Vinod Khosla: College Degrees Are Becoming Useless (Transcript)

There’s two ways. One is you don’t want to fail, which fundamentally means you don’t want to take risks, which fundamentally means you’re not going to do anything new. That’s perfectly reasonable thing to do. And people get comfort in that certainty. That certainty is of very little value to me.

What I like is a shot at doing the impossible. And I like to say skeptics never did the impossible. Think about it. If you’re a skeptic, you’re always finding reasons why something won’t work. If you’re starting your company, if you paid attention to all the things you did, didn’t know, or didn’t know you didn’t know, you wouldn’t start the company and where would you be? You’d have a steady job in some corporation and that’s fine, it’s a perfectly respectable thing to do. But you wouldn’t be creating anything new.

Skepticism vs. Contrarian Thinking

NIKHIL KAMATH: Would you say a skeptic and a contrarian investor have a lot in common. A contrarian is skeptical about the incumbent norms of the day.

VINOD KHOSLA: I would say no. Skeptics to me are always saying why things can’t be done. Entrepreneurs, investors, a whole different thing. I don’t really think of myself as an investor are always saying what if something was possible? And in the technology world it’s particularly important because I’m never certain. But I know what technology makes possible quite well. I can make reasonable guesses at what the world could be. Then you work to make that world happen. If you happen to make it happen, it’ll be successful whether you’re an entrepreneur or an investor. I always think about my life that way. If something’s possible, I want to make it happen.

Electric cars were always possible. You knew you could put a battery and a motor in a car instead of a gasoline engine or a diesel engine. But nobody in the automotive business was going to do it. And if they did, they made half hearted poor attempts. General Motors spent billions of dollars trying to do a half assed job at an electric vehicle, EV1, EV2. Toyota did the low risk approach of adding a hybrid engine. You don’t create the different world that way, you increment it.

There is a world of incremental innovation and lots to do there. But people who want to be in the safe domain do that. Elon Musk created an electric vehicle, almost went bankrupt a few times in doing it. But he followed his belief there and then made the world happen. I don’t believe if we’d have electric cars dominant today be 25% of all car sales in California today if Elon hadn’t made that world happen.

So every expert in every large automotive company or every McKinsey study would say the opposite of what actually happened. It’s sort of this. If it’s possible, you have to make it happen. It doesn’t matter whether you’re talking about cars or rockets or the Internet. The telco companies at AT&T and all those people had such naive ideas about what the Internet should be. They told me in 1996 when we started Juniper, they would never adapt TCP/IP. And I do believe if Pradeep Sindhu and I hadn’t started Juniper, there would be no TCP/IP in the public Internet because Cisco was not going to develop anything. And any of the traditional telco suppliers did the simple thing of listening to their customers, which is a good habit if you’re trying to be incremental. A really bad thing if you’re trying to be revolutionary for everybody who doesn’t know you.

Making the Impossible Happen

NIKHIL KAMATH: Vinod, if I were to describe you in 60 seconds, I would say a very precocious, academically gifted Indian boy who went to IIT Delhi, came into the US, picked two other friends and started Sun Microsystems and then picked a great bet after the liquidity event of selling sun, or part of it in picking TCP/IP over the ATM protocol of the time. And then ever since then, you’re more the kind of investor who’s betting on edge cases, who’s probably taking 100 bets knowing 95 will fail, but the 5 will give you exponential returns. Is that a good way to describe you?

VINOD KHOSLA: I don’t think so. That’s not how I think of myself. I think no matter what environment you’re in now, what’s key is I got sparked by reading a single article about Andy Grove starting Intel in Silicon Valley. And that must have been 1970 or somewhere around there. I was 15, 16, something like that, and then sort of not stopping there saying, how do I make this happen?

I’ll give you examples. When I started at IIT Delhi, there wasn’t a single computer programming class at any IIT anywhere in India. So what did I do? I said, that’d be cool to do. So we started a computer programming club and started the first real class in programming at any IIT as a hobby club in IIT Delhi. There was four of us and we sort of made that happen.

I was talking about biomedical engineering. What happened? I got curious about as an electrical engineer, the electrical phenomena in the human body, the heart, the brain, the nervous system. And so we started, literally started with three or four of us, the biomedical engineering program at IIT Delhi. It wasn’t an official sanctioned thing. And you say to people at 16 or 17, you can make new programs happen at IIT Delhi as a student or new programming happen. It’s not what people imagined possible, but I just sort of had this tendency to not accept the things as they were.

So I think if I were to characterize myself if I thought something should happen, whether it’s starting a company in Silicon Valley or starting a biomedical engineering program or the first ever computer programming class in any IIT, you just worked at making that happen and be clever about how to make it happen, not say, the usual thing people would say is they should start a computer programming class. But they is. Who’s they? Either you do it or you don’t and make it happen.

And it’s no different. That was a microcosm of what Elon Musk said they should be electric vehicles and I’ll create them because they, which is General Motors and Ford and Volkswagen aren’t going to make that. So it’s this characteristic of imagining what’s possible, especially technologically, and then just making them happen.

Sun was the same way. My first startup before Sun, Daisy Systems was the same way. And there were, so you take on, imagine the possible and try and make it happen and don’t give up when it fails, even in a single journey. And five things could have failed at any one of these efforts, definitely at sun or others, but never gave up. I wanted to come to Silicon Valley. Stanford rejected me twice, said no to admitting me, and I always found a way to keep at it. So persistence, sort of passion for a vision, and then persistence through being kicked in the shins many, many times. You don’t give up on that.

