Good morning, everyone, im scott mcgrew. The point being even elite pilots have levels of elite. The same is true in the world of Venture Capital on sand hill road. There are lots of Venture Capital firms and like Fighter Pilots they are a confident bunch but there are some that are more elite than others. At the very top you will find just a few. Kleiner perkins and jason who are wits, Draper Fisher and Khosla Ventures run by vinod khosla. Joined this morning by far rad manju and laura sidel of npr. You know a lot about a lot of things and you had a background in sun micro estimates, but as you invest are there things that you dont know but you suspect would be Good Investments and how do you learn about the thing that you know nothing about . Do you know whats misunderstood in my view about Venture Capital is it isnt about investing at all, its about backing big ideas to go pursue new things and most of the returns in Venture Capital come from new ideas that you dont imagine before. How do you understand the company with the new idea that has nothing to do with your background, its in biotech or something in which you are not familiar . I think you have to have a growth kind of mindset where you dont make a lot of assumptions about what you know. What i know is how little i know and i start with that assumption and i imagine the possible. I let great entrepreneurs take their ideas and try and make something happen. Its surprising how many of the large ideas didnt start out the way they they initially thought things would turn out. So i was wondering what are your thoughts, though, right now, the markets are going down, the nasdaq is way down, all these tech companies, some people have thought we are in a bubble. Do you think this is a bubble bursting around here . Is it going to affect the investor climate here . So two things are important. First, in the Venture Capital business the real Venture Capital business, what happens in china, what happens with oil prices has nothing to do with whether an investment is a good idea or not. In fact, its puzzling to me why stock prices should go down when oil prices should go down, they should go up, the Global Economy will do better. And china is such a small part of the u. S. Company. The u. S. Companies should do just fine, but too much of wall street is about following the herd and believing each other and Reading Press articles and sort of panicking. So you are not panicking right now . Im not panicking. I dont Pay Attention to the stock market. I barely ever look at what the stock market is doing. Whats important is when a new idea in Venture Capital comes your way, whether its a good idea important will not be here for five years. One of the five years that i think is true in the vc world is some of the best investments have been made in down periods. Are you in some way if were heading for a down period are you in some way looking forward to that . You just want a down period to happen, dont you . Buying is on the cheap now, right . Theres buying and selling but in our business you cant do buy and sell in the usual way because our timelines are so long. Five, seven years in an investment. But it is true when everybody is negative the best ideas dont get funded and that creates the best opportunities. Now, the converse to that, vinod, is that in the greatest of times all kinds of ridiculous ideas get funded. Have we seen that . We see both. When it comes to money theres only two emotions i think investors go through, one is fear, the other is greed. People bounce between these two walls and the key is to stay in the middle. Do we get over optimism and things funded that shouldnt be funded . All the time. Its peoples mindset. Your fund has funded some things, door dash im thinking specifically, wonderful service, love it to death. It seems to me those kinds of servicing, delivering your dry cleaning, are the ones that are most vulnerable because if the kid who is working over at twitter loses his job he is not going to get a door dash which means door dash, et cetera, et cetera, et cetera. Why those sorts of companies . Well, every company is different and at each stage it becomes a different kind of investment, but if youre fundamentally adding value for the longterm, what door dash is or isnt isnt going to be clear in the next year or two, it will be who dominates that space in three or four years. I only ask you to look back at uber and say this is true. Specialized limo service, who would take that and how could it ever be worth more than all of the taxi businesses in the country combined. You said you dont look at the stock market but there has been this problem in the Tech Industry in the last year and a half or so where its been difficult for these unicorns, these private companies to go public and thats ultimately how you guys get paid. Does that worry you . It doesnt because those unicorn valuations are artificial anyway, right . So, you know, when Public Market stocks go up and down people dont worry. Somehow they seem to attach more importance to a private companys stock going up or down. I dont Pay Attention to it. Things change. The environment changes, but the fundamental value youre building shouldnt change and what door dash becomes or uber becomes in four or five years will depend on what they do. If uber replaces all public transportation, for example, because uber pools with Driverless Cars is cheaper than sam trans, your local bus service. And more efficient. And more efficient and its door to door youre going to create value. One sector youre interested in, clean energy, and thats a sector where i do wonder about the price of oil having an impact on that because it seems like if the price of oil goes down people get less interested in