The 2 Underrated Startup Success Factors

By Jasper Kuria On 3:49 am

Niko Bonatsos is a Managing Director at the venerable venture capital firm General Catalyst. He is ‘the peoples’ venture capitalist’ and has a massive social media following! In his words “I am particularly interested in investing in and partnering with first time tech founders, who have a strong perspective about solving big problems their way. I don’t mind if you weren’t born in the U.S. (talent is universal, while opportunity is not) or if your accent sounds funny (mine does for sure). I don’t care if you didn’t go to Stanford or if you aren’t a domain expert yet. I partner with tech founders who are learning animals and treat every decision as a learning moment; these are the types that become domain experts a few years later.”

In late 2016, Niko did a ‘fireside chat’ with Capital & Growth, explaining why timing and empathy are often underrated startup success factors.

If you were to pick one and only one single biggest factor that determines a startup’s success, what would it be? Why? Some say it is product-market fit (Marc Andreessen), others hold that it’s timing (Bill Gross) and yet more believe it is the team. Asked another way, what do you think is essentially different about successful startups?

If I had to pick one, I’d pick timing. But again, it could be explained as foresight or genius of the founder to launch the startup at a great moment in time.

The most successful companies have a confluence of factors aligning to work in their favor. Take Facebook, for example. Mark Zuckerberg founded it at a time when everyone was getting online and broadband was becoming pervasive.

More people had camera phones, were taking pictures and creating lots of user generated content, making the platform more engaging—by the way, this was the case for Instagram as well (smartphones had high quality cameras and people enjoyed sharing their pics on FB). If you are swept by a rising tide, you have no option but to swim up!

In contrast, some really talented and hardworking founders just happen to work on the wrong things and don’t attain the same level of success. Some even tried Zuck’s idea but were too early. It often isn’t their fault. The timing just wasn’t right.



Let’s delve into a bit of your background on how you became a venture capitalist. In your interview with Harry Stebbings, you said it wasn’t planned. You just happened to be at the right place at the right time. You had 1 month of runway and you needed to find something to do to legally remain in the US. I am interested more detail.

I was a Fulbright scholar and startup founder at Stanford. When I realized my startup was not working I just had month to decide what I wanted to do next, otherwise I’d have to leave the country (would have lost my status post-graduation). While being a student entrepreneur I had met a bunch of VCs and got inspired by their exposure to so many talented founders and their understanding of a ton of business sectors.

I have always been obsessed with feeding my intellectual curiosity and thought that VC would be a good personal fit for me. Fortunately, I got introduced to General Catalyst via a mutual friend from Stanford as they were just opening an office in Silicon Valley.

I was truly intrigued by the firm’s unique ability to partner with founders building category-defining companies. Also, I found the people I met genuinely nice.  After GC made me a job offer, I quickly accepted. It’s been a tremendously fun, exciting and successful experience so far. There was definitely that same timing element I talked about earlier, being the right person at the right time for the right opportunity.

Part of your investment thesis is to invest in things that seem stupid or annoying. This has served you well, leading to early investments in Snapchat (valued at $16 billion) and YikYak (valued at $500 million). Please expound on this thesis. [Sadly, Yik Yak has since shut down]

Sure. To clarify my thesis, it is products that seem stupid or annoying at first. In addition, there should be a small group of early adopters who really care about the product. This shows that the product has long term potential and the fact that it is controversial makes people talk about it a lot. Early startups don’t have the resources to do marketing and PR and so having a controversial product gets you free marketing.

Eventually, though, the product must become mainstream for the company to be successful.

You’ve become one of the most well-known and successful venture capitalists in Silicon Valley in under 5 years and as an immigrant. To what would you attribute your success?

Thanks for the compliment. It is still early days and I have a long way to go but I’ve been incredibly fortunate to work with some amazing founders. I think the founders do all the hard work and deserve all the credit. VCs just smile! I’ve also been fortunate to get mentorship from the talented and experienced VCs at General Catalyst and other firms.

I think the founders do all the hard work and deserve all the credit. VCs just smile!

— Niko Bonatsos

In your profile you say that although you are a VC you are an entrepreneur at heart? Given that you are relatively young, do you think you will try entrepreneurship again? What field would you do it in?

I am truly enjoying what I am doing now. Working with founders is lots of fun so I don’t see myself doing anything different in the near term. But if I were to do a startup today, it would probably be in Genomics or Artificial Intelligence. Both of these fields hold promise and I believe there are great opportunities. As an engineer, I would want to work on coming up with new, more efficient AI algorithms.

What are three things that turn you off when entrepreneurs pitch to you.

The first is founders who don’t know their numbers. I am talking about the post early stage company that has launched a product and has users but the founders either don’t know their metrics or are trying to hide something.

The second, also related, would be the founders not having empathy for and understanding their users. As a founder you need to understand the key reasons that are driving adoption of your product, in great depth.

Lastly, I want to invest in people who are learning animals. This is a tough one to assess in the thirty minutes to an hour I have with a founder but it is absolutely critical. I don’t care if you are expert now but I do expect that you will be one in three years.


What are some ways you assess if someone is a learning animal?

Learning animals care a lot more about learning instead of being right. Do they treat every decision as an opportunity to learn? Do they think from first principles? If you put them in front of an industry expert, can they get him/her impressed with their learnings and logic about how things will play out in that sector?

Do you have any parting thoughts or advice for entrepreneurs?

Have insane levels of empathy for your users or customer and really try to understand their pain points. Only by doing so will you be able to create something valuable and compelling for them, and as a result you will be successful.


Jasper Kuria