Vinod Khosla

Biomedical Engineer , Billionaire ,

and Industrialist

 

Vinod KhoslaVinod Khosla

Vinod Khosla is, very simply, revolutionizing communications. The venture capitalist at Silicon Valley's Kleiner Perkins Caufield & Byers was among the first to understand that Internet technology and fiber optics could make communications so fast, cheap, and easy to install that it would unleash a tsunami of productivity growth. He placed his bets on a handful of now-hot telecom-gear companies.

Khosla doesn't just spread cash, though. He nurtures startups. Then good things happen. Khosla ducklings Cerent and Siara Systems, for instance, sold last year for $11.2 billion combined. ''He wants to win, and he wants to win big,'' says Bippy Siegal, CEO of BigVine.com, a startup Khosla backed.

Khosla is just as determined to get home for dinner. The father of four only misses a handful each month. Of course, it's easier to leave the office when you're one of the Valley's hottest VC hands.

Another visionary is Vinod Khosla, 45, who, at 27, co-founded Sun Microsystems with a German student Andreas Bechtolsheim. A multi-millionaire by the time he was 30, Khosla joined venture cap firm Kleiner Perkins. One of the companies he backed was the search engine Excite!, which later merged with another group firm, the high-speed cable Internet service @Home.

Khosla, an engineer from IIT, New Delhi, moved to the US in 1976 and acquired a masters degree in biomedical engineering from Carnegie-Mellon University in Pittsburgh. He then got his MBA from Stanford.

More :

The Nasdaq still struggles after enduring its worst year ever. Initial public offerings have shut down. More than 40,000 people who joined dot-coms this past year have lost their jobs, and 91 Web companies have gone bust. Hints of recession are everywhere.

But have faith: The Internet Revolution is real, and it ain't anywhere close to being over. Right now dealmakers in Silicon Valley, Seattle, Boston and elsewhere are knee-deep in the capital stream, panning for the flecks of gold that could become the next Cisco (nasdaq: CSCO), Microsoft (nasdaq: MSFT) or Oracle (nasdaq: ORCL). Plenty of cash fuels their quest—some $37 billion still flowed into venture capital funds after technology stocks plunged last April. The capital invested in new companies rose 40% in the first nine months of last year to $52 billion. A total of 5,380 new companies got funded in 2000. Most of them will fail, as always, but from a few survivors enormous new wealth will flow.


"This is a reckoning, but this is no time to retreat," says Vinod Khosla, superstar partner in VC firm Kleiner Perkins Caufield & Byers in Menlo Park, Calif. "The Tech Wreck is a stock-market phenomenon caused by fear and greed. It doesn't change the underlying cycle of technology innovation. That's the Tech Trend."

Khosla, 46, has made a career of determining which companies will thrive. Lower-profile and less loquacious than John Doerr, his headline-happy partner, Khosla has rivaled Doerr's impressive record in 15 years in the business. Mining the extreme fringe, Khosla has funded some futuristic flops—pen-based computers, interactive games and such. But he also has backed some of the richest payoffs in high-tech.

In the past few years he has turned roughly $50 million in early investments into $15 billion on just half a dozen makers of breakthrough telecom gear— Juniper (nasdaq: JNPR), Cerent, Corvis (nasdaq: CORV), Extreme Networks (nasdaq: EXTR), Siara and Lightera. Khosla sees even bigger payoffs ahead. The future lies in broadband, so he bets on telecom infrastructure (Zambeel), optical networking (Iolon) and software aided by networking (Asera).

Khosla's investment success, both for himself (he is a billionaire) and his partners, is a key component of his appearance at the top of our Midas List of venture capital power brokers (see p. 88). But it isn't just raw returns that earn these people a place on the list; the breadth and depth of involvement in successful ventures go into our formula. Midas members include entrepreneurs and the angel investors who nurture their ideas, the venture capitalists who fund them, the technical advisers who pass judgment on their technology and the lawyers who patent it, and the investment bankers who gift wrap the whole package and sell it to the public.

None is shrewder than Vinod Khosla (pronounced "vih-NODE KOE-sla"). He was born in 1955 into a military family in New Delhi, far from India's future "tech capital" of Bangalore. He earned degrees from some of the world's best tech-savvy institutions—the Indian Institute of Technology, Carnegie Mellon in Pittsburgh and the Stanford business school in northern California. After Stanford he and a Ph.D candidate, Andy Bechtolsheim, divined the idea that led them to found Sun Microsystems (nasdaq: SUNW) in 1982.

Khosla ran Sun until 1984, when he was eased out and was replaced by his M.B.A. classmate and pal, Scott McNealy. Just 30 at the time, Khosla could have retired, but Doerr persuaded him to work "part time" for Kleiner Perkins. "Staying at Kleiner was never in the plans," says Khosla, who had hoped to return to far-out research.

The Nasdaq still struggles after enduring its worst year ever. Initial public offerings have shut down. More than 40,000 people who joined dot-coms this past year have lost their jobs, and 91 Web companies have gone bust. Hints of recession are everywhere.

But have faith: The Internet Revolution is real, and it ain't anywhere close to being over. Right now dealmakers in Silicon Valley, Seattle, Boston and elsewhere are knee-deep in the capital stream, panning for the flecks of gold that could become the next Cisco (nasdaq: CSCO - news - people ), Microsoft (nasdaq: MSFT - news - people ) or Oracle (nasdaq: ORCL - news - people ). Plenty of cash fuels their quest—some $37 billion still flowed into venture capital funds after technology stocks plunged last April. The capital invested in new companies rose 40% in the first nine months of last year to $52 billion. A total of 5,380 new companies got funded in 2000. Most of them will fail, as always, but from a few survivors enormous new wealth will flow.

"This is a reckoning, but this is no time to retreat," says Vinod Khosla, superstar partner in VC firm Kleiner Perkins Caufield & Byers in Menlo Park, Calif. "The Tech Wreck is a stock-market phenomenon caused by fear and greed. It doesn't change the underlying cycle of technology innovation. That's the Tech Trend."

Khosla, 46, has made a career of determining which companies will thrive. Lower-profile and less loquacious than John Doerr, his headline-happy partner, Khosla has rivaled Doerr's impressive record in 15 years in the business. Mining the extreme fringe, Khosla has funded some futuristic flops—pen-based computers, interactive games and such. But he also has backed some of the richest payoffs in high-tech.

In the past few years he has turned roughly $50 million in early investments into $15 billion on just half a dozen makers of breakthrough telecom gear— Juniper (nasdaq: JNPR - news - people ), Cerent, Corvis (nasdaq: CORV - news - people ), Extreme Networks (nasdaq: EXTR - news - people ), Siara and Lightera. Khosla sees even bigger payoffs ahead. The future lies in broadband, so he bets on telecom infrastructure (Zambeel), optical networking (Iolon) and software aided by networking (Asera).

Khosla's investment success, both for himself (he is a billionaire) and his partners, is a key component of his appearance at the top of our Midas List of venture capital power brokers (see p. 88). But it isn't just raw returns that earn these people a place on the list; the breadth and depth of involvement in successful ventures go into our formula. Midas members include entrepreneurs and the angel investors who nurture their ideas, the venture capitalists who fund them, the technical advisers who pass judgment on their technology and the lawyers who patent it, and the investment bankers who gift wrap the whole package and sell it to the public.

 

Top