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Extended Interview: Venture Capitalist Vinod Khosla

Vinod Khosla is an influential venture capitalist in Silicon Valley. He was a cofounder of Sun Microsystems and later a partner at the venture capital firm Kleiner Perkins, which helped fund Google and Amazon. In 2004 he started his own company, Khosla Ventures.

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    This is an interview with Vinod Khosla, venture capitalist. Where do you think clean tech or green tech is right now? Is there a boom going on or is it just a lot of hype?


    You know it's interesting, because I don't even like those terms anymore. Because they refer to interesting little markets like hybrids and batteries and solar cells and wind farms and corn ethanol and biodiesel, but that's not where the real opportunity is.

    Those are nice markets, nice investments, people make money at it, but the real big opportunities are changing the infrastructure of society. We are talking about things like the $200 billion engines market for automobiles and trucks, things like lighting, billions of dollars spent on lighting. We can completely change that. Cement. Huge multi-hundred billion dollar market that needs to change. Glass. Then there's replacing all of the oil in the world. Hundreds of billions if not trillions of dollars worth of fuel that needs to be replaced. And there's gasoline, there's diesel, there's jet fuel.

    And then there's electric power generation. Not the kind you get from a PV cell, that's a good market, but the stuff you can actually store and ship and the utilities meet it at the prices at which utilities can buy power. This is real scale. These are the prices that I call the Chindia price. We are even trying now to replace this renewable coal with this renewable technology because it's cheaper, not because it's greener. So power generation, to replace coal. Oil replacements and then efficiencies in engines and housing and the way we build houses is a very interesting market.


    But you put all of those things together, it sounds to me like if, if they're all going on, that that's a boom.

    VINOD KHOSLA Well, it's a massive opportunity. There's no doubt in my mind over the next 25 years how we drive, how we build our houses, how we fly, how we build our buildings, will all change. And that's essentially, like I said, the infrastructure of society and just when 6 or 8 billion people in the developing part of the world are starting to accelerate in their consumption of energy, these technologies are coming on and that's an opportunity. That's massive long term opportunity.

    I have to add a word of caution. It's an economic boom. It's probably the largest economic opportunity we've seen in a long time, maybe ever. But there are also likely to be bubbles. Anytime there's a boom, there is a bubble and I like to think not in terms of stock market prices. Because when there's a boom everybody gets interested, you get false acceleration […] So I suspect sometime in the next 10 years we'll see a bubble on stock prices. But it won't change the rate of the development of the basic technologies.


    It doesn't look like it's hurt you in, if you were involved in financing . . .


    Well […] in this area one has to be careful and thoughtful. One can't just follow the herd. The fact is lots of people got hurt in the dot com bubble, in the telecom bubble; lots of people made money too.

    The most important part of that equation as far as society is concerned is we did not change the rate at which the internet was going. Internet traffic didn't follow stock prices. It kept increasing. In 2001 after the crash, 2002, every year internet bandwidth has increased, usage has increased, telecom infrastructure has increased and so we have too large a tendency to look at the symptom of stock prices which is almost irrelevant to the basic businesses we are trying to build.