Michiel Kotting shares his take on bold investments, adventure travel, and why 75% stubbornness is the key to success.

Robin Haak: Hello! Great to have you with us today, Michiel. I wanted to start with something from Northzone that caught my attention—the statement that "tech’s age of entitlement" is over. What do you mean by that, and where do you see us heading?

Michiel Kotting: One of the benefits of having been in this industry for so long —I started before the dot-com bubble – is the perspective that comes with witnessing countless trends rise and fall. In 2021, at the height of the frenzy, it was undeniable that we were in an environment where every deal seemed extraordinary with valuations doubling within a year. Everything looked brilliant. For founders, funding rounds were raised quickly and easily, each one with higher valuations than the last. Employees enjoyed the best of both worlds, high salaries, and substantial equity.

That was the age of entitlement whereas today, it’s a very different environment. For investors, judgment matters. For founders, there are hard years ahead if they want to succeed. And for employees, things can go wrong, it's crucial to work at a startup because you love it—not because you think you’ll make more money than at Goldman Sachs.

Good answer. Let’s take it back to when you founded your startup. You’ve talked a lot about building something from nothing. What was it about creating Digital Jones that was exciting but also challenging?

It was by far the hardest thing I’ve ever done. My career up until that point had been very structured. I did well in high school, studied physics because it was hard, and went to BCG, and then to Harvard. It was all about big names, and I worked to excel in those environments.

But when I was at HBS, I became fascinated by entrepreneurship in the U.S.—the dynamism, the big thinking. Coming from a high-performance environment in Europe where everyone worked towards a similar ladder to success, it was amazing to be surrounded by people with such different experiences. One of my classmates had started a film company, another had monitored elections in Zimbabwe, and someone else in healthcare was trying to buy a hospital. It was so different from what I’d experienced in Europe.

Even though it wasn’t part of my original plan, I knew I wanted to start a company and be part of that energy. So, when I founded Digital Jones, we were at the tail end of the dot-com bubble. Raising capital was harder than we’d expected—I pitched to 104 VCs before we finally managed to raise funding. I hated the process, and we ended up raising less than we’d hoped. That meant we had to hustle and work hard to make it happen.

What was amazing about that experience was that for the first time, I wasn’t in a glamorous setting or environment. I wasn’t relying on a big brand name. Everything we achieved came from what we built ourselves. It was the hardest thing I’ve ever done but also the greatest.

Yeah, I can imagine pitching to 104 VCs at that time must have been a huge effort. How did you end up in the Bay Area starting an AI startup?

I was very keen to start a company, and it was clear that the center of gravity for startups was the Bay Area. So, at the end of my term, I called BCG and told them I wouldn’t be returning. That meant I had to pay back my MBA sponsorship to them, which was a hefty check to write. But we got on a plane to the Bay Area, ready for our next chapter.

It worked out well because we smartly leveraged the Harvard network into a Stanford network. I found a room in a house with four other guys who had just finished Stanford Business School, and they were all starting companies. My business partner, who was from India, tapped into the Bay Area network strongly. We managed to get one of the leading AI professors at Stanford as our advisor. So, we arrived with nothing but were able to connect and build a network quickly.

Speaking of your career, you’ve worked as a founder in the U.S., extensively in Europe, in the U.K., and even in South America. How do the different cultures compare in how they operate?

I think one of the great things about our industry is that it attracts highly creative, ambitious, and curious people everywhere. Whether you’re in Tel Aviv, San Francisco, or Vilnius, that energy is the same. It’s something you carry with you wherever you go.

Of course, the clichés hold true. In the U.S., there’s more focus on opportunity and belief in the impossible. Entrepreneurship is celebrated, and failure is seen as a stepping stone to success. That energy and spirit, especially in a place like the Bay Area with its density of talent, is contagious and ignites others.

