
Vinod Khosla: 70-80% Of VCs Add Negative Value To Startups - ankitoberoi
http://techcrunch.com/2013/09/11/vinod-khosla/
======
rvivek
We (interviewstreet, YC s2011) raised money from Khosla ventures and Vinod is
my main point of contact in the firm. I don't know about other experiences but
to us he has been of _tremendous_ help in advice, connections (he knows the
entire world and isn't shy to connect to people he knows for a valid reason)
and in hiring people. He has taken at least 8 interviews for me in the last 5
months for VP/PM roles - sometimes to evaluate and sometimes to convince.

I think it depends on the entrepreneur on how much involved and close you want
to be with your VC. Some of their operating partners - Keith Rabois, Ben Ling,
Mark Jung, Flo (recruiting), Mojgan (PR), etc. are big resources to leverage
on. I'm not trying to evangelize the firm in any way here but just putting it
across that there are pros & cons in every VC firm and it boils down to what
the entrepreneur actually wants. I have personally met entrepreneurs who just
want a high valuation, that's it. The need varies.

Every entrepreneur's goal is to make his/her company successful and if the
odds are high in getting a particular investor on board, then do it.

Btw, I think there are a lot of YC companies after our batch which raised
money from Khosla ventures - instantcab, instacart are the ones on top of my
mind.

~~~
coleslawfail
Glad you have had a positive experience. I wish you the best in building your
company.

Can you comment on why so few YC companies have raised from them?

My comments have received a total of 53 points. KV has tried suing thefunded.
And big, successful startups haven't taken his money.

~~~
jedc
There are at least six YC companies that have raised money from Khosla:
[http://www.seed-
db.com/investorgraph/investorview?investorid...](http://www.seed-
db.com/investorgraph/investorview?investorid=373503)

(InterviewStreet isn't listed because they haven't added their funding data to
Crunchbase; there may be others like this, too.)

~~~
coleslawfail
As my note below implies, there's a big difference between a lead investor and
a follow on. If he were a go-to VC, we'd see it in his portfolio.

Vinod's been at this far long enough to judge his results. He gets his ROI but
at the expense of founders. That's why we don't see him in the upper echelon
and where his marketing doesn't match what is known among knowledgeable
parties.

~~~
keithrabois
KV recently led the Series A in Quartzy and a Series A in another deeply
technical YC company (soon to be announced), which had offers from other
highly prestigious firms.

Most YC companies are addressing markets and challenges that are ideal fits
for KV. There are probably 10 companies or so that would (even with the
benefits of hindsight) been quintessential Series A candidates for us.

Footnote: I write this as someone who loves YC and has personally invested in
over a dozen YC companies.

~~~
coleslawfail
And as someone knows the word has gotten out about Vinod must actively combat
that reputation.

I wish you luck. Good Vinod can be as fine a partner as any, I'm sure. It's
just the history of Bad Vinod, and how he has treated founders, that holds the
firm back. His partners end up more as minions than a check on his ego.

------
coleslawfail
Wish I could say this openly but the secret truth in the Valley is connected
startups know to avoid seed/A round money from Khosla, if you can. They are
very aggressive on terms and it's all about Vinod. They do plain shady stuff,
like share your details and plans with their portfolio companies. At a seed
stage they regular push for 50% of the equity and call it an "experiment".
Then rather stick behind you, they pull the plug.

Don't believe me? Take a look at their portfolio and ask why with all of their
resources so few YC companies are there. Xobni and ...? The other bigger
companies all took growth equity not early money. In all my time in the Valley
the gap between Vinod's public persona and the underlying truth is the biggest
con I've run into. And of course he just keeps up the PR cause that's his best
source of naive founders. Few others send him deals to lead. The good ones
they keep to themselves and shut him out, until he gets in a growth terms
(e.g. Square).

~~~
onedev
Look that's great and all, but if you make like 7 comments in a row spouting
the same thing over and over and over again about Khosla, I'm inclined to
think there are some personal issues between you two and you're looking to
spread FUD.

~~~
coleslawfail
38 points - so far - from those 7 comments. I'm simply saying what many, many
people already know to be true.

But again, judge his portfolio for yourself. For a guy who says he's founder
friendly where's the first generation of successful founders. He's been at it
long enough...

------
CurtMonash
The VC who, by far, most subtracted value from my startup Evernet was Vinod
Khosla. He was still at Kleiner Perkins then.

He also in those days still prided himself on how successfully he negotiated
against entrepreneurs.

