Vinod Khosla: The King of Green Investing

by Dave

Vinod KhoslaImage via Wikipedia

FastCompany.com

Over the past four years, Vinod Khosla has become the world’s foremost investor in environmental 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 companies — including outfits that are pursuing the most innovative, but not yet commercially viable, approaches to serious problems such as global warming. During nearly two decades at Kleiner Perkins,  he was most closely involved with 42 startups. … And measured by return on
invested capital, Khosla’s record has been outstanding. His half-dozen best deals at Kleiner Perkins multiplied $314 million in investments into $15 billion in cash and stock — an 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 2001 — when Fortune named him the “most successful venture capitalist of all time”

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,
data-center, 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. Khosla 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 more
important, the intellectual challenge of intractable problems.

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 optics — during a vacation in
Hawaii. On another typical 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 Bjørn
Lomborg’s book, The Skeptical Environmentalist.

The presentation …, his favorite, is entitled “Mostly
Convenient Truths From a Technology Optimist
” — among them that global
warming is “a technology crisis, not a resource crisis” and that
solutions to large problems require “a dash of greed.”

“There are only four problems with global warming,” he tells me,
“oil, coal, cement, and steel. If we do those four, we’re done.”

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