Presumably those reading this blog already know that I just returned from an exchange term at the Haas School of Business, UC Berkeley. One of the more fun subjects I studied was Venture Capital and Private Equity, taught by the inimitable trio: Jerry Engel of Monitor Venture Partners, Terry Opdendyk of ONSET Ventures, and Sean Foote of Labrador Ventures, who after seven years teaching together had all their lines honed to a tee but still played off each other, like a good standup act.
We were given an assignment to go and find a real VC or two, an interview them. We were quite proud of ourselves by managing to interview Silicon Valley scion Vinod Khosla, co-founder of Sun Microsystems, partner at Kleiner Perkins during their glory years of the dot-com boom, and proponent of all things clean-tech at his current venture, Khosla Partners.
For posterity, I thought I would cut and paste our assignment as I think we asked some pretty good questions, considering we only had five minutes with him!
Interview date: 3 October 2008 (a brief 5 minute chat before Khosla's presentation at Berkeley Labs)
How do you think the venture capital industry will change as a result of the flattening world?
I think the emerging world gives us more points of innovation, there are many smart people in the world and we can be open to all of them — the pool of talent is larger. We can cultivate local venture capitalists all around the world.
We noticed that most of your investments have been in the US — why is this?
Venture capital is a high-touch industry. You need to be close to your businesses to mentor them properly.
How do you reconcile that view with the idea that innovation is coming from everywhere? Are you saying that, to be successful, an international business has to start an operation in the US?
Being in the US increases your probability of success by ten times. The opportunities are all here; the venture industry is all here. You have to be here to be a part of it.
Do you think that this will change as a result of the financial crisis and the changing economy?
The VC industry won’t change much, it might be smaller in a few years but in the short term nothing will change. Hopefully the economic situation will mean that we move away from synthetic goods, and back towards physical goods that make a difference.
What do you mean by synthetic goods? Do you mean moving away from software?
I mean financial instruments, investment bankers making things up rather than creating things that actually add value to the world.