~~~
coleslawfail
Thank you for saying this publicly. If more did the bubble around his persona
would quickly pop.

I'd have no problem if all he did was negotiate good terms. He certainly owes
his LPs that. The problem I have is presents the persona as being founder
friendly. Sadly, he's at the far other side of that spectrum.

~~~
CurtMonash
I guess the most favorable spin would be "That was long ago, and Vinod
hopefully has learned better by now."

~~~
coleslawfail
Nope, he hasn't except to know who to mess with. New founders get Bad Vinod.
Experienced founders get Good Vinod.

------
marcamillion
Vinod is so refreshing to listen to. Obviously there would be a lot of
pushback from the HN crowd - because there are many VCs here.....go figure.

He reminds me of the Elon Musk of the VC industry.

~~~
coleslawfail
That's his con. Then you go to them, pitch, and they want half your company.

New/naive founders get Bad Vinod.

Experienced founders who don't need him get Good Vinod.

Sadly it's an open secret.

~~~
coleslawfail
For those down voting me, please go ahead and list all of the YC Companies who
have taken money from him. He's supposed to be soooo founder friendly. So why
do the best early stage startups avoid him?

~~~
marcamillion
For starters....maybe it is as a result of a difference in investment thesis?

The things I have heard him talk about, I can't imagine a YC company doing
that. Not saying that they won't, and going forward that may be the case, but
I can't recall ever hearing many/any YC company making synthetic beef, or new
types of seed, or other stuff that I hear Vinod talking about all the time.

Now don't get me wrong, I am not saying that there are no YC companies that do
these things. It's just that based on what I know, if there are any, it is a
small subset.

From there, then it is about whether or not the company founders and Khosla
Ventures work well together and see the big picture similarly. Not every
company that is in an industry you invest in, will be suitable for you to
invest in - for a variety of reasons.

So, if we were to be generous, I would say 5% of all YC companies would make
up the total "investable pool" for Khosla Ventures. That's only 20 companies.
From there....there is no telling why they haven't invested - e.g. all 20
could conflict with existing portfolio companies, or maybe only 15 do and the
other 5 are not as impressive as they would like or any other reasons that
disqualify them from being investable and reaching a deal with Khosla.

So all in all....if YC were producing 400 of the types of companies that fit
Khosla's thesis...then I would agree with you.

But that is clearly not the case....so I don't think that is a useful data
point.

~~~
coleslawfail
His investment thesis is high-growth startups. Funny enough, that's YC too.
What you are leaving out is his thesis assumes overwhelming control. That
thesis is not in a founder's best interests. It's far better to raise less.

Nice dodge though turning hundreds of startups into tens based on no evidence.
And in fact, when you look at his non-cleantech portfolio you can see that
almost every YC startup would have a place there, especially the biggies and
especially when they just need growth equity now.

The problem is Vinod saw the insane terms he could get in cleantech, while
pushing founders aside, and so he anchors to those terms for everyone,
including other VCs. The proof is in his lack of big wins, not even from his
Kleiner days.

~~~
marcamillion
Given the hostility and your new account - I am going to assume that you have
an axe to grind.

~~~
coleslawfail
The hostility comes from the large gap between his public persona and what
people actually know. That annoys me, yes. He's not a guy that accomplished
people actively seek out.

You can judge him solely based on his portfolio. You dont need me for that.
And that portfolio is lacking big wins and more importantly, founders who have
become really successful.

~~~
marcamillion
Hrmmm.....ok....now you piqued my interest and I decided to check out some of
their portfolio companies: [http://www.khoslaventures.com/information-
technology.html](http://www.khoslaventures.com/information-technology.html)

Xobni, ZocDoc, RockMelt, Bitly, Square, Instacart, FuzeBox, and a few others.

Those seem like either big wins already or a high possibility of success.

~~~
coleslawfail
Some of those have already exited and for barely getting their money back.

Square is the outlier. But Dorsey was proven by that point. His success
certainly isn't Khosla.

