In short
Podcast Episode Summary: The End of Work - Vinod Khosla's Bold AI Prediction
Episode Overview
- Title: The end of work: Vinod Khosla's bold AI prediction
- Host: Alyson Shontell, Fortune Editor-in-Chief
- Guest: Vinod Khosla, venture capitalist and early AI investor
- Main Topic: The transformative impact of AI on labor and society by 2040, potential shifts in economic structures, and government policy implications.
Key Concepts Discussed
Abundance and the Future of Work
- AI's Impact on Employment: Khosla predicts that AI will take over 80% of jobs, leading to a society where work becomes optional. This shift is expected to allow individuals to pursue their passions rather than work merely for survival.
- Comparison to Historical Changes: Khosla compares the upcoming changes to the transformative impact of technology from the 1970s to now, predicting an equal magnitude of change by 2040.
Economic Implications
- Deflationary Economy: Khosla forecasts a deflationary economy where most goods and services become near-free due to AI and robotics, drastically reducing the financial need for work.
- Wealth Disparities: The discussion addresses how the shift toward AI could exacerbate wealth disparities unless proactive government policies are enacted.
Government Policy Recommendations
- Tax Reforms: Khosla suggests eliminating income tax for those earning below $100,000 and equalizing capital gains tax to ordinary income tax to address wealth distribution. He stresses the need for governments to adapt to the new economic realities driven by AI.
- Universal Basic Income: The idea of implementing a universal basic income or a national wealth fund is proposed to ensure equitable distribution of wealth in an AI-driven economy.
The Competitive Global Landscape
- AI Race Between the U.S. and China: Khosla emphasizes the importance of winning the AI race against China, positing that who leads in AI will determine future global economic power dynamics.
- Policy Implications: He criticizes current U.S. policy that may hinder progress and calls for a more aggressive approach to AI development.
The Role of Values in Entrepreneurship
- Importance of Values: Khosla highlights the necessity of strong values in entrepreneurs for building effective teams. He argues that AI will enable humans to prioritize values over survival in their careers.
Key Quotes
- "The need to work will go away. People will still work on the things they want to work on, not because they need to work."
- "AI will free us to be more human."
- "Whoever wins the AI race will win the economic race and will win the race for socioeconomic power and influence globally."
Conclusions
- Vinod Khosla expresses a hopeful vision of the future where AI liberates humans from mundane work, allowing for a focus on passion and creativity.
- He stresses the critical role of government policies to ensure equitable economic transitions as labor dynamics are dramatically altered by AI.
- The episode underscores the urgency for society to adapt to these changes through proactive measures in policy and economic structure.
Final Thoughts
- Khosla's insights offer a provocative view on the intersection of technology, economy, and human values, urging listeners to consider the implications of AI on their future livelihoods and societal structures.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOVinod Khosla's Vision for AI
0:45 to 1:11
Vinod Khosla shares his bold predictions on AI's impact on work and society.
“and shifting society from survival to true fulfillment.”
Automation and Business Efficiency
1:25 to 2:52
Discussion on how AI is transforming business functions and customer interactions.
“And over time, AI agents will be also in customer facing and growth oriented domains.”
The Future of Work in 2040
2:52 to 4:50
Khosla outlines what life and work may look like by the year 2040.
“Oh, it's fun to talk about these things.”
Abundance and Work Motivation
4:50 to 6:05
Exploration of how abundance may change work motivations and roles.
“If I'm right, you will see a couple of phenomena.”
Khosla's Upbringing and Entrepreneurial Journey
6:05 to 8:37
Khosla shares stories from his youth in India and his path to entrepreneurship.
“But first, I want to go back in time to your upbringing in India.”
The Contrarian Mindset in Entrepreneurship
8:37 to 11:28
Discussion on the importance of contrarian thinking in business success.
“2500X is pretty rare even for venture capital.”
Wealth Disparity and Future Economy
11:28 to 14:00
Insights on how AI will affect income, jobs, and economic structures.
“By the mid 2010s, Khosla was investing in AI image and radiology technology.”
The Future of Free: Abundance and Economics
14:00 to 15:10
Explore the prediction of near-free goods and services by 2040 and its economic implications.
