In the latest episode of The PinMeTo Podcast, we have an insightful talk with Johan Crona, Founder and Managing Partner at Cloud Capital, an investor and entrepreneur with more than 20 years of experience in the SaaS ecosystem.

Johan breaks down the unique challenges in the market, talks how cultural diversity drives unique customer behavior and how that affects SaaS companies’ growth in the EU. We also touched upon how AI gives SaaS products an opportunity to enhance customer experience, use efficiency and more.

Our discussion also goes into Johan's strategic investment in PinMeTo, spotlighting his reasons for backing the company, including its "strong leadership" and the particularly "sticky product" that holds customers close.

To hear the full conversation, search for "The PinMeTo Podcast" on your favorite podcast app or find us on Spotify.

The text has been lightly edited for clarity.

Johan (00:00)
Hello.

Bernardo (00:10)
Johan. Welcome to the PinMeTo podcast.

Johan (00:13)
Hi. Happy to be here. Thank you for having me.

Bernardo (00:16)
Thank you so much for being here with us. Just to kick things off, Johan, for those in our audience who don't know you that well, could you give us a quick rundown on your professional journey?

Johan (00:31)
Yes, sure. So the background I studied... Actually, first before going to high school or university, I actually studied at the Swedish Military Academy. So I have been studying leadership and at War College, I think you call it in English. So I have a military background, and worked as a Reserve Officer in the Swedish Army from time to time. After that, I went to high university in Jönköping, where I studied computer science. In Jöndshopping, they also have this focus area or extra area that's entrepreneurship. I guess that's where I first came in contact with entrepreneurship and starting businesses. Since then, if you're going to do a quick rundown, I've been involved in a lot of different startups. I've started a lot of companies myself together with different partners, both within software, I've been doing consultancy, developing software solutions, and both doing bootstrap companies, but also a few companies that have been venture funded, actually also companies within the military industry and also consumer facing companies. I've been trying a lot of different things. Also a few smaller exits among those companies. There were a few companies that actually went successful in the case that someone else wanted to buy them eventually.

Johan (02:09)
That was a lot of fun. Since 2010, I've been doing investments. First, I was at ALMI, which is an investment company in Sweden, run by the government. There I was at ALMI Invest for seven years. Since 2017, I have started my own investment company together with a couple of friends, where we have been focusing on doing investments in B2B SaaS companies. That's where we eventually came across PinMeTo, which we invested in a couple of years back. Nowadays, mostly doing investments. But I still see myself as half entrepreneur, half investor. I think that's a good mix to have when working with early-stage companies.

Bernardo (02:54)
Absolutely. Growing up, what experiences or influences led you to pursue this career in tech startups? Is it something that was always in your mind? Tell me a little bit about that.

Johan (03:14)
Yeah, I think in my background that… I mean, my father, he actually worked at a big insurance company in Sweden, one of Sweden's largest, but he was some entrepreneur there. He was actually starting a lot of different businesses during his time there. I think I was introduced to starting up ventures from hearing his stories at home during dinners and so on. But it wasn't until I started studying at University in Stockholm, where I ran into Eric, who is still one of my best friends, and he was already a serial entrepreneur. I still remember it almost was like a lightning strike when he talked about his different business ideas and he was looking for people to join his different ventures. And I was super interested in joining him. And since then, we've been partners and started a lot of different companies together and we're still close friends. So I think I had this upbringing where I was exposed to the idea of starting up businesses and then started doing my own businesses from university and going forward.

Bernardo (04:36)
Very well. You're transitioning to SaaS, as you've mentioned before, How would you describe the state of the SaaS industry? We can talk about the Nordic, Sweden, but all around Europe and the world. How do you see the status of things in the SaaS industry?

Johan (04:59)
Yeah, that's an interesting question. I was actually doing investments in SaaS companies already around 2011, 2012, when I had done a couple of years at ALMI. A few of my first investments there were actually SAAS companies, and even though they didn't see themselves as SAAS companies back then, the term wasn't established back then. I've been in this industry for 10-plus years and seen it evolve. And in the beginning, I think SAAS was an innovation in itself. You take software that's previously been either an Excel spreadsheet or perhaps an on-premise, something that you installed on premise, something that you installed on people's computers, and then you move that to a cloud-based solution. And then you have all these different advantages that you can share the code base and you can lower the price and you can stop doing big revisions. You can do continuous deployment and so on. You can lower the price so the customers could start subscribing to the software instead. And that in itself was an innovation that created this wave of demand that companies over time learn how to buy cloud based software instead of on-prem software. So the innovation was just in the business model and in the delivery.

Johan (06:31)
And now I think that part of what has happened is the market has matured a lot since there's been so much investments going into, and now maybe I talk about both Sweden, but I think generally all over the globe. So this spurred a lot of investment going into these companies from say, 2016, 17, 18. So the investment community, both private investors and different funds and also the public market, over time learned to understand this business model. And it has some peculiarities along how to financially measure them and with all these KPIs and so on. But what happened during '17, '18, '19, and then obviously the peak was during COVID when the demand for digital services exploded, when everybody was forced to work from home. And then we had a bubble. So the valuation was super high during COVID and the year after. And then something happened with inflation and the war in Ukraine and so on. So now there's been a lot less capital going into the sector. And I also think that from an innovation perspective, all the easy wins have been taken. So just taking an existing system, taking a CRM software and putting it into the cloud, that's not an innovation anymore.