The Purpose of Passion

NIKHIL KAMATH: To what end, Vinod?

VINOD KHOSLA: Because it’s your passion, right? And I think the most important thing in life is a passion for a vision to make it happen. And then the persistence to make it happen as you go through the ups and downs and frankly also being smart about how you approach it, what teams you assemble.

NIKHIL KAMATH: Do you think that’s the point of life today?

VINOD KHOSLA: Well, everybody should have a different point in life. If I’m a great artist, my point in life may be just great painting. And if I’m a great artist, my point may be great paintings I love or it could be great paintings that go for great prices at the New York Art Auction. I believe those are not the genuine artists. The artist who paints for themselves is the genuine artist. It’s whatever mission you set for your life. And I think most happiness and most troubles and travails come from pursuing a mission.

The Next 20 Years: A Vision for Impact

NIKHIL KAMATH: That’s a great way to describe it. If you can tell me today at 70, Vinod, what is your passion? What are you looking forward to in life?

VINOD KHOSLA: I expect in the next 20 years at age 70, if I’m healthy, because that’s one thing nobody controls, I expect I will do more effect more change in the world in the next 15, 20 years than I’ve done in the last 50 years of my life. That’s very simply the goal and it’ll be to make certain things happen that I’m passionate about.

NIKHIL KAMATH: And why is that the goal? To effect change in the world? Is it posterity?

VINOD KHOSLA: No. You know, I believe when you die, you die. And I’ll be buried under some tree, my ash is sprinkled somewhere.

NIKHIL KAMATH: Or logically, that would mean that you have to improve the qualitative nature of life today versus worry about the change you create.

VINOD KHOSLA: Well, so I think the question to ask and the question I say is, let’s say 25 years from now, age 95. My father lived to age 95, so that’s a good metric. If I’m lying on my deathbed, what do I wish I’d spent the last 25 years on?

Almost certainly it won’t be I wish I made more money. Almost certainly it wouldn’t be I wish I played more golf or went sailing or spent more time at resorts. None of that, I think, will matter to me or I owned another house.

NIKHIL KAMATH: Do you suspect it would be the change you brought in the world?

VINOD KHOSLA: I think it’ll be how satisfied my brain is with what it was able to do and how I utilize my brain.

Family First, Hard Problems Second

NIKHIL KAMATH: I think a lot of people, when asked the same question on their deathbed, they tend to say things like, “I wish I spent more time with my friends. I wish I loved more. I wish I was more myself and didn’t have to put on a mask or a projection.”

VINOD KHOSLA: So that’s really important. So by far. I still always prioritize family over work.

NIKHIL KAMATH: I know your family.

VINOD KHOSLA: Yeah, you met them. Yes, at the giving pledge. The nobody would say I don’t spend enough time there. And I love spending time with my dogs, in fact, so I do prioritize that thing. But I can’t impose my time on my kids. So how much time I spend is more constrained by them, not by me.

And I’m very close to all my kids, so yes, it’s what matters to you. Family definitely is right at the top. But going drinking with buddies, that’s just. I don’t like drinking anymore.

NIKHIL KAMATH: Did you ever?

VINOD KHOSLA: No, I never did. But you know, I didn’t mind going out for a beer. I don’t do that anymore. What I really enjoy is whatever time I can spend with family and helping the people I care about in any way. But that’s more constrained by their time, not by my time.

And then it’s use my brain to solve hard problems that nobody else will work on. So it’s additionality in that sense, if I can work on things. Look, I’m almost certain Fusion Commonwealth Fusion wouldn’t have started. And the world needs fusion. Yes, that’s a good thing to do. But it’s also like selfish for me because it’s a hard problem and the hardness is what I love solving for.

NIKHIL KAMATH: Why is that, Vinod? Why do you like a harder problem?

VINOD KHOSLA: Why do people like climbing Mount Everest instead of a smaller mountain?

NIKHIL KAMATH: Ego. So few can do it. So I did it. It’s a big deal.

VINOD KHOSLA: Well, so you could call it that. Yeah. I like things that will have a large impact. So in that sense it’s legacy. But I do it in a way where I’m not the entrepreneur building Commonwealth Fusion, Sam Altman’s building OpenAI. You know, there’s aren’t no building public transit. But the world needs all these things.

So you know, I have a document I wrote up that’s public document when I was 60.

NIKHIL KAMATH: That AI will change the world.

Reinventing Societal Infrastructure

VINOD KHOSLA: No, no. At 60 I said what do I want to do back then? I said next 25 years of my life. At 70, I still say next 25 years. I feel like I’m in the same time horizon. But I wrote a document, it’s a 50 page document on what do I want to work on for the rest of my life.

And I called it “reinventing societal infrastructure with technology.” Mostly because everybody I talked to said it can’t be done. And so it was really the Mount Everest aspect of a hard problem that doesn’t think that people don’t think can be done that I imagined 10 years ago. And it’s a public document, it’s on our website.

And I just thought when I started on the writing that I thought I’d find one problem to work on. And I found there was no part of private GDP, non governmental GDP that I couldn’t work on in a way that would be hugely multiplicative. That means give all 8 billion people on the planet the same lifestyle that the richest 800 million people on the planet, 10% have without destroying the planet.

And I’ve always been passionate on the climate issue because it’s such a long term problem, people don’t spend enough time on it. It’s not something that can be solved when it shows up. Right. So I defined them and started working on them. And our portfolio 10 years later reflects all those areas pretty much.

