of itself. So returns comes second, building something of significance comes first. I think that's absolutely key. The other thing is the attitude with which we approach companies. Our motto, which you may have heard, is bold, early and impactful. And all those matter, mostly high technical risks that most others are afraid to take and really large impact.

• 5:45Speaker 02

  So impact really matters to us as a firm because of our value system.

• 5:50Harry Stebbings?

  Absolutely, and I love that in terms of those three kind of core values. I guess with that kind of venture assistance and kind of the companies that you like to work with in mind, being those hugely impactful companies, how does that mean you spend your time, allocate your day and really spend that time to help the best entrepreneurs that you do?

• 6:06Speaker 02

  Well, let me go back first to what venture assistance for us means. We have a brilliant engineer or technologist or somebody with a business model insight that's unique and different. They usually are fairly unidimensional, rarely they have they manage people or run marketing or be in a CFO. So entrepreneurs really need help in directions that

• 6:30Speaker 02

  They're not familiar with themselves, where their background isn't. They usually fail not because of what they are strong at, but what they might be weak at. And that's what venture assistance means. Surrounding them with the support they need. And it's fairly unique about us, but when we started the firm in two thousand and four, our tagline said venture assistance. And that's still the first thing we focus on. How can we help an entrepreneur build a much bigger company? From my point of view, a few small nudges left or right can change the trajectory of a company by hundreds of percent. Happens more often than not. A bias in a decision left or right, a little more conservative, a little more aggressive,

• 7:14Speaker 02

  when to be aggressive, when to be conservative in a startup. Those are things that entrepreneurs usually aren't familiar with, definitely not first time entrepreneurs. And that's where they need the most help to turn a good idea into a great idea and to evolve it over time. These things are very counterintuitive, very different than what business school might teach you. They're very unusual. Where does that cause me to spend my time? The single most important thing I spend time on, probably more than any other single thing in my calendar, is helping our companies recruit great teams. It's unusual for me to not have hundreds of resumes sitting on my desk. If you walk in today, hundreds, literally,

• 7:59Speaker 02

  that I've sorted through personally, looked around on LinkedIn, interviewed these people. I probably interview eight to ten people a week, even now, mostly for our companies. Then comes challenging them about their conventional wisdom. The key in a startup is to remove risk and challenging them on what they're not thinking about, where risks may lie, hidden obstacles may lie. That's an important part of venture assistance. And that's where I spend my time. So doing a session where instead of sitting in a board meeting where you're polite with everybody, just working one on one, challenging a team to think about the hard parts of their business, where things may fail, where they might

• 8:40Speaker 02

  Find extra leverage or build a much bigger company if they're steered left a little bit. These are nuanced questions and very seldom do people help entrepreneurs with these.

• 8:51Harry Stebbings?

  We mentioned going off track before Vinod in terms of going where the conversation takes us. And I have a couple of things to unpack from that. And you mentioned those core questions where you can really add hundreds of percent to a business with answering one of those core questions. Entrepreneurs always get a lot of advice, though. How do you almost advise entrepreneurs to determine which advice to take versus which not to, given that they receive so much advice today?

• 9:14Speaker 02

  So I often say, whose advice to take on what topic is the single most difficult thing an entrepreneur does? Because there's plenty of advice. The number of people qualified to advise an entrepreneur is really, really limited. In fact, I would suggest that most board members, just because they went to business school and joined a venture firm, are not qualified to advise an entrepreneur. They're not qualified to challenge an entrepreneur. They're not even qualified to help them judge who they need on the team. So that is a very, very difficult question to answer.

• 9:49Harry Stebbings?

  It totally is, and I absolutely agree with you in terms of really determining kind of who's best in that specific instance. I guess the other element that you said was about risk and risk is a fascinating topic for me. How do you think about acceptable versus unacceptable risk within companies?

• 10:04Speaker 02

  Well, one of the problems I have in many startups that have initial traction is you suddenly have something to lose. And most board members advise the startups to reduce risk in a way where you can increase the probability of success of the startups, but make the consequences of that success inconsequential. So there's a big difference between going for a much bigger play or a safer, more conservative play. We tend to do the first, which is go for the bigger vision. It's perfectly reasonable to go build reliable, safe companies that have good financial returns, but that's not building a large business. And we are very clear on what we do and we don't think it's bad to do.

