Brave Thinkers 2011 November 2011

Vinod Khosla

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1 star = Not taking much risk | 5 stars = Risking it all

Venture capitalist
Menlo Park, California

A tech entrepreneur wants to save the planet—by scorning environmentalists and courting failure.

You’ve pumped millions of dollars into the clean-technology sector—and right now, you’re raising $1 billion to fund more long-shot ideas designed to save the planet. But you’re a critic of both environmentalists and venture-capital firms. Why?

Environmentalists get in the way. They often ask the right questions, but they’re chasing the wrong answers, often hypothetical or uneconomic solutions. Venture-capital firms invest in trends by projecting returns. But most projections are pretty much bogus, and research shows that experts are no better at predicting the future than dart-throwing monkeys. Big ideas are where real innovation is, and calculations are near impossible. We see returns as a side effect of bringing big ideas to market.

Brave Thinkers 2011You recently created a stir by calling the Prius a “greenwashing” gimmick. What are you working on that’s better?

Electric cars are coal-powered cars. Their carbon emissions can be worse than gasoline-powered cars. And today the Prius has a very expensive battery. Real change needs to meet the “Chindia price.” That’s the price at which people in India and China will use your product without subsidies. Unless your technology can achieve unsubsidized competitiveness against the market and fossil fuels, you’re just a toy. We have five projects trying to change the cost structure of batteries. If we can develop a battery that costs $2,000 instead of $20,000, that car meets the Chindia price. We also have a company called Ecomotors. Our approach is: What if an internal-combustion engine could be twice as efficient as today’s engine for the same price? Nobody else is trying to reinvent the engine. We are. I’m envisioning a future with 75 percent less electricity use for the same light or air-conditioning, and 75 percent less oil consumption for the same car.

Critics contend that your investments ignore easy incremental achievements in favor of low-probability home runs.

The probability of failure doesn’t matter to me. We can make a lithium-ion battery that is 20 percent cheaper. But that’s boring. At least 30 people are trying that. I want something five to 10 times cheaper. I don’t mind the higher risk.

So what are some other risky ventures you’ve bet on this year?

I’m very excited by biomass and biofuels. We have a company, KiOR, that turns biomass—for instance, wood chips—into gasoline. The potential value of this company is huge. It could compete with regular crude oil without subsidies. We also have a company trying to create [synthetic] meat that tastes as good as the real thing and may be many times more energy- and plant-protein-efficient. We call it “meat 2.0.” We also have a materials company that is trying to reinvent steel.

Illustration: Anje Jager

Derek Thompson is an Atlantic senior editor.
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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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