Now we do other things too because we have to have decent fund returns to keep getting the privilege of investing more. But those hard problems really challenge me. And you know, my old partner John Dewar used to say “the way to get something done is tell Vinod it can’t be done.” And I do that. That’s an ego thing. If something can’t be done, then I want to attempt it.

Technology vs. Selling Ideas

NIKHIL KAMATH: Right. In your many successful pursuits as an entrepreneur has the technology element of it or the ability to sell an idea element of it, what has been more valuable to you?

VINOD KHOSLA: I think I always first focus on what technology makes possible. So one of my goals in my lifetime is to eliminate most cars in most cities. So if we put a 25 year metric on that, by 2050 we should be able to eliminate that. Now there isn’t another person in the world who told me that’s reasonable. I’m pretty sure it not only can be done, but it will be done.

NIKHIL KAMATH: Will it be directly proportional to the density of population in cities?

VINOD KHOSLA: No, I think most transit should be public transit.

NIKHIL KAMATH: So in a tier 3, 4, 5 town with a scarce population of say, I’m making a case for urbanization turning around de urbanization almost. Say instead of millions of people crowding around one city center, you have smaller cities, fewer people, far spread out. Does public transportation work from that lens?

The Bicycle Commute Economy

VINOD KHOSLA: Yes, for the following reason. This is what I mean by these are conceived as hard problems, but if you’re clever you can solve them. In fact, you’re exactly right. That’s the model for India in the year 2000. I wrote a blog, they weren’t called blogs then. Called “the Bicycle Commute Economy for India.”

And essentially I speculated instead of having everybody from the villages migrate to the major cities and having huge, huge cities like we are starting to have, there should be a city like aggregation of people. So you get economies of scale within a bicycle commute of the hometown or the home village of every person. All billion and a half people in India. It was less than a billion and a half back then.

And I figured there’d be 3,000 major cities. There’s 700 districts in India. So the idea that there was sort of an aggregation of a million or 2 million people as the optimal size of a city where it’s still small and personal and within a bicycle commute, but people aren’t moving from Bihar to Mumbai and not able to go see their family very often, which leads to social isolation, broken up families, drinking, all that other stuff.

NIKHIL KAMATH: Do you think AI is bad for big cities and good for smaller cities? The model you’re explaining?

VINOD KHOSLA: I think AI is good either way and we can come back to it.

NIKHIL KAMATH: I watched your interview of the utopian and dystopian scenarios where you made a very utopian case for it.

VINOD KHOSLA: Yes, I did. But you know, it was around 2000 that I wrote this piece called “the Bicycle Commute Economy.” It might even be on our website still. And it was specifically for how India was discussing how to set up the telecommunications network, where to set up. They were mostly thinking landlines then, not cell phones.

But my point is that is a good aggregation. But policy will determine that, not technology. And then technology will serve that scenario. I did believe with the right telecommunications infrastructure and good communications, you could enable that model to work without needing to move to a big city. Because a lot could be done locally and today believe that technology even more so today can make that possible and make a lot of the services that weren’t available in a small city of a million or 2 million people possible today.

So really have every person in India be able to live within a bicycle commute. Now today is a little different, but back then most of the population was rural. So you had to speculate that most of it will move to cities as happened in this country and happened in other countries too. Right? Right. China’s seen some of this migration with pretty negative consequences of people moving away from their communities.

NIKHIL KAMATH: If you were a betting man, would you bet on de urbanization or urbanization in the next decade?

VINOD KHOSLA: I think it will depend in each country on the policies they adapt and the incentive systems they set up.

NIKHIL KAMATH: Which do you suspect is a better policy?

VINOD KHOSLA: Oh, de urbanization is clearly a better policy, right? Yeah, I believe. Right.

Career Advice for the Next Generation

NIKHIL KAMATH: And if I would bring it back to our audience. Vinod, assume I’m a 22 year old boy or girl in India. I want to learn from Vinod who has done a spectacular job of calling what industries might do well tomorrow. I want help from you in figuring out where I should spend the next 10 or 20 years of my life. Which industry should I work in in terms of a job or which industry should I start a company in?

VINOD KHOSLA: So now you come to a very hard question. You know if I’m 20, by the time I’m 35.

NIKHIL KAMATH: Yeah.

VINOD KHOSLA: The year 2040, the world will be more different from today. In 15 years, well within the lifetime, if you go into medical school and take five, six years doing that, you waste yours half that time then the world is today from 2019, 1970. So you’d have to look back 55 years. 50 years or more.

NIKHIL KAMATH: Why don’t you call five years for me? I want to learn from you in making my career choice today. So if 10, 15 years are too far ahead to extrapolate, I’m 22 today, tell me for when I’m 27. Five years.

The Future of Work and Learning

VINOD KHOSLA: So the answer is the same for both. The point I was making is we’ll see more change in next 15 years than we’ve seen the last 50 and 50 years ago, the world, especially in India, was a very, very different world. You know, in 1970, I never had a TV at home or a telephone at home. Even when I left India, I never had a telephone or a TV at home. It wasn’t something that was in most homes in India or running water or very basic things. And that’s how different the world will be in 15 years.

Almost certainly with no doubt, there isn’t a job where AI won’t be able to do 80% of 80% of all jobs. So 80% of all jobs, AI will be able to do most of it within the next three to five years. If you look 10 or 15 years out, there’s no chance there’s a job that humans do that AI can’t do almost as well with some minor exceptions which I think today I have a hard time saying will happen for sure for regulatory or other reasons like a heart surgeon or a brain surgeon. But even those AI will be able to do it better than a human, but regulation may not allow it.

