Vinod Khosla is pouring his own

millions into science experiments to

counter global warming and to prove
hes the smartest guy in the Valley.
By Richard Shaffer

Khosla is the
worlds foremost
investor in
environmental
startups.

Photographs by

Howard Cao

a
devilish

green
angel

July/August 2008 Fast company 93

Vinod Khosla is pouring his own

millions into science experiments to
counter global warming and to prove
hes the smartest guy in the Valley.
By Richard Shaffer

Khosla is the
worlds foremost
investor in
environmental
startups.

Photographs by

Howard Cao

a
devilish

green
angel

July/August 2008 Fast company 93

Making cement without also making

carbon dioxide seems impossible; the basic

chemistry of the process releases the gas. But
maybe thats not really true, Stanford University scientist Brent Contstantz began thinking
last year. Of course, it was only a theory, he told
himself, but the market for cement is so large
about $13 billion annually in the United States
aloneand the pressure to reduce its effect on
the environment so strong that he sent a 12line email to venture capitalist Vinod Khosla.

I have an idea for a new sustainable

cement, Contstantz wrote. Im sure you
are already aware that for every ton of
[standard] Portland cement produced,
approximately one ton of carbon dioxide
is released into the atmosphere. My cement
wouldnt do that; in fact, it would remove
a ton of carbon dioxide from the environment for every ton of cement produced.
Khosla, who knew Contstantz only
casuallythe two hadnt been in touch for
20 yearswas on vacation. But after a discussion that lasted only an hour, he told
the scientist, I dont care about the rest of
the business plan. You dont need to estimate costs. You dont need to do a cash
flow. You dont need to do a presentation.
Just hire five people, set up a lab, and go.
Contstantz was astonished. What
were up to, he warned, takes balls.
Well, youve got the money now, was
the response. Get busy.
It was a classic performance from Khosla, a man who enters any chamber
believing hes the smartest man in the
room, in the words of one longtime VC.
94 Fast company July/August 2008

In 30 seconds, in one paragraph, I knew

this was worth doing, Khosla says now,
adding that the cement startup, called
Calera, may be our biggest win ever.

ver the past four

y e a r s, K h o s l a h a s
become t he worlds
foremost investor in
env ironmental startups. He has committed
an estimated $450 million of his personal
fortune to financing 45 ethanol factories,
solar-power parks, and makers of environmentally friendly lightbulbs, batteries, and automotive components. These
investments have made him the most
prominent of an increasingly rare breed,
the so-called angel investors who put
their own funds into the youngest of
companiesincluding outfits that are
pursuing the most innovative, but not
yet commercially viable, approaches to
serious problems such as global warming.

Its a kind of seed-stage investing that

traditional venture funds have l argely
abandoned. And rightly so, Khosla says.
If somebody comes to you with a coldfusion idea, you should not be funding
it as an investor with other peoples
money. Funding it, if theyre credible
people, as a science experiment, as a
hobby, is perfectly okayas long as its
your own money.
Khoslas green investing has made him
something of a celebrity, mentioned in
the media with the likes of mogul Richard
Branson, former President Bill Clinton,
Hollywood producer Stephen Bing, and
General Motors chairman and CEO Richard Wagoner. Ive known Khosla since his
days as a recent immigrant from India
more than two decades ago but hadnt
seen him in years until we met in his
office in Menlo Park, California, earlier
this year. Khosla Ventures is tucked away
in an unprepossessing corner of a redwood complex of small offices. The decor
is rental-furniture bland. The only reading set out for visitors is a four-month-old
issue of National Geographic with a cover
story on biofuels. Khoslas own office is
spare, with 15 large black-and-white photographs of his four children on the walls.
For others in the firm, office dress is Silicon Valley casualjeans, fleece vests, and
running shoesbut Khosla arrives more
elegantly attired, in taupe slacks; a chocolate long-sleeve, zip-neck knit shirt; and
slip-ons in luggage tan with leather bows
and kilties. Hes 53, a slender 5-foot-10,
genial and looking relaxed despite the
prominent dark circles under his eyes.
Although he lives near his office, this
morning he has already driven one of his
daughters to school in San Francisco, a
90-minute round-trip that he makes every
weekday in order to spend time alone with
her. Later, hell review several business
proposals, prepare to announce three new
investments and the hiring of an operational manager for his firm, and polish his
remarks for an appearance at the United
Nations. To meet with me, he has taken a
break from writing a position paper on
where the world will get the biomass it
needs for oil independence. He writes two
or three such papers a month, averaging
more than 100 pages a year. Nobody
wastes less of the time in his life than
Vinod, says venture capitalist Roger
McNamee, whose office at Integral Capital
Partners was for a decade just down the
hall from Khoslas, at the storied Silicon

