Scaling solutions for the climate crisis, with Vinod Khosla

0:00Scaling a business in the US can feel like a maze. Each state has its own payroll, benefits, and compliance rules, pulling your focus away from growth, which is why founders use Deal. Deal is the professional employer organization, or PEO, that gives you a dedicated HR expert, plus Fortune 500-level benefits for your team. The National Association of PEOs says businesses can grow twice as fast if they use one. So, if you're scaling, make it simple with Deal. Go to deel.com. slash MOS and get up to three months free. If you're in private capital, you understand that your next great deal starts with who you know.

0:41That's why over 3 ,000 firms trust Affinity, the CRM platform purpose-built for private capital. Affinity's relationship intelligence reveals your team's strongest paths to founders, investors, and decision makers using insights hidden in emails, calendars, and meetings. With powerful AI tools like Affinity NoteTaker and Deal Assist, you'll spend less time managing data and more time closing the right deals. Learn more at affinity.co slash marketplace. Hi folks, Jeff Berman here. This week we wanted to share a conversation I had in the fall with Vinod Khosla. Vinod joined me on stage at the 2024 Masters of Scale Summit to discuss a range of issues, including one of his passions, how to scale solutions to climate change.

1:34The entrepreneur and billionaire investor is a true titan of tech. He's the founder of Sun Microsystems and Coastal Ventures, and over the past several decades, he has been integral to the success of dozens of tech companies. The Node believes we only need a handful of dedicated change makers to turn the tide on the global climate crisis.

2:20Stuff that just seems absolutely nut balls. Ten years later, we're like, well, that's just how you do it. We haven't made it just how you do it. This is Masters of Scale.

2:37I'm Jeff Berman, your host. I spoke with Vinod on stage at the Presidio Theater in San Francisco back in October. We dove straight into a thesis he champions, that we need a small but mighty number of what he calls instigators to turn the tide on climate change.

3:00Will you start by telling us about your instigator thesis? I've dealt with instigators, which are really entrepreneurs, all my life. But when I was looking at the climate problem and people kept telling me it was a very hard problem, not a solvable problem, I looked at it carefully and I said, it's a much simpler problem than people make it out to be. You only need a dozen instigators in a dozen areas. Everybody can help. Everybody can contribute. But we need a dozen instigators to solve the climate crisis. I mean, OK, so it matters, but it doesn't matter in the grand scheme. If I drive an electric car or what have you, why a dozen in a dozen areas?

3:50Because there's only a dozen large areas that have large carbon emissions. Now, I'm talking carbon emissions. I'm separating climate change from sustainability. To me, they're quite different things, though they're often confused. Can you unpack how you view them differently? Sustainability is about recycling and things like that. Green approaches, it gets mixed in with some of the wellness approaches to food and other things. But if you're strictly looking at the climate change problem, it's about carbon emissions. And there's a dozen important areas. Electric vehicles is one. Aviation fuel is another.

4:36Plant protein or proteins is another. There's only a dozen large emission areas that really matter. If we solve them, we will mostly have solved the climate crisis or the carbon emissions crisis. If we don't, it doesn't matter what else we do. And your view is literally one instigator, one entrepreneur in each of these categories can make a difference or can make the difference. I hate giving Elon Musk any credit, but I do give him credit for instigating the change to electric vehicles. Without him, we would be on a very different path, dependent on General Motors and Volkswagen and Ford to ship electric cars.

5:24So he did more than without ever being in the car business to change the paradigm of what's accepted and then got everybody to follow. We contain multitudes, even Elon Musk. Yeah. Yes. You know, Pat Brown did that with plant proteins. And I think those are well on our way. They'll have up and down cycles, but I think we are well on our way to solving the protein problem. and it's through fundamental science innovation. Bob Baumgart's done that in fusion. I don't think fusion's a if question. I think five years from now, nobody will be debating whether fusion's possible. It'll be how fast can we implement it.

6:10Why do you believe we'll be there within five years? Just because, you know, if I looked at 2018, I think that was the year we invested in Conwell Fusion, by the way, also invested in OpenAI the same year. In a public transit system, three fundamental things in one year, I was very proud of that year. But it isn't that Bob started that company. We started it in a way where in the following five years, maybe a dozen, maybe 20 startups started doing the same thing. And then when there's that many shots and goal and talent and money are flowing in, which is what Bob caused to happen, that's an instigator.

6:57So at this point, whether Bob succeeds or fails, I think the world will have fusion because there's so many good scientific attempts. And do you believe we have enough time to get to all 12 categories? So I didn't speak to that issue. I do think we are well on our way in steel. I think we are well on our way to sustainable aviation fuel. And these are things most of you probably haven't heard of. But I've seen the state of development to say at this point, it's mostly engineering risk. Very often, the risk is cost. But dispatchable power generation is a big one that there's more than one approach that'll work there.