But leaving aside those exceptions, the vast majority of jobs will be done, will be capable of being done by an AI. And that’s what today’s 20 or 22 year old has to take for granted. So what matters, the single most important thing that matters is not specialization in an area. I don’t learn welding or I don’t learn finance. I learned the ability to learn, be able to move around rapidly as the world evolves and learn rapidly.

And I have to say today at age 70, I’m learning at a much faster pace than I’ve ever learned in my whole life, ever. Every 20 year old should strive for this ability to jump into any new area, whether it’s a physics problem or a biology problem or a finance problem. Just this ability to think from first principles and learning new areas because ChatGPT can teach you any new areas and AI will have that capability to be able to leverage these things well. So I would say you have to optimize your career for flexibility. Not a single profession.

NIKHIL KAMATH: Okay.

VINOD KHOSLA: That’s the most important advice because you don’t know what will be around. Almost certainly this interview could be done without us physically meeting on real video generated by an AI. And the AI may be directed with what camera angle somebody wants.

NIKHIL KAMATH: I hear you Vinod, when you say the rate of change will be faster. I’m going to, as a 22 year old, be more adaptable and flexible. I still need to make a choice today. Do I work in an IT services company? Do I work in a nuclear fusion company? Do I work in a data center? I still need to pick.

VINOD KHOSLA: Yeah. So I do think it almost doesn’t matter where you start.

NIKHIL KAMATH: Right?

VINOD KHOSLA: Okay. I’m saying first education is going to be valuable to learn how to learn. Not to be good at one thing like being an accountant or a chartered accountant, that’s not going to be important. But that education, the process of learning how to learn and in fact one of the best things about computer science is isn’t that, you know programming because you know Google’s gone from 0% AI generated code to, I think they last claimed 35% of all code being written in Google is being written by an AI.

But it’s the process of thinking that computer science teaches you really well and learning architectures and systems and system things. Some of those things are about learning to learn, but you can do it in a number of areas. So it’s not just computer science. So I would say there’s a wide range of things, but keeping your lens zoomed out for the widest angle is sort of the way to think about how you should go about your career.

Generalists vs. Specialists

NIKHIL KAMATH: So you’re saying don’t be a specialist, be a generalist.

VINOD KHOSLA: Be a generalist, not a specialist. Absolutely right. And learn how to be a generalist. Learn how to use AI the best. And we may be, you know, maybe it’ll eliminate all jobs. AI will. But the fact is for certain, the people who don’t know how to use AI will be obsoleted by people who know how to use AI first. And there, if you’re dynamic and learning, then you can move with whatever’s happening in the world.

I would say the following. It’s just because we can’t predict the future doesn’t mean it won’t be dramatically different. We just don’t know what it will be. I like to say something else, which is most people most of the time assume improbables are not important. I’ve always assumed the exact opposite. Only the improbables are important. We just don’t know which of a thousand improbables is important.

So what do you do in that case? You go for agility, you follow trends, you move around, you be more adaptable and flexible. Do more first principles thinking. It’s a very different way of growing up, whether you’re 20 or you’re 60 or 70. Clearly I’m learning more now, as I said. And so today I feel like I can have an intelligent conversation around cell therapy in biology or about fusion, I can do both. Or about Carnot efficiency in steam engines, which we discussed today, for some aesthetic reason, certain fundamental things, you have a broad knowledge on which you can build other knowledge.

So what is that pedestal of knowledge you acquire and how do you keep expanding? It is very, very important. Most people stop learning. And I think I would say if you get a job as a waiter at a restaurant, 20 years later, you haven’t gained a lot more expertise that you didn’t gain in the first year. As a way to rest. You’re not exponential compounding of your capability, but other jobs. If I pick the right one, your knowledge compounds and your capability compounds over time.

So I would look at the basic principle of financial compounding in knowledge and job capability as a young individual. What will make it compound? And then you have to intersect that with what’s interesting to me. What do I have passion for?

The Future of Economic Systems

NIKHIL KAMATH: If AI were to disrupt all jobs, will AI also need to be nationalized and we move back to a socialistic economy in a way you know, look. Or does capital continue to remain the moat going into a world like that?

VINOD KHOSLA: It’s very hard to tell. It depends on policies. Each country adapts. And I think each country, or at least each region, will make different choices. So why do we have capitalism? It was fundamentally for economic efficiency. The world of Adam Smith was about economic efficiency and the idea that if a human is doing a job, they’ll be much more efficient. If they’re doing it for themselves and earning more income, the need for efficiency may decline dramatically in most areas, not in all areas.

You’ll still need to be efficient in the amount of steel or cement or copper you use. But efficiency’s role will decline, and hence how you structure it and how you give the benefits of these technologies to everybody is a social choice. It’s not a technology choice. It’s not a choice entrepreneurs will make.

NIKHIL KAMATH: Could one argue that before Adam Smith cropped up in Scotland, if you go back many centuries before that man was still looking out for his best, his own interest, so we might not have had the term capitalism in today’s parliament.

VINOD KHOSLA: It was always about capitalism. Right.

NIKHIL KAMATH: In a post AI world as well, we will feel the need to distinguish.

VINOD KHOSLA: Ourselves and compete, yes, but will we have the ability to? So imagine the following. You’ve seen my wife’s company, CK12. If every child in India, which I hope happens in the next five years, has a free AI tutor, that’s entirely possible today at a small fraction of the education budget the government has today. And it’ll be better than the best education a rich person can offer their kids by hiring them personal teachers. Almost certainly the AI will do a better job than the most expensive tutor or teacher you can hire for your kids. If you’re rich and can afford anything in that world, education is really free and it’s ongoing.

