Niko Bonatsos: The Journey with General Catalyst

Niko, it's good to see you again. You have been one of the most well-known investors for the last thirteen years, but let's start with your pre-history - what's the prequel to you becoming an investor?

Kyriakos, thank you so much for having me. It's an honor to be on your podcast. I'm really excited for this conversation with you.

So before joining General Catalyst, our firm, about thirteen years ago, I was in the business of collecting a lot of academic degrees. So I was made in Greece, grew up in Greece, and then moved to the UK.

For almost seven and a half years, I was in college and collected degrees in electrical and computer engineering, manufacturing, engineering, and management, researched biomedical signal processing, and then ended up at Stanford in 2009 to study management science and engineering. At that time, everyone, even their mother, was building mobile apps and was interested in building the next big social network. So it was a great time to replicate.

Unfortunately, we were a few years too late. But during that process, I met a lot of venture capitalists and ended up joining our firm, General Catalyst.

What brought you to Stanford?

I was inspired by much of the content I saw, especially on eCorner at the time. They have a ton of notable founders today, and back then, somewhat notable founders tell their stories, showing up at Stanford as part of the Entrepreneur Thought Leader - seminar series that the management, science, and Engineering Department was running at the time.

I was inspired by the content I was consuming because it was TED-like content but for all things tech, entrepreneurship, and engineering. So I filed an application, was fortunate to get in, and got the Fulbright scholarship that allowed me to have access to capital and do it, and that was it.

And what would you say was different about Stanford? Did you find something different than your days in Cambridge?

I think Cambridge certainly was a lot more fun because the social life there was a ton more vibrant. And for some reason, just at the time in 2008, and 2009, when I was there, folks were not as obsessed with finding a job and lining up their next career opportunity. At Stanford, everybody was like - oh, shit - we're deep in student debt. We need to make it work. However, the connectivity that Stanford had with Silicon Valley was incredible.

You could walk around campus and see Steve Jobs walk his dogs

You could even go to the grocery store and see Steve Jobs, Mark Zuckerberg, and all those people who were like young millennials at the time and did their grocery shopping in the neighborhood. And you could cold email all those people. A few of my classmates and I cold-emailed Elon Musk, and he replied, and we met him. So the connectivity that Stanford had with Silicon Valley was incredible for those of us who were really eager to put it into use.

Can you tell why that's the case? Every time I come to Stanford, too, it's near all the big investors as well. They are very close. I'm always wondering why is this not the case in Europe. Why would you not have the same near Cambridge, for example, or Oxford?

I don't know, but even Europe has changed. For one, I can't speak to Europe. But what I can tell you about California, my theory is that it's because it's a newer place still, the whole area has a history of less than one hundred and fifty years, at least it's civilized.

And as such, there is that feeling that we're all in this together. Failure is an option, and it's okay to fail, maybe you learned something, but let's help each other so we can all rise together and increase the size of the pie.

In Europe, I found, by mostly growing up here now - having done a little bit of business here over the years - that things tend to be more formal. This is also the case in the Eastern part of the United States. And you need to get a trusted introduction to go and meet somebody important, et cetera. So that's my theory, but I don't know for sure.

How did you hear about General Catalyst?

I had heard about General Catalyst through a Stanford classmate friend of mine who got an email from Chris Farmer, now the CEO of Signal Fire - a really awesome venture capital firm - saying, I found your profile online. You're really interesting. I'm looking for a VC associate. Do you want to interview?

And that friend of mine said, I'm not interested because I'm moving back to Europe, but I have a friend of mine who's interested in doing that - that friend was me. And that's how I got connected to General Catalyst. I'm eternally grateful to Chris for giving me a chance, and of course, General Catalyst, to join the industry because I was not thinking about doing so then.

How did you first meet the Snapchat founder?

I met them through many of the Stanford connections I had a year later in 2012. So I met them when I was still a senior at Stanford. And this was the beginning of the journey with them.

I do very much remember the first time I met them because Evan had a point of view of building the fastest camera app out there. He was the only founder then who did not want to build on top of Facebook. Everyone and their mother at the time who was doing stuff in social networking or consumer in general - was building on top of the Facebook graph.