For example, when I invest in a company in a smaller market, let’s say, Bratislava, I always recommend making sure to spend time in places like London, New York, or San Francisco a few times a year. It’s important to connect with peers in those talent-dense locations. That way, you don’t just become the biggest fish in a small pond—you get inspired and challenged by others and learn to measure yourself by people in more talent-dense locations.

I read about your move from Accel to Northzone, and one of the quotes was about gaining more geographical freedom. Is it important for you to meet and connect with people in different parts of the world?

Absolutely. I mean, one of the amazing things about this job is meeting very international people with big ambitions. That’s something I love about it.

I’ve been doing this for 13 years now, which is the longest I’ve ever stayed in one role—or two, in this case, since Accel and Northzone are very similar jobs. But I’ve stuck with it because it’s so diverse. You meet companies with completely different backgrounds, goals, and ambitions. That international diversity keeps it exciting.

Could you talk more about the shared philosophies you see among great firms and what sets them apart?

I think a lot of great firms share a philosophy of backing big, ambitious bets. These bets can go wrong, but if they succeed, they need to happen at warp speed. It’s demanding, but it’s about striving for category leadership in something exciting.

I also think founders need to be 75% stubborn. One of the quotes on the website talks about operating on principles rather than investment theses. For me, it’s about seeing things others don’t—believing in things that aren’t there yet. If you stick too much to consensus or listen too closely to industry experts or VCs, you won’t get there.

The older I get, the more I’ve seen, and it’s easy to show up with a polished story about how things “should” work. But if a founder simply agrees with me, things go wrong. And as a VC, you need to realize that where you spend five hours a week on a company, the founder spends 80. They speak directly to their customers. You don't. So what you need to do is ask probing questions, and help them see their blind spots while not dictating their direction.

At the same time, stubbornness alone isn’t enough. Building a company from zero to thousands of employees requires growth and development. What works at the beginning won’t work in the middle or later stages. I look for founders who are 75% stubborn enough to stick to their vision but open-minded enough to learn and adapt along the way. That balance is key.

75% stubborn. I like that. Would you say you were the same way when you were a founder?

Absolutely. I think I fall into that camp as well.

And to what level did you grow Digital Jones before you sold it? How much revenue were you making, and how many employees did you have?

We were about 50 people when we sold it. After the acquisition, I became part of the management team at the acquiring company, and that’s where I went on a big ride. The company nearly went bankrupt—we went from 800 people down to about a third of that. It was brutal, but we managed to turn it around, and eventually, we IPOed. So, I’ve experienced pretty much every stage of the journey.

Tell me about that. Letting go of two-thirds of the team—that must have been incredibly hard.

It was brutal. But that’s the thing—now, having been in this industry for a long time and having seen very successful companies up close, the path to success is never a straight line. Every company will face a fundamental, make-or-break moment of a big challenge. If you’re not encountering those moments, it probably means you’re not being daring enough. You’re not taking big enough risks.

One of your key pieces of advice is to ignore the $100,000 MRR benchmark as a founder. What do you think are better goals or KPIs to aim for?

It’s a bit of a cliché, but for me, it boils down to two things. First, it’s about real customer love—understanding who your product is for and why they can’t live without it. You need to look for early behavioral indicators that show customers really need, want, and use your product. And, of course, you have to figure out if there’s a big enough pocket of people that share that need.

The second thing is having a good sense of the strategic chess game you’re playing. What a startup needs to focus on changes every six months. You need to find a balance - you can’t just be super strategic like a consultant; you also need to hit performance numbers at the moment. I like to use what I call the 60-30-10 rule.

Spend 60% of your budget and team effort on hitting today’s numbers—scaling what’s already working and making sure you double or triple down on it. Then, 30% should go towards figuring out where the next wave will come. That might mean experimenting with your next product, exploring a new market, or starting projects that could contribute meaningfully a year from now - not just something that will work within the next three months. The final 10% should focus on that dot on the horizon—what you stand for strategically and why you could become a big winner. Without that, you risk stagnating. You might iterate from $100,000 to $200,000 or $300,000 MRR, but that gets boring quickly.