• 10:50Speaker 02

  Do the other thing, but our mission is very, very clear. So risk is absolutely one of those things. You have to decide what profile you want. Then comes the issue of there's different kinds of risk. If you raise a lot more money, you might reduce other risks. If you have a small amount of money, you might increase, say, a product completion risk. If you spend more time developing a product, you reduce your engineering risk or product risk, but you might increase market risk. There's always trade offs. So risk management is the other hard thing an entrepreneur does.

• 11:26Harry Stebbings?

  It absolutely is. I guess, you know, you mentioned time there also and kind of how maybe raising more money can allow you to execute faster or whatever that may be. But often time is cited as kind of the main reason that kills startups. I'm really interested, having worked with so many incredible entrepreneurs and having sat on the other side of the table as an incredible entrepreneur yourself, what are some of those really tough situations that you think is super helpful for you to advise founders on? And also, do you agree that time is the biggest killer of startups?

• 11:53Speaker 02

  So time is a bigger killer, but you can increase the time you have. I always say if you survive long enough, you might get lucky or try and survive long enough to get lucky. So being careful about things like burn rate matter. Sometimes you just have to try different things. One of the things I tell entrepreneurs in general is don't make a plan, but plan to plan. Most startups that are big successes went through a number of iterations in their business plan. Take something like Square. What it is today wasn't part of the plan when we originally invested. It was a hardware dangle. So you, one has to evolve their plan as they learn. An evolution of a plan is a powerful force in every area in which it operates.

• 12:37Speaker 02

  And good entrepreneurs use it very, very well. So I think that's a key part of being a good entrepreneur, evolving your plans, managing your burn rate, managing risk of various sorts, yet taking the right kinds of risks to go for the bigger vision or the bolder vision, if that's what your goal is.

• 12:56Harry Stebbings?

  I'm so pleased you said that about really taking those risks to go for the bigger vision. And even mentioning Square and kind of the incredible evolution that they've enjoyed. The question for me is, I guess, why do startups innovate maybe so well? And bigger companies or incumbents maybe don't. Why do you think that is?

• 13:11Speaker 02

  About a decade ago, I looked at all the large innovations that have really been material in society, not the incremental innovation. Then incremental innovation would be Intel going from, say, a 16 nanometer semiconductor process to 10 nanometers or below. Those are incremental. But talk about recreating media. Fox and CBS didn't do that. It was YouTube and Twitter and Facebook that reinvented media. Pharmaceuticals weren't reinvented by the pharmaceutical companies. A startup called Genentech in the eighties did biotechnology. Space wasn't reinvented by Lockheed or Boeing. It was reinvented by people like SpaceX and Rocket Labs, one of our companies.

• 13:55Speaker 02

  In the case of automotive, you'd think VW or GM would do interesting things. It was Tesla and Vaymo that did the most radical things in automotive and changed the trajectory of automotive. So I was hard-pressed over 40 years to find one area where a large company was willing to take the risk and innovate in a big way. It's a too large a step and there's plenty of experts who tell you why radically new things won't work. I would say experts are experts in a previous version of the world, not the world you're trying to create. And so relying on experts leads to conservatism and incrementalism.

• 14:37Speaker 02

  And that's a perfectly good thing for a General Motors or a General Electric to do. It's not how startups build big companies like Google or Facebook or pick your favorite garden health or Impossible Foods or Square or Stripe. I could go on. Nobody in the financial services industry innovated in finance. It was Square, Stripe, a firm, Funbox, a few companies like that, just to mention some of our own companies. So big companies don't take the large risk. Also, when they run into problems. They avoid the problems or change direction or get conservative or move on to something different.

• 15:17Speaker 02

  A startup has to survive and survival, which is necessity, is the mother of invention, as you've heard before. It's what works really, really well. So that's what is so great about the startup world. Almost all large innovations I could think of over the last forty years came from startups. One came in the last forty years from a big company.

• 15:37Harry Stebbings?

  I totally agree with you in terms of the size of innovation and especially on some of the names that you mentioned there. When we look though at, you know, tolerance to failure in Silicon Valley, you mentioned the kind of a difference of yours being the willingness to take such technical risk and absolutely seen in some of your investments and across the portfolio. I guess my question is then, Vinod, why has tolerance to failure gone down in Silicon Valley? And do you agree that maybe it has?

