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.
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.
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.
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.
As CEO of another KV-backed company (CellScope), I'd like to chime in and echo rvivek's comments. Vinod demoed my otoscope device during his talk, which was great, but for CellScope the real value has been in helping us to expand the vision of the company. KV was the lead investor in our seed round when we finished Rock Health, just as digital health was coming on the scene. He and his team have constantly pushed us to think bigger and faster, and provided resources and connections to add meat to those bones. I am very glad to be working with KV on building a company to make a real difference in healthcare.
Right. But in terms of delivering in a favorable way on those promises, CEOs I know speak less well of Khosla than of the other high-profile new-breed VCs -- Andreesen-Horowitz, Google Ventures, etc.
Also, the second-worst story I've heard of "WTF???" VC negotiations over the past couple of years was with Khosla. (That said, it wasn't nearly as bad as the worst one.)
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).
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.
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...
The good thing I've heard about Khosla Ventures is that they're fast to make decisions (a trait shared by a16z, Sequoia, and most of the other "best" firms, especially newer ones). Stringing people along for a long time is one of the worst things to do when raising funding -- this says nothing about the experience after taking funding, though.
The flip side is does he help you succeed? You just made a case for why you should be in his portfolio - he'll go to the lengths of shady stuff to help you out.
He openly admits he's tough, but that's out of wanting all of his investments to succeed.
You? No. He helps himself, first and foremost. And it goes far beyond an ROI. He makes sure he's uniquely in a position to win. That's not founder friendly.
Again, the proof is in the portfolio. He wins, few founders have with him. The lack of YC there is telling...
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.
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?
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.
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.
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.
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.
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.
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.
Unfortunately, lack of evidence that he has funded YC Companies is not evidence that hes a bad VC. I'm not saying he isn't, instead, if you could provide proof from various (more than 5) founders that have obtained funding from him and yet feel this way, it might make for a better argument.
I didn't say he's a bad VC. I'm sure his LPs love him.
He's just not who he markets himself as. It's not about you and your company. It's about him.
As for YC, they have what, 400 companies? For a guy who is supposedly (self-proclaimed) so founder friendly, and has $3B in funds, not one big YC company has taken money from him?
Your proof is not how the Valley works, in my view. They know and so they steer clear. That's the glaring proof. Good companies stay away until it's growth equity. Heck, look at Square. They gave Khosla a board seat as part of a huge valuation. He certainly didnt get that company off the ground.
I know of a non-YC company which did take money from Khosla and had a lot of good things to say about them, actually, but I wouldn't generalize from a single data point.
Heh, seriously? I'm sure the valuation he gave Jack has nothing at all to do with it. Jack didnt need Vinod, big difference. Square would be Square without Vinod.
KV asks for less control provisions than other comparable funds. Indeed, we rarely even require a Board seat. Most often, the founder persuades us to accept one.
These "experiments" are normally companies that no other fund on the planet would finance, as they are extraordinarily risky. In those cases, KV does expect greater equity (due to risk and the fact that nobody else will support the company) than a standard seed or Series A. Would you prefer we just decline to fund them like every fund?
With how much liquity floats around today, there's no such thing as too risky. No, Vinod jumps in early exactly to maximize leverage and over the founders and other investors. Why not simply treat them like any other seed? Then leverage over time with pro rata rights? As an angel, did you ever require insane positioning? And angel investing, as you know, is pretty risky. Seriously, two seats, take a step back see that you are justifying a terrible position for founders right out if the box, most especially when they take the options pool from their shares as well. You talk like it's charity when it's robbery, and then of course Vinod's ego runs wild on them.
I note here you keep failing to answer my questions. Bad Vinod is real and it's not just the experiments. With first time founders, the word is to be very careful with KV and many choose to avoid altogether. New founders, less connected in the Valley, are especially vulnerable.
Completely inaccurate. Many of the companies literally cannot be financed by anyone, with the possible exception of Founders Fund. Moreover, it would be an extraordinary case where we would even ask for Board seats like that. In fact, we would more often then not prefer to avoid Board seats entirely. As a technical matter, you cannot increase your ownership % by investing via pro rata rights, just preserve it.
Keith, you are either getting false information from your partners or willfully misleading here. I prefer the former interpretation since I know for a fact this behavior exists at KV and specifically with Vinod leading the push. That's where the Bad Vinod reputation comes from and where people know to stay away.
I have witnessed a sufficient number of pitches in the last six months to opine from my own vantage point. KV invests in many companies that no other VC in the US will invest in. We also support companies that raised money earlier under different circumstances that nobody else will invest in. (I can't address any historical examples without you guiding me to a particular company, etc.)
You do realize that Vinod has been at this for a long time. And his bad reputation is based on that long history. So why make definitive claims based on six months of data?
Moreover, above you justify the insane terms for those founders. You are doing them a disservice on some false belief they can't get funding. If they build something valuable, they will be fundable. Just cause KV jumps in early doesn't entitle KV to be bullies. Vinod has often been a bully. Being early doesn't justify that noxious behavior and his reputation among those who know suffers because of it.
You've already ignored my questions about specific examples.
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 -- something that is really assuredly /good/. I wouldn't mind having more VC's around like him.
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!
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?
"The only way to win is not to play" is always a time honored strategy.
What you say during your PR pitch is almost irrelevant (unless you fuck up catastrophically). The nature, location and the very fact that you're doing a PR pitch speaks much much louder than the content of your pitch.
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.
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...
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.
Also, his first two funds were self-financed. He did well enough on those that when he started Khosla Ventures III he was able to raise $1Billion in LP money.
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.
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.
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.
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.