made the value proposition very simple—‘If you come here and spend one year, your salary will increase 300 percent.’ The school turned profitable very quickly,” Khosla said.
You don’t get paid for solving non-problems.
This came during the audience Q&A session, in response to a question about the future of genomics and personalized medicine. “This is a very promising area, because we are starting to see these vast amounts of data,” Khosla said. “For some people, that is a problem. For me, it is an opportunity. I would encourage you to explore that area.”
In the “sergeant style” of management, you decide where you are charging and you get all your troops moving toward that goal. But most of the time, your objectives aren’t clear and you don’t understand your market. You have to be flexible and ready to change as you learn things. I call that the “shepherd model” of managing. Some of the sheep are going left, some are going right, some are going backward. But generally, the shepherd is corralling the sheep forward. When the road isn’t clear, that kind of model finds the greenest pastures.
—In response to a question about whether Khosla is in favor of startups “pivoting” to new business models when their early plans go awry.
Finally, I’ll leave you with an extended Khosla quote in response to one audience member’s question about whether there’s a “valuation bubble” in the startup world.
I read a blog post that said that in the first half of this year, there were 26,000 new startups created. That is an incredible number. Whether there is a bubble or not, there are some fundamental changes going on. The post-PC world has created a new set of opportunities that will result in some big, interesting companies. Twitter, Facebook, AirBnb, and Groupon have already happened, but there will be 20 more like that. I believe that Marc Andreessen’s Wall Street Journal article was correct, and that the opportunities are increasing. However, whenever that happens, everybody starts jumping on, and you start seeing silly ideas. You are seeing some of that now, and valuations are clearly getting ahead of themselves.
But if you are stupid enough to invest in a bad thing at a high price, that is your problem. The relevant question is about mentorship. With all this frenetic activity around angel funding, with some angels doing 20 investments a month, they can’t possibly mentor and guide their companies. And if you miss that, it can take a high-potential, high-probability idea and make it into a high-potential, low-probability idea.
At the same time, VCs aren’t able to raise money, while the number of angel-funded startups is still expanding. There will not be enough money to fund all the startups. So picking your partners early is important. More than anything else, get the help you need. You only know 10 percent of what you need to know to build a successful startup. Over time, you will learn the rest of the questions, and having a partner who has screwed up enough times will help you find those questions and address them earlier.