Valley partnership of Kleiner Perkins

Caufield & Byers.
During nearly two decades at Kleiner
Perkins, Khosla lost far more often than he
won. He wasnt responsible for the firms
best-known successes of his eraAmazon,
Netscape, and Google. By my reckoning,
he was most closely involved with 42 startups. Most were sold or closed, although a
few still operate privately. Eleven, however,
went public (mostly during the dotcom
bubble). Thats better than 25%not at all
bad in the VC world. And measured by
return on invested capital, Khoslas record
has been outstanding. His half-dozen best
deals at Kleiner Perkins multiplied $314
million in investments into $15 billion in
cash and stockan increase of nearly fiftyfold, and five times more than all the
money invested in all 42 companies.
It was at the peak of his success in late
2000 and early 2001when Fortune named
him the most successful venture capitalist of all time and he later appeared on the

covers of two other national business mag

azines in a single weekthat he decided
to change. Shares in his most successful
company, Juniper Networks, were trading
at more than 40 times their offering price
a year and a half earlier. But he foresaw a
bleak near future for optical networking
equipment, in which he had made his
name. Just as telecom stocks, including
Juniper, were reaching all-time highs, he
warned in a keynote at a Goldman Sachs
conference that at least one of the industrys most famous companies would soon
be bankrupt. If I really believed what I
was saying, I told myself, then it was time
to look elsewhere, he recalls.
Around that time, a friend introduced
him to a space-research scientist with a
business idea unlike any Khosla had considered before: generating electric power
from water, oxygen, and natural gas.
Seven years later, the company, now
known as Bloom Energy, has yet to introduce its first product, but Khosla marks

his initial support for it as a turning

point in his career. I knew then I wanted
to go green, he says. In 2004, he struck
out on his own. I felt that energy needed
more exploring than a responsible venture fund should do, he says.
At Khosla Ventures, he has put his
own money into graphics-display, datacenter, and wireless technologies, but
environmental startups are what excite
him. He has been on a campaign to end
American dependence on petroleum
since oil was trading at a quarter of its
present price. Unlike his more famous
former partner at Kleiner Perkins, the
energetic John Doerrwho has choked
up onstage recounting his daughters
worries about climate changeKhosla is
unemotional about going green. He
hopes to improve the world by developing, for example, cleaner-burning coal
and cars that run leaner, but his more
fundamental motivations seem to be the
size of the potential market and, even

khoslas green
ventures
Most of Vinod Khoslas environmental startups are efforts to reduce
our dependence on petroleumboth by
making better use of oil and by finding
other sources of liquid fuel. The rest
address solar and geothermal power
and desalination of seawater. Very
broadly, his green-tech portfolio falls
into three clusters:

Fuel Efficiency: To lower the cost of

driving, EcoMotors and Nanostellar are
rethinking the diesel engine, Transonic
Combustion is improving fuel injectors,
and Tula is at work on new versions
of microprocessors that monitor the
operations of todays cars.
Alternative Fuels: Creating and

refining ethanol are Cilion, Coskata,

Ethos, Hawaii BioEnergy, LanzaTech,
Mascoma, Praj, and Range Fuels.
Amyris Biotechnologies, Gevo, KiOR,
and LS9 are trying to commercialize
other substitutes for petroleum.

Electric Power: Firefly Energy, Sakti3,

Ive never
been interested
in business,
Khosla says. Im a
techie nerd. What I
like is intellectual
stimulus.

and Seeo focus on batteries; Group IV,

Kaai, Lumenz, Soraa, and Topanga, on
lighting. Ausra, Infinia, and Stion do
solar power, Altarock is in geothermal,
and Great Point Energy aims to make
clean-burning gas from coal.

July/August 2008 Fast company 95

Making cement without also making

carbon dioxide seems impossible; the basic

chemistry of the process releases the gas. But
maybe thats not really true, Stanford University scientist Brent Contstantz began thinking
last year. Of course, it was only a theory, he told
himself, but the market for cement is so large
about $13 billion annually in the United States
aloneand the pressure to reduce its effect on
the environment so strong that he sent a 12line email to venture capitalist Vinod Khosla.

