Vinod Khosla: Silicon Valley’s persistent provocateur

One man who will be deeply disappointed with Donald Trump’s victorious run in the US presidential election will be Vinod Khosla. In the run-up to the elections, Khosla engaged in a bitter and public debate with Trump’s principal backer Elon Musk on the latter’s platform X, arguing that “No delusional person would be president, and this guy is certifiable with no values.” For this, he invited abundant vitriol from Musk and criticism from a section of the Republican party which he had supported and voted for in the past before turning into an independent.

But Khosla has rarely been daunted by criticism. For the last 15 years, the billionaire investor has battled local people and the state government in San Francisco all the way to the US Supreme Court to restrict access to a beach near his home. Khosla claims that the fight to stop public access to the beach was a matter of principle and fairness.

The son of an Indian army officer, he became the symbol of immigrant Indian success in the US long before Indian-American business executives became the choice of American boardrooms. But it wasn’t a success-at-the-first attempt for the electrical engineering graduate from IIT Delhi. An initial venture in 1975 - a soy milk company to service people in India who did not have refrigerators - failed to take off. It did little to douse his entrepreneurial impulses.

Moving to the US on a full scholarship for his master’s degree in biomedical engineering from Carnegie Mellon University, he went on to do an MBA from the Stanford University Graduate School of Business. Even in this, he displayed doggedness (some call it cussedness), which is a feature of his life. His initial application to Stanford for admission to its MBA program was rejected for lack of work experience. Khosla promptly went and took up two jobs and after a year, reapplied, only to be rejected again. Though by then he had been accepted by Carnegie Mellon for an MBA program, he kept hounding the admissions officers till finally a dropout by another student finally earned him a spot at Stanford where he received an MBA degree in 1980.

The choice of Stanford was strategic. Silicon Valley was taking off, with startups like Microsoft and Apple showing the way. In December 1980, Apple’s $1.3 billion IPO lit the fuse of inspiration for a thousand startup dreams. Significantly, the startup fever was driven by the emergence of venture capital firms like Kleiner Perkins and Sequoia Capital, a development that had a huge bearing on Khosla’s future.

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Significant ventures

His first venture in Silicon Valley, Daisy Systems which made computer-aided design systems for electrical engineers, did achieve key revenue and profit milestones followed by a reasonably successful IPO. But Khosla wasn’t satisfied and he left to set up Data Dump in 1981 with a former Stanford classmate. This venture flopped and the prudent thing might have been to take any of the well-paying jobs that beckoned a brilliant engineer with an MBA who had won the Stanford Dean’s outstanding student recommendation.

Instead, Khosla persisted with entrepreneuring, co-founding Sun Microsystems (derived from the initials of the Stanford University Network) on February 24, 1982 with Scott McNealy and Andy Bechtolsheim, who were also graduate students at Stanford. Soon after they were joined by Bill Joy from Berkeley. Funding came predictably from Kleiner, Perkins, Caufield, and Byers (KPCB) and Sun’s workstations based on its Java programming language, the Solaris operating system and Sparc microprocessor raked up a billion dollars in revenue over the next five years.

An IPO followed in 1986 and Sun was well on its way to become the powerhouse that would see its market cap soar to over $150 billion at the time of the dotcom boom in 2000 before it collapsed spectacularly and was bought by Oracle in 2010 for $7.4 billion.

Khosla, of course, had moved on before that, leaving Sun in 1986 to work with KPCB on a part-time basis for the first two years. Among his investments here the only real success was in chipmaker Nexgen. But the semi-break served a useful purpose with Khosla making more trips to his home country India where he moved his family so that his four children could explore their roots.

This was a phase when Khosla participated actively in panel discussions on the newly liberalized economy’s various issues. One such that caught his attention was the poor communications infrastructure and marrying that with his belief that the nascent internet was about to change the world, Khosla made his first significant move as an investor placing a small bet on a company called Excite which was bought by Home Corp for $6.7 billion in 1999. Khosla was on his way and soon another $8 million investment for a 30% stake in Cerent turned into multi-million dollar returns when Cisco Systems bought out the optical networking startup for $8 billion.

In 2004, his goal of funding “science experiments” led him to set up Khosla Ventures to focus on both for-profit and social impact investments. Its philosophy is best explained in a paper tiled Reinventing Societal Infrastructure with Technology that he penned in 2018 wherein he says “The future and my admiration belongs to those dreamers who think of these unreasonable possibilities, who aren’t afraid of the high probability of failure, and who take, bold and, radical risks.”

Just short of 70, Khosla, who is married to his childhood sweetheart Neeru, is still as feisty as ever. He seemed to make peace with Musk after Trump’s win, but that may just be a temporary cessation of hostilities.

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