SKS Microfinance Should Present Themselves as a Business, Not as Do-gooders: Vinod Khosla

Thursday, November 10, 2011

In one of the toughest environments to raise money, Vinod Khosla recently closed a $1.05-billion fund and promised to use most of this cash to back startups that he believes will change the way the world consumes energy.

Since 2004, when he started Khosla Ventures, the Sun Microsystems co-founder has displayed almost messianic zeal in his quest to find alternative energy companies that can displace the dominance of fossil fuels. Many of the companies he has backed have floundered and some are showing promise, but Kholsa says he is unfazed by failure because a single spectacular success can make up for a dozen flops.

A staunch capitalist, Khosla, 56, says that in India he is trying to put together a model where he can do good and make money at the same. In an interview with ET, he says SKS Microfinance, the troubled microlender of which he was an early backer, made some mistakes but meddling by politicians cost the company dear. Excerpts:

Where do you see rare, revolutionary technologies emerging? Which are the Black Swans in alternative energy?

I don’t think we’ll see Black Swans in wind. It’s possible to see in solar, but unlikely. In fuels, bio-fuels, we’re already seeing Black Swans such as KiOR (a renewable energy company backed by Khosla Ventures which listed on the Nasdaq in June).

They are already very much on the path to be cheaper, without subsidies, than deep off-shore drilling. I think there are going to be Black Swan technologies in LED lighting. If you get a light bulb that pays for itself in the first year, and then every year saves you Rs 100-500, you’re going to change every one of your bulbs. In car and truck engines, if it’s 50% more efficient, and gives 50% more mileage, who’s not going to buy it?

So will a range of solutions replace oil?

It’s hard to predict. One would like to see a range of solutions. Electric cars are toys. They’re for rich San Franciscans and rich Germans. They don’t make sense for normal people. They’re too expensive. What is important is cheap cars. If you add $10,000 worth of batteries to a car, it’s silly. But that is what every electric car does, and environmentalists keep pushing it.

One of the fundamental problems is environmentalists keep pushing solutions to the press, such as solar cells and electric cars that make no economic sense. They defy the laws of economic gravity. I keep saying we need to produce products at the ’Chindia’ price- the price at which people in India and China will buy it- without subsidies.

Source: The Economic Times (link opens in a new window)