I have an idea for a new sustainable

cement, Contstantz wrote. Im sure you
are already aware that for every ton of
[standard] Portland cement produced,
approximately one ton of carbon dioxide
is released into the atmosphere. My cement
wouldnt do that; in fact, it would remove
a ton of carbon dioxide from the environment for every ton of cement produced.
Khosla, who knew Contstantz only
casuallythe two hadnt been in touch for
20 yearswas on vacation. But after a discussion that lasted only an hour, he told
the scientist, I dont care about the rest of
the business plan. You dont need to estimate costs. You dont need to do a cash
flow. You dont need to do a presentation.
Just hire five people, set up a lab, and go.
Contstantz was astonished. What
were up to, he warned, takes balls.
Well, youve got the money now, was
the response. Get busy.
It was a classic performance from Khosla, a man who enters any chamber
believing hes the smartest man in the
room, in the words of one longtime VC.
94 Fast company July/August 2008

In 30 seconds, in one paragraph, I knew

this was worth doing, Khosla says now,
adding that the cement startup, called
Calera, may be our biggest win ever.

ver the past four

y e a r s, K h o s l a h a s
become t he worlds
foremost investor in
env ironmental startups. He has committed
an estimated $450 million of his personal
fortune to financing 45 ethanol factories,
solar-power parks, and makers of environmentally friendly lightbulbs, batteries, and automotive components. These
investments have made him the most
prominent of an increasingly rare breed,
the so-called angel investors who put
their own funds into the youngest of
companiesincluding outfits that are
pursuing the most innovative, but not
yet commercially viable, approaches to
serious problems such as global warming.

Its a kind of seed-stage investing that

traditional venture funds have l argely
abandoned. And rightly so, Khosla says.
If somebody comes to you with a coldfusion idea, you should not be funding
it as an investor with other peoples
money. Funding it, if theyre credible
people, as a science experiment, as a
hobby, is perfectly okayas long as its
your own money.
Khoslas green investing has made him
something of a celebrity, mentioned in
the media with the likes of mogul Richard
Branson, former President Bill Clinton,
Hollywood producer Stephen Bing, and
General Motors chairman and CEO Richard Wagoner. Ive known Khosla since his
days as a recent immigrant from India
more than two decades ago but hadnt
seen him in years until we met in his
office in Menlo Park, California, earlier
this year. Khosla Ventures is tucked away
in an unprepossessing corner of a redwood complex of small offices. The decor
is rental-furniture bland. The only reading set out for visitors is a four-month-old
issue of National Geographic with a cover
story on biofuels. Khoslas own office is
spare, with 15 large black-and-white photographs of his four children on the walls.
For others in the firm, office dress is Silicon Valley casualjeans, fleece vests, and
running shoesbut Khosla arrives more
elegantly attired, in taupe slacks; a chocolate long-sleeve, zip-neck knit shirt; and
slip-ons in luggage tan with leather bows
and kilties. Hes 53, a slender 5-foot-10,
genial and looking relaxed despite the
prominent dark circles under his eyes.
Although he lives near his office, this
morning he has already driven one of his
daughters to school in San Francisco, a
90-minute round-trip that he makes every
weekday in order to spend time alone with
her. Later, hell review several business
proposals, prepare to announce three new
investments and the hiring of an operational manager for his firm, and polish his
remarks for an appearance at the United
Nations. To meet with me, he has taken a
break from writing a position paper on
where the world will get the biomass it
needs for oil independence. He writes two
or three such papers a month, averaging
more than 100 pages a year. Nobody
wastes less of the time in his life than
Vinod, says venture capitalist Roger
McNamee, whose office at Integral Capital
Partners was for a decade just down the
hall from Khoslas, at the storied Silicon

