In a world where AI has already begun to infiltrate our daily lives, what will life look like by 2040?\u00a0<\/p>\n
Venture capitalist Vinod Khosla believed in AI long before it became part of the public discourse, and he bet big and early on OpenAI, the leading AI research company that serves hundreds of millions of users a week.<\/p>\n
Khosla predicts that within 15 years, AI will completely redefine life as we know it, driving down the cost of living, freeing young people from a future of work, and shifting society from survival to true fulfillment. But his utopian vision hinges on one critical safeguard: governments getting their policies right.<\/p>\n
In a new episode of Fortune 500: Titans and Disruptors of Industry<\/a>, Fortune\u2019s Editor-in-Chief Alyson Shontell sat down with Khosla to discuss his optimism about the AI future. Listen to the vodcast above.<\/p>\n Here\u2019s some of what they discussed during their 35-minute conversation:<\/p>\n On the impact of AI on labor from now until 2040<\/strong><\/p>\n On Khosla\u2019s upbringing in India, early career in America, and venture capital successes<\/strong><\/p>\n On the best way to replace income from the wealth disparity AI can create<\/strong><\/p>\n On the ways policy can protect the population<\/strong><\/p>\n On the AI war with China<\/strong><\/p>\n On his early investment in OpenAI<\/strong><\/p>\n Read the transcript, which has been lightly edited for length and clarity, below.<\/p>\n A quick message from our sponsor:<\/strong><\/p>\n What should CEOs consider as they assess and prioritize use cases for AI?<\/strong><\/p>\n Jason Girzadas, CEO of Deloitte US:<\/strong> This is on the topic of every CXO conversation I\u2019m a part of, and I think the thought process has to be looking for high-impact areas that may not be necessarily the most glamorous or high-profile, functional areas, but are ripe for automation and use of this technology to create efficiencies as well as innovation. And over time, AI agents will also be in customer-facing and growth-oriented domains. In our case, at Deloitte, we\u2019re using it within our finance organization, looking at very mundane processes like expense management and working capital management. We\u2019re seeing other organizations using it in call centers and with software development that can be automated.\u00a0<\/p>\n What are the key elements for successfully implementing AI agents?<\/strong><\/p>\n It comes down to intentionality. And so, I think that intentionality, in going functional area by functional area, in concert with business and IT leadership with an enterprise, it needs to be a mainstream business planning effort that\u2019s budgeted, that\u2019s KPIs are developed, and there\u2019s real accountability for actual business outcomes and impact because of agentic capabilities.\u00a0<\/p>\n What Khosla thinks life could look like in 2040<\/strong><\/p>\n Vinod, it\u2019s a pleasure to be with you. You\u2019ve had a storied career as both a founder and a venture assistant. As you like to say, you do <\/strong>not<\/strong> like to be called a venture capitalist. And you\u2019re certainly one of the titans of industry. So thank you for being with me today.<\/strong><\/p>\n Oh, it\u2019s fun to talk about these things.<\/p>\n Absolutely, my favorite thing as well. I love your future outlook. I think it\u2019s really a healthy dose of optimism that people need to hear when it comes to the AI future. Can you just give me a big-picture perspective of what you think life could be like in 2040?<\/strong><\/p>\n I would say, to imagine the change between today and 2040, you\u2019d have to go back and look at the change between the \u201970s and now, when TV still had rotary dials and three channels, there was no such thing as a cell phone, no such thing as the internet. Life was very different. Expectations were very different. I think that magnitude of change is what will happen in the next 15 years?<\/p>\n And what will we be doing? Are we going to be working? Are we going to be using public transportation? Are we all going to have private chauffeurs? What does life look like?<\/strong><\/p>\n Here\u2019s the thing to imagine: Almost all expertise globally will be free. It\u2019ll raise lots of interesting questions. Do you pay a farm worker the same as an oncologist? Because they happen to have the same expertise, which is the expertise of AI. Almost all labor will be free because we will have robotics, probably for a few hundred dollars a month. The way you pay a few hundred dollars a month for a car, you\u2019d pay for a robot in the house. [It will] definitely make you any style of food you want, any recipe you can ask for or might wish for, or it might even be good at what you haven\u2019t had recently, and predict what you might like for a change. That\u2019s one side of it.\u00a0<\/p>\n On the enterprise side, functions left for humans to do are very hard to predict. It\u2019s pretty unlikely a 5-year-old<\/a> today will be looking for a job.