• 15:59Speaker 02

  Well, I would say my willingness to fail is what has allowed me to succeed. And not being embarrassed about large failures I've had has given me the courage to keep going. But in Silicon Valley, which was mostly in the eighties and nineties about building company, became a financial tool and investment class. Then you had financial investors who then have to spreadsheet things out. We don't allow IRR calculations in our firm when making an investment, which is pretty unusual for an investment firm. We never look at them. We don't focus on them because we want to take the large risks, which you couldn't put into numbers in a spreadsheet. And if you did, they'd look ridiculous.

• 16:41Speaker 02

  But when people take a financial investing approach to venture, you end up with much less risk and much more pragmatic and sensible decisions. But they exclude the really large breakthrough ideas.

• 16:56Harry Stebbings?

  I totally agree with you in terms of kind of that evolution of venture into really the asset class that it often is, excluding the breakthrough ideas. My question then is like, do values fundamentally matter in startups? And more important, not more importantly, but a subsequent question, do VCs really care about the values in general? Given now it's an institutional asset class, unlike any other financial product.

• 17:15Speaker 02

  So this is a hard thing and Ben Horowitz recently wrote a very Good book on the value of values in venture firms and startups. I would say two things matter and they're different. One is the mission for a company. Many startups have that, many don't. I'd say fifty fifty. And I always tell entrepreneurs, be obstinate about your vision, be flexible about your tactics. But that doesn't speak to the values a company has. Values is focusing on you care about its impact, whether it's positive or negative. And I think very few investment firms focus on that. We do. We will not make an investment that's negative for society. We might make some neutral ones.

• 17:59Speaker 02

  And there's real situations where we passed on hundreds of millions of dollars of profit because we didn't want to do the wrong thing, because it conflicted with our values. Maybe another day we can go into that. That's fairly rare, but we are very, very proud that we will not make negative things. Even when we are doing clean tech, we are very focused on values. When we did Impossible, we were very clear we would pass up on profit and not sell Impossible to a food company that might divert its mission. For example, we've chosen not to invest in some areas like gambling or encouraging drinking. That was a recent example that came up. Or debt collection, things like that.

• 18:42Speaker 02

  We basically don't invest in advertising tools now, which I think are being used fairly negatively just to cite some very specific examples and a broad range of that. And you know, the only time you can test your values is when there's something you have to give up to practice your values. And I think we've been tested and been very proud of what we've done internally on that front.

• 19:06Harry Stebbings?

  Can I ask for your advice actually? And this is very off schedule, but I think a lot of people go into venture with the value-driven mindset that you have and the optimism of making the world a better place through technology. And then it almost gets beaten out of them with the financial nature of the asset class, the pressure of LPs and the inherent pressure of constantly climbing the heart and the ladder to GP and your own firm and having the best returns in the industry. Would you advise me starting my career in terms of retaining those values of the goodness that technology can bring in certain cases?

• 19:36Speaker 02

  Well, what I'd say to leaders in firms, be clear what your values are, be explicit about them and stick with them when the going gets hard, when it's hard to practice those values. That's the only time you test it. If you're a young VC just entering the business, it's easy to move around between firms and pick the set of values you believe in or care about. And to be fair, look, I feel like the better you do, the more luxury you have to indulge in your values and I'll call it an indulgence because you get the privilege or indulgence to do it. But I do think both young people in VC firm leaders or investment firm leaders can decide what to do and what not to do.

• 20:19Speaker 02

  And I think a good example at a very large scale is BlackRock. Their value system has been very clear, very explicit and very vocal. And I appreciate things like that from other firms.

• 20:31Harry Stebbings?

  Yeah, no, absolutely. We were talking about kind of struggles for founders also, moving back to the founder's side of the equation. I think one really interesting thing that a lot of founders struggle with, especially first time founders understandably, is how do they run an effective board meeting? Having sat through many boards, both on the operator and the investor side of the table, how do you advise founders on running a truly effective board meeting today if they're not?

• 20:53Speaker 02

  The first question you have to ask as a founder is what's the purpose of a board meeting? If you have a perfunctory board, a set of investors who just want reports, you walk through your slides. But that's really not helpful to a founder. To me, the right way is send all the materials out, have everybody do their homework. And if they have questions, they can ask questions. If they haven't done their homework, read the materials, then they have no right to take up other people's time and ask questions. What's really useful to a founder, if you have a good board, is focus on the two or three questions that you most need feedback on. In private company boards, I don't think the role of a board is as much fiduciary as it is in public companies.