And whether it’s sixth grade education or college education or professional education, it doesn’t matter. And you’ll be able to do anything at any time and switch your majors because you don’t have to go back to college for three or five years to change from electrical engineering to mechanical engineering or from medicine to something else. I think that world is soon, education’s free.

Imagine if medical expertise was free. Every doctor was free. Imagine every lawyer was free and every judge was free. So AI could judge a legal dispute, so everybody had access. Most people in India probably can’t hire a lawyer to enforce their rights. And that’s why we don’t have real justice, access to fairness. And of course, the courts have bottlenecked and you can have AI judges and frankly 10 years ago I wrote about the poorest person can have the best wealth advisor at their level even if they’re making 5,000 rupees a month. Because they can. Because in somebody who makes a lot more won’t have better advisors.

In fact, even if you wanted just tax jaw dodge and other do tax schemes and stuff, the AI will be able to figure that out better than a human. So in that world, how do you distribute wealth? If a farm worker can do the same job that an oncologist can you pay them the same? Almost certainly it’ll be true 15 years from now. I mean that almost certainly it’ll be true. So very hard to predict how this sorts out. And many countries will resist it because unemployment, it causes dislocation which people always object to.

Sovereign AI and Data Ownership

NIKHIL KAMATH: Based on that, if the AI models of today, the incumbent world are controlled by one geography, how do you think of sovereign AI in countries like India?

VINOD KHOSLA: Well, that’s why we have Sam in India. You know, I’ve always assumed countries will want sovereign AI. That’s why we invest in Sarvam in India. We invest in a company called Sakana in Japan for the same reason. Now certain populations aren’t large enough to have their own AI, but regions do.

NIKHIL KAMATH: Do you think the time is near when we all start capitalizing and protecting our data in a manner that we give access to some AI based on our preferences or geographies?

VINOD KHOSLA: Again, that’ll be a function of government policy. But Europeans have very different data policy than the US does.

NIKHIL KAMATH: Likely outcome you think?

VINOD KHOSLA: I don’t think so. I think, look, you can choose not to share any information with Google today or wipe out all your information, but do you then get the benefits of the services on which they can customize to you? I have no question. I’d rather share my data and get customized services than get services that are not customized.

NIKHIL KAMATH: To me I would say that if my data is the commodity that is bringing revenue to company X, I would want to get a share in the revenue in one manner or another.

The Value Exchange in Digital Services

VINOD KHOSLA: But you do. Reid Hoffman has a new book called “Super Agency.” If you read it, he talks about the fact that if you ask people the following question: at what price would you not use Facebook? Like how much would you pay if I said I’m taking it away, but you can get it back if you pay for it and it’s like $40 or $50 a month. How much does Facebook make from you per month? On average, about $40 or $50 a year.

So you’re getting, pick a number, $600 worth of value and they’re getting $50 worth of value in a year. What is a fair exchange? Everybody has the option to not buy into these services. Now there’s lots of nuances, but is an economic surplus created? Yes. Again, it’s a policy question. Government policy will have a lot more to do with these things than people realize today.

AI-Powered Government Services

And you know, I’ve argued, and I would argue as part of Aadhaar today we have UPI which takes away the need for Visa and MasterCard. So it’s a 3% tax on the economy that Indians don’t pay, but everybody in the US pays. But what if in addition to payment services, there was medical services and education services? My bet is every Indian could get that at less than a dollar a month or a billion dollars a year. A month for each of these or 10 billion a year. It’s so trivial in cost.

If I was PM Modi, I’d be doing everything I can to get those as common services at that point because AI is doing the work. You don’t care about economic efficiency. Your government is as efficient as private enterprise in these services that can be made into AI and they should be. They’re so accessible today, they’ll always be available.

If you live in a village, you shouldn’t have to go take a day’s journey to go get a basic medical checkup and the doctor sees you for five minutes and then you spend a day getting back to your village. It just shouldn’t.

The Future of Healthcare Access

And 10 years ago in this document I wrote about the fact at some point in the future, much more. We are five minutes from Stanford Hospital and I wrote about the fact that a village in India, I will get better cardiac advice, cardiac care than I can get at Stanford because Stanford will still in 15 years have their cardiologists and in the village there’ll be AI. Almost certainly true.

So should the government include all of these services or as many of these services for free? They kind of include everything. Housing will still be a material thing and so you can’t give it away for free. But the software based services that depend on expertise, personal lawyers for everybody, personal tutors for every child or adult, personal medical care advice, if you need surgery or medicine, you still need a physical thing. But half the economy could be covered in almost free services from the government.

And to be honest, I’d love to do that in India. It’s such a no brainer and make it available in the next five years. But let’s talk about what entrepreneurs have as opportunities.

NIKHIL KAMATH: I heard you and Bill debate this. Why does regulation not allow doctors in the UK? I think you were making a case for that.

AI in Mental Health Services

VINOD KHOSLA: Look, mental health services aren’t available in India. In the UK we have something that’s used by 40% of all NHS mental health clinics to intake patients. What does intaking a patient mean? A therapist talk to them and classify their mental illness. The AI is much more accurate than the human therapists. 93% accuracy for talk based therapy kinds of conditions. Are you bipolar? Are you schizophrenic? Are you depressed? And AI can do the therapy.

It should be scaled infinitely in India and it’s the kind of thing, people may be afraid to go or embarrassed to go ask for services. And there aren’t enough therapists in India to meet everybody’s needs. But the AI can offer it for free.

Universal Basic Income and Economic Transformation

NIKHIL KAMATH: So in a way you’re also saying that UBI is an inevitability.