“You won't even need the engineering degree except if your passion is learning.”
Government Policies and Economic Redistribution
15:10 to 19:16
Discuss the importance of government policy in economic redistribution and potential reforms.
“complex areas that are hard to predict, like steel.”
The AI Race: U.S. vs. China
19:16 to 23:00
Analyze the competitive landscape of AI technology between the U.S. and China and its implications for global power.
“So I don't want to go too far into areas that are still in process in my thinking.”
Show all 16 chapters
Khosla's Perspective on Democracy and Capitalism
23:00 to 25:04
Hear Vinod Khosla's views on democracy, capitalism, and their roles in future socioeconomic structures.
“So I absolutely agree and I think it's important that we win.”
OpenAI: The Early Days and Elon Musk's Involvement
25:04 to 28:00
Learn about Vinod Khosla's initial investment in OpenAI and the dynamics with Elon Musk.
“And I would say most people don't have that luxury.”
The AI Battle: OpenAI and Its Rivals
28:00 to 29:26
Explore the competitive landscape of AI, focusing on OpenAI's role and challenges.
“It seems like he wanted it like a private fiefdom with him in charge instead of what he claims like the public benefit company it is now.”
The Uncertain Future of AI
29:26 to 30:55
Discuss the unpredictable nature of the AI industry and potential first mover disadvantages.
“And it was$50 million at a billion valuation?”
Values in AI and Entrepreneurship
30:55 to 33:54
Understand the importance of values in the success of AI leaders and entrepreneurs.
“I would venture to guess one of the key areas of competition will be who has the most compute.”
Navigating the Future: Utopia or Dystopia?
33:54 to 36:18
Examine the key factors that could lead society towards a utopian or dystopian future with AI.
“And I think that's what the world of abundance will offer us.”
Transcript
Automatic transcript. May contain errors.0:00Alyson Shontell:We will have enough abundance. The need to work will go away.
0:04Vinod Khosla:In a world where AI has already begun to infiltrate our daily lives, what will life look like by 2040? I sat down with Vinod Khosla, who many call one of the greatest venture capitalists of all time.
0:15Alyson Shontell:Those who use AI will clearly beat those who don't use AI.
0:20Vinod Khosla:He believed in AI long before it became part of the public discourse. And he's bet big and early on OpenAI, the leading AI research company that serves hundreds of millions of users a week. I've placed the largest bet I've placed in 40 years by a factor of two. Khosla predicts that within 15 years, AI will completely redefine life as we know it, driving down the cost of living, freeing young people from a future of work, and shifting society from survival to true fulfillment.
0:48Alyson Shontell:It's pretty unlikely a five-year-old today will be looking for a job.
0:53Vinod Khosla:But his utopian vision hinges on one critical safeguard, governments getting their policies right.
0:59Alyson Shontell:So the current MAGA notion of lower the taxes will not work.
1:04Vinod Khosla:I'm Alison Chantel, editor-in-chief of Fortune, and this is Titans and Disruptors of Industry. We'll be right back after this break.
1:25Vinod Khosla:If this is on the topic of every CXO conversation I'm a part of, and I think the thought process has to be looking for high impact areas that may not be necessarily the most glamorous or high profile functional areas, but are right for automation and use of this technology to create efficiencies as well as innovation. And over time, AI agents will be also in customer facing and growth oriented domains. In our case, Deloitte, we're using it within our finance organization, looking at very mundane processes like expense management and working capital management. We're seeing other organizations using it in call centers and with software development that can be automated.
2:15Vinod Khosla:It comes down to intentionality. And so I think that intentionality in going functional area by functional area in concert with business and IT leadership in an enterprise, it needs to be a mainstream business planning effort that's budgeted, that KPIs are developed, and there's real accountability for actual business outcomes and impact because of agentic capabilities. Vinod, it's a pleasure to be with you. You've had a storied career as both a founder and a venture assistant, as you like to say. You do not like to be called a venture capitalist, and you're certainly one of the titans of industry.
2:51Vinod Khosla:So thank you for being with me today.
