Sal Khan on Creating a Better Future

Sal Khan is the founder and executive director of Khan Academy, an online platform for learning that strives to provide a free education for anyone in the world.

Sal went to the Massachusetts Institute of Technology for his undergrad before working at Oracle and a startup called meVC. After the dot-com bubble, he went to Harvard Business School and then worked as a hedge fund analyst from 2003 to 2009. While he was at the hedge fund, he started tutoring his cousin, Nadia, and the video tutorials he made eventually became part of what is now Khan Academy, which reaches more than ten million students monthly and has amassed over one billion views on its YouTube page.

Interview audio included with each question; transcript edited for clarity.

Stories worth noting:

1) Pivoting into finance after business school and dealing with rejection
2) Using his hedge fund background to determine the structure of Khan Academy
3) His advice for leaving a career or school to start a venture
4) His thoughts on the importance of balancing work and life
5) His approach to dealing with distractions

Can you speak about your mindset going into the hedge fund and your career before starting Khan Academy?

When I was entering college, finance was the furthest thing from my mind. I thought I wanted to be a theoretical physicist or mathematician and try to solve the great mysteries of the universe. Once I got to college I kept that interest, but computer science was already a field and it was getting hotter in the mid-1990s. And then I realized that more than just understanding reality, you can start creating realities here. On the pragmatic side, you started to see stories of people founding these great companies and doing well.

That was my first career out of college — I worked at Oracle and then I worked at a finance-related startup called meVC. It was going to democratize venture capital and I was the CTO at the ripe age of 22 years old. It grew to 40 people and I was the first employee there — the founders were two bankers who hired me. And then the NASDAQ popped, and it became survival mode. That day, I thought maybe I should apply to business school.

At the time, my thinking about business school was that clearly something is happening to the world and the economy, and I didn't really know what I wanted to do with my life. I had this tech thing, but I found it somewhat emotionally traumatic because everyday is like a roller coaster. One day you're daydreaming about your future stock wealth, another day you're wondering if you’ll ever be able to buy a house.

So I thought business school would allow me to think more about what I want to do. I always had an interest being a broader generalist, but my resume definitely was pigeonholing me into CTO-type positions.

Sal Khan Commencement Address

Sal Khan delivering the Class Day address at Harvard Business School in 2014.

I'd be lying if I didn't tell you part of my motivation was that I was very lonely and wanted a wife. I thought, school is a good place to meet people and figure out life. So I went to business school and I was exploring my options. I actually found the finance classes quite intriguing: it was this neat combination of math, economics, and human psychology. I got more and more interested in markets.

The second year, I took a capital markets class and my professor and I had a rapport. I asked him, “I really love this class, what can I do that is like this?” And he said, “You should go work at a hedge fund.” And I said, “That sounds great... what's a hedge fund?” If you ask someone what's a hedge fund, you will get many not-so-clear answers.

I started asking around and I obviously had a lot of debt at that point so it looked like a really intriguing thing.

I applied and probably got turned down from 40 different places. It was a horrible job market.

For most of the people who want to go into hedge funds or private equity or these more selective financial careers, they have been building their resumes from the get go: they work at Goldman Sachs, and they get an internship at this private equity firm or this hedge fund. Mine looked nothing like that. I was getting a lot of inquiries from tech companies and even tech VC firms, but no one in the hedge fund world. But eventually there was this guy who was operating out of his house; his nascent hedge fund was starting to do well and he wanted to hire his first analyst. This was April of my second year when most of my peers had jobs already. I thought it'll at least get my foot in the door.

I was lucky. Dan Wohl, my boss at Wohl Capital, was an incredible investor so I was able to learn a ton from him, not just on the financial or industry side, but also on how one should live their life. I was really enjoying that job, and I didn't view it as a temporary thing. When I was a year or two into it I was very happy and satisfied with where I was going, and based on Dan's investment acumen, we were doing well. But I had visions of one day starting a school.

In college, I got rejected for the Rhodes Scholarship twice. Both times I told them: I want to get a Ph.D. in education because I'm interested in ways to reform education. They clearly didn't view my application as credible.

Even in the hedge fund world, I thought, if I could do really well over the next 10–15 years, I could retire and start a school on my own terms. That was always in the back of my mind, but I definitely didn't expect to stay there for a short amount of time.

You have a very technical background in your undergrad as well as the hedge fund analyst role. Did you feel your technical foundation helped you when you were creating and growing Khan Academy as an organization?

