A venture firm that never loses money on a deal isn't taking enough risk — the right early-stage strategy is to back the most talented founders in promising spaces, even if that means accepting real losses.

17:51>> And like that's not sustainable. >> Yeah. >> So, how I how do how do you kind of think around around where we are kind of in the in that cycle today? Because at some stage like the laws of gravity will will will reassert themselves. >> Yeah. Maybe it's helpful to sort of explain our philosophy at the early stage, cuz we we also don't want to target a low

18:12loss ratio. Like it's not >> No. >> We're not taking a great amount of risk if we have a low loss ratio. You know, we we we joke all the time there's a you know, a prominent VC uh around in our ecosystem, and you know, one of his uh big points of pride is he's never lost money on a deal. And we're like, that's not that's not

18:27[laughter] a point of pride. Like that's a horrible data point. Like that's not what you want. >> Yeah. >> That's a PE firm. >> Yeah, exactly. And so like certainly you can make the case that you're not taking enough risk if that's the way you approach it. The way we've approached it historically, and this is sort of a you know, Khosla Ventures philosophy um is you know, any major

18:43space where there are multiple very talented entrepreneurs building, where we think there's tailwinds, where we have a point of view on the technology that it's good, we should pick the best founders. And we should we should try and back the the leaders at the early stage, the market leaders. Um and you know, if the space happens to work out, and we've got the leader, excellent. If the space happens to not work out,

19:08and we have the leader, no harm, no foul. Actually, that's part of our business. That's what we should be doing. >> Yep. Yep. >> The the bad box of what I described is the space works out and we picked the wrong one. And those are the things that we really scrutinize and we we try and make sure that we get right. Um so, you know, I don't know. There's there's many

19:27examples of spaces that didn't quite work out. Um but we did back the leading entrepreneur and they're talented entrepreneurs and they were competing and there were lots of players in the space. That's totally fine with us. And so, that's the philosophy that underpins how we can have a loss rate that, you know, and and and and sort of how we think about balancing taking an appropriate amount of risk. Obviously,

19:47that's a little bit different at the growth stage. And so, you know, we we shouldn't have as high of a loss rate. Um as of right now, everything is so early that we don't know. There's all these unknowns about who captures value, as you said. Um I'm sure loss rates are going to go up over time. All we can think about is how we build the firm. Um and, you know, the results