Valley partnership of Kleiner Perkins

Caufield & Byers.
During nearly two decades at Kleiner
Perkins, Khosla lost far more often than he
won. He wasnt responsible for the firms
best-known successes of his eraAmazon,
Netscape, and Google. By my reckoning,
he was most closely involved with 42 startups. Most were sold or closed, although a
few still operate privately. Eleven, however,
went public (mostly during the dotcom
bubble). Thats better than 25%not at all
bad in the VC world. And measured by
return on invested capital, Khoslas record
has been outstanding. His half-dozen best
deals at Kleiner Perkins multiplied $314
million in investments into $15 billion in
cash and stockan increase of nearly fiftyfold, and five times more than all the
money invested in all 42 companies.
It was at the peak of his success in late
2000 and early 2001when Fortune named
him the most successful venture capitalist of all time and he later appeared on the

covers of two other national business mag

azines in a single weekthat he decided
to change. Shares in his most successful
company, Juniper Networks, were trading
at more than 40 times their offering price
a year and a half earlier. But he foresaw a
bleak near future for optical networking
equipment, in which he had made his
name. Just as telecom stocks, including
Juniper, were reaching all-time highs, he
warned in a keynote at a Goldman Sachs
conference that at least one of the industrys most famous companies would soon
be bankrupt. If I really believed what I
was saying, I told myself, then it was time
to look elsewhere, he recalls.
Around that time, a friend introduced
him to a space-research scientist with a
business idea unlike any Khosla had considered before: generating electric power
from water, oxygen, and natural gas.
Seven years later, the company, now
known as Bloom Energy, has yet to introduce its first product, but Khosla marks

his initial support for it as a turning

point in his career. I knew then I wanted
to go green, he says. In 2004, he struck
out on his own. I felt that energy needed
more exploring than a responsible venture fund should do, he says.
At Khosla Ventures, he has put his
own money into graphics-display, datacenter, and wireless technologies, but
environmental startups are what excite
him. He has been on a campaign to end
American dependence on petroleum
since oil was trading at a quarter of its
present price. Unlike his more famous
former partner at Kleiner Perkins, the
energetic John Doerrwho has choked
up onstage recounting his daughters
worries about climate changeKhosla is
unemotional about going green. He
hopes to improve the world by developing, for example, cleaner-burning coal
and cars that run leaner, but his more
fundamental motivations seem to be the
size of the potential market and, even

khoslas green
ventures
Most of Vinod Khoslas environmental startups are efforts to reduce
our dependence on petroleumboth by
making better use of oil and by finding
other sources of liquid fuel. The rest
address solar and geothermal power
and desalination of seawater. Very
broadly, his green-tech portfolio falls
into three clusters:

Fuel Efficiency: To lower the cost of

driving, EcoMotors and Nanostellar are
rethinking the diesel engine, Transonic
Combustion is improving fuel injectors,
and Tula is at work on new versions
of microprocessors that monitor the
operations of todays cars.
Alternative Fuels: Creating and

refining ethanol are Cilion, Coskata,

Ethos, Hawaii BioEnergy, LanzaTech,
Mascoma, Praj, and Range Fuels.
Amyris Biotechnologies, Gevo, KiOR,
and LS9 are trying to commercialize
other substitutes for petroleum.

Electric Power: Firefly Energy, Sakti3,

Ive never
been interested
in business,
Khosla says. Im a
techie nerd. What I
like is intellectual
stimulus.

and Seeo focus on batteries; Group IV,

Kaai, Lumenz, Soraa, and Topanga, on
lighting. Ausra, Infinia, and Stion do
solar power, Altarock is in geothermal,
and Great Point Energy aims to make
clean-burning gas from coal.

July/August 2008 Fast company 95

angel
choir

more important, the intellectual challenge of intractable problems.

Some Khosla Ventures deals are so preliminary that even he calls them imprudent science experiments rather than
companies. Science experiments are key
to solving the problems of global warming and energy independence, he says.
Incremental approaches will not work.
He has backed a company developing
automobile injection systems that could
double the fuel efficiency of gasoline
engines, if its technology works. He has
millions riding on efforts to make fuel
from materials other than corn, although
none has advanced beyond the pilot or
demonstration phase. He has put money
into a company that believes its microbes,
which can turn sugar into the basis for a
malaria drug, also can turn it into cheap
substitutes for gasolineand he did so
long before the founders had figured out
what the companys product would be.
Weve funded an incredible number of
things that would make no sense at all for
a traditional venture fund, he says.

hosla has long

seemed drawn to venture capital by the

chance to satisfy his
curiosity and to demonstrate that, whatever
the question, he has
the answer. Ive never
been interested in business, surprisingly,
he tells me. Im a techie nerd. What I like
96 Fast company July/August 2008

Josh Kopelman
Founder, Half.com (sold
to eBay). His First
Round Capital has
invested in StumbleUpon
(to eBay), among others.

Mike Maples Jr.