VINOD KHOSLA: I think some form of income redistribution by 2050 will be absolutely essential everywhere in the world.

NIKHIL KAMATH: Do you think it’ll be income redistribution or will it be shoring up the bottom part of the population?

VINOD KHOSLA: Well, there’s many ways to get there. You could give everybody income for not working. The question is, where do you get that from? There’s probably another way, which is my favorite way, is to deflate the economy.

NIKHIL KAMATH: Which is what America is doing.

VINOD KHOSLA: Well, if you do excess spending, you’ll get inflation, not deflation. But if a lot of services become free, you’ll have a deflationary economy. So in my essay on “AI, Dystopia or Utopia,” I talk about in the US, I believe 25 years from now, it could be that $10,000 today in 2050 buys more goods and services that you need, whether it’s food or housing or medical services or entertainment or education. Then $50,000 buys today because the services…

NIKHIL KAMATH: Will be provided by machines which don’t inflate.

VINOD KHOSLA: Yeah, you’ll have excessive production. So deflationary prices. You’re no longer constrained by inputs to get outputs in many areas. In some areas you’ll still have inputs, but you’ll have much more input.

The Economics of Infinite Supply

NIKHIL KAMATH: Isn’t the cost of a service also dependent on purchasing power? Like how much I am willing to pay relative to Vinod?

VINOD KHOSLA: Yeah, except if there’s infinite supply. If there’s an infinite supply of doctors, what do you think a doctor will cost?

NIKHIL KAMATH: I think Adam Smith, like you mentioned earlier, also spoke about the marginal utility of things wherein one agentic doctor, the first one that is created and is free, has X in value. The second, the third, the fourth, proportionately have lower and lower value to a point where they have no value.

VINOD KHOSLA: But overnight, if I created a billion doctors for India, which is entirely feasible, what happens? They become near free. Their cost of computing or the cost of power to run a computer. Same thing happens in education, same thing happens in legal studies.

NIKHIL KAMATH: Does the cost of computer for AI ever… your brain has a cost of compute, right? The amount of energy it takes to produce an output. Let’s say that today that is far cheaper than how much AI is taking. When do you think that crossover happens? When the cost of compute in a…

VINOD KHOSLA: System becomes a complex question. Because at some level the cost will decline, but you won’t take advantage in efficiency in cost, but you’ll take it in more performance. So if everybody has a super assistance, if your personal housekeeper is a PhD in every subject, that’s sort of the world to imagine. I know it sounds crazy, but look, I think the more interesting question for your audience is what’s one important question which you asked? How do you pick a job? We talked about that.

The AI Advantage for Entrepreneurs

The other question to ask is what job should I take now and what company can I start? And for the next 10 years the following is true. Anybody in any industry not using AI will be obsoleted by somebody who’s using AI. So if I’m an entrepreneur in India today, I say, what’s my next move? Say, where can I apply AI that obsoletes the service either in cost or in performance or in quality that somebody’s providing without AI and beat them at it. I think that’s the metric for every entrepreneur.

NIKHIL KAMATH: If say 10 entrepreneurs hear that…

VINOD KHOSLA: And they will be. Can hear that?

NIKHIL KAMATH: Yeah, 100%. And they all use the same means to approach this problem. And AI is as democratic as it is right now. Wouldn’t they all 10 arrive at the same solution?

Strategic Thinking and Long-term Vision

VINOD KHOSLA: I think there’s massive difference in the quality of entrepreneurs. And the outcome will be a result of the quality of the entrepreneur. How they think from first principles, how strategically they think. Almost certainly the people who only think a year out will be obsoleted by the people who think, what do I want to build in five years, but what can I sell next year, but where do I want to head in five years?

Mountain climbing is a good analogy for entrepreneurs that I love. Imagine you want to climb Mount Everest and you have two people setting out and one says, “I’ll get to base camp, then to Camp one, Camp two, Camp three, I think there’s Camp four and then the peak, right?” It’s not a straight path, right. Another entrepreneur says, “I’m going to get the most revenue in year two, year one and year two.” They won’t go to Camp one, base camp or Camp one. They’ll pick the highest peak that doesn’t then lead to something beyond.

The path to Everest through these camps is very strategically picked to have the long term vision of getting to Everest. Most people maximize revenue for the short term and are not thinking strategically. So the strategic entrepreneurs will do better. The entrepreneurs who pick better employees, who help them think through strategy will do better.

The Importance of Team Building and Advice

So people selection or team building will become the most important characteristic where the AI technology is democratized. If you believe it’s democratized, which investor you pick, do they have a short term orientation or a long term orientation? Makes a dramatic difference what kind of advice you get. Most of the advice most entrepreneurs get is bad.

So if you Google “90% of venture capitalists add no value,” my name pops up because I’ve always said this for the last 25 years. I see such bad advice being given or short term advice being given by investors. So picking your investors, right, picking your employees, right, those make a huge difference.

When things go wrong, do you get scared and retract or pick a better strategy to survive and be more strategic? Do you think from first principle all those things are massive differentiators? I think the shortage today is not of technology or capital, it’s of great entrepreneurs who know how to make these choices.

The single most important decision an entrepreneur makes is whose advice to trust on what topic? Because they’ll get advice from lots of people, everybody does. Most of it is not good advice. And so I feel bad for entrepreneurs who get bad advice. But in the end they’re responsible for deciding what advice to take and it’s the most important decision they make.

