The really big-picture approach to green tech; FACES OF BUSINESS 2007; Mentor and entrepreneur dismisses hybrid cars and hydrogen as weapons against c

Vinod Khosla seems to relish rattling cages.

He has become the nation's most visible investor in green tech, that fast-growing field of companies that develop new fuels and other eco-friendly products. Environmentalists couldn't be happier to see serious money flowing into the young industry, which they hope will render oil obsolete and fight global warming.

But Khosla's comments border on environmental heresy.

Hybrid cars won't solve climate change or even make a serious dent. Solar panels are a waste in San Francisco. Hydrogen power is a waste, period.

Khosla, 52, has insisted on what he sees as an essential fact about global warming: Only economical, large-scale solutions will succeed.

"There's no point talking about climate-change solutions like hybrids," said Khosla, founder of Khosla Ventures in Menlo Park. "The average person in India or China is not going to buy it. So if we're going to look for solutions, let's look for ones that are going to work."

His willingness to buck conventional wisdom and finance big, game-changing ideas has placed Khosla at the forefront of green tech. Here, all the challenges are huge, and the technology is disruptive. If things go the way Khosla wants, our entire fossil fuel-dependent energy system will get turned on its head.

One of his startups, Range Fuels, is building a bio-refinery in Georgia that will make ethanol from wood scraps left over from timber harvests. Another, Ausra, plans to build large solar thermal power plants in Central and Southern California, generating power for far less money than rooftop solar panels can. Similar solar plants have been in use in California for decades, but Ausra uses a unique design that should be cheaper to mass produce.

"When he gets an idea, he chases it to its logical conclusion," said John O'Donnell, Ausra's executive vice president. "He's kind of fearless about seeing how far a new technology can grow."

Khosla also has become one of a growing number of business executives pushing for national action on global warming. In a Wall Street Journal opinion piece he wrote earlier this year, he urged President Bush to declare war on oil, and he has testified before Congress on the potential for biofuels to replace petroleum. At public appearances, he comes armed with statistics to convince listeners that the energy solutions he favors really will work, and the ones he dislikes really won't.

"He prides himself on being as up on the issues as any one expert in any of those fields," said Mitch Mandich, Range Fuels' chief executive officer. "He is really the green energy evangelist in the United States today."

Green-tech advocate is just Khosla's latest incarnation. He co-founded Sun Microsystems, helped start Juniper Networks and has a knack for accurately predicting how entire industries will be changed by new technology. In green tech, he has found a wide-open field with room for him to do what he likes - start companies.

That's been his passion since growing up in India. In his teens, he discovered a magazine article describing the birth of chipmaker Intel. It clicked.

"The idea that technological breakthroughs could give you an advantage to start a company and do things no one else could do - that's what inspired me," Khosla said. "I knew I could do this."

He persuaded his father to let him study engineering at the Indian Institute of Technology, even though his father, an army officer, wanted him to join the military. He also started kicking around an idea to start a soy milk company. But 1970s India wasn't the best environment for an entrepreneur whose family lacked business connections, Khosla said.

"In those years, it took seven years to get a phone line in India," he said.

He came to the United States in 1976 to study first at Pittsburgh's Carnegie Mellon University, then at Stanford University. While at Stanford, he started writing the business plan for Daisy Systems, a company that would create computer-assisted design systems for electrical engineers. Daisy opened soon after he graduated from Stanford in 1980.

He left Daisy to start Sun in 1982 with financial backing from the venture capital firm Kleiner Perkins Caufield & Byers. Four years later, he switched jobs again, this time joining Kleiner Perkins as a general partner. Then, using his own money, he created Khosla Ventures in 2004 as a way to invest in more experimental technology. 

But don't call him a venture capitalist. He prefers "venture assistant." The first term smacks too much of investors who give startups their money, but not their effort or loyalty. Khosla prefers to mentor entrepreneurs and take an active role in developing their businesses. His own entrepreneurial roots help.

"Entrepreneurs tend to be people who don't know what the reasonable limits are," Khosla said. "You're imagining things that others say are impossible. That's the essence of entrepreneurship. So you're either naive or unreasonable. ... But it's a different kind of personality."

Entrepreneurs who work with Khosla say he doesn't micromanage. But he does keep a close eye on their companies and the markets they inhabit.

"He's very involved," said Mandich at Range Fuels. "He could tell you about the details of our company as much as I could."

Mandich and others add that Khosla likes to do his own research - a lot of it. He typically spends the summer months working outside the office, delving into topics that interest him and trying to figure out the business implications.

Perhaps as a result, he's become known for investing in some technologies that have yet to prove themselves. His company's Web site refers to such ideas as "imprudent science experiments."

"He's willing to really look at technologies that may not mature for some time, but if they do, they'll have a big impact," said John Balbach, managing partner of the Cleantech Group, an organization that tracks and encourages investment in the field.

No American venture firm has been more active in green tech this year. In the first three quarters of 2007, Khosla Ventures participated in 14 financing deals with a total, combined value of $68.4 million, according to an analysis by Thomson Financial and the National Venture Capital Association. Only one other U.S. firm, Draper Fisher Jurvetson, participated in as many deals, with a total value of $38.5 million.

As the amount of money pumped into green tech rises - reaching $2.6 billion from U.S. venture firms in the first three quarters of this year - so do fears of an investment bubble bursting. Khosla said that will happen, but not soon. He plans to keep investing in the field and said he's interested in bio-plastics and other biomaterials.

"There's no doubt in my mind we'll go through a bubble at some point," he said. "I don't believe we're there today. These markets are so much larger than the traditional Silicon Valley areas."

The federal energy law signed earlier this month by Bush, for example, will increase the use of ethanol and biofuels enough to support a $70 billion market, he said.

"Entrepreneurs are usually happy if they see a $350 million market," Khosla said.



Online resources

Faces of Business is a year-end series of profiles featuring prominent people in the Bay Area business scene. To read all the profiles:

www.sfgate.com/ZBWQ.



Vinod Khosla