US Investor Series: Niko Bonatsos "Betting on Bold Ideas: How to Pitch to General Calatalyst"

Excellent. Hello, hello. How are you doing? Hey, very well, thank you so much. There you go. You had a little code name going on. Oh, no problem. I've been here all along, but I realized that you were expecting to see me with my own name, right? Instead, I decided to join from the office. I'm at the beautiful San Francisco office, and I thought it would be better to do it from a meeting room instead of just staring at my computer screen. And Michael, thank you for inviting me here. Very grateful for the Start Community, and Fora will be sponsoring this episode series. Looking forward to an awesome conversation.

Yeah, it's definitely true. It's been the case for the last couple of years. And there are several reasons for that. First reason is startups have the following set of advantages over other companies: speed and focus. And I've noticed from experience that if you have everyone on the team be technical, meaning on the building side, the chances of having multiple shots on goal with the limited runway you have from your pre-seed or even Series A money are much higher. Secondly, I've noticed that since we come in early, pre-seed or seed, in the vast majority of the investment we make, the first idea doesn't work, either because it's not the right timing or because the founders don't love it as much. But I've noticed technical teams, especially technical teams, have a much better ability to jump on to the next idea versus teams led by business-heavy founders. Those folks would need to spend a lot of time thinking about a new idea in extreme detail before they actually start building and testing things out. Thirdly, I've noticed that teams that are fully technical have a much easier ability to recruit other small technical folks who want to work with other technical folks. And in a world of technical talent being hard to recruit and retain, this is an amazing asset that your company can have. So for all reasons, I do love investing in technical founders building for themselves. Last one, I do tend to invest a ton in first-time founders, and as a result, many are on the younger side. So when you're on the younger side, you're inexperienced and you also don't have a network. However, if you have intuition for the customer because you yourself are the customer, chances are that your ability to build a better product is higher. Chances are that you know somebody else like yourself, a friend of yours, who could be a good customer for whatever you're building or hire. That's another reason why I like that.

I'm a little bit biased. I think technical is always better. However, my definition has broadened a bit. So sure, if you have three founders or four founders, it's okay if not all four of them are coding. But I think all of them should be a builder. If one of them is a product person or a designer but they're not coding, or they're using some of the new tools that have popped up, that's fine. Cool. I just don't love it when I see a seed-stage team that has a COO and a CFO. I'm like, Jesus, what's going on? Or I hate it when I see a seed-stage team, especially with first-timers, they have a chief of staff or they have a head of business development. Like, what planet are you guys living on?

Yeah, good question. I had this aha moment in my very early days at GC that frankly, as a new VC at the time back in 2010, I didn't really need to know anyone who could introduce me to amazing founders on the consumer side. Why is that? Because the vast majority of the most interesting consumer founders at that time were building on mobile. Very few big companies were building for the app stores. And by the way, I could actually see what products consumers really like because the app stores are architected in such a way where you can see which products are getting the most downloads. And at the time, quite a few of them were also paid. You could see which ones consumers were paying money on. This is before iOS subscriptions or in-app purchases the way we know them today. So it democratized venture capital investing in my opinion. And nobody like me at the time could find developers who very often were young millennial founders, so more or less the same age as I was at the time. And the response rate was pretty good. Do I still check the App Store to do the same? I actually do, but this is more because it's an addiction to me that somehow I haven't found the cure for. Do I do it every day? I don't do it every day. Do I do it every week? Yes, I do it every week. Do I ask other people at GC to do it every day as I used to? No, we don't really have anyone who's obsessive-compulsive about that stuff because the App Store has changed. However, I spend a lot of time now on TikTok and Discord because these are the places in today's world where if you're a Zoomer founder who knows how to speak TikTok or knows how to speak Discord, you can make it rain. You can get hundreds of thousands, if not the first few million, of users or customers to hear about your product and sign up for free. And that's part of my information diet, 15 minutes every day. I try to time it. I'm on TikTok to see what's going on and then spend some time on Discord as well.

Yeah, so again, many of the founders I invest in are immigrants. They're fresh off the boat to the US, like I was once. And there are people who are out of central casting. They are folks who have perseverance in spades. They live in a future version of the world in their heads, and they will try whatever it takes to solve the problem they're obsessing with right now. So I do think you're always one amazing connection away from introducing you to whoever is relevant for whatever you're doing. So do you care about fundraising? You just need to know one person who has done it with friendly credibility with VCs to open a lot of the doors that matter. Are you somebody who wants to figure out how to sell to OpenAI? Great, you need to find somebody who has access to them or worked over there in the past. And this door can open. And founders, what do they have? They have infectious enthusiasm and pace. So do I think it's attainable for every founder to find one amazing mentor to help them out and open doors? Yes. If anything, I think it's a trait of a great founder where you can get busy people who for some reason fall in love with you to do stuff for you for free. So that's something that I strongly recommend, especially the Silicon Valley ethos, which is now very much a mindset globally. Like the cold emailing and the idea of 'I can help you, I can pay it forward.' Why not leverage that regardless of where you are, regardless of where you're getting started? And then on the flip side, I also now have the benefit of aging. I have seen so many people who, on the back of one relationship, have built careers or even companies or VC firms. And that's amazing to see. Whoever started working with Elon Musk earlier on in his career, clearly could have done nothing else, and entire venture capital firms have been built behind just working with Elon Musk, to mention one example, maybe the most extreme example.

