Shares in his most successful company, Juniper Networks, were trading at more than 40 times their offering price a year and a half earlier. But he foresaw a bleak near future for optical networking equipment, in which he had made his name.
Just as telecom stocks, including Juniper, were reaching all-time highs, he warned in a keynote at a Goldman Sachs conference that at least one of the industry's most famous companies would soon be bankrupt. "If I really believed what I was saying, I told myself, then it was time to look elsewhere," he recalls.
Around that time, a friend introduced him to a space-research scientist with a business idea unlike any Khosla had considered before: generating electric power from water, oxygen, and natural gas.
Seven years later, the company, now known as Bloom Energy, has yet to introduce its first product, but Khosla marks his initial support for it as a turning point in his career. "I knew then I wanted to go green," he says. In 2004, he struck out on his own. "I felt that energy needed more exploring than a responsible venture fund should do," he says.
At Khosla Ventures, he has put his own money into graphics-display, data-center, and wireless technologies, but environmental startups are what excite him. He has been on a campaign to end American dependence on petroleum since oil was trading at a quarter of its present price.
Image: This combo picture shows (top) the world's smallest direct methanol fuel cell battery produced by Japanese electronics giant Toshiba in Tokyo, and (bottom) DVD disks made of vegetable based plastic by Victor Company of Japan. | Photograph: Yoshikazu Tsuno/AFP/Getty Images
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