Cofounder of Motive.
Portfolio includes Digg
and Twitter..

What
makes Khosla
invincible is that
he doesnt care if
you dont think well
of him, says an
ex-partner.
is intellectual stimulus. Its fundamentally what I enjoy.
He was smitten by Silicon Valley as a
teenager in New Delhi in the 1970s. Every
week, he would rent and carefully read
worn-out copies of what was then the
startup publication of record, Electronic
Engineering Times. In the 1990s, he was
inspired to concentrate on optical communications while reading books on the
physics of opticsduring a vacation in
Hawaii. On another ty pical summer
break, he studied complex systems at the
Santa Fe Institute; to prepare, he worked
for six months with a tutor, brushing up
on calculus and linear algebra. When he
got interested in climate change, he prepared an extensive briefing book for
himself, loosely based on Danish political scientist Bjrn Lomborgs book, The
Skeptical Environmentalist.
Khoslas almost obsessive thoroughness carries over into his private life. In

Andy Bechtolsheim
Cofounder, Sun
Microsystems; founder,
Granite Systems (to
Cisco) and Kealia (to
Sun). Backed Google..

Brett Bullington
Early employee
at Excite. Investor
in MusicMatch and
Ludicorp, maker of
Flickr (both to Yahoo).

the late 1980s, before hiring a designer for

his new 12,000-square-foot home on a
woody hillside, he read more than 100
books on architecture. He likes to set
goals that can be measured. To remind
himself to spend more time with his eldest
child, he used to keep a jar of jelly beans
on his office desk, removing one each
Monday; those that remained were the
number of weekends until she would
go off to college. Although he travels
frequently, he requires himself to be
home for dinner at least 25 evenings a
month; his administrative assistant
monitors his performance. Sometimes his
own bookkeeping is quirky; in mid
conversation with me on a cell phone
several years ago, he pulled into his driveway, announced that he was officially at
home, and kept right on talking for an
hour. But when I ask how often he skied
last year, he answers immediately and
precisely: 45 days.
Fellow investors describe Khosla as
driven, arrogant, sometimes singleminded. He likes to argue and is so tenacious that his former partners often sent
him into negotiations to defeat, or at least
wear down, the opposition. What makes
him invincible is that he doesnt care if
you dont think well of him, says an expartner. After Khosla expressed skepticism about hybrid cars, he responded to
every last criticism of his position on the
Gristmill blog. I want to test my ideas,
he explains. I dont really care what they
think, but one in 10 responses is something I should consider.
Initially rejected by Stanford Uni

Reid Hoffman
Founder and chairman,
LinkedIn. Invested in
Digg, Flickr, IronPort
Systems (to Cisco),
and Six Apart.

Photographs: Liz Maples (Maples); Kim Kulish/Corbis (Bechtolsheim); Douglas C. Pizac/AP Photo
(Hoffman); Randi Lynn Beach/The New York Times/Redux (Andreessen); courtesy of Sherpato
Ventures LLC (Shriram); Katy Raddatz/Corbis (Thiel); James Duncan Davidson (Dyson)

Many venture funds

now are managing so
much capital that building
companies around an idea
and a few people is no longer
profitable enough; newborns need too little money
and too much other help. Only 4% of all venture
dollars go the youngest companies, half the level
of a decade ago and a quarter of the 1995 level.
The pullback has created an opening for Khosla
and a few others. Until recently, most angels have
been wealthy individuals who occasionally invest
in new companies. Lately, however, about 50,
located primarily in the San Francisco area, have
become full-time investorsprofessionalized and
almost institutionalized, in the words of one
successful practitioner, Ram Shriram. According
to Ron Conway, who has been an angel investor
for almost 20 years, Today, a handful of us operate
just like venture funds, except were putting in
our own money. Among that handful:

Marc Andreessen
Cofounder, Netscape,
Opsware (to HewlettPackard), and Ning.
An investor in Digg,
Plazes, and Twitter.