2:53Alyson Shontell:Oh, it's fun to talk about these things.
2:55Vinod Khosla:Absolutely. My favorite thing as well. I love your future outlook. I think it's really a healthy dose of optimism that people need to hear when it comes to the AI future. Can you just give me a big picture perspective of what you think life could be like in 2040? I would say to imagine the
3:13Alyson Shontell:change between today and 2040, you'd have to go back and look at the change between the 70s and now when TVs still had rotary dials and three channels. There was no such thing as a cell phone, no such thing as an internet. Life was very different. Expectations were very different. I think that magnitude of change is what will happen in the next 15 years.
3:41Vinod Khosla:And what will we be doing? Are we going to be working? Are we going to be using public transportation? Are we all going to have private chauffeurs? What does kind of life look like?
3:49Alyson Shontell:Here's the things to imagine. Almost all expertise globally will be free. It'll raise lots of interesting questions. Do you pay a farm worker the same as an oncologist because they happen to have the same expertise, which is the expertise of AI? Almost all labor will be free because we will have robotics. Probably for a few hundred dollars a month, the way you pay a few hundred dollars a month for a car, you'd pay for a robot in the house. Definitely make you any style of food you want, any recipe you can ask for or might wish for, or it might even be good at what you haven't had recently and predict what you might like for a change.
4:32Alyson Shontell:That's one side of it. On the enterprise side, functions left for humans to do, very hard to predict. It's pretty unlikely a five-year-old today will be looking for a job.
4:45Vinod Khosla:A five-year-old today will most likely not be looking for a job. So my daughter. Oh, great. Good.
4:51Alyson Shontell:If I'm right, you will see a couple of phenomena. First, the need to work will go away. People will still work on the things they want to work on, not because they need to work. Look at the vast majority of jobs in this country, let alone the rest of the world, which is worse. If you're an assembly line worker on a GM car car line, mounting a tire for eight hours a day for 30 or 40 years. If you're a farm worker here in the Salinas Valley, not far from here, hunched over in 100 degree heat, picking lettuce, those are not jobs. Those are service you. I think we will have enough abundance. The need to work will go away.
5:41Vinod Khosla:I think that sounds like a great future in terms of freeing us of servitude, jobs that are just jobs that you have to do because you need a living, as opposed to jobs that you really want to do, like you. You're still working. You don't need to be, but you love it. And I love my job and it's a great place to be, but so many people don't feel that way. And I definitely want to dig into how you think that could be financially viable and how we can support all these people who aren't working. But first, I want to go back in time to your upbringing in India. I know you didn't come from a well-to-do family.
6:14Vinod Khosla:The way that you learned about entrepreneurship, I think you were going out and physically renting magazines. I would hope that at some point you rented a Fortune magazine. That would be awesome. But I'd love to just hear how your upbringing shaped your perspective that you now use today. Well, a couple of things.
6:30Alyson Shontell:First, I would say I grew up with very few expectations. I remember coming to this country in 1976. My family had never had a TV at home. My family had never had a phone at home. So expectations of what life was like was pretty low. You worked a lot and you survived was the expectation. So I started in a very different world, but I also realized very quickly how much you have agency over your own future, how much you can create. And that was very energizing for me, like my future was in my hands. And I never really got a regular job. You know, I got my master's degree in biomedical engineering and then my MBA at Stanford and then did my first startup, did my second.
7:31Alyson Shontell:I was fortunate I've never actually worked for anybody or applied for a job or had a resume, as they used to call them before LinkedIn. Everybody will have more opportunity to chart their own future to tie it back. You know, today, with your daughter, you would say to her, go to school, study hard, do well, get into a college. You hope she gets into a college, and then she can get a good job and support her family. In 15 years from now, you will say, what is bad advice today, or used to be, which is follow your passion. Follow your passion comes second to surviving. I think that surviving part will go away and you'll tell every five-year-old kid, follow your passion.
8:18Vinod Khosla:That would be awesome. And so you clearly followed your passion all the way to the States, to Stanford, where you started Sun Microsystems, and then you went to Kleiner Perkins and you helped kind of be the brainchild of Juniper Networks, which is one of the greatest returns in venture capital history. That was fun. Yeah, I bet it was a 2500 return. I would like that. That's amazing.