The Future of Entrepreneurship

NIKHIL KAMATH: Do you need an entrepreneur then? If you can model for the behavior that successful entrepreneurs like you speak about a few often. If you can model for all their behavior and put it in a model and throw out outcomes like they were making the decision, why do you then need the entrepreneur? Why do you need venture capital?

VINOD KHOSLA: You know, are we there today? No. Might we be there in 10 years? Maybe.

One of my speculations on the Internet on Twitter has been when will the first billion dollar company that only has 10 employees be started or has it already started? I think that’s a valid question and sometime in the next 10 years we will see a company with a billion dollars of revenue that has only 10 employees. Whether it’s already been started or will be started, I don’t know.

Investment Thesis for the Future

NIKHIL KAMATH: So Vinod, I’ve been spending a lot of time with my team trying to come up with a thesis of what sectors might do better than others as this change in the world happens while it occurs. Some of the things that we’ve been digging data up around are things like the world will be older and sicker and people will have lesser kids than they’re having or were having 10 years ago. When people have more time in discretionary spending power, they go back to their innate programming of wanting to speculate. The speculative businesses might do better. Do you have thoughts on these or opinions like this of your own?

VINOD KHOSLA: On the entrepreneur side, I look at the question who thinks from first principles? Who’s not scared of hardship because the entrepreneurial roller coaster has lots of highs and lows and who has the fastest learning rate? If they are fast learner, they’ll adapt to the world as it changes. And that may be the most important characteristic of an entrepreneur.

NIKHIL KAMATH: Yeah, I’m making the assumption that you’re a faster learner than everyone else here and I want to know what you’ve adapted to now that I might not be seeing yet.

VINOD KHOSLA: Well, I don’t think people believe this world I’m describing. So if you look at my “AI Dystopia or Utopia” paper, most of the world I’m talking about is not something people believe.

NIKHIL KAMATH: But that’s natural because I feel like humans are programmed to worry a lot more about fear than think of the gain that they’re getting twice as much according to Kahneman.

VINOD KHOSLA: But not everybody is not all humans. And those are the people who will do well, who are optimistic about the future and then persistent through real hardship of the ups and downs to make the passion they have happened. Right? Like we have a company that’s building public transit based on self driving where the vehicles become small and personal. You don’t need a DTC bus in New Delhi to carry people. It can be a two person pod that drives itself from A to B.

The Future of Electric Vehicles and Market Dynamics

NIKHIL KAMATH: I actually have a personal question around this. For the last couple of years I had come up, I almost made an assumption that mobility will move to electric from IC, fossil fuel based and I bet on everything from scooter companies to car, truck, bus, even a flying taxi company. But the adoption to EV in this last cycle seems to be slowing down. Do you agree with that thesis that all vehicle, all mobility will be electric in nature. And if yes, why is it slowing down on land?

VINOD KHOSLA: Yes, almost certainly.

NIKHIL KAMATH: Why is it slowing down? The pace of adoption?

VINOD KHOSLA: You know, look, anytime you’re an incumbent, you want to slow things down. It’s to your advantage that things change slowly because you adapt more slowly. And so incumbents always do that. And there’s always fits and starts. It’s never a straight line. But I can’t see some of the US companies are slowing down. But what’s happening. BYD in China is the fastest growing company in the automotive world.

NIKHIL KAMATH: Actually, even in India, a lot of companies are slowing down.

VINOD KHOSLA: Yeah. And that may be. But that doesn’t change eventually where it’ll get to.

NIKHIL KAMATH: Yeah, I hope so too.

VINOD KHOSLA: I’m pretty certain that’ll happen. But the more the uncertainty, the harder it is to pick the right company to invest in.

Career Choices: Energy, Data Centers, and Following Your Passion

NIKHIL KAMATH: Do you think energy and data centers as a business, sufficient legroom and tailwinds to be. If I were 22 and starting off to spend a decade in them. By energy, I don’t mean the means of generating energy. It could be fusion, it could be something else. But focusing on energy, you know, I.

VINOD KHOSLA: Would say there’s some combination of where your passion is and expertise. Passion counts for more than most people think. Right. Because you persist through ups and downs. And if you don’t have passion, you give up. It’s like you don’t give up on your religion just because you had a hard time.

NIKHIL KAMATH: So someone wise once said, “emotion, which is a passion, ceases to be a passion once you develop a clear understanding of it.” So you’re not really. It’s very hard to be passionate about something that you’ve understood. Religion could fall in that territory. Nobody can truly understand it. And I’ve heard you in interviews say that passion is not necessarily the pivotal force that should define which sector you should work in.

VINOD KHOSLA: So I think in the world of the past, I used to tell kids when the advice you get is “follow your passion,” I would say follow your passion if you’re willing to starve and not make a living for your family.

NIKHIL KAMATH: Live on a beach in a hut and stuff. I remember you seeing this. Yeah.

VINOD KHOSLA: So you can go surfing and you can absolutely go live in Hawaii and survive. But you’re not paying for a Stanford education for your kids if you’re surfing. So you have to be realistic about. It may still be a good trade off, but everybody has to be explicit on what trade off they’re making.

If you bet your life on being the best Cricketer, you don’t make it, then you’re a waiter. Are you willing to take a 0.001 probability you’ll be a world class cricketer on the Indian cricket team or the rest of the probability you’re a waiter? That’s a choice you get to make.

That used to be true. I think we will go in a world where you can pursue much more of your passion. I think that will change and that is where AI will free humanity to pursue what they’re interested in and to change your passion if it changes over time.

NIKHIL KAMATH: Right.

VINOD KHOSLA: My passions aren’t the same from when I was 20.