<\/p>\n A 5-year-old today will most likely not be looking for a job. So, my daughter. Oh great, good.<\/strong><\/p>\n If I\u2019m right, you will see a couple of phenomena.<\/p>\n First, the need to work will go away. People will still work on the things they want to work on, not because they need to work. Look at the vast majority of jobs in this country, let alone the rest of the world, which is worse. If you\u2019re an assembly line worker on a GM car line mounting a tire for eight hours a day for 30 or 40 years, if you\u2019re a farm worker here in the Salinas Valley, not far from here, hunched over in 100-degree heat, picking lettuce. Those are not jobs. Those are servitude. I think we will have enough abundance, the need to work will go away.<\/p>\n Khosla\u2019s early life and venture capital success<\/strong><\/p>\n I think that sounds like a great future in terms of freeing us of servitude\u2014jobs that are just jobs that you have to do because you need a living, as opposed to jobs that you really want to do. Like you\u2014you\u2019re still working. You don\u2019t need to be, but you love it, and I love my job, and it\u2019s a great place to be, but so many people don\u2019t feel that way, and I definitely want to dig into how you think that could be financially viable, and how we can support all these people who aren\u2019t working.\u00a0<\/strong><\/p>\n But first, I want to go back in time to your upbringing in India. I know you didn\u2019t come from a well-to-do family. The way that you learned about entrepreneurship\u2014going out and physically renting magazines. I would hope that, at some point, you rented a <\/strong>Fortune<\/strong> magazine, that would be awesome. But I would love to just hear how your upbringing shaped your perspective that you now use today.<\/strong><\/p>\n Well, a couple of things. First, I would say I grew up with very few expectations. I remember coming to this country in 1976 my family had never had a TV at home. My family had never had a phone at home. So, expectations of what life was like were pretty low. You worked a lot and you survived, [that] was the expectation.\u00a0<\/p>\n So I started in a very different world, but I also realized very quickly how much you have agency over your own future, how much you can create. And that was very energizing for me\u2014my future was in my hands. And I never really got a regular job. I got my undergrad, my master\u2019s degree in Biomedical Engineering, and then my MBA at Stanford. And then did my first startup, did my second.\u00a0<\/p>\n I was fortunate. I\u2019ve never actually worked for anybody or applied for a job or had a resume, as they used to call them before LinkedIn<\/a>. Everybody will have more opportunity to chart their own future, to tie it back.\u00a0<\/p>\n You know, today with your daughter, you would say to her, go to school, study hard, do well, get into a college. You hope she gets into a college and then she can get a good job and support her family. In 15 years from now, you will say what is bad advice today, or used to be, which is, follow your passion. Following your passion comes second to surviving. I think that surviving part will go away and you\u2019ll tell every 5-year-old, follow your passion.<\/p>\n That would be awesome. And so you clearly followed your passion all the way to the states, to Stanford, where you started Sun Microsystems. And then you went to Kleiner Perkins, and you helped be the brainchild of Juniper Networks, which is one of the greatest returns in venture capital history.<\/strong><\/p>\n That was fun.<\/p>\n Yeah, I bet it was. A 2,500x return. I would like that. That\u2019s amazing.<\/strong><\/p>\n 2,500x is pretty rare, even for venture capital<\/p>\n 100%. I\u2019m wondering how\u2014being a little bit of a contrarian thinker, that\u2019s a signature trait of the most successful entrepreneurs and venture capitalists in the world. What learnings from Sun and Juniper\u2019s success did you pick up to help hone that contrarian view?<\/strong><\/p>\n Give yourself permission to think out of the box.\u00a0<\/p>\n You know, when I was in sustainability, I used to say, think outside the barrel, the oil barrel. Almost everybody has it, very few people exercise it. And the most important trait in entrepreneurs, it\u2019s about agency and driving your future and being empowered. I had no resources, I had no contacts, I didn\u2019t have any money. You create agency and you make it happen.\u00a0<\/p>\n It\u2019s still very hard. [In] the last 40 years, lots of failure points, lots of things that didn\u2019t work, but you power through those and have resilience. And I think [in] 2040, almost everybody will have agency, because they won\u2019t have the constraints of abundance. If government policy allows it.