Again, don't just look at KV. Khosla has been at this for a long-time starting
at Kleiner. Where are all the companies he made? Those aren't that...

~~~
keithrabois
Feel free to email Jack at Square (Series A), or John Herring at Lookout
(Series A), or Hosain at Jawbone (Series A, B) for references on KV.

You might also be familiar with Juniper, for example.

~~~
coleslawfail
If that's the best you got, you've proved my point. Square I address below.
Vinod gave the best valuation exactly because it was Jack. That's hardly
founder friendly when you have no choice.

Jawbone is another fun data point. Yes, he bailed them out when they were
going under. But all that did was give Vinod insane positioning. You care to
share how much he owns? It's private equity, not VC.

Juniper is a perfect example of Bad Vinod. How long after founding did Pradeep
last as CEO? and relative to Kriens, how we'll did he end up?

Lookout I don't know enough to comment on, but it looks like they were smart
enough to get a second firm in to keep Vinod from his worst tendencies.

~~~
keithrabois
Square will be a $10 B+ outcome. Juniper already is. Lookout, Jawbone and
ZocDoc (all Series A leads) are $1 Billion companies. Ring Central is on the
precipice of its IPO, etc.

~~~
coleslawfail
Nice dodge on the questions. I freely admit he does well BT his LPs. The
problem is Bad Vinod has consistently screwed with founders. Good Vinod is
likely a product of all of those terrible outcomes.

------
davidjgraph
So a VC presenting at a startup media event says that the vast majority of
other VCs don't add value, but his does.

In other news...

~~~
clicks
Well... he's a pretty smart guy (being the co-founder of Sun), and he's got a
nice record.

But what I like most about Khosla (and Khosla ventures) is that he focuses on
cleantech ventures:
[http://www.khoslaventures.com/sustainability.html](http://www.khoslaventures.com/sustainability.html)
\-- something that is really assuredly /good/. I wouldn't mind having more
VC's around like him.

~~~
coleslawfail
That's marketing, not a record. Look Vinod talked big in green tech and he got
his ROI. But where are all the founders who made gobs of money? And where's
the epic changes he was crowing about?

Now he's pulling the same stunt in healthcare. He's rushing in with naive
founders, taking big stakes, and all he needs to do is flip a few to have the
set return a decent ROI. But the founders are mere cannon fodder. And he
justifies it with his own ego - you are blessed to have him aboard!

~~~
clicks
Your account has been registered for an hour, and within that hour you've
managed to make 7 comments very critical of Khosla. Certain things you've said
are immediately and verifiably false. You're not exactly screaming
trustworthiness here, but anyway.

Making good investment decisions when it comes to green is HARD, as evidenced
by the failures of KCPB (Fisker), the government (Solyndra), and the hesitance
of YC (why does YC have a history of not accepting green ventures? Why don't
they get a partner who's learned in this area? Danielle Fong is obviously
brilliant (dropped out from Princeton at age 17... where she was doing her
PhD), yet she was rejected by YC -- and went on to get funding from Khosla
Ventures and Peter Thiel). The science of investment strategies when it comes
to web companies is considerably easier - it is mostly solved to a great
number of people, it isn't that easy when it comes to green companies. I think
it is logical then, considering that unlike the webspace, this is VC's market,
that the terms would be more favorable for them.

Anyway though, I wonder if you've got a bad impression of Khosla because of
his sometimes brash mannerisms? His aggressive incisiveness?

~~~
coleslawfail
Point to what I've said that is false.

Danielle is great. But do you know the terms she and her team got? She doesn't
control the board, does she?