Yeah, absolutely. By the way, all the examples I gave started from humble beginnings. Some went to Stanford, but he's not from the Bay Area. John and Patrick Collison started in Ireland, and I think their first company was acquired by a Canadian company. And Elon started from South Africa. Right. So amazing talent can come from anywhere. As soon as you spot that kind of talent, regardless of where you sit, are you an engineer? Are you whatever you want to do? Try to be with them and join them. Whatever, make the case for it.

Yeah, I'm thankful for the kind words. We're grateful for our LPs and the awesome portfolio founders we have who have enabled us to be able to raise more money. I'm a little bit of an odd case at GC because I'm a generalist early-stage investor. And for me, it's like with technical founders building for themselves. And to an extent, I don't care what they're building. Sure, half of them right now have an AI flavor in whatever they're building, but it could be enterprise, could be fintech, could be consumer, could be crypto, could be frontier tech, could be whatever. But the way I look at the world is either you're that kind of founder archetype and I'm interested in your pre-seed or seed, or you're not. And I will introduce you to some of my other awesome partners. I would do five or six pre-seed or seed investments a year, and I would do two to three Series A or B investments a year in the same kind of founder archetype, but most often with product-market fit. That's how I see the world. Sure, if I could be investing in photo sharing apps for the rest of time, I would be thrilled. However, the world has changed and the world doesn't necessarily need another photo sharing app.

It's hard to generalize, but let me give some quick framework and answers here. I think you got to get started where you're comfortable with, having access to your customers. And if your customers are right outside your doorstep, great. You got to be over there. If you are building for yourself and you're in the dev tools category, it doesn't honestly matter much where you are. If you are somebody who wants to build for the financial services industry, it's a good idea to be in New York. For folks who want to come to the US, I would say the US is an amazing place. If you're the kind of person who only wants to talk and think about technology all day long, I think about LLMs, SDKs, APIs, agents, whatever it is. If you want to only think about that stuff all day long and hang out only with other tech people, that's what you're craving because wherever you are, you have always felt like an outsider. Except in a magical place because you're a nerd. You come to the US, you have pop status. Nerds rule San Francisco. And many of them that come here from afar, for the first time in their lives, they have validation. They're not the weirdos. They have the highest status. So for that kind of person, just to experience that is a life experience. Get connectivity, pay it forward. It is a magical place, yes. But if you're not craving to only think and talk about tech and only hang out with other tech people, you don't need to be here. You have connectivity here, but you don't need to be here. Secondly, where do I see a reason for founders to be? If you're building technology for other tech startups and large tech companies, that's what the industry in San Francisco is all about. The same way that you would move to New York to be in front of the financial services industry, that's the reason why you might want to have a presence or even move here if you only want to sell to other tech companies. And that's what I would say. Otherwise, I would go back to my previous answer: you're one amazing mentor away from having connectivity to anyone in Silicon Valley. In today's world with Hacker News, TechCrunch, all the different blogs, seminars like this, you can learn more and embrace the Silicon Valley mindset of building companies.

I think San Francisco is freaking great for any company that's building for other tech companies. I think New York is awesome for all things fintech, all things crypto. New York is also awesome for any of the European or Israeli type of founders who want to open up an office in the US to conquer the American market. And I say that because the time zones also are more friendly for those who have to be getting started in Europe. Los Angeles is pretty great for what we call at GC global resilience, so manufacturing, defense, anything that requires a lot of space. And because LA has had a long tradition and history in aerospace, manufacturing, especially the area around SpaceX, this is an awesome part of the world in this country to be building companies. If you want to do stuff in biotech, South San Francisco and Boston are probably the two best places to be. And then you see some other cities in the US like Austin and Seattle that both have strong universities, strong anchor companies that have hired, recruited, grown a deep engineering talent pool where you have awesome startup innovation going on. These two cities have a robust early-stage VC network as well. So in Austin, you do see a number of companies in the global resilience base pop up. And in Seattle, because you have such a deep pool of Microsoft and Amazon talent, as well as many Silicon Valley tech companies like Stripe having successful offices there, you see many enterprise infrastructure companies getting built or having a successful presence.

Yeah, I do believe in that. So if you come from a small country and you're very ambitious, unfortunately you got to get out. But if you're coming from a small country and you want to build a startup, it's actually good news because building for the local market you won't really get paid. And you will realize sooner rather than later that it's a massive waste of time to be really focusing all your time and energy building the product and the team to serve the local market. And you see that very often with Israelis who from day one they really don't bother, unless something consumer-facing, to do anything for the local market. I know not like some of the enterprise security or military stuff, especially after the October 7th events, but they go after serving the US market from day one. So that is a blessing. I think in these guys that you can have this worldly perspective, be forced to serve a global market. Because this means that you'll be able to attract capital, it means you will be able to attract ambitious talent to come and join you, it means that you will have to be more extra work from the very early days to reach out to mentors as we're discussing before and have connectivity with other ecosystems. And I think New Zealand certainly checks that box. The local market there is tiny. And Australia in many ways also checks that box because sure, the economy there is advanced, it's sizable, but it's not massive enough. You're not like India or China where the local market is passive enough for you to do something incredible. So I do like these characteristics of founders getting started in smaller countries.

I can be cold emailed or sent a note on LinkedIn or Twitter. My email is [email protected]. I think most investors like myself are pretty visible and approachable online because all of us want to be community inclusive. If for whatever reason you cannot get hold of someone like me, you're one amazing mentor away from connecting you with us. So what's the easiest way to get hold of any VC that you want? Make friends with one of their portfolio companies, and then you get the introduction. And it's so easy for any founder to reach out to any other founder and then get some introduction.