8:41Alyson Shontell:2500X is pretty rare even for venture capital.
8:44Vinod Khosla:100%. I'm wondering how, being a little bit of a contrarian thinker, that's a signature trait of the most successful entrepreneurs and venture capitalists in the world. What learnings from Sun and Juniper's success did you pick up to help hone that contrarian view?
9:00Alyson Shontell:Give yourself permission to think out of the box. You know, when I was in sustainability, I used to say, think outside the barrel, the oil barrel. Almost everybody has it. Very few people exercise it. And the most important trait in entrepreneurs, it's about agency and driving your future and being empowered. I had no resources. I had no contacts. I didn't have any money. It just, you create agency and you make it happen. It's still very hard. It's still the last 40 years, lots of failure points, lots of things that didn't work, but you power through those and have resilience. And I think 2040, almost everybody will have agency because they won't have the constraints of abundance if government policy allows it.
9:57Vinod Khosla:I do want to know your thoughts on that because most jobs, clearly people do because they need money. And secondarily, it's a sense of purpose. You wake up in the morning, you have a responsibility, you go to do it. The loss of both of those things, income and purpose, are huge. And I want to know your thoughts on how our brains can adapt to survive that kind of fast transition in both hugely important areas. You may be out of luck.
10:22Alyson Shontell:Your daughter won't be. I think younger people will adjust to this freedom to do what they want much easier than older people's notion of where they have meaning in life. Most people today don't have enough time to spend with their kids. Totally. Most people today don't have enough time to spend with their aging parents. Talk about two large consumptions of time that is very, very meaningful. If you're an artist, you'd better get used to working at a restaurant as a waiter or waitress. That's the reality for most people aspiring to be an artist or a basketball star or a surfer or a musician. So I do think the room for creativity is very, very large, but we are drilled into a narrow vision of what we are supposed to do.
11:18Alyson Shontell:And I think that's the fundamental thing that will change about humanity. AI will free us to be more human.
11:25Vinod Khosla:It's a message Vinod Khosla has had for decades. At the start of the millennium, he said AI would redefine what it means to be human. By the mid 2010s, Khosla was investing in AI image and radiology technology. Then in 2019, his company Khosla Ventures was the first to make an institutional investment in the chat GPT creator OpenAI. It was his largest single investment in 40 years. How do you think is the best way to replace income when we have this huge wealth disparity?
11:53Alyson Shontell:Let's talk about that. I think each country will do things differently. Starting in about 2030, 80 % of all jobs, so two-thirds of all jobs, will be capable of being done by an AI. So whether you're a physician, whether you're a radiologist, whether you're an accountant, whether you're a chip designer, whether you're a salesperson, AI will do your job better. And there'll be an interim period where every professional will have four AI interns. They're training to leverage themselves. And I think the initial model of AI deployment will be AI interns working for somebody who's already a senior accountant or a physician or a chip designer.
12:52Alyson Shontell:But what happens when all labor is free? By the way,$15 trillion of U.S. GDP is labor. $15 trillion. That would mostly go away. That's a hugely deflationary economy, something nobody's planning on. But it's a different kind of deflation than past deflationary economies. The abundance of goods and services will be very, very large. Prices will be very, very low. So I would suspect by 2040, $30 ,000 will buy and maybe$10 ,000 will buy much more than you can buy if you have$100 ,000 income today. So the level of income you need in a deflationary economy will be very different.
13:41Vinod Khosla:Interesting. So you think it'll cost less for just lifestyle?
13:44Alyson Shontell:Look, all education should be free. Yep. Which means college is goodbye? It's a real question. It'll take longer because people like institutions and the notion of institutions. But you won't need a college to get an engineering degree. You won't even need the engineering degree except if your passion is learning. My passion is learning. That's why I do what I do.
14:10Vinod Khosla:So education is free.
