Fireside Chat with Vinod Khosla from Khosla Ventures

Vinod Khosla: 

My willingness to fail gives me the ability to succeed.

To be an entrepreneur you have to be an optimist. A good entrepreneur is unreasonably optimistic, maybe even a little bit irrational. You have to be able to ignore failure until you achieve success. Who remembers a successful person’s failures? No one. Failure can become irrelevant if the entrepreneur takes the right attitude towards failing. It is okay to fail as long as you fail quickly. Trying to not fail is a self-fulfilling prophecy to mediocrity. Failure is the key to success. 

If you don’t have a vision you are unlikely to succeed. If you have a vision, then keep trying until you succeed. How do you decide when to stop thinking about an idea and start building it? Passion. If you are passionate about an idea you will not stop trying to implement it until you achieve product/market fit. Passionate people do not give up easily. The iterative process for a passionate person is seemingly endless. This is something that VCs look for.

If you are going to pitch a VC, first figure out 3-4 things that appeal to them. Pitch to that. In other words, give the VC 3-4 things to talk to his partners about.

An entrepreneur should always be trying to answer the question, “Why should a VC invest in me?” Investors only have two feelings: greed and fear. Use this knowledge to help you answer the question.

E.g.

1. Here are 3-4 reasons why an investor should invest in me.
2. Here are the risks. 
3. Here’s how my company will address those risks.

The single biggest task you will face as an entrepreneur is managing risk. Everything an entrepreneur does increases some risks while decreasing others. A successful entrepreneur knows how to successfully manage his company’s exposure to risk. Deciding whose opinion to trust is another major hurdle that every entrepreneur must face. Vinod Khosla’s best practice is to narrow your choices down to 2-3 people, hear their opinions, then make a decision on who is most trustworthy. After you make a decision, it is important to list the Top 5 reasons as to why the decision you made was wrong. People often spend more time justifying decisions than inspecting them for errors.

Be sure to check out Vinod Khosla’s 15-page essay on Gene Pool Engineering. He cited the paper on multiple occasions throughout the night.

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Material sourced from a fireside chat with Vinod Kholsa at RocketSpace SF.

Andreessen-Horowitz Invests In The Start Fund, Offers $50k To All Y Combinator Startups

Andreessen-Horowitz has announced that it will invest in the Start Fund. The Start Fund offers $150 thousand to all Y Combinator graduates. Out of the $150 thousand offered, $50 thousand will now come from Andreessen-Horowitz. 

Andreessen-Horowitz does not have the resources to surface over a hundred seed stage companies per year, but Paul Graham does. Y Combinator alumni are a proven bunch. Paul Graham has shown that he is capable of surfacing superstar startups such as Dropbox, AirBnB, Reddit and Heroku. In effect, Andreessen-Horowitz is now outsourcing its early stage investment selection to Paul Graham.

Brilliant.

The Start Fund was formed earlier this year with the sole purpose of investing in Y Combinator startups. It is a joint venture between Yuri Milner of DST Global and Ron Conway of SV Angel. No word yet on why Milner and Conway chose to take on a new partner.

Vinod Khosla Raises $1.05 Billion for New Fund

Vinod Khosla has closed a new $1.05 billion fund for Khosla Ventures. Khosla plans on using the money to invest in mobile and clean tech.

It is a tough time to be raising money, but Vinod Khosla has had no such trouble. Khosla is an experienced veteran. He founded Sun Microsystems and was a partner at Kleiner Perkins before going off to fund his own VC shop, Khosla Ventures. 

This is Khosla Venture’s fourth fund — Khosla Fund IV. Khosla says he plans on using the money to invest in mobile and clean atech. This is the same strategy that he has used in the past, and so far it has worked out exceptionally well. Khosla Ventures has produced over $1 billion in profits to date.  So why fix what’s not broken?

Vinod Khosla, who is an investor in the CrunchFund, declined to comment.

Union Square Ventures Invests In Duck Duck Go’s Search Algorithm

Duck Duck Go has been competing with Google on search for the last four years. Up until now, the startup had been completely bootstrapped. But now Duck Duck Go is tweaking its business model. Founder Gabriel Weinberg has decided to raise money from Union Square Ventures. Terms of the deal were not disclosed.

Weinberg recently hired Duck Duck Go’s first employee. The decision to grow the company internally is based on Duck Duck Go’s recent external growth. Pageviews are up. Duck Duck Go is receiving about 300,000 search queries per day, which is up from the 200,000 received in June.

USV partner Brad Burnham will join Duck Duck Go’s board. Jim Young from i/o ventures and Joshua Schachter from Tasty Labs also participated in the round, along with a few other angels. The money will be used to make new hires, which will allow for a faster release cycle. 

Pinterest Raises $27 Million from Andreessen-Horowitz

Kara Swisher is reporting that Pinterest has raised $27 million from Andreeseen-Horowitz at a $200 million valuation. The startup had previously raised $10 million from Bessemer Ventures at a $40 million dollar valuation.

Pinterest is still in limited beta. The website’s main feature is its virtual pinboard. Users can aggregate items on their own pinboards or they can subscribe to the pinboards of other users.  

The startup first gained notoriety when it was alleged that Myspace had ripped off its design. Since then, the team has been working feverishly to stay one step ahead of its competitors.