This ties back to the age of entitlement. When capital was almost free, companies could just keep growing by spending more. But in reality, before 2020, we saw many SaaS companies plateau around $30 million because they were stuck in niches and weren’t strategic enough. That’s why you need to keep asking, “What are we building, and how does that guide what I do every day?”

And with Northzone, you're a multi-stage VC fund, investing from seed to growth. What do you focus on specifically? Do you cover the full range, or do you concentrate more on a certain stage?

I cover the full scale. If I had to pick one, I’d say I enjoy Series A the most. But what I find exciting is when you start getting really good at certain topics. For me, a lot of it has been in AI, which ties back to my own background. You start spotting opportunities, and it’s nice to be able to lean in and invest even if you encounter a company a bit later in its journey.

So you like Series A because the company has already achieved a fair amount, and you’re looking at where it can go next?

Yeah, I like all stages, but what’s exciting about Series A is that you can see how the team has operated. At pre-seed, it’s often about what the founders have done before—their pedigree and past experiences. By Series A, you can see how they’ve worked together as a team, what they’ve done when they faced challenges, the solutions they’ve come up with, and the kinds of people they’ve brought on board.

It’s still early enough that the numbers don’t really matter much. In Series A, there are usually more numbers, but they can be misleading—early customer behavior and unit economics don’t always reflect what happens later. But you can see what they chose, how they worked. That’s why it’s helpful to meet companies early—so by the time you decide to invest, you’ve already seen how they operate.

Let’s talk about the deal you made with Personio. That was back in 2017, right? What was it about Personio that caught your interest and led you to make such a big investment?

It came from three angles.

First, we had this big-picture theory. HR tech had been lagging behind marketing tech and finance tech. We’d seen the shift in sales and marketing from on-premise software to the cloud with Salesforce, and then to SMB-focused companies like Pipedrive. We’d seen the move from SuccessFactors to Workday. So, we believed there was a clear opportunity for an SMB champion in the HR tech space, especially with the rise of more efficient delivery mechanisms.

Second, we talked to a lot of HR leaders. At the time, they were seeing a lot of point solutions but were really hoping for platforms. Instead of best-in-class tools for performance management or ATS, there was a demand for an integrated, full-suite solution.

Third, we started looking at everyone in Europe who was building in this space. A bunch of our portfolio companies were already using Personio and were happy with it. They were excited about the product, and we were hearing great things from that side. Finally, when we met the team, we loved the founders.

If you look at the numbers, it really paid off, since they're now looking at 1.5 billion in gains.

Yeah, it's been impressive to see that team operate and see how from the get-go they hired amazing people. They were super focused on the business, they were always focused on culture and they were building with a long-term vision. It’s a great example of that 75% stubbornness. In the beginning, it was their first job, so working with Hanno, there were some obvious things I could point out. But he’s such a fast learner that now I have to do a lot of homework and stay on my toes just to be useful to him.

Looking at the investments you’ve made —you invest across a lot of different areas. How do you pivot from investing in say a healthcare startup and then an AI startup?

That’s one of the advantages of time—you’ve seen and experienced a lot. I worked in pharma for five years, so I’ve got experience there. I also started an AI company, so I’ve learned a lot in that space. I’ve always leaned more toward B2B, so I’ve built up expertise on that side.

But also I have tremendous curiosity. I love diving deep into the topics I’m working on, and I enjoy geeking out with founders about what they’re building. I think a common thread in the companies I like is that there’s a strategic chess game involved—balancing tactical decisions with understanding what works and what that implies for the market you’re targeting. So, I tend to end up with companies where those factors are super important - and that’s where I feel I have a little bit of an edge.

And obviously, having studied physics, you must have quite a technical mind. Would you say that helps when it comes to assessing the value of certain AI solutions?