7:41And we've instigated that change. If I take these dozen areas, I'd say eight of the dozen have very good, scientifically sound efforts to develop the technology. That's the optimist in me. My bet is by 2030, most of these areas will have a solution. And then the 2030s will deploy them, build five plants, 10 plants. But at that point, we get to a point where we can do thousands of plants a year in each of these areas, whether it's steel or power generation or others. I think we are now legally required to talk about AI in every conversation. So I'm going to not break the law here. How will AI help us achieve the 12 on 12?

8:29Yeah. So the first thing I would say is we should be cautious about ascribing too much to AI. How many people know the NeuroEPS conference here? Raise of hands. It's sort of the go-to conference for AI. Very few hands up. And I looked at last year's papers and the years before on AI and climate change. And I said none of these approaches, these efforts of AI in climate change are going to be consequential. Why not? Just because they address minor problems. You know, building efficiency isn't a climate change problem. You can improve it 2-3%, but you're making very little progress. Unless you get to 80-90 % reduction in carbon in every one of the major areas, we're not going to get there.

9:19And so I'm only looking for the 90 % reductions, not the 10 or 20 % improvements in efficiency or other things. In which categories do you think AI may help us the most? Well, so I think in the next couple of years, we'll get to an area where we have what I call, and this is not an original term, AI scientists. then you can apply a much faster rate of scientific progress in materials design for example we are using AI in Conwell Fusion to control plasma plasma control is a hard problem we are using AI Conwell Fusion is partnering with DeepMind to do that but I do think fundamentally AI scientists to get creative about new approaches in some of these areas will make a huge difference I want to take us beyond climate, if I may, unless there's something you want to add there.

10:18Taking the instigator thesis into healthcare, for example, we have at least a couple of companies here, including Transcripta, that are using AI to discover new applications for existing drugs, to discover new drugs. How do you think about the instigator thesis as it applies to healthcare, particularly with AI health? And I think I would broadly say entrepreneurs cause most of the radical change. When it comes to incremental innovation, big companies are relatively good at it. And Intel can do a good job of moving from a seven nanometer semiconductor process to a five nanometer process. But in the 40 years I've been doing innovation, I've only done a technology-based innovation.

11:05I can't think of a single example of large innovation that was done by a large player or a large institution or a government program. But in each case, whether, I like to put it the following way, did Amazon reinvent retailing or was it Walmart or Target? We talked about Elon Musk, it wasn't General Motors or Volkswagen. In Airbnb, you might have thought that, hey, Hilton or Hyatt would know how to do that. Or in Uber's case, you'd think somebody like Hertz will reinvent that area. There isn't a single example I can think of a large innovation that a large institution was part of doing or predictable.

11:59Now, big companies help. they pile on. Today, we are dependent on the big auto companies to build EVs, but they've all switched because somebody has shown the way, and that's what instigators do. And that is happening in healthcare. Vaccines were done that way. Almost all the large innovation is happening at many levels. You talked about drug discovery. You know, the idea of drugs being designed by AI, very powerful. I think I first talked about it 10 years ago in a long piece I wrote. But every company is now getting on that bandwagon. They'll help. And how quickly do you think we'll see the revolutionary change, not the evolutionary change, but the revolutionary change in healthcare?

12:50Healthcare depends on regulatory control. So that limits what we can do at the drugs level. No matter whether you have AI-designed drugs or other traditional drugs, you've got a 10-year process of getting a drug approved through the FDA. Now, there's a cheat to that that I'd love to see happen, and we are working on it. If you design a drug that's for one person, you know, today we design a drug and works for all 7 billion people on the planet, whether it's a fancy drug or a simple aspirin. And different people have different genetics. We don't optimize for that. You could design a drug for only one person.

13:33I don't know how the FDA would handle that. We are attempting to see how that might go. Design the drugs with the help of AI for one person. one patient at a time. Much easier to do in certain classes like genetic diseases. You can do that. The other end is, and I'm very excited about this idea, it's hugely disruptive. How many people have heard of a thesis put up on AI about two weeks ago called AI dystopia or utopia? Everyone raise your hands, please. No, you don't have to. I postulated that all expertise will be free. So if you look up in TechCrunch, in 2012, I wrote a blog called Do We Need Doctors?

14:19Under a simple thesis in 2012, later expanded to a 100-page thesis by 2016, we won't need doctors for their expertise because AI will be the best primary care doctor. We're working on that. AI will be the best and easily scalable therapist for mental health. AI will be the best oncologist in most of these areas. By the way, it's not restricted to medicine. AI will be the best structural engineer. AI will be the best salesperson or marketing person. So almost all expertise will be near free. Okay. The best marketing person, the best salesperson. Yes. I mean, that's not necessarily intuitive, at least not for me, because there's...