clean energy. No, its absolutely true that depending upon the price of competitive technologies, in this case oil or gas, alternatives get more or less interest. But at this stage if you look at the clean energy sector, things like lighting are doing very well, thats clean energy. In certain parts of the world solar still doing great. It really depends. If you have a much better Power Generation technology or a Refrigeration Technology it will do fine. Weve done a lot in clean energy in agriculture, thats very, very interesting. So its a very broad area, not a narrow voi. How depend are your investments or interests in government subsidies in clean neshlg . Would you increase subsidies if you could, decrease them . How dependent are they . You know, my car and my solar are partially paid for by subsidy and i love it. Its great. But they are not going to last forever. So we never im vest on the basis of subsidies. You know, if they are there you take advantage of them, but you cant bet the longterm that subsidies will increase the value of an area. If something scales to be large it cant have subsidies, its just a rule of budgets. But isnt there come sense i mean, if oil is cheap people particularly in the Consumer Market it wouldnt seem as important to them to put in the solar panel or do all those things to bring down their bills that are helpful to getting i think its fair to assume that today and five years ago you could have assumed all price will go up and oil price will go down and that over any tenyear cycle both will happen. You cant be sensitive to that so you pick areas. Some are more dependent on price of oil, others arent. But frankly in our business theres so many new areas that are changing. Like even data science, for example, effects energy. Its a different way to last in that area building iet men zags. I need to interrupt you as you introduce the concept of data sensors, theres a Big Data Company i need to ask you about. I need to do that after i pay a bill. We will be back with press here in just a minute. Were talking with vin nod khosla. Theres one thing i want to get to but some of my viewers know you as the guy with the beach. May i ask you about how your beach is . You have a great Coastal Property and you are in a battle with the state of california. Before we get to the thing i really want to ask you about which is ajasdi, what about your beach . Its not a topic i want to talk about, very clearly its a dispute around Property Rights and most of the press hasnt gotten the basic facts right. It dates back to the treaty of hidalgo. No, it doesnt. It dates back to the coastal act in california. Theres a press guy getting it wrong. Have you taken it as soon as it needs to go . Will you take the case as far as it needs to go . I wont comment on what i will or wont do . Will you comment on ajasdi . It is this Big Data Company and we can talk to the ceo in a minute, but the way it works is complicated. This goes back to my very first question of when they came to you or did you come to them . Did you understand immediately what it was they were doing . I as soon as i met ajasdi i was very excited about the company. What has happened is the proliferation of data is so large that the way its used is changing very, very rapidly. Any change creates great opportunities, but whats even more exciting is theres so much more value to be created out of the same data that we already have that we can process differently. No question. Big Data Companies are trying to do that, but did you top logical analysis, did you understand what that was when you met with them . I think i did. Okay. I have to find out if they think you did. Here is the fundamental thing, when data increases orders are issued and it is increasing. The idea of an oracle database becomes irrelevant. You cant do things the same way. Its still valuable, oracle still valuable. What you do new and whats possible changes because theres so much more data. I will explain it a simple way. Almost all the time when people used to look at data theyd say if i do this will sales increase . Thats a very linear way of looking at data. New tools like ayasdi opened up the world to questions you didnt know to ask. Is a different word or phrase going to be better at advertising on Tuesday Morning versus thursday afternoon . Its not a question you would normally think about and we humans are limited in the questions we can think to ask of data. Ayasdi is awesome because it can figure out what the right questions are. That has been an area about expertise and judgment in the past and this is a whole new feed radically different. Is it the kind of thing where you can i mean, there are a bunch of these kinds of Data Analysis companies. Is it the kind of thing where you know when you see what these guys are doing versus what other guys are doing that this one has a special thing . There are a bunch of Search Engines and then google came along and it was obviously that google is better. Is it obvious here or is it hard to tell . Early on it is never obvious, but what ayasdi was doing is so dramatically different. Weve looked at hundreds of Data Companies. Every other company was trying to solve a different problem. Google is very good at Driverless Cars, thats a Machine Learning problem. You can do specific problems. The idea that you dont know what the right questions are has frankly not been addressed by any company. Every company tries to take one mathematical or al gore rhythmic approach, not to get too technical. What ayasdi does is tries all the possible approaches. I want to interrupt and let laura have one more question. We have only a minute left. The idea that its visualized, that you can see the data and it appears like in a 3d way how or not is