Ram Shriram
Early employee at Netscape.
Early investor in Google
and Shutterfly. As
Sherpalo Ventures, backed
Naukri and Plaxo.

versitys Graduate School of Business,

K hosla lobbied the deans office for two
years, sometimes making weekly calls,
until he was finally admitted. The best
way to get Vinod to do something, says
longtime friend Doerr, is to tell him you
dont believe he can do it.
But there is at least one skill Khosla
seems to lack. As his official biography
has it, while still in his twenties, Khosla
helped found two extraordinarily successful startups, Sun Microsystems and
an early design-automation company
called Daisy Systems. He wrote the business plan for Daisy while still a student at
Stanford, but others ran the company and
he soon left. At Sun, he was replaced early
on as chief executive by his former roommate in business school, Scott McNealy.
Khosla had no people sense, recalls a
Sun director of that era. He would go
through the factory floor and terrorize
people and shut down the line. There was
Vinods way and no other way. It drove his
cofounders crazy. (Khosla says that his
disagreements with the board were frequent and significant but his involvement
with production wasnt among them.) To
keep him with the company, the board
promoted him to chairman, but after he
boycotted four board meetings in a row,
sitting resentfully alone in his office, he
was fired. He retained a large stake in Sun,
however, as well as in Daisy, and their
public offerings made him rich.
His brief, troubled tenure in the executive suite rarely stops him from telling
startup CEOs what they ought to be
doing. At board meetings, hes insistent

Peter Thiel
Attorney, hedge-fund
manager, and PayPal
cofounder. As Founders
Fund, invested in
Facebook and IronPort.

Ron Conway
Investor in some 500
startupsin effect,
a venture-capital index
fund. Portfolio includes
Facebook and Zappos.

analy tical, unemotional, and often

blunt, says one fellow director. Another
describes him as massively intrusive.
A third, more charitably, says, He has
so much more energy than other people
that he can overwhelm entrepreneurs. . . .
If Vinods on the board, the CEO needs a
senior vice president in charge of managing him.

s we talk around

a table in his office,

K hosla pulls out a laptop a nd r u ns me
t h rough one of h is
numerous PowerPoint
presentations, flipping the slides quickly
until he reaches a diagram of possible
remedies for global warming. I get so
many proposals that unless I have in my
head what areas I will be interested in
ahead of time, it doesnt really work, he
tells me.
Hes a tireless promoter, speaking at
dozens of conferences a year. To contrast
himself with Al Gore, now a member of
Kleiner Perkins, Khosla likes to focus on
what he calls solutions, not problems.
The presentation he shows me, his favorite, is entitled Mostly Convenient Truths
From a Technology Optimistamong
them that global warming is a technology crisis, not a resource crisis and that
solutions to large problems require a
dash of greed.
To mainstream environmentalists,
some of his views are heretical. He con-

Esther Dyson
PC-industry personality
turned private investor in
Brightmail (to Symantec),
Del.icio.us and Flickr
(both to Yahoo).

tends that hydrogen fuels are a dead end.

Although he drives a hybrid car, he
believes that hybrids wont significantly
slow global warming. And hes convinced
that, in most places, energy from solar
panels will for many years be much too
expensive. There are only four problems
with global warming, he tells me, oil,
coal, cement, and steel. If we do those
four, were done.
Done, however, is for tomor row.
Despite his ambitious plans and hundreds of millions of invested dollars,
Khoslas companies are still in the early
stages. Calera is typical; it is only now
preparing to open its first cement plant,
on a 200-acre site next door to a gas-fired
electric-power utility. Carbon-dioxideladen exhaust from the power plant will
be captured and used to make and dry
the cement. Calera plans to be in pilot
production by the end of the year, in
commercial operation by 2010, and running 100 sites in North America five
years later.
As our meeting comes to an end, Khosla
closes his laptop and heads back to work
on the biomass paper. An academic is
helping him with this one, which he
hopes will be accepted by Science or
Nature, the prestigious scientific weeklies.
Think of it, he says as he turns away.
Publication in a peer-reviewed journal.
What other venture capitalist would even
try to do that? FC
Richard Shaffer writes about technology and
economics from New York.
> Feedback: loop@fastcompany.com

July/August 2008 Fast company 97

angel
choir

more important, the intellectual challenge of intractable problems.

