Leadership, says Vinod Khosla, "is about having a point of view, an internal compass." And Khosla, a cofounder of Sun Microsystems and one of Silicon Valley's best known venture capitalists, has a point of view -- and then some.

He gives short shrift to his fellow VCs, saying, "Ninety percent really add no value, and I truly believe 70 percent of them reduce the potential of a company." Business consultants? Less accurate than a bunch of monkeys throwing darts. Journalists? Why pay attention to an English major? asks Khosla, a 1980 Stanford Graduate School of Business alumnus.

During his View From the Top appearance at Stanford in May, the investor and founder of Khosla Ventures, who is well known for his successes, discussed a few of his failures and shared advice on leadership and how to succeed in the venture capital business.

Persistence Pays Off

Early during his stint as Sun's first CEO, Computer Vision, a major customer, signaled that it was going to defect to a competitor. As soon as he got the news, Khosla jumped on a red-eye flight to the East Coast and camped out in the customer's lobby. He stayed there until 6 p.m., when the CEO finally agreed to meet with him, "mostly because he wanted me to go away," Khosla says. They met again the next day and Khosla left with a handwritten contract in his briefcase. "The point is, if you actually believe something, you try your best to make it happen. It doesn't always happen, but it happens most of the time." But too many people, he says, "take 'no' for an answer far too easily."

Consider Your Impact

Our mission, says Khosla, is to make a positive change. Khosla Ventures invests heavily in green, or cleantech, technologies. "If you get a lower rate of return but higher impact, we'll probably pick that, because I'm much more interested in that than feeding some pension fund a slightly higher rate of return," he says. That's more than just talk; Khosla Ventures was an early and substantial investor in cleantech technologies.

Become Risk-Tolerant

Many entrepreneurs make the mistake of reducing the chances of failure so radically that "the consequences of success are inconsequential," he says. "A 90 percent chance of failure is not a problem if there's a 10 percent chance of (earning) 100 times your money." The venture capital business is about accepting higher risks in hopes of gaining a higher upside, says Khosla, who has seen his share of failures. His first startup, Data Dump, failed. "I like to say my willingness to fail is what gives me the ability to succeed," he says.

Find Your "Internal Compass"

When CEOs lack a belief system, or fail to act in accordance with it, they make mistakes, he says. He uses the example of a company changing its strategy in reaction to bad press. "How silly is it that some English major who's never had a business job can determine the strategy of a Fortune 500 company?" he asks. Executives make that make mistake because they care more about what's written than they do about their belief system, says Khosla.

Be Wary of Experts

Silicon Valley is full of consultants and venture capitalists who have never been a CEO or company founder. By and large, says Khosla, their advice is worthless. Although there are exceptions, the only people whose advice to an entrepreneur is worth heeding are those who have worked at a startup, he says. "And most VCs haven't done that, so they give stupid advice. You know, if you got out of business school and joined a VC firm and grew up and eventually became a partner, you haven't learned what it's like to be in a startup," he says. His company pushes new hires out the door after three or four years to spend time at a startup before they can return and have a shot at a partnership.

Forget the Spreadsheet

IRR, or the internal rate of return, is a measure loved by financial analysts and is the rate of growth a project is expected to generate. But it has almost no relevance to venture capital and is not used as a measure to evaluate investment opportunities at Khosla Ventures, says Khosla. Calculating an IRR creates the illusion of knowing how well a company will perform, he says: "I did enough business plans to know I can make the business plan do whatever I want on the spreadsheet. Reality is different."

This piece was originally published by Stanford Business and is republished with permission. Follow them @StanfordBiz