• 21:38Speaker 02

  It's much more advisory. So ask the board the questions you're most struggling with, the questions where you're most uncertain, where you want a different point of view. And if you have a good board and most boards aren't very good, that's what you should do. If your board isn't very good, fire your board members and get a good board. Boards that won't be just hypocritically polite with you, they can be brutally honest, hopefully in a nice way, but yet challenge your thinking, give you different points of view, address the concerns or risks or opportunities you're struggling with. I personally try and do this one-on-one with founders. I don't go to a lot of board meetings now. I focus on this because I find most boards don't operate this way and a waste of time for the founders.

• 22:23Harry Stebbings?

  Can I ask, why do you think maybe most boards aren't as effective as they should be and as optimal for the founders as they should be? What can we do to make them better?

• 22:30Speaker 02

  Well, for starters, entrepreneurship is really hard. There's a presentation on our website called the Entrepreneurial Rollercoaster, where the highs are high and the lows are low. Any entrepreneur knows this, and I first wrote this title and this presentation in nineteen eighty-six. It's stayed constant mostly since then. If you haven't gone through this rollercoaster, it's very easy as a board member to give advice that's perfunctory, sounds like good business school advice, but isn't based on the reality of how hard it is to be a founder, how stressful, how taxing, how conflicting it is. If you haven't gone through that, you've not earned the right to advise the entrepreneur, in my view.

• 23:15Speaker 02

  And I don't think most board members have gone through it. The other thing that's important is your goals as a founder may not align with your boards. If they're looking for a good three acts on their money as quickly as possible, that may be very different than the entity you're trying to build, the mission you're on. And unless those things align, you as a founder will get the wrong advice.

• 23:37Harry Stebbings?

  Can I ask, do you think risk is actually aligned between founders and VCs? And what I mean by that is VCs have large portfolios and it's in their interest for you to take as much risk as possible to get the huge outcome that they need to make their fund returns. Work, but then for the founder, four hundred million exit is a fantastic exit in anyone's books and, you know, will make them very financially comfortable. Do you think that actually risk is a line between founders and VCs?

• 24:01Speaker 02

  So as a founder, I always say in this presentation I wrote in nineteen eighty six, there's a slide that says, know why you want to be a founder. And by the way, in those days, slides for overhead projections on ASST. But know why you want to be a founder. You could be a founder because you want to make lots of money. You could be a founder because you have a mission you really care about. It's the kind of founder we like. Like Pat Brown at Impossible Foods or Jack Dorsey at Square, or Patrick Collison and John Collison at Stripe. People with a mission and not in a hurry to get out. But you could also want to start a company just because you want to work with friends and not have a boss and have a lower stress environment.

• 24:43Speaker 02

  There's lots of good, valid reasons to be a founder. And as a founder, you have to find a VC that matches your goals. If you're looking for a quick exit, great, find somebody who wants that. If you're looking to build a mission, find somebody who's aligned with that. So it is important founders pick not just names, but VCs who really care about what they care about. We're just looking at something in an area that's of extreme interest to us, the brain. It was clear the founder had a ten, fifteen, twenty year vision of what they wanted to build. And that was perfectly aligned with what we want to do, which is very much what Impossible Foods wants to do.

• 25:23Speaker 02

  That works great. But if somebody starts, for example, if somebody talks about exits or IPOs in the first few slides, I almost never go beyond that, say, if that's your focus, we are not a good fit for you, the founder.

• 25:36Harry Stebbings?

  Yeah, no, I do absolutely agree and I'm very much aligned to you on that and my negative reaction to it. I do want to touch on one final element before the quick fire and we've spoken a lot about founders. But there's also the difference in certain cases between founders and CEOs. How do you think about the founder versus CEO thought and what's your approach to that?

• 25:54Speaker 02

  So almost always, if a founder grows to be a good CEO, they will build. The bigger, better company. What's needed to lead a company is vision and passion and unreasonable about your mission. Most managers are too pragmatic to be unreasonable, to be visionary, to be bold enough. So whenever possible, you want a founder to lead the company. Now, that only happens if the founders who need all these other functions, good management, good process, taking the right risks, hiring the right teams, leading the right teams. Some founders will do it naturally, but often the best founders hired the people who can do these things that they don't understand. So the quality of hiring is the most important thing.