14:11Alyson Shontell:Education can be free. Healthcare, except interventional procedures like heart surgery, will be near free. Labor, whether you're talking about farm workers or assembly line workers or retail workers or accountants, that'll be all free. And in a competitive economy, that means declining prices. Now, I don't think GDP will, we will have dramatically increased GDP, if it's measured right, GDP as we measure it will be a very poor measure of growth because prices will be declining in this deflationary economy. So there's an unusual opportunity. Post-2040, most goods and services will be near free to produce.
15:01Alyson Shontell:Energy will be free because of fusion and other sources of energy. It won't be oil-based and it'll be much cheaper. And there's complex areas that are hard to predict, like steel. I suspect we'll have 10 times more steel resources and much less need for steel. But things like housing are the hardest problem. But you have this world where we have abundance of goods and services. You need food and housing, healthcare, education, entertainment, almost all free. Interesting.
15:36Vinod Khosla:Do you see a world where, I think the internet made so many millionaires that happened faster than at any point. And I think there's a feeling that AI will create more billionaires than at any point. Are we looking at this sort of like you're either a surfer or a billionaire and there's nothing in between? What does that look like?
15:54Alyson Shontell:You know, it's very hard to predict. And most of it, most of it will depend on government policy. So the current MAGA notion of lower the taxes will not work. My politics are clear. I think the minimum level of services governments will be able to provide will be much, much higher in all dimensions. How that redistribution happens, very hard to tell. Why are governments inefficient at certain things? because they hire people who don't have the right incentive structure. So incentives is what capitalism is about. By the way, capitalism is by permission of democracy. You can't leave 80 % of the population behind.
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16:42Alyson Shontell:They will revoke capitalism if that happens.
16:46Vinod Khosla:I think we're seeing that a bit.
16:47Alyson Shontell:And we are seeing pieces of that. But policy will see how we handle this set of services. There's simple things short term, more structural things long term. For example, in this traditional battle of now moving to economics, share of income to labor versus capital will shift a lot to capital, little to labor. How do you change that in the short term? I think fundamentally we ought to eliminate the notion of capital gains. All income is ordinary income. Everybody pays the same tax. And the next presidential campaign, I hope, gets behind nobody pays income tax below$100 ,000 a year starting 2030.
17:41Alyson Shontell:That shortfall is made up by an increase in the capital gains tax to be the same as ordinary income. I could go through lots of detailed policy. I'm working a document on that. But it makes it tax neutral. No more taxes, but much fairer distribution of income. 40 % of all capital gains is paid by people making more than$10 million a year. Now, that's a very small percentage. 123 million people, roughly that, make less than$100 ,000 a year, and you make all taxes go away for them. So there's ways, and that's why I think policy, which would be driven by politics, will drive where we end up on this equation short term.
18:35Alyson Shontell:And I think it will start in the early 2030s, this massive drive for structural change. People have proposed AI taxes, robot taxes, I think some sort of wealth fund for a nation. Norway has an oil fund. Alaska has an oil fund. We won't have oil, but we will have other sources of wealth creation that should be. And these are some raw ideas. There are plenty of flaws in them, but they will be refined and something structural has to happen. It could be universal basic income. It should be a wealth fund. It could be services that are near free. Any of these things. So I don't want to go too far into areas that are still in process in my thinking.
19:26Vinod Khosla:No, I think it's the right innovative thinking and approach. And I think a lot of people who are making under$100 ,000 would really support a lot of that. And they're the voters.
19:35Alyson Shontell:They will vote for a candidate who says no taxes if you make less than$100 ,000. Let's tilt the equation towards labor and not capital. I'm sitting here with a billionaire in California.
19:48Vinod Khosla:Lots of billionaires are starting to plot their leaving California because of a potential wealth tax on them. I know you've had thoughts about what's right and the wrong way to tax billionaires to be most effective for still creating innovation here. What are your thoughts generally on the right way to tax billionaires? And why is the current proposal potentially wrong? And do you have plans to leave California?
20:11Alyson Shontell:I have no plans to leave California. In fact, people would generally have left on January 1 or before January 1. But it doesn't structurally solve the problem beyond the one-time shot of income. One time. It's silly. And so many entrepreneurs who own 20 % of their company are talking about leaving now in case somebody takes another shot. Because junkies come back for another shot. If at the federal level we doubled capital gains tax, made it all uniform, one tax, then we will equalize and balance between economic profitability and economic growth and investment. That's the reason for capital gains is increased investment and more equitable distribution of income.
