Investing in Innovative Fuel Technologies
ZAKARIA: The crisis in Iraq and Syria fueled by oil. The crisis in Ukraine greatly complicated by natural gas. So what if we lived in a world that was powered by something other than these hydrocarbons we are so dependent on? That's a world that my next guest is betting on. Quite literally. Vinod Khosla was the founding CEO of Sun Microsystems. He now runs his own firm Khosla Ventures. And he's the 352 richest person in America, according to Forbes. In recent years most of his energy has gone into finding promising alternate energy technologies and investing in them. Vinod Khosla, pleasure to have you on.</s>VINOD KHOSLA, FOUNDER & PARTNER, KHOSLA VENTURES: Happy to be here.</s>ZAKARIA: Let me ask you about something that you know a lot about. People say that you have one of the most extensive and interesting energy portfolios. What do you see as the fundamental alternatives? Is there one? Is there a silver bullet? If not, what are the array? We hear about solar, we hear about wind. And, you know, they are still a tiny, tiny percentage of American energy usage. What is the future?</s>KHOSLA: So, you are right in solar and wind that they are a tiny percentage. And in fact, I have a critique of environmentalists. Though they have done a very good job of identifying the problems, the solutions they have generally proposed are naive and simplistic. So they talk about wind and solar, but who wants power only when the wind is blowing or the sun is shining? I want my power when my favorite NFL game is on. And so translating environmental problems into real solutions is non trivial.</s>ZAKARIA: So, what are the ones that we haven't heard of that you think are going to surprise us, that are technologies in energy? Because you've done some very experimental stuff.</s>KHOSLA: We do like fund experimental stuff. I very much believe in the Nassim Taleb's black swan pieces. That means our solution is not some probable path we know today. It is some improbable path, we just don't know which of a thousand different improbables.</s>ZAKARIA: And so maybe it's solar, maybe it's hydrogen, maybe it's biofuels, maybe it's ...</s>KHOSLA: Yeah. Now the most promising if I were to project 30 years unlikely to be nuclear technologies. I ...</s>ZAKARIA: Nuclear fusion you think?</s>KHOSLA: I hope so. There's a number of very creative, some relatively naive attempts at nuclear fusion, but I'm a fan of encouraging all those including the naive ones, because they almost end up having ingredients that are extremely valuable when combined with other ideas.</s>ZAKARIA: So, you're making bets across a whole range of areas. Almost by definition they can't all work.</s>KHOSLA: Absolutely. We compete against -- so we have multiple biofuels bets. If one of them succeeds then the others will necessarily fail. We have batteries, and if batteries work then biofuels will fail. If biofuels work, batteries will fail. That is the nature of innovation. It's the nature of market competitiveness and we should be attempting more of these and the only time I get disappointed is when we don't see enough such efforts.</s>ZAKARIA: So, the Obama administration made a very ambitious efforts in early, early on with Steven Chu as secretary of energy saying they were going to fund alternative energy? Was it - was it - did they have the right ideas, did they have the right implementation?</s>KHOSLA: They had the right ideas. Clearly there were some implementation mistakes, but I would say to you it is impossible to do something new without screwing up. Innovation means risk, and risk means failure. In fact, I personally like to say my willingness to fail is what gives me the ability to succeed. So the nature of innovation is you have to take on failure. In fact, John F. Kennedy said only those who dare fail greatly can succeed greatly. Elon Musk tried Tesla. You know he almost went bankrupt a few times. He put all his personal wealth behind his conviction. He could have gone bankrupt, and that you've got to admire that kind of courage and he may have permanently changed the trajectory of electric cars. That's why he was voted the most influential car company, and now every other automaker is looking at him and changing their strategy.</s>ZAKARIA: So you look at Solyndra and you say this was a necessary part of a big experiment?</s>KHOSLA: Look at Solyndra. If there's ten solar startups, and there were probably 50, you are all going to lose on seven of the ten. There's going to be a winner. There's a win, place, and show, and everybody else in the new technology effort goes bankrupt. It is the nature of breakthroughs in innovation and competitive technology races. Even if all the Obama administration did is increase the number of competitors and increase the level of competition, I think that's a good thing. If you'd look at national issues, and climate change is misunderstood. I consider it not climate change, but climate risk. There's climate risk, there's national security risk, there's geopolitical risks. There's a series of risks which government does subsidize. National defense is all risk mitigation. Climate risk subsidization is risk mitigation. So if you frame it in terms of risk, the question is which risk should we take and which shouldn't we. I think we've spent $7 trillion or so subsidizing oil by policing the oil lanes around the world. That's American government spending over time. If you spend $7 trillion policing oil lands, is that a subsidy? Are we -- shouldn't we be subsidizing alternatives to create a level playing field?</s>ZAKARIA: Vinod Khosla, pleasure to have you.</s>KHOSLA: Thank you.</s>ZAKARIA: When we come back, what Silicon Valley might teach North Korea? Really.