<\/p>\n How jobs\u2014and people who won\u2019t have them\u2014will change amid AI automation<\/strong><\/p>\n I do want to know your thoughts on that, because most jobs, clearly, people do because they need money, and secondarily, it\u2019s a sense of purpose. You wake up in the morning. You have a responsibility. You go to do it. The loss of both of those things, income and purpose are huge, and I want to know your thoughts on how our brains can adapt to survive that fast transition in both hugely important areas.<\/strong><\/p>\n You may be out of luck. Your daughter won\u2019t be.\u00a0<\/p>\n I think younger people will adjust to this freedom to do what they want much easier than older people\u2019s notion of where they have meaning in life. Most people today don\u2019t have enough time to spend with their kids. Most people today don\u2019t have enough time to spend with their aging parents. Talk about two large consumptions of time that are very, very meaningful. If you\u2019re an artist, you\u2019d better get used to working at a restaurant as a waiter or waitress. That\u2019s the reality for most people aspiring to be an artist or a basketball star or a surfer or a musician.\u00a0<\/p>\n So I do think the room for creativity is very, very large, but we are drilled into a narrow vision of what we are supposed to do, and I think that\u2019s the fundamental thing that will change about humanity. AI will free us to be more human.<\/p>\n How do you think is the best way to replace the income when we have this huge wealth disparity?<\/strong><\/p>\n Let\u2019s talk about that. I think each country will do things differently, starting in about 2030. Four years away 80% of all jobs<\/a>, so two-thirds of all jobs, will be capable of being done by an AI. So whether you\u2019re a physician, whether you\u2019re a radiologist, whether you\u2019re an accountant, whether you\u2019re a chip designer, whether you\u2019re a salesperson, AI will do your job better.\u00a0<\/p>\n And there\u2019ll be an interim period where every professional will have four AI interns they\u2019re training to leverage themselves. And I think the initial model of AI deployment will be AI interns working for somebody who\u2019s already a senior accountant or physician or chip designer. But what happens when all labor is free?\u00a0<\/p>\n By the way, $15 trillion of US GDP is labor. $15 trillion that will mostly go away. That\u2019s a hugely deflationary economy, something nobody\u2019s planning on. But it\u2019s a different kind of deflation than past deflationary economies. The abundance of goods and services will be very, very large. Prices will be very, very low. So I would suspect by 2040, $30,000 will buy, and maybe $10,000 will buy, much more than you can buy if you have $100,000 income today. So the level of income you need in a deflationary economy will be very different.<\/p>\n What will become free\u2014or very cheap\u2014in an automated society<\/strong><\/p>\n So you think it\u2019ll cost less for lifestyle?<\/strong><\/p>\n Look, all education should be<\/p>\n Which means colleges, goodbye?<\/strong><\/p>\n It\u2019s a real question<\/a>. It\u2019ll take longer, because people like institutions and the notion of institutions, but you won\u2019t need a college to get an engineering degree. You won\u2019t even need the engineering degree, except if your passion is learning, my passion is learning, that\u2019s why I do what I do.<\/p>\n So, education is free.<\/strong><\/p>\n Education can be free.<\/p>\n Health care?<\/strong><\/p>\n Health care, except interventional procedures like heart surgery, will be near free. Labor, whether you\u2019re talking about farm workers or assembly line workers or retail workers or accountants, that\u2019ll be all free. And in a competitive economy, that means declining prices. Now I don\u2019t think we will have dramatically increased GDP, if it\u2019s measured right. GDP, as we measure it, will be a very poor measure of growth, because prices will be declining in this deflationary economy. So there\u2019s an unusual opportunity.\u00a0<\/p>\n Post-2040, most goods and services will be near free to produce, energy will be free because of fusion and other sources of energy. It won\u2019t be oil based, and will be much cheaper. And there\u2019s complex areas that are hard to predict, like steel. I suspect we\u2019ll have 10 times more steel resources and much less need for steel, but things like housing are the hardest problem.\u00a0<\/p>\n But you have this world where we have abundance of goods and services. You need food and housing, health care, education, entertainment, almost all free.<\/p>\n Which policies can protect society from financial inequality<\/strong><\/p>\n I think the internet made so many millionaires happen faster than at any point. And I think there\u2019s a feeling that AI will create more billionaires than at any point. Are we looking at this as you\u2019re either a serf or a billionaire, there\u2019s nothing in between? What does that look like?