Yes and no. It's actually interesting that most people — based on my background and even stereotypes about Khan Academy — assume the analyst role must have been at a quantitative hedge fund, doing algorithmic trading. But it was actually the opposite: we were a qualitative hedge fund. I wanted to do that because while there was definitely a quantitative aspect to it in modeling an organization’s financials and making predictions, there was also a more human picture to it.

Most of my day involved doing research on these companies, modeling and talking to their management teams to make sure I understood their business. Dan taught me to really listen closely and think about what is being said without it being said. Seeing when people are hesitant and what they choose to highlight, you can actually learn a lot about human psychology.

Sal Videos

Sal making videos in the earlier days of the Academy.

In the Khan Academy world, in the early days I was making videos on math and science, so that's where my background helped a lot. I had an interest in those subjects and already had a strong view that most people weren't learning them in an intuitive way. Once Khan Academy started to get off the ground, I think the technical part was definitely important because for the early prototypes of the software on Khan Academy, I was coding stuff myself.

But I also think the hedge fund background was important when it was time to decide what the structure of this organization should be. There were already VCs who were walking up and saying I'll write a check for this much right now, we could do a double bottom line organization and one day we can have some premium services, and this and that. But through my work in the hedge fund world I had become a student of capital structure.

I've seen that no matter what the founder thinks he or she wants, at the end of the day, it is the owners or the stakeholders in the economic future of the entity that are, in the long term, going to decide what the entity becomes.

I didn't want to undermine that trust that people had in Khan Academy, and I didn't want it to change even after I was dead. I still dream that it's going to be around 500 years from now.

How did you go about deciding to leave your job and pursue Khan Academy full-time?

It's funny because I would always tell myself that I was relatively risk averse, but if you look at the arc of my career, even a two person hedge fund isn't most people's notions of stability. Compared to quitting my job, it was.

I’ve thought a lot about this question when I was coming out of college and when I was thinking about doing Khan Academy full time. The more you put something out there and get evidence of strong product market fit and traction, and the more you can get that evidence while keeping your options open, the better. So if you are a Mark Zuckerberg or Bill Gates and you're in your dorm room in Harvard during sophomore year, you need a lot of evidence to convince yourself not just to leave a stable job, but to drop out of college. You shouldn't do that just from being inspired by some idea. Bill Gates had a contract with IBM, which was the tech company of the time, and Mark Zuckerberg clearly had this thing that was growing 10,000% a year with a lot of traction and no sign of stopping. So, if you hit on something like that, quit your job — you'd be nuts not to do it or at least to take some time off.

Khan Academy office

Khan Academy now has over a hundred employees at its Mountain View office.

But that's not going to be the norm. I would tell most people, including a younger version of myself, that it is good to go to a more established place right out of college. It insulates your resume just as going to a good college is something people will never take away from you. If early on in your career, you have a Google, a Goldman Sachs, McKinsey, or a Khan Academy on your resume, people will know it. They'll have heard of it and they’ll know those companies only hire certain people. They'll also think you probably learned something interesting at those firms that you can bring it to their firm.

The key is that if you do have an entrepreneurial desire long-term, don't let that atrophy.

Once you're at five to six years in the industry, that's your first wave where you've learned a lot and it's not unreasonable to start thinking entrepreneurially. You're in your late 20s, you still don't have many mouths to feed and you kind of have a sense of how the world works. But even then, don't just do it on a whim. Put something out there and prototype it. See if you can get some fit.

I started tutoring my cousins in 2004, made videos in 2006, and I didn't quit my job until 2009 when there were already about 50,000 people who were using it. So it took me a while to make the plunge and even then it was super scary. There is a fun element to it: adventures are fun, but mostly in hindsight. When you don't know how it's going to end, it's incredibly stressful and scary. But one thing I did tell myself is that even if I have to go back to work in a traditional sense, I wasn't going to give up on this Khan Academy thing. So try to structure your endeavour in a way that it's kind of unkillable.

You mentioned that Dan Wohl was an important mentor for you. What are some of the key lessons that you learned from him in terms of your life principles and also from other important mentors that you had in your life?

I’ve had a lot of great mentors. My first boss at Oracle was Thomas Kurian. He was a fairly young guy at the time; now he's the President of Product Development at Oracle. He was very clear in telling me not to get cynical. It's very easy to get cynical, especially early in your life, and even more so coming out of college. You leave college very idealistic, you go to a big company and you start to wonder whether you matter.

Avoid becoming cynical yourself, and definitely avoid the cynical people. Because then it just turns into a death spiral of cynicism, and that's not going to help anybody.