21:06Alyson Shontell:That's just one idea. That's a structural change that would make sense. I'd be surprised if that doesn't happen before 2040. Now, capitalism was about economic efficiency. But if the need for efficiency goes away because of extreme abundance, then why focus on efficiency? Let's focus on equity. Every country will be different. Very unlikely business in Germany, for example, with strong participation of labor on their boards, will allow AI to replace jobs. China will. They're very much on that trajectory.
21:43Vinod Khosla:The AI race between the U.S. and China is incredibly close. The U.S. still leads in advanced models and AI chips, but China is rapidly closing the gap, leveraging massive scale and state backing. What was once a clear American advantage is now a high stakes sprint where breakthroughs or policy shifts could change the balance almost overnight. The feeling from the Trump administration is the U.S. must win. David Sachs, the AI czar, is saying I'm afraid of pessimism of AI and the states is going to hold us back. China is ahead in energy, even in EVs. How do you think what's happening there and what's happening here will affect kind of the future?
22:21Alyson Shontell:We are in a techno-economic war with China, and we shouldn't call it anything other than a war. Because whoever wins this AI race, though I mostly disagree with the Trump administration and I'm on their s*** list, I mostly agree with their policy on AI. We have to win that race. Whoever wins the AI race will win the economic race and will win the race for socioeconomic power and influence globally. Whether you're talking about Southeast Asia, Latin America, Europe, all of that depends on who wins the AI race because it's such a pivotal technology. So I absolutely agree and I think it's important that we win.
23:12Alyson Shontell:I think the Biden administration was pretty good about it. The Trump administration, I agree with all of their policy on AI and aggressiveness on AI.
23:23Vinod Khosla:And the importance, is it like ideological where China's viewpoint could be put into products or is it more like war devices in terms of autonomous?
23:33Alyson Shontell:I think it's fundamentally about socioeconomic influence all over the world. Which political system prevails? I happen to like democracy over the Chinese system. They're literally forcing more equality, and they think it can be centrally governed with Xi in power. I couldn't argue that that's a bad system. I just don't like it. Maybe I'm too brainwashed.
24:00Vinod Khosla:I think a lot of Americans would agree with you.
24:01Alyson Shontell:I like democracy. I like this system, especially in a world of abundance.
24:08Vinod Khosla:Democracy and capitalism. Both systems that have worked out well for Khosla, who's a billionaire and considers himself an independent. And though he aligns with the Trump administration's position on AI. It's pure genius and its potential to transform every type of human endeavor. Khosla has long been an outspoken critic of the president. Khosla has also sparred with Elon Musk over his lawsuit against OpenAI and his involvement in the Trump presidency. That's contrarian to a lot of VCs I see right now who would be saying, we need to support the administration. They're good for little tech. They're good for our LPs for our returns.
24:45Vinod Khosla:Depraved values be damned. How do you square that?
24:48Alyson Shontell:It depends on what you care about. I care about my freedom. My first startup I made enough to never need money again. That was my first startup in 1980. And I decided I would do what I want.
25:02Vinod Khosla:And say what you want.
25:03Alyson Shontell:and say what I want, and I want to feel good about where I stand. And I would say most people don't have that luxury. I think it's almost an indulgence to be able to do what I do. I can't be fired. I've never worried about a career. I don't need more money at age 71. Health permitting, next 25 years, I'll be doing exactly the same thing because I like working 80 hours a week learning. And nobody can take that away from me. So if I speak up for the right thing, it's because I have this immunity from, maybe they'll put me in jail, I wouldn't put that past this administration. If Don Lemon can be arrested, well, who knows.
25:54Alyson Shontell:But I do think if people don't speak up, we are more likely to head down this authoritarian path because people are optimizing their short-term advantage by getting in with the administration. I have the luxury, so I definitely owe it to speak up in a country that's been really good to me. I think most Americans don't know how good they have it in this country and how much they control their own fate and agency. And it doesn't matter what Elon thinks. What I value, neither him nor Trump can take away, I don't think.