<\/strong><\/p>\n It\u2019s very hard to predict, and most of it will depend on government policy. So the current MAGA notion of lower taxes will not work. My politics are clear. I think the minimum level of services governments will be able to provide will be much higher in all dimensions. How that redistribution happens is very hard to tell.\u00a0<\/p>\n Why are governments inefficient at certain things? Because they hire people who don\u2019t have the right incentive structure. Incentives is what capitalism is about. By the way, capitalism is by permission of democracy, you can\u2019t leave 80% of the population behind. They will revoke capitalism if that happens.<\/p>\n I think we\u2019re seeing that a bit.<\/strong><\/p>\n We are seeing pieces of that, but policy will see how we handle this set of services. There are simple things short-term, more structural things long-term.<\/p>\n For example, in this traditional battle of\u2014now moving to economics\u2014share of income to labor versus capital, it\u2019ll shift a lot to capital, little to labor. How do you change that in the short term? I think fundamentally, we eliminate the notion of capital gains. All income is ordinary income. Everybody pays the same tax. And the next presidential campaign, I hope, gets behind: Nobody pays income tax<\/a> below $100,000 a year, starting 2030. That shortfall is made up by increase in the capital gains tax to be the same as ordinary income.\u00a0<\/p>\n I could go through lots of detailed policy. I\u2019m working on a document on that, but it makes it tax neutral. No more taxes, but much fairer distribution of income. 40% of all capital gains is paid by people making more than $10 million a year. Now that\u2019s a very small percentage. 123 million people, or roughly that, make less than $100,000 a year, and you make all taxes go away for them.\u00a0<\/p>\n \u201cFour years away, 80% of all jobs, so two-thirds of all jobs, will be capable of being done by an AI.\u201d<\/p>\n Vinod Khosla<\/p><\/blockquote>\n So there\u2019s ways\u2014and that\u2019s why I think policy, which will be driven by politics, will drive where we end up on this equation in the short term. And I think it\u2019ll start in the early 2030s, this massive drive for structural change. People have proposed AI taxes, robot taxes\u2014I think some sort of wealth fund for a nation. Norway has an Oil Fund. Alaska has an Oil Fund. We won\u2019t have oil, but we will have other sources of wealth creation that should be. And these are some raw ideas, they have plenty of flaws in them, but they will be refined. And something structural has to happen. It could be universal basic income. It should be a wealth fund. It could be services that are near free. Any of these things. I don\u2019t want to go too far into areas that are still in process in my thinking.<\/p>\n I think it\u2019s the right innovative thinking and approach. And I think a lot of people who are making under $100,000 would really support a lot of that.<\/strong><\/p>\n And they\u2019re the voters, they will vote for a candidate who says no taxes if you make less than $100,000. Let\u2019s tilt the equation towards labor and not capital.<\/p>\n Khosla on the proposed billionaire tax in California<\/strong><\/p>\n I\u2019m sitting here with a billionaire in California. Lots of billionaires are starting to plot to leave California because of a potential wealth tax on them. I know you\u2019ve had thoughts about what\u2019s right and the wrong way to tax billionaires to be most effective for still creating innovation here. What are your thoughts, generally, on the right way to tax billionaires, and why is the current proposal potentially wrong? And do you have plans to leave California?<\/strong><\/p>\n I have no plans to leave California.<\/a> In fact, people would generally have left on January 1 or before January 1. But it doesn\u2019t structurally solve the problem beyond the one time shot of income. One time. It\u2019s silly, and so many entrepreneurs who own 20% of their company, are talking about leaving now in case somebody takes another shot, because junkies come back for another shot.\u00a0<\/p>\n If at the federal level, we doubled capital gains tax or made it all uniform, then we will equalize and balance between economic profitability and economic growth and investment. That\u2019s the reason for capital gains, is increased investment and more equitable distribution of income. That\u2019s just one idea. That\u2019s a structural change that would make sense. I\u2019d be surprised if that doesn\u2019t happen before 2040.\u00a0<\/p>\n Now, capitalism was about economic efficiency, but if the need for efficiency goes away because of extreme abundance, then why focus on efficiency? Let\u2019s focus on equity. Every country will be different. It\u2019s very unlikely [that] business in Germany, for example, with strong participation of labor on their boards, will allow AI to replace jobs. China will, they\u2019re very much on that trajectory.<\/p>\n Khosla on the AI war with China and the Trump administration<\/strong><\/p>\n\n
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