Ethan Choi: AI Redefines Jobs and Investments

Ethan Choi of Khosla: A Strong Voice on AI and Investment

Ethan Choi, a partner at Khosla Ventures, is not shy about sharing his strong opinions on the impact of artificial intelligence (AI) on the job market. He believes that AI poses a significant threat to entry-level jobs, challenging the traditional social contract between employers and employees in the modern world.

Choi is well-positioned to assess the impact of AI, having led investments in several companies focused on this technology. He is known for his founder-centric investment philosophy, supporting companies in the enterprise software and fintech infrastructure sectors.

Before joining Khosla in 2024, Choi was a partner at Accel, where he oversaw growth investments in renowned companies such as 1Password, Klaviyo, Pismo (acquired by Visa), Nuvemshop, and commercetools. Prior to that, he worked at Spectrum Equity, supporting companies like Lynda.com (acquired by LinkedIn), Headspace, Lucid Software, and PicMonkey (acquired by Shutterstock).

A Prolific Investment Approach

In a recent interview, Ethan Choi shared his thoughts on the potential disappearance of entry-level jobs, his philosophical evolution regarding investment, and his shift from a growth-focused strategy to a more flexible approach.

Managing Investment Volume

Crunchbase News: You have led numerous deals in recent years, including in companies like Ramp, ClickHouse, Vercel, Glean, and Bridge. How do you manage this volume of investment?

Choi: The past few years have been particularly intense. I led about seven deals last year, which is exceptional even by the highest standards. This year, I have slowed down to focus more on integration with the companies I have invested in.

The Impact of AI on Entry-Level Jobs

Choi is concerned about the disappearance of entry-level jobs due to AI. He himself uses AI models to optimize his workflow, such as comparing the indexing methodologies of Clickhouse and Snowflake while driving. These tools allow him to extract insights faster than any human, giving him the feeling of wearing an "Ironman suit."

However, this ability to perform the work of a junior associate almost instantly means that these roles are on the verge of extinction. The foundational work, once reserved for young entrants to the job market, is now being called into question.

Consequences for Education

If "on-the-job" training disappears, what is the future for students and universities? According to Choi, the burden of the first three years of "professional training" must be shifted to universities. He criticizes the traditional American educational model, which imposes general requirements already covered in high school. Universities should instead be places where AI is used to build and apply concrete knowledge.

For computer science students, this means graduating with the skills of an experienced engineer. The bar is higher for everyone. While institutions like Vanderbilt and Arizona State University are adopting AI-focused programs, other prestigious universities struggle to adapt.

Evolving Investment Philosophy

Khosla Ventures is known for its contrarian approach. How does this translate in a competitive market?

Choi has evolved towards an agnostic approach regarding investment phases. Although often associated with growth, he is increasingly getting involved in seed and Series A rounds. In a context where the pace of change is rapid, a company's current metrics do not guarantee its future.

His investment philosophy has changed: once focused 80% on metrics and 20% on founders, it is now 90% founder-centric. The quality of the founding team and their adaptability are essential. With the acceleration of technological development, a company can experience 50 years of changes in a decade. It is crucial to support those who can manage this stress.

Transitioning to an AI-Centric World

Choi anticipates "massive carnage" for certain software companies in the face of AI. The transition to a cash flow and profit-based evaluation is painful. The market must now believe that a company is natively AI-focused, with revenues based on inference and usage rather than traditional licenses.

He foresees difficulties for lightweight applications and mid-sized companies unable to attract talent in applied AI. He admires the founders of Intercom and Airtable who are "burning their boats" to reinvent their companies to adapt to this new paradigm. In this market, one must reinvent themselves or be replaced.

Opportunities in Financial Services

With his experience in fintech, Choi sees unconventional opportunities in financial services. He believes that reference systems can be replaced, even in established sectors.

For example, DualEntry, a company in which Khosla has invested, aims to replace NetSuite and basic accounting systems. AI enables startups to create migration paths and extend existing platforms in record time.

Encouraging Risk-Taking

Vinod Khosla often encourages founders to challenge conventional wisdom. Choi shares examples where he has guided founders toward risky but potentially revolutionary choices.

While identifying and managing risks is crucial, it is essential to give founders the courage to take transformative risks for their business and their sector.

Changing Hiring Criteria

Choi emphasizes that talent density is crucial for success. In a market where AI automates routine work, the criteria for defining "elite" hiring have evolved.

Ironically, one of the main differences is whether an executive has previously been an individual contributor (IC) and can accomplish most required tasks with the help of AI.