VC at Kleiner Perkins, Vinod Khosla, on industry, investment trends
AlwaysOn interviews Kleiner Perkins' VC extraordinaire Vinod Khosla on where technology and his investments are going:
I don't think the software business is over, but I think the economics are getting a lot more rigorous. If somebody provides a better return people will take it. And Salesforce.com has done that. At some point you run out of the number of people who need bigger IT systems because you've given one to everyone, and you also run out of new areas to create these [systems]. SAP created one and Siebel created another, and PeopleSoft created HR, and then maybe Ariba created a smaller segment.
But then you start getting to get the marginal categories. We saw that happen on the Internet. Jeff Bezos created an important category which is multi-billion dollars, and then people created all kinds of niches and pretended that they were huge. So, people take a successful model and keep replicating it, but the opportunity gets more and more marginal in that class. Eventually you get to the very marginal, and they're not important. So will there be more important software niches? Yes. Will there be huge ones? Might be. IT might be back in that class.