• 26:39Speaker 02

  I always say the team you build is the company you build, not the business plan you make. So some founders do this really, really well. Patrick Carlson, college dropout, very, very young, inexperienced, built an incredible team. Jack Dorsey did that at Square, both turned out great company. So I wrote a blog a long time ago about how to avoid needing a CEO as a founder. This was in TechCrunch probably eight, 10 years ago. Then I wrote a blog on what to do if you need a CEO, if you haven't grown as much. Larry and Sergey at Google needed a CEO, got a CEO, then Larry came back in, and then he's moved on to other things. That's also an acceptable sequence.

• 27:22Speaker 02

  But be clear about why you're starting a company and what you want to achieve and line up your decisions about this. But almost certainly, great founders have great vision, passion, unreasonableness, more ambition than most practical people would accept as possible or doable. And those are wonderful people to work with. They're really, really exciting, sometimes hard, but really, really exciting. If you get the right board and advisors who challenge you as you go on this mission, that's the right combination.

• 27:52Harry Stebbings?

  On that note of these incredible founders, I do want to move into my favourite element of any episode, I have to admit, Vinod, being the quickfire round. So I say the short statement and then you give me your immediate thoughts, about sixty seconds or less. Does that sound okay?

• 28:05Speaker 02

  That sounds great.

• 28:06Harry Stebbings?

  Okay, so what is the favourite book and why? I need to read more this year. What would you recommend?

• 28:11Speaker 02

  Well, I just put out my book recommendations from twenty nineteen. So I'll mention there was twenty plus books on it. It's on medium dot com. But my favourite technical book is Life on the Edge, which is about quantum biology. My favourite economics book is Third Pillar, which is about the need for community in capitalism. And while politics, capitalists and community need to play together. Uninhabited Earth, about the climate crisis, something I've been passionate about for a long time. Loon Charts, about the culture of Silicon Valley. And my all time favourite is Lying by Sam Harris. This is where you really test yourself on whether you're honest. And I always say we prefer to be brutally honest than hypocritically polite.

• 28:55Speaker 02

  So my favourite all time book, Lying by Sam Harris.

• 28:58Harry Stebbings?

  I, I, I love that. I'm adding that to the reading list. I haven't read it yet. My next one is, on appearance, Vinod, you've achieved all one could want to achieve, both as an operator and as a venture master. What motivates you today?

• 29:09Speaker 02

  I want to have fun. So I turned sixty five today and have a plan for the next twenty years. I wrote it up about two years ago in a document on Medium called Reinventing Societal Infrastructure with Technology. There was a video I gave at our CEO summit called Awesome, What All of You Are Doing. It's a hundred companies doing very, very cool and highly impactful technology in our portfolio. And companies that most venture firms would be afraid to invest in. So I didn't include successes like Square or Stripe or Nutanix in that. I only covered the companies other venture firms would be afraid to invest in. It's an awesome list. I couldn't even reduce it below a hundred.

• 29:51Speaker 02

  That's what's really cool about it. It's from Rocket Lab to Impossible Foods, to Microbots doing surgery, to three D printing houses, to doing free Through AI, all kinds of cool stuff in a wide range of technologies. Personally, if I can have an impact, it's the most valuable thing, most rewarding thing I can do. And I'm always curious to learn about new technologies. I'm a techie nerd at heart.

• 30:18Harry Stebbings?

  And tell me, what motto or quote do you most frequently revert back to? And why does it hold resonance with you?

• 30:23Speaker 02

  A quote I love is skeptics never do the impossible. You know, there's real doers, which are entrepreneurs, and then partificators, experts, gurus, that always say why things can't be done. I always say why not instead of why it can't be done. To me, if there's a ninety percent chance of failure and there's a ten percent chance of changing the world, that's a pretty good deal. So go for the ten percent. Don't be scared by the ninety percent. And that's really hard. It's challenging. Some days it's really depressing, but it's really, really rewarding and fun. So I could spend the rest of my life working just on those kinds of things.

• 31:00Harry Stebbings?

  Off schedule, but I have to ask you, you mentioned the hard there. How do you deal with the hard times when things don't go so well? Or as some may call it, say, the shit hits the fan, so to speak.

• 31:09Speaker 02

  Well, it's really, really hard in startups when shit hits the fan, when you're helpless. I think if you believe in a mission, you stick with it. You power through walls, bang your head against the wall till you break through. So I think that's the key. If you're not mission aligned, if you're looking at it financially, then when things go get hard, you abandon it. So I I do think mission oriented founders make for much better companies, much bigger companies, and much higher returns, even if they go through ups and downs.

