This conversation features Keith Rabois, General Partner at Kleiner Perkins, and Vinod Khosla, Founder and Managing Partner at Khosla Ventures. Keith previously co-founded and led companies like PayPal and Square, while Vinod co-founded Sun Microsystems and has been a prominent venture capitalist for decades.

The discussion covers their working relationship as accomplished individual investors, their approach to evaluating founders and companies, and their perspectives on AI's transformative impact on company building. They explore how AI companies require fundamentally different approaches to hiring, compensation, and operations compared to traditional tech companies.

The conversation also delves into their investment strategies across AI, manufacturing, defense, and financial services, along with their views on the geopolitical implications of AI development and the techno-economic competition with China.

Partnership Dynamics and First Principles Thinking

Their collaboration is built on first principles thinking, which makes it easy to identify areas of agreement and disagreement without hand-wavy discussions.

"I prefer hypocritical, brutal honesty to hypocritical politeness" - Vinod, describing their direct communication style that eliminates guessing about opinions.

They spend minimal time on firm operations, focusing instead on portfolio companies and new investments, with Monday meetings always starting with current portfolio before new opportunities.

Founder Assessment: Exceptionality and Learning Rate

Keith looks for founders who are the best he's ever met in some dimension - smartest, most tenacious, best at assessing people - or have rare Venn diagram overlaps of traits.

"What's key is the learning rate of the founder" - Vinod, emphasizing that founders who listen to everything without critical examination are poor investments.

Max Levchin exemplifies the rare combination: "Reid Hoffman said Max is a first-rate technologist and a first-rate business mind. There's less than five people in all of Silicon Valley that are that" - Keith.

For YC founders, the most important question is "how much have they learned in the last three months" - three months being sufficient time to demonstrate learning velocity.

AI Investment Strategy and Company Building Revolution

Keith invested in zero AI companies before rejoining Kleiner Perkins two years ago, now 70% of his investments are AI-focused after learning through partner meeting osmosis.

They have 30+ portfolio companies building AI workers to fully do work rather than co-pilots, believing "co-pilots, humans get in the way."

AI companies require fundamentally different architectures - traditional product management doesn't work when capabilities evolve monthly and 12-month roadmaps become meaningless.

Compensation models are completely different, with some companies able to pay amounts "that only professional athletes could aspire to when we were growing up."

Beyond Transformers: Alternative AI Approaches

They've invested in multiple approaches beyond transformer models including neurosymbolic techniques, interpretability leading to different models, and diffusion models.

Real-world models and embodied robotics represent major opportunities where "it's completely up for grabs" who will win, though success is certain.

Current models lack intuition - their company General Intuition demonstrated this by replicating Ukrainian soldiers' escape tactics from partial video clips.

For applications like banking or insurance, non-hallucinating AI is critical: "If you're giving somebody's bank balance, you better not ever hallucinate."

Manufacturing and Defense Technology Opportunities

AI can revolutionize manufacturing by reducing labor costs not through robots doing jobs, but by running systems differently - potentially replacing thousands of manufacturing engineers with AI.

Defense investments include Hermes for supersonic aircraft, addressing the gap where "Russia has used supersonic aircraft missiles in Ukraine and we don't have any."

They invested in Varda, Mock Technologies, and Rocket Lab before defense tech was considered cool, driven by geopolitical concerns about adversaries like the CCP.

Financial Services Excellence and Market Dynamics

"In every single fund we've had, we've returned the fund solely on one financial services investment" - a remarkable track record including Square, Stripe, Affirm, and Upstart.

Ramp, despite starting pre-AI era, is rethinking their entire company architecture to remain competitive: "Should we rip up everything we've learned?"

Current enterprise AI adoption is driven by top-down CEO pressure, creating unusual market dynamics where "they may not care about the impact" short-term.

Geopolitical Stakes and Technology Competition

"We are in a techno-economic battle with China. We must do everything to win and everything we can to disadvantage them" - Vinod on the current global technology race.

State-level AI regulation is "a horrendous idea" because regulators don't understand global implications and "not everybody abides by American rules."

The Hill Valley Forum was established to alert elected officials under a Democratic administration about technological threats, emphasizing bipartisan national security concerns.

Resources Mentioned

Creating a Team Like No Other

2-month roadmap that makes no sense. And so you have to. Then, also, how does sales work with your research team? Like, OpenAI, you know, actually pairs, as far as I can tell, like the people doing c

Quick Team-Building Activities for Busy Managers 50 Exercises That Get Results in Just 15 Minutes

you know, actually pairs, as far as I can tell, like the people doing customer acquisition with the research team. And that's a completely different model than how most technology companies were built

assistant secretly before

when like? I don't have time to go do that. Um, like my friend David Sachs back in the day hired a research assistant secretly before, you know, to help him. I don't, I don't have time to do that. So