As for me, direct experiences and those of many people I know. Vinod's
duplicity is well-known.

~~~
wozniacki
Care to cite a Khosla-gate?

I don't remember one.

I'm sure a Calacanis or a Wilson would have exposed a crooked VC with show &
stow tactics.

Others have been flogged quite publicly.

Source:

[https://news.ycombinator.com/item?id=893845](https://news.ycombinator.com/item?id=893845)

[http://betabeat.com/2011/12/pay-to-pitch-how-much-is-too-
muc...](http://betabeat.com/2011/12/pay-to-pitch-how-much-is-too-much/)

[http://www.avc.com/a_vc/2009/10/paying-to-
pitch.html](http://www.avc.com/a_vc/2009/10/paying-to-pitch.html)

------
gilgoomesh
Surely, Sturgeon's Law applies here?

[http://en.wikipedia.org/wiki/Sturgeon%27s_Law](http://en.wikipedia.org/wiki/Sturgeon%27s_Law)

90% of everything is crap. Why should VC's be any different?

------
dragonwriter
Most startups add negative value to VCs, too. Its high-risk, high-potential-
reward on both sides of the street.

------
quique
First off as a rule of thumb, I generally avoid talking about people. In the
rare case I do, it's only if I've had significant experience with them.

As an operating partner with Khosla Ventures for the past two years, below are
a couple things that I respect about Vinod that entrepreneurs may misinterpret
in all the tech gossip.

1) Bold leadership Rather than be in the business of doing "deals," putting
money in, getting money out - Vinod is truly in the business of building
companies with meaningful impact on the world.

Research KV's portfolio and you'll see how Vinod is contributing to
fundamental human needs in food, agriculture, clean energy, healthcare and
education among many other areas. He even setup an impact fund where others
aren't investing. His leadership pushes me to focus on making a bigger and
positive difference in people's lives.

Also read his perspective on Silicon Valley:
[http://bits.blogs.nytimes.com/2012/07/13/khosla-the-
silicon-...](http://bits.blogs.nytimes.com/2012/07/13/khosla-the-silicon-
valley-vision/) To me, it was a healthy reminder not to be so small minded and
uphold our larger purpose for innovation.

2) Honest feedback I highly recommend you read Vinod's point of view on
venture assistance and the role of board members before commenting on this
thread: [http://www.khoslaventures.com/wp-
content/uploads/2013/02/Ven...](http://www.khoslaventures.com/wp-
content/uploads/2013/02/Venture_Assistance1.pdf)

I admit, I've been in meetings where's he's given me candid, no BS feedback.
Although sometimes it was uncomfortable to hear, ultimately I'm thankful
because it made be a better entrepreneur and designer. I prefer honesty from
someone who challenges me to be great rather than hypocritical politeness.

Think about all the great founders of our time, from Steve Jobs to Mark
Zuckerberg - they all have strong points of view that not everyone can get
along with but don't confuse this with being a jerk:
[http://techcrunch.com/2012/09/09/do-you-need-to-be-a-jerk-
to...](http://techcrunch.com/2012/09/09/do-you-need-to-be-a-jerk-to-be-a-
successful-entrepreneur/)

------
unono
Vinod Khosla is one of the few good guy VCs out there. He's invested in high
tech foods, robots, energy, healthcare, farming. He runs a Google X type fund.

~~~
coleslawfail
Not true. Yes he takes what appears to be big risks but he hedges by insisting
on insane terms. Then it's his and only his company. A good guy he is not.
Smart, yes. He does deals no one else will. There's value there but mostly to
him and his LPs. The founders are mere employees.

One easy test is the lack of YC companies in his portfolio. Another is the
lack of big name founders he created. It's all about Vinod.

~~~
unono
That doesn't sound so bad to me - sounds like capitalism - greed is good
[http://www.youtube.com/watch?v=vscG3k91s58](http://www.youtube.com/watch?v=vscG3k91s58)

~~~
coleslawfail
Of course, then there's insisting on 50% equity plus an options pool that
comes from founder shares at the seed stage...

------
jmtame
_The VC connects wealthy investors to nerds. There are few alternatives. You
can self-fund by consulting and by setting aside money for your venture. That
doesn 't work._

Can you elaborate on this part? Is this a pattern you noticed in many
entrepreneurs?

I can recall at least one successful startup that had to contract early on in
order to get by. They were in my YC batch and they're now doing pretty well.

------
casca
If you have a pile of money at your disposal, it's not hard to invest in all
the good things that Vinod Khosla invests in. Maybe his previous success was
down to luck or maybe he's not one of those VCs that "add negative value", but
it'll be a good few years before there's any feedback on the quality of his
more recent choices.

------
npguy
Given the effort that VCs put in to understand the business, this ratio of
value addition is not surprising.

[http://fakevalley.com/conmen-arrested-for-cheating-vcs-by-
se...](http://fakevalley.com/conmen-arrested-for-cheating-vcs-by-setting-up-
garages-in-sfo-bay-area/)

------
durandal1
And 90% of all statistics are made up on the spot.

------
paulhauggis
..except the positive value of the cash you need from a VC to survive.

