"...I like technologies that have a 90% chance of failure…because a 10% chance of making 100 times your money is better than an 80% chance of doubling your money...”
-- Vinod Kholsa, founder of Khosla Ventures
- SOURCE: Lyon, David. (October 25, 2010). "10 Big Green Ideas.” Newsweek. View website.
Of course, not everyone can make statements like this and get away with it. It helps when you’re a person who has turned “a computer science project into Sun Microsystems, a multibillion-dollar phenomenon.” Though not everyone’s DNA is the same (thank goodness) and this approach to investing (dollars or time) is not for everyone, it’s an important perspective to keep in mind.
In this article, Khosla goes on to say, as other well seasoned investor colleagues have told me, that there is a huge degree of “randomness and unpredictability” in picking winners, whether they are strategies, teams, investors, or whatever the case might be. He calls them Black Swan technologies, based on Nassim Nicholas Taleb’s theories in his 2007 book, The Black Swan (not on the racy movie in your local theaters!).
Part of what this means is to remember that there is no silver bullet or single deal that is going to get us to our goals, whether they be solving our climate change dilemma, earning investors their return or establishing competitive advantage. Princeton University’s Robert Socolow made this clear with his concept of Stabilization Wedges a few years ago, even though part of the salience of his argument was that we already have the technology needed to address climate change.
Perhaps what we need is a shotgun, not rifle. (Sorry, being raised in Kentucky, references like these are hard to pass up.) If you know that you can’t know what you need to know in order to achieve success, you better try often. (Might want to re-read that again!) A quote from Michael Jordan on Khosla Ventures’ home page says it well, "Our willingness to fail gives us the ability and opportunity to succeed where others may fear to tread…I've missed more than 9000 shots in my career. I've lost almost 300 games. Twenty six times, I've been trusted to take the game-winning shot and missed. I've failed over and over and over again in my life. And that is why I succeed."
You could also interpret Khosla’s statements to mean that we can’t just focus on or expect incremental improvements alone to get us to that future state we hope for (contrasting Socolow’s focus). For example, while energy efficiency and weatherization offer easy, cost-effective ways to save money, reduce air pollution and limit carbon emissions, some innovative game-changing technologies surely wouldn’t hurt our efforts as we thread the needle in order to reach our very ambitious goals of, say, reducing carbon emissions by 80% by 2050 or managing our water resources to accommodate the 100 million people that will be added to the US population by 2050.
OK, enough rambling for today…For more information on the kinds of (exciting, intriguing, confusing) investments that fit this description (a.k.a., swing for the bleachers and do it often because every ball isn’t going to be a homerun), take a gander at a great visual of the Khosla Ventures portfolio here.