• 31:40Harry Stebbings?

  What do you know now, Vinod, that you wish you'd known when you started Coastler all the way back in two thousand and four?

• 31:46Speaker 02

  More risk is a good thing, not a bad thing. More risk is something most people are afraid of, and it's where the larger opportunity lies. Nassim Taleb's talked about it. Nonlinear returns matter, and they really are nonlinear. Squares up ten X since the IPO or eight X or something like that. We were not afraid to stay in there and really go build the bigger entity. We didn't sell many of our companies. Companies, we stuck with them to go really for the big thing. So nonlinear risk and don't be afraid of it. Because most other people are in one place where markets aren't efficient.

• 32:23Harry Stebbings?

  And then I want to finish with another super interesting one, which is your most recent publicly announced investment. And why did you say yes and get so excited?

• 32:30Speaker 02

  We like really large breakthroughs. Just as a side, one of the things I love is three people I've invested in have won Nobel prizes after we invested, not before. So really big ideas get really exciting to me. For a specific investment, OpenAI is going after a big hairy audacious goal of building an ADR. That to me is worth pursuing as an investment, but also for society. It may eliminate the need to work for society, lots of issues there. But it could be really, really exciting if it works. And I don't know what the probability of success is. Again, even if it's only 10%, and there's a 90% chance of something less, that's fine with me. So that's very exciting.

• 33:15Harry Stebbings?

  Vinod, as I said at the beginning, this is an episode that I've wanted to do for many years now. So I can't thank you enough for joining me. And I also can't wait to see the next 10 years for Coaster and the incredible portfolio you've built.

• 33:25Speaker 02

  Well, thank you. It's always fun to do this. As you can tell, I get excited. And if I can excite one more person into being an entrepreneur on a mission that helps society, that has impact or does some very cool thing like microbots, this hour is worth it.

• 33:42Harry Stebbings?

  I mean, my word, as I said at the beginning, such an incredible honour to have Vinod on the show. And I'm very excited to see the huge impact that the Coaster portfolio companies will have on society. Also, if you'd like to see more from us behind the scenes, you can do so on Instagram at H Stabbings 1996 with two Bs. I always love to see you there. But before we leave you today, I wanted to take a moment to mention HelloSign, a great example of a company that found success in building a product focused on user experience. HelloSign is an effortless e-signature solution used by millions to securely send and request legally valid digital signatures and agreements. I have to say, I absolutely love their design and workflow. It's just so intuitive. And they've raised a total of $16 million in funding and recently got acquired by Dropbox.

• 34:23Harry Stebbings?

  For an impressive $230 million, check out hellosign.com/20vc to join thousands of companies and founders who value fast, secure and simple e-signatures. And if HelloSign saves the day for signatures, Hims saves the day for wellness as the wellness brand for men. Did you know that by the age of 50, 85% of men have significantly thinning hair? And don't think I'm immune to this with my youth, as approximately 25% of men begin experiencing effects of male pattern baldness before they turn 25. So we need to get our act together. Hence, Hims, the one-stop shop for hair loss, skincare and other wellness supplements for men. We mentioned the 50-year-old and 25-year-old there, and that's where Hims are great because they recognise that there are very different kinds of hair loss.

• 35:06Harry Stebbings?

  So Hims offers various treatments to help men find effective solutions that really work for them. And for 20vc listeners, you get the first month free. Go to forhims.com/20vc5. That's forhims.com/20vc5. Disclaimer: Prescription requires an online consultation with a physician who will determine if a prescription is appropriate. Offer valid only if prescribed. Three-month minimum subscription. Additional restrictions apply. See website for details and important safety information. Remember, that's forhims.com/20vc5. And this episode is also brought to you by the stalwart of Silicon Valley banking, Silicon Valley Bank. For over 35 years, Silicon Valley Bank has been the bank for visionaries of all kinds,

• 35:50Harry Stebbings?

  people and businesses who've revolutionised everything from software to social media, from workspaces to wine. With nimble banking services and solutions, Silicon Valley Bank helps startups adapt to the changing needs of a growing company. Learn more at svb.com/next. That's Silicon Valley Bank, ideas bank here. As always, I so appreciate all your support and I can't wait to bring you a fantastic episode this coming Friday with Tomer Agosto.