Some Khosla Ventures deals are so preliminary that even he calls them imprudent science experiments rather than
companies. Science experiments are key
to solving the problems of global warming and energy independence, he says.
Incremental approaches will not work.
He has backed a company developing
automobile injection systems that could
double the fuel efficiency of gasoline
engines, if its technology works. He has
millions riding on efforts to make fuel
from materials other than corn, although
none has advanced beyond the pilot or
demonstration phase. He has put money
into a company that believes its microbes,
which can turn sugar into the basis for a
malaria drug, also can turn it into cheap
substitutes for gasolineand he did so
long before the founders had figured out
what the companys product would be.
Weve funded an incredible number of
things that would make no sense at all for
a traditional venture fund, he says.

hosla has long

seemed drawn to venture capital by the

chance to satisfy his
curiosity and to demonstrate that, whatever
the question, he has
the answer. Ive never
been interested in business, surprisingly,
he tells me. Im a techie nerd. What I like
96 Fast company July/August 2008

Josh Kopelman
Founder, Half.com (sold
to eBay). His First
Round Capital has
invested in StumbleUpon
(to eBay), among others.

Mike Maples Jr.

Cofounder of Motive.
Portfolio includes Digg
and Twitter..

What
makes Khosla
invincible is that
he doesnt care if
you dont think well
of him, says an
ex-partner.
is intellectual stimulus. Its fundamentally what I enjoy.
He was smitten by Silicon Valley as a
teenager in New Delhi in the 1970s. Every
week, he would rent and carefully read
worn-out copies of what was then the
startup publication of record, Electronic
Engineering Times. In the 1990s, he was
inspired to concentrate on optical communications while reading books on the
physics of opticsduring a vacation in
Hawaii. On another ty pical summer
break, he studied complex systems at the
Santa Fe Institute; to prepare, he worked
for six months with a tutor, brushing up
on calculus and linear algebra. When he
got interested in climate change, he prepared an extensive briefing book for
himself, loosely based on Danish political scientist Bjrn Lomborgs book, The
Skeptical Environmentalist.
Khoslas almost obsessive thoroughness carries over into his private life. In

Andy Bechtolsheim
Cofounder, Sun
Microsystems; founder,
Granite Systems (to
Cisco) and Kealia (to
Sun). Backed Google..

Brett Bullington
Early employee
at Excite. Investor
in MusicMatch and
Ludicorp, maker of
Flickr (both to Yahoo).

the late 1980s, before hiring a designer for

his new 12,000-square-foot home on a
woody hillside, he read more than 100
books on architecture. He likes to set
goals that can be measured. To remind
himself to spend more time with his eldest
child, he used to keep a jar of jelly beans
on his office desk, removing one each
Monday; those that remained were the
number of weekends until she would
go off to college. Although he travels
frequently, he requires himself to be
home for dinner at least 25 evenings a
month; his administrative assistant
monitors his performance. Sometimes his
own bookkeeping is quirky; in mid
conversation with me on a cell phone
several years ago, he pulled into his driveway, announced that he was officially at
home, and kept right on talking for an
hour. But when I ask how often he skied
last year, he answers immediately and
precisely: 45 days.
Fellow investors describe Khosla as
driven, arrogant, sometimes singleminded. He likes to argue and is so tenacious that his former partners often sent
him into negotiations to defeat, or at least
wear down, the opposition. What makes
him invincible is that he doesnt care if
you dont think well of him, says an expartner. After Khosla expressed skepticism about hybrid cars, he responded to
every last criticism of his position on the
Gristmill blog. I want to test my ideas,
he explains. I dont really care what they
think, but one in 10 responses is something I should consider.
Initially rejected by Stanford Uni

Reid Hoffman
Founder and chairman,
LinkedIn. Invested in
Digg, Flickr, IronPort
Systems (to Cisco),
and Six Apart.

Photographs: Liz Maples (Maples); Kim Kulish/Corbis (Bechtolsheim); Douglas C. Pizac/AP Photo
(Hoffman); Randi Lynn Beach/The New York Times/Redux (Andreessen); courtesy of Sherpato
Ventures LLC (Shriram); Katy Raddatz/Corbis (Thiel); James Duncan Davidson (Dyson)

Many venture funds

now are managing so
much capital that building
companies around an idea
and a few people is no longer
profitable enough; newborns need too little money
and too much other help. Only 4% of all venture
dollars go the youngest companies, half the level
of a decade ago and a quarter of the 1995 level.
The pullback has created an opening for Khosla
and a few others. Until recently, most angels have
been wealthy individuals who occasionally invest
in new companies. Lately, however, about 50,
located primarily in the San Francisco area, have
become full-time investorsprofessionalized and
almost institutionalized, in the words of one
successful practitioner, Ram Shriram. According
to Ron Conway, who has been an angel investor
for almost 20 years, Today, a handful of us operate
just like venture funds, except were putting in
our own money. Among that handful:

Marc Andreessen
Cofounder, Netscape,
Opsware (to HewlettPackard), and Ning.
An investor in Digg,
Plazes, and Twitter.