26:33Vinod Khosla:Elon was an interesting way that you came into OpenAI as the first institutional investor. If I recall, he was a co-founder with Sam. There was money, I think, that was supposed to be kind of delivered in a handbasket by Elon that didn't happen. and you swooped in. Can you just take me back to that initial investment and about how you became the first?
26:52Alyson Shontell:First, I would say on Elon. I'm happy to call him when he needs to be called, which is often. I'm also an admirer of Elon as an entrepreneur. He's created so many interesting companies and makes the future happen, which is a real contribution to society. Electric vehicles wouldn't have happened without Elon. Private space would be, you know, I'm very proud of our company, Rocket Lab, which is worth$45 billion, something. But SpaceX, clearly, Elon pioneered the way. He's pushing in other areas. Robotics. Robotics, for example. I'm not optimistic he'll win that race, but it's an open race. AI is an open race.
27:40Alyson Shontell:He's definitely participating the right way and with a lot of courage and boldness. It's hard to bet against Elon because he's such a good entrepreneur. Having said that, he had committed a billion dollars to OpenAI, and then he reneged because he wanted to be in control as far as I can tell. I wasn't privy to the battles pre-us investing in OpenAI, so take that with a grain of salt. But he wanted to be CEO. He wanted to run the AI company. It seems like he wanted it like a private fiefdom with him in charge instead of what he claims like the public benefit company it is now. He essentially was holding the team, Sam and others, Greg and others hostage.
28:30Alyson Shontell:And Sam had to look for other sources of money. There was no other source. My personal view was Google had good AI. Baidu had a facility just down the road from Google here in Silicon Valley, stealing all their best people by overpaying them and developing Chinese AI. That's where the AI battle started, in my view. And I thought there needed to be another AI effort in the West. I'm pretty well known for my hostility to China. And I don't wish them ill. I think they can be successful. I just don't want them to dominate us with their AI. And so I thought it was important to support OpenAI. I was also certain when AI happened, the consequences of success would be consequential.
29:23Alyson Shontell:And that was OpenAI as a bet. I placed the largest bet I'd placed in 40 years by a factor of two for an initial bet.
29:31Vinod Khosla:And it was$50 million at a billion valuation?
29:34Alyson Shontell:Yes. In a company that was a nonprofit.
29:37Vinod Khosla:And is now worth a few hundred billion dollars.
29:40Alyson Shontell:I'll let you do the calculation. But my point is, it took a lot of conviction. It took a lot of courage to... And you apologized to all your LPs. You said, sorry. In fact, in 20 years in Coastal Ventures, it's the only time I made an investment and sent an apology letter to my LPs saying, I'm doing it anyway, but I realize how foolhardy this looks. But it takes courage to do that. And I'm proud of our team that everybody got behind it. You placed the largest initial bet we had ever placed by a factor of two.
30:14Vinod Khosla:Now, there's no denying OpenAI is the clear front runner. It's got something like, what, 800 million users actively on it. It is getting chipped away at by things like Gemini. I think Demis Hassabis is a very worthy opponent in Google and what they've been shipping there has been pretty remarkable over the last year. Do you ever worry that OpenAI could be the first mover disadvantage where we've seen that with Napster, with MySpace, there are all these companies, they defined a category and then they went poof.
30:47Alyson Shontell:You know, what I would say to you is the race is far from over. So I can't guarantee you OpenAI will be successful. I will say the following. Demis is great. He has a great talent team. So Google's great effort. Anthropic is a good effort. It's a good team. I would venture to guess one of the key areas of competition will be who has the most compute. And I think OpenAI is betting more on compute. Meta is betting a lot. Others are. I also think OpenAI is doing as much or more research than any of the other major players in terms of things that aren't going into a product immediately. So many people focusing on catching up to OpenAI and trying to make short-term bets.
31:42Alyson Shontell:I think OpenAI is placing more longer-term bets. And who has the lead in the best current model, I think will shift a lot probably every six months. And so I don't think the battle is over. I wouldn't count out Elon with XAI. but they're far behind.
