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For Vinod Khosla, one of the most critical factors in building a startup is ensuring that the business is inventing something truly revolutionary:
“If you’re extrapolating the past to predict the future, the big companies do that very well. Intel knows how to go from a 15nm process to 10 to 7 to 5… Entrepreneurs fundamentally have to invent the future they want in a very different way, and you have to have conviction.”
This is why Khosla Ventures tends to avoid investing in startups that aim to make incremental improvements, like slightly reducing costs or increasing efficiency, as the risk associated with such ventures is often too high.
Vinod further elaborates:
“If you’re fundamentally reinventing something and changing the assumptions, then you have a lot more time to get it right so there’s a lot more iterations you can do.”
The second crucial element, according to Vinod, is assembling the right team.
“If you get the right team — it doesn’t even matter if you get the spec right — it will iterate to the right answer, and almost all good startups do that. This is why the team is more important than the market you pick.”
But building the right team is just the start. You also need to create a culture that encourages open debate and healthy disagreement:
“If there’s a single founder and you’re dictating terms, you’re not going to evolve… You have to set up a culture so that it doesn’t matter if you’re senior or junior — you speak up if you have a concern or an idea. You’ll detect problems much earlier, and as a group you can evolve your direction.”
Vinod highlights how Andy Grove, the former Intel CEO, was instrumental in establishing Silicon Valley’s laid-back culture in the 1970s:
“He wanted an engineer — whether they were junior or senior or a VP — to speak up and not be intimidated that the executives were all wearing ties and coats.”
