Sun Microsystems co-founder places bets on clean technology

By Anupreeta Das Reuters
Published: October 8, 2008

SAN FRANCISCO: The venture capitalist and "cleantech" evangelist Vinod Khosla is placing his bets on alternative technologies that could potentially make at least 80 percent of global energy consumption cleaner in the next few years.
Speaking during the Reuters Global Environment Summit here, Khosla said he was hunting for "black swans" in alternative energy: revolutionary and unforeseen ideas that change the world as we know it and are as unexpected as the birds they are named for.
"There is no such thing as great visionaries," said Khosla, a co-founder of Sun Microsystems who is one of the best-known venture capitalists in Silicon Valley. "There's a huge dose of luck."
Nassim Nicholas Taleb, a Wall Street trader turned author, used the term "black swan" in a recent book to describe unpredictable and consequential events in business that can be clearly explained once they happen, like the current financial crisis, Khosla noted.
But the world of technology creates opportunities for "good" black swans, said Khosla, who was dressed in his trademark all-black outfit.

Khosla Ventures, the venture capital firm he founded in 2004, has alternative energy investments across the spectrum of wind, solar, biofuels and geothermal energy.
The firm also invests in cleaner battery technology and cleaner building materials. Khosla said he expected more than half the firm's investments in 65-odd start-up companies to succeed.
Khosla said clean technologies had to do much more than reduce the size of the average carbon footprint to compete with traditional sources of energy or building materials, like fossil fuels or cement. They also have to be cheaper than traditional power and have the capacity for mass production, he said.
"Does a Prius sell well? Of course it does," Khosla said, referring to Toyota Motor's hybrid vehicle. "So do Gucci bags. But are they material compared to the number of bags sold at Wal-Mart? Not on your life."
Biofuels made from non-food-based natural sources and waste are among the most promising sources of such scalable clean-energy alternatives, Khosla said.
He said he expected there to be at least six different ways of producing cellulosic ethanol within the next four years, each producing that alternative fuel at prices competitive with corn-based ethanol and regular gasoline.
Once the wider market sees that a cleaner fuel can be made cheaply enough to compete with existing fuels, Khosla said, he would expect a mass conversion to the cheaper and cleaner fuel, particularly because cellulosic ethanol can be poured into gasoline tanks with only minor modifications to a car.
Khosla agreed that the future of biofuels remained uncertain because the technologies were still new.
But he defended his outlook by saying that millions of investment dollars had been poured into alternative fuels since 2006, money that is accelerating research, production and eventual commercialization. "Four years ago, when I said biofuels were interesting, people told me, 'Don't be flaky,"' he said.
Even big oil is taking an interest in the activity going on in these second-generation biofuels, so called because they are following the push toward corn-based ethanol.
Besides biofuels, technologies that store solar and wind power to provide a consistent supply - "not just when the wind is blowing and the sun is shining" - would attract venture investment dollars, he said.
Khosla, an Indian-American who came to the United States as a student in the 1970s and is a fixture on Forbes magazine's list of billionaires, said he was happiest poking around for the next big cleantech idea and chatting with entrepreneurs.
"I'm a techie nerd," he said.