Thirdly, he said something that still resonates today: "I want every single person who opens Snapchat up to smile and feel happy."

I was like, wow, that's a big and powerful feeling that your product could evoke. Of course, it's hard to imagine that Snap would own the selfie revolution in the following years. And it turned out to be a perfect storm because at the time, the iPhone - for the first time - had a high-quality front-facing camera. And many young girls at the time - teenage girls - were really eager to take selfies of themselves while they were going through their day and share it with their besties.

Over time, this became one of the leading communication and entertainment platforms that we have. And recently, they surpassed what is now, 11 years later since then, 750 million monthly active users. It's pretty cool. Looking forward to when you do that with Terra...

What are you searching for during meetings with founders, and how can you tell they're great founders?

First off, we often get it wrong, right? But at the end of the day, every time I meet a founder, I'm trying to answer the following question. What if she or he is right? How big could it be? That's the question or set of questions I'm trying to answer.

Certain people are amazing storytellers, are ridiculously ambitious, can lead, are stunning recruiters, serve as talent magnets, are technical and can build for themselves, are customer-obsessed. So the more of this you know - the traits you have - the more likely we will say yes.

Those are a lot of categories. Can you recall an example for someone who is listening now?

Yeah. For example, when I met you, you were certainly not a domain expert in all the things Terra is today, but you're an individual who was clearly ambitious, very curious, and eager to come and play in the big leagues. I remember you flew to San Francisco to meet me and meet some other people at the time - network. Who does that on their own time, especially as a recent graduate? Few people do that, I think. That already sets you apart.

Two - you're very curious to learn more about your customers. And you've been great all along, asking people like me to introspect potential customers and learn from them. I noticed that you could lead by recruiting other mostly technical individuals, which is an asset if you can do that.

You already had an awesome technical co-founder, Raouf, and also, for some reason, you could get a lot of the Imperial, recent graduates, or it seemed to be recent graduates to do stuff for you on the cheap.

These are some of the things I saw back then when we first invested in you in late 2020. And, of course, the last thing to mention - man, you had insane perseverance, which I think is required for a very early-stage founder. I think you were pinging me almost every week at the time to grab my attention or to have me do stuff for you.

What mistakes do you see from founders when they're trying to raise funds in the early stages?

I don't know where to start, but let me say a few of the common pitfalls. One is a lot of founders don't take fundraising seriously, and they think automatically it will happen for them. So it shows that doing it one meeting at a time without knowing your audience or being unprepared for it.

And if you think about it, all of us investors, in essence, or professionals, are saying no very politely. So knowing your audience, taking this activity seriously, doing it with a serious commitment over a few weeks, and asking some founder friends of yours to really help you out could make a hell of a difference.

Two, you could see founders who show up at a meeting and the body language with their co-founders won't be great, or it could be that they disagree in front of the investors, stuff like that, and it sounds crazy, but it happens pretty often.

How can you tell? Can you recall something?

Yeah, you could see it. I could ask you something like - hey, tell me a little bit about your technology stack. And you may tell me one thing, and then your co-founder will be like - hey, we migrated to something else. That's clearly a red flag.

Or I would ask you what you have on your product roadmap. And you would tell me, and then your co-founder would say - yeah, that's something we launched a week ago. We're like, this person is clearly not a product founder, as he makes it sound about himself.

Thirdly, knowing your metrics is not necessarily the case for pre-seed or sometimes seed founders because there are no metrics, but for some seed and, of course, in a series A or later-stage founders asking questions about all things, metrics, and either hearing no answer at all or then you hear an answer, and you can verify after the fact on something different. Clearly, you lose interest. And so in the situation, if you don't remember a specific metric to say - look, I don't have it on top of my head. Do you want me to e-mail you afterward? Or can I take 30 seconds to look?

An answer like that is a perfect answer. But to give one that's not partially true or you have no idea, this doesn't show pretty well. I can go down the list, but these are some of the more common pitfalls.