Investment Bubbles vs. Real Progress

NIKHIL KAMATH: Yeah, fair in all that you’re saying. Vinod, you, you’re coming across very optimistic and utopian about this whole thing. I know you don’t believe in bubbles per se, but as an investor you have seen the many cycles, many more than I have. Do you think we could be in a bubble today and overestimating? I’m not saying overestimating the change, but the pace or the rate of change.

VINOD KHOSLA: I would make the following differentiation. Investment is a different thing than building. So when you’re an investor, by and large you’re competing with other investors that have only two emotions, fear and greed. And so every time there’s an opportunity rich space, you get a bubble.

If you look at the dot com bubble in 1998 or so, if you look at stock prices, they went up and then they collapsed and then they normalized. But I don’t look at that world because I don’t think of myself as an investor. I say what happened to Internet traffic? You can’t tell where the bubble is by looking at Internet traffic.

One of the original bubbles was in the 1830s in England when railroads first came and you got the industrial revolution, you got the right to build railroad between two cities. You could offer scripts, essentially do a stock, an IPO. And of course there was a huge bubble in script prices and then a collapse, the same thing. If you look at the miles of railroad built, you can’t tell when the bubble was in the 1830s.

So what is reality for you? To me the reality is Internet traffic, miles of railroad bid AI applications, AI valuations isn’t something I worry about. But there surely will be a bubble. Almost certainly will be or will be or we are in one.

I like to say even in 2025, most investments that are made will lose money. Most, the vast majority I might even guess north of 80%. But more money will be made than lost. So the few things that succeed are playing in such large markets, it’s the same issue. Of these ten startups, one will make more money than the other nine lose in every area of the next thousand startups, 990 can lose money and you can still make money by investing in the right portfolio.

So I do think we will see that. I do think we will see a collapse in valuations. Most likely. You can’t never be certain. But it’s such a large market, we are playing in such a large global transformation that there will be many more opportunities than we’ve seen ever before. And that’s good news for entrepreneurs. And almost certainly most of this won’t be done by large companies.

Cryptocurrency and Blockchain Technology

NIKHIL KAMATH: Do you have a view on crypto and blockchains? They’re not allowed in India. It’s a. It’s a world where we have seen sudden adoption in the west and some neighbors of ours.

VINOD KHOSLA: But again, as you’ve seen, crypto has been a function of politics, not of reality.

NIKHIL KAMATH: You don’t think.

VINOD KHOSLA: I think there’s very different worlds of crypto. There’s cryptocurrency very, very different than the blockchain. The blockchain has a lot of uses. And if you said to me, will we see adoption of stablecoins? Absolutely. It makes total sense to adopt stablecoins. Every economy should have a stablecoin. The Indian government should issue a stablecoin and then. Great place to do it with the Aadhaar system.

NIKHIL KAMATH: But don’t you think something is wrong with the premise that you didn’t trust regulation in the formal economy, so you created a blockchain outside and a crypto on top of it? Now, if you denominate the stablecoin with the same dollar or the same currency, aren’t you going around in a circle?

VINOD KHOSLA: Here’s the problem. When you don’t have trust, when is the blockchain important? When you don’t have centralized trust. I don’t think distributed trust works across borders in all areas altogether.

So the vast majority of uses of crypto are illegal stuff. Gun trades, drug trades, sex trafficking or arms trades. It’s the vast use of crypto or people in Argentina trying to get their money out of the country, or in China people trying to get their money out of the country. So in some places they’re doing exactly what the global economy would want them to do, which the government doesn’t want them to do. But it’s mostly illegal. And then there’s speculation and of course related to that, fraud.

Are there good uses for the blockchain of distributed trust. Yes, we have a company building a cell phone network based on distributed trust. Everybody can contribute their own access point. Now there’s another company building Google Maps competitor based on how much you contribute to mapping. There’s lots of good uses for the stablecoin, but there’s lots of bad uses. The problem is the bad uses prevent the good uses. And so stablecoins as a currency mechanism is better than speculation.

NIKHIL KAMATH: And from that lens, the banking industry will likely get disrupted sooner than later.

VINOD KHOSLA: With stablecoins it would be, yes, the.

NIKHIL KAMATH: Cost of transaction and the.

VINOD KHOSLA: Yeah, and UPI started to do that in India, but it should be much, much cheaper. And you know, look, you don’t need to have the whole legal system. You can have software contracts for at least half the things for which you have a legal system around contracts. So software contracts are really good use of the blockchain, automatic settlement of the contracts. Financially, really good use of the blockchains. So I hope those come up specifically.

The Future of India’s IT Services Industry

NIKHIL KAMATH: To your home country. Vinod of India, which has a disproportionately high number of IT services being exported. I can’t remember the number, but somewhere around 200 billion. What do we do? How do we become.

VINOD KHOSLA: BPO as a business will disappear. Software IT services will mostly disappear. Disappear means transform pretty radically. Whether some of those companies can transform or not will determine whether they survive or not.

NIKHIL KAMATH: What do you suspect will they? Will the incumbents transform?

VINOD KHOSLA: Today I see them adjusting incrementally, not radically. Here’s the problem, right? If I can do a system integration service for 1/5 the cost, the customer will always take 1/5. Modular trust. So will some of these vendors drop their prices by 5x or 80% or at least by 60% and then expand their services? Hard to tell. I do apologize. I have no. Thank you.

NIKHIL KAMATH: Thank you for doing this, Vinod. This was fun. Thank you for having done this fun.

VINOD KHOSLA: But I’m happy to catch up sometime.

NIKHIL KAMATH: Yeah, 100% we’ll do it.

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