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Rabois: Ramp possesses unique AI capabilities in finance that competitors lack
“They understood immediately why RAMP had a lot of the secret sauce to be successful in using AI in finance and that nobody else on the planet does. And so they were really excited to meet with actually Eric and Kareem, almost independent of investing. It was m…”
Rabois: Khosla systematically matches founders to partners, unlike Founders Fund
“Founders fund, we do, we did it too, but more on an ad hoc basis, not systematic, but at KVU is very systematic, like top down.”
Rabois: Hid Faire seed board seat from Khosla partners for a year
“Fair came back and said, Max said to me, you know, we chatted, I chatted with my co-founders, and, you know, we'll say yes, but you have to join the board, and having learned and been burned by the Robinhood experience, I never really told my partners that I w…”
Khosla: Cheaper, 70% less-carbon cement plants will become operational in 2023
“Already I can say the cement we are producing will be 70% less carbon, and our first plants will be operational this year and cheaper. Then traditional Portland cement.”
Friedberg: Andreessen Horowitz pioneered Silicon Valley's over-capitalization strategy
“Andreessen was the first to kind of make the statement where Mark Andreessen said, when I was raising my Series B, Andreessen Horowitz actually gave me a term sheet. So did Founders Fund and Kosla, and I went with Kosla. Andreessen was like, look, we're going …”
Khosla Ventures bans IRR calculations when evaluating potential investments
“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.”
Khosla Ventures Passes on Founders Who Discuss Exits in Initial Pitch Slides
“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.”
Kaul: VCs are judged on net returns above 20% IRR, not win rates
“In this business, being conservative is a real problem, because we're in the business of returning 20% or greater net IRR to our investors, and we don't get judged by how many companies succeed out of the number of companies we invest in.”
Khosla Ventures' cleantech portfolio will generate a positive overall return
“We will end up positive, and there's a number of companies that are worth north of a few billion dollars there that are making real impacts.”
Khosla Ventures has never had a partner deal veto in 17 years
“In my 17 years being here, I can't remember a veto. We don't really even have a number for a veto.”
Seed Investments From Multi-Stage VC Funds Carry Major Signaling Risk
“One thing we did do that has a trade-off is we took on some signaling risk by including large funds like Thrive, And Coastal and our seed round that can cause an issue down the line where if they don't end up supporting you, it makes it challenging for a new i…”
Vinod Khosla: Business building is like marriage, demands choosing one model
“Business and product building is very similar to your marriage. You have many opportunities before your marriage, but to be happy, you should choose one and really focus. And my advice to you, choose one business model and be really focused.”
Rabois: Passed on Robinhood seed after Khosla banned seed board seats
“I had already, like, locked in a turn sheet to lead the series seat for Robin Hood chilling at 20 post, which was pretty expensive, but they came back and Really wanted me to join the board in the seed round, and this was in maybe my second year at KB, so I as…”
Rabois: Khosla Ventures' $3B fund includes $415M for seed investing
“So KV, although that's a, sounds like a big number, four hundred fifteen million of that is for seed investing, 1.5 billion or so is for venture, and only about eight or nine hundred million is for growth.”
Khosla: Decade-old clean tech bets like QuantumScape returned 5-10x multiples
“If I look across our portfolio, some of the investments we made more than 10 years ago are, you know, there's a whole number of them. QuantumScape, Verdeji, Lanza Tech, Impossible Foods, that are five to 10 X multiples though they took a longer time to get the…”
Rabois: A single stock sale returned Khosla Ventures' $1.3B Fund V
“Now, I have a colleague at KB who's involved in one company that was trading really, really well, and he was very savvy. And decided to sell. That decision alone returned KB-Five, which is a 1.3 billion dollar fund.”
Khosla Ventures passed on hundreds of millions in profits over moral values
“We will not make an investment that's negative for society. We might make some neutral ones, 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 va…”
Khosla: Company Building Must Precede Financial Returns in Venture Capital
“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 come second, building something of significance comes first.”
Khosla Ventures allocates one-third of capital to non-traditional tech sectors
“And I think one of the things I really love about our firm is that though we do invest half or more in traditional venture areas. We also spend about a third or so of our allocation in areas that have yet to be disrupted by technology, don't have venture there…”
Kaul: Khosla's biggest wins came from regulated sectors like healthcare and food
“Square is in the banking industry. Gardent and Oscar have been in the healthcare industry. Impossible Foods is in the food industry. These are, you know, very, very regulated markets, and they've been some of our biggest wins.”
Rabois: VCs cannot succeed by focusing solely on winning investments
“I don't think you can do the just focus on your winners strategy. I think that causes real problems for you in the future as an investor, because by definition, the number of like non super successful companies you're going to invest in is greater than the num…”
Rabois: I don't build underwriting spreadsheets or target 3x-5x multiples
“I don't like build spreadsheets and I try to underwrite to three X, four X, five X, not what I do at least.”
Rabois: Stripe Series C was Khosla's highest entry price ever
“At the time at KV, when we invested in Stripe Series C, it was an order of magnitude more expensive than the entry price for any investment in the history of KV.”
Rabois: Sponsoring non-standard venture deals consumes internal social capital
“If I want to do something that's very not standard or very controversial or not expected, I'm kind of burning and consuming some social capital. Now, if I make the right call that That gets paid back with interest, and you know, the next time I want to make a …”
Khosla Ventures bans investments in gambling, debt collection, and ad tech
“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. We basically don't invest in advertising tools now, which I think are being used fairly n…”
Khosla Ventures provided Impossible Foods' initial $3M seed check
“Nine years ago in our office, we gave Pat the first three million bucks.”
Khosla Ventures invested in Square's Series A at a $30M valuation
“You know, I think when we invested in the Series A of Square, I think it was around a thirty million dollar valuation. It was Jack and Jim in a PowerPoint.”
First Round flexed on valuation to back Square at $40M pre-money
“So when Jack was starting square and we met with him, he said, well, you know, if you thought Twitter was expensive, this is going to be even more expensive. And his first round was at a 40 pre and we learned our lesson and we were fortunate enough to be the S…”
Adrian Aoun: Founders Fund and Khosla Ventures treat founders well during downturns
“The investors that I went with in forward, people like Founders Fund or Kosla, Keith Raboy at Kosla, who I know has been on your show. These are people that when times get tough have been good actors.”
Rabois: Khosla Ventures holds hours-long Monday partner meetings for vigorous debate
“So we had very extensive partner meetings every Monday for hours at a time, and we vigorously debated new investments as well as the Impact and a potential upside of the current portfolio.”
Rabois: Vinod Khosla published papers on AI replacing doctors before 2013
“He was on the, you know, the AI crusade before I even joined KV in 2013. He published papers about, you know, how AI was going to replace doctors in medicine, and this is like before I joined KV, so way ahead of the curve.”
Khosla: Khosla Ventures invested in OpenAI and Commonwealth Fusion simultaneously
“You know, we invested in OpenAI and we invested in Conwell Fusion about the same time.”