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Yesterday, we wrote that veteran Silicon Valley Investor Vinod Khosla, who is in India to review the progress of Khosla Labs, is bullish about India. We then followed it up with why Khosla is bullish about India. Now we come to the most important part. What is his investment mantra? From the last two posts, it is quite clear that he is kicked about mobile health. But what is the broader agenda? Here’s what he had to say on it.
1. Areas of Interest
Machine learning, data mining and what used to be called artificial intelligence. For the first time, we have enough computing power and enough data that make it viable. It doesn’t matter if you are trying to build self driving cars like Google or applying it to healthcare.
Data mining companies are applying themselves on Genomics, finding terrorists, better search for oil and gas and almost any area that you look. Along with this, you are starting to see a lot more sensors. That’s going to be a very rich ecosystem in the next 10 years.
In the next 10 years, it will cause as much change as Mobile has caused in the last 10 years. Imagine another mobile like ecosystem popping up. That’s why it is great to be in entrepreneurship.
Mobile & Internet continue to be exciting: Things like Pinterest, Dropbox, AirBnB are really great ideas. What really amazes me is mobile health. You can slash the costs of health by 90% in India. That may take 10-15 years but my bet is that it will happen in places like India which is short of resources. Health services delivered through your mobile phone will be of better quality than you might be able to get in the US. It will be so cheap that it is almost free.
Agriculture, food, health, space, the world is ripe for innovation if you have skills and are willing to allow yourselves to try.
2. Belief Based Investing
I don’t like to invest in anything that is bad for society. So you won’t see me invest in a gambling business. I don’t care how much money it makes us. If I can make more of an impact and less money, I’ll prefer to do that. I’m very open about that and I don’t tell investors that I’m trying to maximize profits. In the last 100 investments we’ve made, never calculated our rate of return. I’m in no hurry. It is great fun to innovate, cause economic disruption. Startups are very hard and sometimes very depressing. But it is very rewarding. We have a special fund called Khosla Impact which backs only companies that work with the bottom of the pyramid.
3. What do you look for before investing?
More than anything else, we look for people. We started Khosla Labs because we have a team. People always come number 1.
Second thing that matters: Are they trying to make something in an area that has a large success. I don’t mind failing. I like the more risky start ups that are trying to do the bigger bolder things.
Third: Do people have some advantage in going after the marketplace. It essentially boils down to the first two.
4. Fail in Small Ways
I only like to do unreasonable things. George Bernard Shaw said that the world only makes progress because of unreasonable men. I find most people are so afraid to fail that they don’t try things that they are capable of. This has become a big issue for me. I encourage people to try. Allowing yourselves to fail in lots of small ways and adjusting ourselves to what works is how it is done. Fail in small ways where it can’t hurt you in a big way.