Ram Shriram
Early employee at Netscape.
Early investor in Google
and Shutterfly. As
Sherpalo Ventures, backed
Naukri and Plaxo.

versitys Graduate School of Business,

K hosla lobbied the deans office for two
years, sometimes making weekly calls,
until he was finally admitted. The best
way to get Vinod to do something, says
longtime friend Doerr, is to tell him you
dont believe he can do it.
But there is at least one skill Khosla
seems to lack. As his official biography
has it, while still in his twenties, Khosla
helped found two extraordinarily successful startups, Sun Microsystems and
an early design-automation company
called Daisy Systems. He wrote the business plan for Daisy while still a student at
Stanford, but others ran the company and
he soon left. At Sun, he was replaced early
on as chief executive by his former roommate in business school, Scott McNealy.
Khosla had no people sense, recalls a
Sun director of that era. He would go
through the factory floor and terrorize
people and shut down the line. There was
Vinods way and no other way. It drove his
cofounders crazy. (Khosla says that his
disagreements with the board were frequent and significant but his involvement
with production wasnt among them.) To
keep him with the company, the board
promoted him to chairman, but after he
boycotted four board meetings in a row,
sitting resentfully alone in his office, he
was fired. He retained a large stake in Sun,
however, as well as in Daisy, and their
public offerings made him rich.
His brief, troubled tenure in the executive suite rarely stops him from telling
startup CEOs what they ought to be
doing. At board meetings, hes insistent

Peter Thiel
Attorney, hedge-fund
manager, and PayPal
cofounder. As Founders
Fund, invested in
Facebook and IronPort.

Ron Conway
Investor in some 500
startupsin effect,
a venture-capital index
fund. Portfolio includes
Facebook and Zappos.

analy tical, unemotional, and often

blunt, says one fellow director. Another
describes him as massively intrusive.
A third, more charitably, says, He has
so much more energy than other people
that he can overwhelm entrepreneurs. . . .
If Vinods on the board, the CEO needs a
senior vice president in charge of managing him.

s we talk around

a table in his office,

K hosla pulls out a laptop a nd r u ns me
t h rough one of h is
numerous PowerPoint
presentations, flipping the slides quickly
until he reaches a diagram of possible
remedies for global warming. I get so
many proposals that unless I have in my
head what areas I will be interested in
ahead of time, it doesnt really work, he
tells me.
Hes a tireless promoter, speaking at
dozens of conferences a year. To contrast
himself with Al Gore, now a member of
Kleiner Perkins, Khosla likes to focus on
what he calls solutions, not problems.
The presentation he shows me, his favorite, is entitled Mostly Convenient Truths
From a Technology Optimistamong
them that global warming is a technology crisis, not a resource crisis and that
solutions to large problems require a
dash of greed.
To mainstream environmentalists,
some of his views are heretical. He con-

Esther Dyson
PC-industry personality
turned private investor in
Brightmail (to Symantec),
Del.icio.us and Flickr
(both to Yahoo).

tends that hydrogen fuels are a dead end.

Although he drives a hybrid car, he
believes that hybrids wont significantly
slow global warming. And hes convinced
that, in most places, energy from solar
panels will for many years be much too
expensive. There are only four problems
with global warming, he tells me, oil,
coal, cement, and steel. If we do those
four, were done.
Done, however, is for tomor row.
Despite his ambitious plans and hundreds of millions of invested dollars,
Khoslas companies are still in the early
stages. Calera is typical; it is only now
preparing to open its first cement plant,
on a 200-acre site next door to a gas-fired
electric-power utility. Carbon-dioxideladen exhaust from the power plant will
be captured and used to make and dry
the cement. Calera plans to be in pilot
production by the end of the year, in
commercial operation by 2010, and running 100 sites in North America five
years later.
As our meeting comes to an end, Khosla
closes his laptop and heads back to work
on the biomass paper. An academic is
helping him with this one, which he
hopes will be accepted by Science or
Nature, the prestigious scientific weeklies.
Think of it, he says as he turns away.
Publication in a peer-reviewed journal.
What other venture capitalist would even
try to do that? FC
Richard Shaffer writes about technology and
economics from New York.
> Feedback: loop@fastcompany.com

July/August 2008 Fast company 97