15:11There's only a dozen startups doing salespeople, AI salespeople. But in each case, there are sparks of creativity. There are relational components, right? If you and I are working on a deal, there's trust that we build over time. and I'm able to ask you questions, you're able to ask me questions, we're able to work together in the best case to create a deal. Are you imagining two AI agents putting that deal together? How are you imagining that being a more efficient and effective process? The first thing I would say is just because I can't precisely predict how the change will happen doesn't mean the change will not happen.

15:49I'm almost certain the change will happen and radical change, but it's hard to predict exactly how. So if you were to bet and know in 15 years, things will be the same, I'd take 10 to odds on that with anybody.

16:08More from my conversation with Vinod Khosla in just a minute.

16:21Real leaders don't back down when the stakes are high. They innovate, they push forward, and then they take the stage at the Masters of Scale Summit. Join us in San Francisco, October 7th to 9th, to hear from the CEO of the New York Times, scientists using cutting-edge technology to find cures, the leader of crypto powerhouse Coinbase, a retired four-star general, and many, many more. Apply now at mastersofscale.com slash apply25. That's mastersofscale.com slash apply25.

17:21aws.amazon.com slash activate and start building. Expanding your business in the U.S. can feel like a maze. Every state has its own payroll, benefits, and compliance rules, which can pull your focus away from growth. That's why founders use Deal. Deal is the professional employer organization, or PEO, that gives you a dedicated HR expert plus Fortune 500 level benefits for your team. The National Association of PEOs says businesses can grow twice as fast if they use one. So if you're scaling, make it simple with Deal. Go to deel.com slash M-O-S and get up to three months free.

18:08Welcome back to Masters of Scale. You can find this conversation and more on our Masters of Scale YouTube channel. Next up, I asked Vinod if there are any areas where he thinks human effort will still be more important than AI. Look, there's certain things that are not rational that make us human. And I think those categories will be categories. Look, even today, you can get a well-produced glass like this off a factory line. but I'll pay more for a handmade glass. We all do. I do. And so that's the humanness factor. We prefer certain things and we don't have to be rational about everything in our lives.

18:59We like to think of ourselves as rationalists. I do. But there are things I prefer. And perhaps the irrational decisions are some of the most important ones that we make. In fact, there's some of the most important decisions. I think there was a scientist, and I won't name the name only because I haven't been able to verify it, who said we make most decisions rationally except the most important ones. Who do we marry? That's not a rational decision. That is an emotional decision, and it should be. That's where humanity comes in and humanness comes in. And I postulate in my thesis that we will have more room for humanness because we won't be occupied by the things AIs can do for us.

19:48You know, I'm a techno-optimist, but I modify techno-optimism with a simple phrase, which I use in my long, it's a 25-page essay, so not easy reading. I say techno-optimism with care and caring. And the care part is AI safety, and the caring part is inclusiveness about everybody else. And I do think techno-optimism by itself is not necessarily good for society as a whole. It's good for the technologists. But with care and caring, I think it becomes the single most powerful tool we've ever had to move society to an era of abundance and being more human. Now, people ask me a simple question like, won't it displace jobs?

20:43Honest answer, yes. In fact, I think 80 % of all jobs, so if you do the math, 65 % of all jobs in 20 years can be done by an AI in those countries that choose to do so. And it'll be a country-by-country political choice. So a lot of job displacement and probably a pretty disruptive period, which I define in my essay. But today, being a farm worker, having to work in Salinas in 100-degree heat eight hours a day for 20, 30 years, or working on a General Motors assembly line, mounting a tire on a car for 30 years, eight hours a day, that's not jobs. That's servitude because you need to make a living.

21:33I'm pretty certain we will have enough abundance. And I postulate GDP growth will go from 2 % to 5%. And that kind of growth rate, maybe not our kids, but our kids' kids, will live in the era of abundance. And we will have enough resources to support everybody at the minimum standard of living. So people work on the things they want to work on, not the things they have to work on to support their family. let's end on abundance thank you so much thank you

22:07Vinod Khosla's version of techno-optimism is an inspiring one and I'm so grateful he joined us at the Masters of Scale Summit you can find a link to his essay titled AI dystopia or utopia in the show notes I'm Jeff Berman thank you for listening

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24:20podcasts is Leetal Molad. Special thanks to Jay Punjabi, Jodine Dorsay, and the entire Masters of Scale Summit team. Visit mastersofscale.com to find the transcript for this episode and to subscribe to our newsletter.