Episode summary
Why This OpenAI Investor Isn’t Worried About Its $800B Valuation | The WSJ Money Interview
The Journal
· · 11 min · Hosts: Gunjan Banerji · Guests: Vinod Khosla
Summary
Vinod Khosla says his approach to risk was shaped by arriving in the U.S. from India in 1976 with little money, no network, and a willingness to start over. He argues that the upside of building companies matters more than protecting against failure, and that his early ventures like Daisy Systems and Sun Microsystems validated that mindset. He frames investing as a search for option value, not a hunt for neat forecasts, and says he hopes OpenAI can become a 1,000 X outcome or more.
On OpenAI’s reported $800 billion valuation, Khosla dismisses the idea that valuation itself should drive the decision. He says markets ultimately settle around a fair price based on mood and demand, and that he focuses instead on whether a company is creating something interesting that others are not building. In his view, the most valuable opportunities often look unusual early on.
Khosla also links entrepreneurship to design thinking, saying he has applied it to furniture, buildings, and company-building alike. He argues that people should create the world they want rather than accept what exists, and he extends that logic to tax policy, saying capital gains should be taxed like ordinary income while the wealth tax is a “dumb idea.”
Key takeaways
- Khosla says his risk tolerance came from moving to the U.S. with almost nothing and learning he could survive even if a startup failed.
- He treats venture investing as option value investing and says he hopes OpenAI becomes a 1,000 X outcome or more.
- Khosla dismisses OpenAI valuation worries, arguing markets will find a price and that he cares more about building value than judging mood-driven marks.
- He says capital gains should be taxed like ordinary income because AI will shift more value from labor to capital.
- Khosla supports higher taxes on capital gains but calls California’s wealth tax a bad policy that “solves nothing.”
Notable quotes
“I've always been a risk taker. I left India in 1976, came to this country, didn't know a soul”
“I like to say I do option value investing if I'm at all financial”
“I hope OpenAI is 1,000 X or more”
“I don't care. Look, markets always have people on both sides”
“I'd be happy to pay more taxes and have capital gains, which is mostly what I pay, be the same as ordinary income”
How the episode opens
- I'd be happy to pay more taxes and have capital gains, which is mostly what I pay, be the same as ordinary income. - But you have opposed the wealth tax on the table right now in California. - That's a dumb idea.
Not every tax is a good idea. It solves nothing. - Vinod Khosla is widely considered one of the most successful venture capitalists out there.
Today, he oversees billions at Khosla Ventures, one of the first VCs to back OpenAI. He invited us to his headquarters in Menlo Park to discuss the dramatic shifts that will redefine wealth over the next decade and why he actually wants to pay more in taxes. You have an unapologetically bold take on risk-taking and failure in particular.
Was there a turning point that shifted how you though about risk-taking? - I've always been a risk taker. I left India in 1976, came to this country, didn't know a soul, didn't have any support, just said, "I want to get to Silicon Valley and go start a company.
That was a big risk. It's attitude that matters and not resources. So I always assume if I start a company, it fails.
I can still feed myself McDonald's. When I first came to this country, even eating at McDonald's was a luxury. I had myself budgeted for one McDonald's meal a week.
That's all I could afford. Otherwise, it was Swanson's chicken pot pies that cost 39 cents back then. They cost $1.39, I checked recently now.
So I had very low, minimum standards that I needed to survive. - And that gave you some operating leverage to go for it. - Yes.
It gave me a lot of freedom. - You mentioned once that there was a moment where you realized that you had more money than your dad had ever made in his entire life.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- risk
- investing
- openai valuation
- taxes
- convexity
Companies and tickers mentioned
- OpenAI
- Sun Microsystems
- Daisy
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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