that or how different is that . Is that what everybody is doing now, they are trying to show us, visualize data for us . No, its much more than visualization. Theres plenty of visualization companies in their surface and those companies and traditional Data Companies are about looking for your keys under the lamp post no matter where you lost them in the night. Right. That is what they do. You say this area i can ask a question, i can think about it. What ayasdi does is say i dont need to know what you think the question is. We will help you figure out what the right question is. Vinod khosla thank you for being with me. I need the rest of the time to talk to gurjit singh. And we will talk to ayasdi welcome back to press here. If you are just joining us we were talking to Venture Capitalist have a node could say las about ayasdi. He has joined the u. S. Governments department of defense in funding the Big Data Company. Big data is a big buzzword. One of our challenges is describing how ayasdi does big data differently through topological analysis. The shape of data can tell you something about the data. Stay with us, its easier than you think. This is a graph of my salary over Time Starting with my first job out of college. The shape shows the shape of the data shows im generally on the right path. Here is a graph showing eruptions of old faithful, shape tells us there are two a day, one is much bigger than the other. Thats easy stuff one year regression. Lets step up to what ayasdi done. This is a graph of data of knee replacements performed by a president who. I cannot interpret this data at all but the mathematicians and computers at ayasdi can and it tells them all kinds of things. Gurjeet singh is the ceo and one of the founders at ayasdi. I was readings your dissertation i got pretty much past the title page. How would i do explaining what the hell it is you do. Its very simple. We learn to see the world in shape. Imagine fonts, we can express the letter a in so many different forms. Topology is a branch of mathematics that was invented to deal with this notion of shape. What we did at stanford and at ayasdi thereafter was essentially take this old area of mathematics principles and apply it to data. Go on. Im still unclear as to what that means. So does that mean is it like geometry, so, you know, we know what the shape of a triangle is and it has a mathematical formula, is that what you mean . That is exactly what i mean. In fact. So think about we saw a shape on the screen which was your salary, doing brilliantly of course. Thank you very much. But also imagine that you look at your customers, right, and oftentimes as a large enterprise you would look at your enterprise ant you will want to segment them. Segmentation, its actually a shape problem, you are trying to decompose your data into multiple distinct pieces that dont talk to each other roughly. Similarly imagine that you are an economist and you are looking at the growth rate of the gdp versus the fed interest rate. Its a cyclical phenomena, when the Interest Rates are low the economy goes. Your math and your computers can handle all kinds of questions. We were talking knee replacements, but i have a graph of violence in iraq and that is a graph somehow of the violence in iraq and your data scientists can learn things that the soldiest did not know they needed to ask. Thats phenomenal. And what would that be . You know, this was something that we were just talking about, which is the idea that you would help people ask the question. Right. Questions. How . Imagine when you search something on the web, you go to foogel, you have an idea, you turn it into pretty much an english sentence, hit go and see a list of results and then you select one or whatever. Now, when youre dealing with data i imagine in knee surgery you have as a Hospital System millions of patients and for every patient you have tens of thousands of interactions. Formulating your question into an english sentence is no longer possible. Right . So these shapes in the data they allow in a very simplistic way for somebody to circle a region in a slap and say i see this as being a distinct part of the shape, why is that . And the software will tell you these are all the knee surgeries in which the outcomes are great because the drug that was prescribed was a neuro toxin as an example. It sounds like a general purpose thing. Who are you selling to . Who is your sort of Customer Base at this point . So commercially we sell into Financial Services and healthcare and we also do some business with the government. Can you talk about the business you do with the government . No, i cannot. Well, getting back to, say, that graph, you know, what would somebody what question would somebody ask looking at a data graph like that, you know, what would pop out . Theres all these red dots over here, what do they mean . America. Football players, . K w Soccer Players. You look at the shape of all the Soccer Players and try to find a shape correctly it would look like the letter y you say what distinguishes the arms from the y to the base of the y and why is that the case. Do coaches do that or doctors do that or does ayasdi do that and get back to the bank or soldier. Our customers do that. In many cases an end user might not interact with the shape directly. For example, as a Hospital System before a knee surgery is going to be performed a physician would look at the emr data, the patient data thats already in the emr the stuff that doctors can understand. Yes. And the view that they would see would already be a very simplistic version of the shape actually, that its der Syed Rizwan Farook from the shape. Did you have to develop special products for the hospital version of ayasdi and Soccer Player