How General Catalyst MD Niko Bonatsos Identifies Talented Founders
By Annika Huprikar
What’s Ahead:
Learn how General Catalyst MD Niko Bonatsos evaluates startups and which industries excite him today.
Everyday, we might send a snapchat to a friend to keep that streak, order an Uber, or maybe even get takeout through Grubhub. Our day-to-day digital experiences reveal how the consumer-facing product market is poised for disruption by technology. We were fortunate to gain detailed insight on this development from Niko Bonatsos. As Managing Director at General Catalyst, he invests in early and growth stage companies, especially those focused on consumer and enterprise technologies intended to disrupt industries and make our lives better.
“You’ve got to evolve. Consumer preferences are changing all the time.”
Bonatsos’ journey embodies dynamism. Growing up in Greece and the UK, first working as a computer engineer in Japan, and then working in the technology+startup space in Silicon Valley, he has a “portfolio” of diverse experiences and breadth of knowledge that he shares with his founders.
Bonatsos has been with General Catalyst for the past 11 years, investing in positive and powerful chains that perhaps have been overlooked by Silicon Valley. Despite General Catalyst being multistage as a VC, Bonatsos is partial to emerging tech and disruptive consumer products.
“You’ve got to evolve,” he says.“Consumer preferences are changing all the time.”
Student founders were a particularly big focus during the earlier parts of his career. For 3-4 years, he would look at apps and analyze them, downloading 50 each week and then reaching out to those founders to discuss their product and future potential. Bonatsos seeks talented, voracious learners who are obsessed with solving problems in their own way.
“What better people can I think of than first time founders? They don’t have the legacy, but they have the insanely creative imagination that has not been cluttered at all by failures and things they tried in the past. ”
“What better people can I think of than first time founders?” Bonatsos says. “They don’t have the legacy, but they have the insanely creative imagination that has not been cluttered at all by failures and things they tried in the past. Creativity with necessary grinding to exceed as a founder are core parts of the DNA to being someone who is an early stage entrepreneur.”
When assessing a team of a potential startup, Bonatsos identified three main criteria he seeks:
The intactness of learning and expertise
When founders first come to meet with GC, Bonatsos knows that these founders are not necessarily experts in their intended space or industry. A few years down the line, however, he expects them to know their stuff. Competition down the road will “eat them alive” or the space itself may weaken, so it is crucial to him that the founders are “learning animals who treat every meeting, decision, and interaction as a learning opportunity.
Having a North Star
It’s no secret that the path to entrepreneurship is bumpy, so when times get tough, Bonatsos believes that founders need to be grounded by a deeper reason to start the company and see it through. When things are hard, they need to be able to concretely remind themselves of why they are involved in this work. Having this authenticity is key.
Be a narrative storyteller
This criterion is particularly difficult, but makes a load of difference, especially as a first-time, early-stage, or student entrepreneur. When founders can tell an exceptional, compelling story and paint a detailed picture about their product and intended trajectory, they get investors excited, the press to write about them, recruit more individuals, and so on.
Bonatsos sums up this notion best: “If you don't have a lot of evidence to back something that you're saying, you better be an exceptional storyteller, and in the beginning as a founder, you only have yourself, your ideas, maybe a few co founders that's about it. So, you can learn over time how to be a really good storyteller, and it's a very important trick.”
On the VC side, Bonatsos has important advice regarding how VCs can promote talented founders who might fly under the radar and make opportunities for founders more accessible.
Be open minded to invest in people who cold email.
Bonatsos shares that “particularly established VCs don't want to talk to anybody unless they’ve been introduced by a trusted connection of theirs. I think that's BS, because especially with new sectors that are evolving and emerging, just expecting your network to really feed you with these opportunities, is frankly really unlikely or it's going to be very late.”
Remember the importance of diversity of thought
VCs need to do a better job at recruiting different types of people to firms. With enough surface area internally on the team, the investors can have a better understanding of what first-timers and early-stage founders are pitching if someone can relate to it through background, interests, or expertise. It is important that investors can resonate or relate to a product, so increasing this diversity of thought is a must to achieve this.
“Particularly established VCs don’t want to talk to anybody unless they’ve been introduced by a trusted connection of theirs. I think that’s BS.”
Though the consumer-facing market has faced increasing pressures with cost, convolutedness, and ability to interface with consumers, the emergence of new distribution channels that are not exploited by big, wealthy brands is promising. Tik Tok and Discord, for example, are two relatively recently platforms that bigger brands don’t know how to leverage. With these cloud forms reaching a certain scale, they become prime platforms for young startups and founders to interface with users. The consumer-product market continues to be a dynamic space with technology turning our new consumer devices, coupled with the psychological fact that “people don’t want to be on the same networks and platforms as their older siblings and parents.” Just think about millennials' distaste for Facebook, relegated as a platform their parents use.
Currently, Bonatsos is excited about the future of the work space and healthcare industry.
Given the backdrop of the COVID-19 pandemic that we have all lived through for more than a year now, Bonatsos believes the work space is prime for disruption. Many are unemployed and have had to adapt in the workforce in unexpected ways; he says things need to be done differently to help people have more opportunities and the ability to make money. This is a good space where technology can improve quality of life.
The pandemic has shown us an intriguing duality about the healthcare sector, both a weakness as well as exciting potential for how things can be done differently. Bonatsos discussed telehealth as a main example of disruptive technology that has enabled wider access to healthcare as well as a safe medium for getting medical help during the pandemic. More business software has been developed for use by doctors and nurses to help free up their time away from the computers, where they would normally be filling out cumbersome paperwork every day.