What do investors want? Vinod Khosla shares tips | Economic Times

You need a certain culture of persistence and large vision (when building a start-up or innovating) but not necessarily deep expertise, says serial entrepreneur Vinod Khosla. In fact, the Silicon Valley veteran believes deep expertise may even be a disadvantage. “No large innovation over the last 40 years has been done by somebody who knew the area they were innovating in,” said Khosla, speaking at the Economic Times 40 Under 40 awards on Friday.“There’s no chance that anybody at General Motors or Volkswagen or Mercedes could build an electric car like Tesla. The big advantage was that Tesla didn’t know anything about building cars. The same thing happened with space. Boeing or Airbus didn’t do space innovation; it was start-ups like RocketLab and SpaceX,” said Khosla. The super-successful investor who’s been at the core of many start-up journeys says the majority of the time, innovation came from those who didn’t know they were in the business themselves. “AirBnB, Ola Cabs or Uber came from people who didn’t know they were in the transportation business or the hotel business. There’s no way a Hyatt or Hilton could do what an AirBnB did.”So if it’s not expertise, what does Khosla look for when investing in a new venture? Exponential learning.“The thing we look for more than anything is not somebody who’s experienced but how quickly they learn. What’s their rate of learning? You could tell a good entrepreneur in 90 days by how quickly they take new input, learn and refine their mark. So it’s exponential learning that matters more than deep expertise in an area,” he said. Are you persistent enough?In addition to an entrepreneur’s rate of learning, Khosla also looks at two other key factors - the resilience to power through lows and a large vision. “Creating a start-up is very hard, it’s very uncertain. The highs are very high and the lows are very low - they’re very depressing, very lonely. What we look for is resilience and persistence. People who will power through that (the lows),” he said.Another area the serial investor looks at is how willing the entrepreneur is to trade short-term benefits for long-term vision. Using his favourite analogy, that of climbing Mt Everest, Khosla said, “Nobody got to Mt Everest without first getting to base camp and then Camp 1, Camp 2 etc., before the final ascent. And none of these camps are in a straight line. The visionary entrepreneurs imagine Mt Everest and they’ll get to base camp even if there’s a higher peak that they can climb more easily because they have their eventual goal in mind. They will trade short-term benefits for long-term and I think that’s very important.”“(When building Amazon and Google) Jeff Bezos and Larry Page were very flexible about their tactics day-to-day, year-to-year but they never lost their vision. They sacrificed short-term benefits so they could stay on track for their vision. They were true and certain of what they wanted to do even when they were very young and inexperienced. I think that’s absolutely essential. ”