It does. But at the same time, you have to stay modest and recognize where your knowledge ends. Part of investing is seeing the forest for the trees. I always have to remind myself not to get too caught up in the details and instead focus on the big picture.

For example, do the people sitting in front of me seem like they know what they’re doing? Do they have the drive and motivation? Can they clearly articulate their strategic choices? Over time, I’ve also learned how important storytelling is. In the past, I’d think, “Oh, they’re not great at pitching, but the product is amazing, so let’s invest anyway.” But if a founder isn’t good at pitching, they might also struggle to convince people to work for them, get customers to take a risk on their product, or raise future funding. That ability to communicate is absolutely essential.

Are there any specific trends in AI applications that you find exciting right now?

Right now, everything in AI feels exciting. It’s so much fun because old principles still apply, and understanding both the limitations and the opportunities is important. Sometimes it feels like we’re two years into this generative AI journey and everything has already happened. If you’re not OpenAI or Anthropic, you might think it’s too late.

But the reality is, we’re at the point where the rubber is just starting to hit the road. The most important things are still being built, iterated on, and figured out. That’s unbelievably exciting. We’re all trying to figure it out at the same time, which makes it even more fun.

It’s a new frontier. We need people who understand it to invest in what’s happening and pick the right companies to back…

Exactly. And it’s an iterative process. You also have to remember to take bold bets, knowing that most of them won’t work out. But the ones that do can succeed in a really big way.

We're going to wrap up by talking a bit more about you. You mentioned earlier that you’ve always pushed yourself into challenging places—studying physics, doing an MBA in the States, and becoming a founder. What makes you seek out these difficult paths that others might avoid?

I think it’s sheer enthusiasm. I just love adventure and tackling exciting challenges - many of the ones I’ve chosen have been very people-centric. I’m one of those rare people who has always loved managing others. Honestly, I miss that part of running a company—I loved managing people. Many of these big challenges have been about group dynamics or trying to achieve something with a team. I’m fascinated by what makes people tick and what drives success.

Interesting. Do you come from an entrepreneurial family? Where do you think your entrepreneurial spirit comes from?

Yes and no. My dad is an art historian and spent his career working for a government art institute. But my stepdad was an entrepreneur, so I’ve seen both worlds. That said, investing is very different from creating companies yourself.

And what would you like to do more of in your life right now?

I’d love to travel more, especially for adventure travel. But, I can’t travel as much as I’d like to right now.

Adventure travel - what does that mean for you?

Well, for example, last year, I went ski touring in Kyrgyzstan. I’ve hiked mountains all over the world. I love rugged, remote experiences.

Wow. And you mentioned that you find your zen in cooking. What kind of cooking do you enjoy most?

A lot of my friends are crafty, but I’m terrible—I can’t even put up a shelf without messing it up. Cooking is my version of being hands-on because it’s tactile and creative. It’s also very meditative for me.

It ties into my love for hosting and having people around. I have boxes in my kitchen organized by cuisine—Japanese, Indonesian, Mexican, and so on. I’ll pick one and cook something inspired by that cuisine. It’s a bit like being a VC, dabbling in a bit of everything!

That’s nice. It lets you travel without leaving home, right?

Exactly. And it’s calming, almost like a meditative process.

Okay, that’s great. Now - last questions. You’ve said you’re a sucker for personal growth. What does that mean to you, and how do you push yourself?

I actively seek open and direct feedback from everyone around me. I also put myself in new, challenging situations. That’s especially important in VC, which is such an indirect industry. You make one or two investments a year, and they might or might not work in six, or seven years from now. It’s easy to get lazy or complacent, but I push myself to stay sharp and do the work really well. That’s where the forced growth comes from.

Thank you so much, Michiel, for sharing your journey and insights with us today. It’s been a pleasure talking with you!

Thanks, Robin. I really enjoyed the conversation, too! Take care.