No matter what it seems like, wake up every morning and show up asking: what can I do today to make the most of this experience and to make it matter that I was there? Even when I was miserable in different kinds of jobs, when you take that attitude it becomes a challenge and it's more fun.

Thomas Kurian

Sal was one of Thomas Kurian's first direct reports when he started at Oracle.

There's a bunch of stuff that I learned from Dan. I was ready to work 80 hours a week for him and he told me to go home. He said our job as investors is not to just work ourselves silly. That's just going impair our judgment. If you work too much on something you get so married to that idea that you're not going to know when to pull out of it.

Overprecision creates the illusion of artificial accuracy.

I even try to stress this in our own team when we're overanalyzing things. With overanalysis, you think you're mitigating risk, but you're actually increasing your risk by psychologically marrying yourself because you did so much analysis. Dan said our job is to make only a few really good decisions a year and to avoid making really bad decisions. And the best way you can do that is to have perspective, to be recharged. You can't define yourself by your job.

I was working a solid 40 hours a week but those 40 hours were intense. If I didn't have that life outside of Wohl Capital, I wouldn't have been able to offer Nadia help. I wouldn't have had time to prototype software. So what I tell people is go learn your skills early in your career, find great mentors, work hard, learn a ton, and push yourself. Always ask questions. Ask for critical feedback and show that you can take it. But you should also leave some space for your passions and your interests, and that might blossom into something interesting.

Resources like Khan Academy provide individuals with more agency over their education than ever before. At the same time, people are getting more distracted by social media and push notifications. Where do you see Khan Academy’s role in keeping people engaged, and what advice do you have for dealing with today's distractions?

I'll start with the latter. I think it's super important to be unplugged. For someone who works in technology, many people, including my wife, are often annoyed by how inaccessible I am via technology.

I don't touch my phone over the weekend. I don't touch it after six o'clock. I actually barely look at it during the day.

And I think that's really important. It's not just becoming scatterbrained. You'll become unhappy if you are constantly rechecking your phone for the next dopamine rush, which is what most people are doing. And it is correlated with depression rates and anxiety.

In terms of Khan Academy's role, we want to make sure what we create is compelling and interesting, to create game mechanics and use the latest science out there to make it more engaging so that we can compete with all the distractions. But at the end of day, it's on the individual. It's an interesting dynamic because as you mentioned now with massive open online courses and Khan Academy, the knowledge is way more accessible. When I was 20 years old, if I really wanted to learn something on my own, I'd go to a library and get a pretty dense textbook and try to power through it. Sometimes it worked, sometimes it didn't. Now if you have that motivation, the tools make it way easier for you to do it. But then you have these competing sources of information.

Khan Academy homepage

Khan Academy uses design principles and interactivity to make its product more engaging for users.

The world is going to stay competitive, and I think the people who are able to have the discipline to quarantine or to compartmentalize around the distractions, to realize when they're okay and when they're unhealthy, and to dedicate efforts to bettering themselves with the many tools that exist — those are the people that are going to do better.

You're in a big game, and to win the game is to be a happy productive person — it isn’t to become rich or famous. And to become a happy productive person, you want to feel like you have a job that's creative or you have enough economic freedom that you can do the things you want in life without comparing yourself to others and constantly looking for that dopamine rush from your phone.

What advice do you have for people who are deciding between different career paths?

I think it's all about recognizing that you're operating on very little information. Do things that keep as many options open to you as possible, and don't fall into the trap of rationalizing what just feels comfortable or what you've already had positive feedback on.

It never shocks me how many people think about their relationships the way they should think about work, and they think about work the way they should think about their relationships.

For some people I know, when you ask them why they’re dating someone, they’re like, “Well, they’re a nice person.” Do you think going to marry them? “No, not really.” The more you date them the more likely you are to end up marrying them just out of momentum! And your dream person might be down the hall but is not even approaching you because you're dating that other person. So you're closing your doors just out of comfort, just for having a warm body around.

And then when it comes to a job they’re like, “No, I'm not going to take that job because it's not perfect.” They'll go into this paralysis around work, and it should be the exact opposite. If you think that there's a job that seems decent and it's not hell on earth but you’re going to learn something—and you learn something at every job—do that. But while you're doing that, keep a lookout for other opportunities and swing from that vine to the next.

Meanwhile with your relationships — go have coffee with a lot of people, but only when you see somebody that makes you think, "Hey, I could marry that person" or "I can spend my life with that person," then commit! It's amazing how people tend to get the two most important things completely confused.


Disclaimers: The views presented here are solely those of the interviewee. They do not represent Khan Academy or any of the other individuals or institutions named above.

Kasra Koushan

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