32:02Vinod Khosla:You have a track record of picking raw talent early, spotting it even in founders that have not proven themselves yet. Sam Altman was pretty unproven, looped, Y Combinator. He had some successes but not great. Jack Dorsey, he had just been fired from Twitter when you backed Square.
32:18Alyson Shontell:Not only had Jack been fired from Twitter, I like to tell people he had forced, failed startups, if you look on Wikipedia, before we backed him. look there's a couple of things that matter more than anything else i think this is going to be even more important in the world of ai values matter people's values matter jack has great values i think sam has great values you know he didn't take any equity in open ai despite many chances to do that that's not why he's doing it so you mean initially even now no equity in open ai Yes. You know, people say that's pretty amazing. Nobody believes it. You don't believe it.
33:02Alyson Shontell:Yeah. But it's true. As far as I know, it's true. But it's not why he's doing it. You know, it's not a financial incentive. And people who grew up on Wall Street think it's the only incentive in life. And I think Wall Street has a really bad set of ethics in general. I think values matter a lot in picking founders. who are on a mission to change things. And I think values will be what we, AI will let us have without being distracted by the urgency of expediency or supporting your family. I hope that's where humans go. High values, being able to speak their mind, being able to not do everything for money.
33:54Alyson Shontell:And I think that's what the world of abundance will offer us. I do think it's an important characteristic of entrepreneurs for one important reason. Entrepreneurs with good values build better teams. And better teams is what you need to build a great startup.
34:10Vinod Khosla:You've also spoken about how you believe that the future will be a utopia. It could be. But it could become a dystopia if we do the wrong things. What do you think is most important for us to get right to achieve the utopia versus dystopia future?
34:26Alyson Shontell:So I'll give you my favorite example. Today, 2026, robots are not allowed to work in retail on Sundays in Germany. That's like the stupidest policy you could do, and more of that will assure self-destruction for Germany. By the way, retail workers aren't allowed to work on Sundays, so robots aren't allowed to work on Sunday. It's just mind-blowingly stupid. But it's the power of labor in Germany, and that may prevent them progressing. This is the piece of policy that will be determined by the politics of a country that is very hard to predict. So I think 2030 to 2040, the period I didn't talk about, will be really chaotic and country by country different.
35:18Alyson Shontell:One thing that's very clear, starting 2030 to 2040, those who use AI will clearly beat those who don't use AI. It doesn't matter whether it's a company, whether it's a country or a government. And if we restrict its maximum use and maximum benefit, it'll be a problem. Silicon Valley loves to talk about disruption. And it's fun if you're disrupting things. It's not a lot of fun if you're being disrupted. And if we don't pay attention to the people who are being disrupted, and the current administration is flawed there, it's very good about less regulation and wanting to win. very poor about taking care of the people who need taking care of.
36:08Alyson Shontell:I think we'll have chaos in society and maybe breakdown of social norms, and it'll be very much country by country and politics.
36:19Vinod Khosla:Well, Vinod, thank you so much for diving into so much of this. It's really exciting to hear your abundant future concepts, and I know you'll be there helping to shape it, So we appreciate and we'll be watching.
36:31Alyson Shontell:Well, thank you. Sorry for being so verbose, but I'm really passionate about these ideas. And frankly, as I said, I have the freedom to pursue these ideas without needing to worry about all the things most people have to worry about. So I'm glad I can exercise that. You've earned it.
36:50Vinod Khosla:I mean, you're the definition of successful capitalism. So congratulations on that.
36:54Alyson Shontell:Thank you.
From the publisher
What if AI made your paycheck optional? Vinod Khosla, one of the world's greatest venture capitalists and an early backer of AI, believes the technology will take over 80% of labor, freeing humans to live on passion instead.His track record backs up the boldness, as early bets on OpenAI, DoorDash, Instacart, and Square have made him one of the most consequential investors of our time.In this episode of Titans, Khosla sits down with Fortune Editor-in-Chief Alyson Shontell to unpack his abundant vision for the AI future, what government policy should tackle for a more equitable 2040, and what the U.S. needs to do to win the global AI race.
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