Johan (07:59)
So now you have to think more thoroughly around if you're going to establish a new SaaS company, you need to have something unique and something distinct and maybe focus on a certain vertical or certain segment or a more distinct problem that you have some insight into. So it's a much tougher place, I would say right now SAAS, both because it's been maturing and a lot of the buyers have already decided on their stacks, so they already have like 20, 30 different providers of cloud software. So to get them to switch something out is a much harder feat than it was five or ten years ago. So it's much more mature and a different landscape now than it was five, ten years ago.

Bernardo (08:58)
And in theFrom your perspective, what have been the most significant trends in the SaaS industry over the past few years? And where do you think we're headed in the future?

Johan (09:16)
Yeah, I think one trend is that the whole ecosystem has matured so much, and you see that the incumbents, the big ones like Salesforce and the likes, they are consolidating the market. There's been a lot more companies being bought. You want to try to be a solution for the customers that covers more use cases. Some customers, at least, I think it's a trend that maybe it's not viable for everyone, but a lot of customers, I think, have been annoyed by having 20 or 30 or 50 different vendors and they want to consolidate. When Salesforce comes and says, We have a suite of products where you can exchange maybe 10 of your existing platforms into one, then that's compelling for an IT department and also for the businesses that get everything consolidated. But on the other hand, what's going to happen then is, and we can see this now clearly from a couple of our companies that have been competing with, for instance, Salesforce or ZenDesk and the likes, is that their product is getting very, very hard to understand. They're getting very feature-rich, but it's also very, very hard to work with them now because there's so much going on.

Johan (10:39)
There's so many modules and so many tabs and settings and so on. So the ease of use has been lost a bit. And we actually see now that companies that are doing more niche solutions and focusing on ease of use and have thought something out around the use case for a specific persona is still winning ground. I guess it's like a pendulum that is turning back and forth from companies wanting to have fewer vendors, but on the other hand, users at some point, they just get fed up with working with bad software, which tends to be the case when you consolidate too many different platforms into one. I think still there's so much to do in software and to innovate and find different niches, even though Salesforce and the other ones are massive and can seem to be intimidating from time to time.

Bernardo (11:42)
Exactly. You mentioned before that some of the challenges that the founders and the people that are making these small companies are trying to go bigger and bigger. You mentioned the war, etc., at least right now after COVID. But what do you think are the common hurdles today that should founders navigate with them?

Johan (12:13)
I think one common hurdle still for Swedish and maybe also European SaaS companies is we have a disadvantage here on this side of the Atlantic that we don't have one market that's similar, even though we have the European Union, which is doing a some try to make the market more easily accessible with rules and so on, but it's not always working. We have so many cultural differences in Europe. So even though if you're a decent SaaS company, it's hard to grow fast across Europe because every market is a little bit different when it comes to culture, how they are buying, what they are valuing, and so on. If you compare that to the US, which is both a much larger market and at least more similar between different parts of the country. So the US SaaS vendors have always had that advantage that they can grow a lot more in their home market and take a big market share in the US and be stronger. And here in Europe and Sweden, we always have a small home market. We need to be good at international business and find ways to expand. So I guess that's what we spend a lot of time on in a lot of our companies is how do you find an efficient way to expand internationally out of your home market and still doing that without it costing too much.

Johan (13:46)
I guess that's one of the big hurdles.

Bernardo (13:52)
Let's switch the conversation to something that is actually going on right now. A lot of people are concerned, some are concerned, some are super happy, which is SaaS companies plus AI, artificial intelligence. The intersection of SaaS and AI is a super hot topic these days. In your opinion, is this integration a good thing or a bad thing? How do you look into the future with this?

Johan (14:28)
Yeah, it's a super interesting topic, right? So as long as we stay within AI and SaaS, then I think I'm just basically positive. I think this is a new exciting technology, and it's something that any SaaS company must start to have a plan to make the best use of. As we talked about earlier, there's so much competition now in SaaS generally. So if you are able to continue to invest in your technology and in your product and do that with your customers best in mind, then AI, of course, gives you an opportunity to increase the customer experience and also, for instance, the efficiency of the use of your AI, of your SaaS product. I guess that's one of the key things for me that I see most of our companies right now working with is how can we significantly improve the user experience and efficiency of our users? So can we come up with suggestions for things to write? Can we make analysis automated so that we get smarter suggestions when it comes to reporting or KPIs? I mean, it depends on what your product is doing, right? So from that point of view, I think it's just a very exciting time.

Johan (16:03)
And I think this will lead to a more separation between the leaders and the ones that are not catching up. So since the market has matured, you have a lot of companies with old technology stacks and they don't have the time to invest in new technology. They just need to maintain their old tech stack because they have this huge amount of technology or tech debt that they need to take care of. And if you, on the other hand, are a company that can leverage AI and improve your product and keep in mind what your customer's needs are, then you can have a huge advantage if you use this new technology in the right way. So yeah, it goes both ways, I think.

Bernardo (16:56)
Exactly. Okay. So you invested, as you know, in a lot of companies, created a lot of companies, including PinMeTo. Since we are here in the PinMeTo podcast, let's talk about it for a bit. What drew you to PinMeTo in the first place, and what made it a compelling investment for you?

Johan (17:19)
Actually, we followed the company for quite some time. Most times I met Daniel, Melkyrsr, one of the founders, at different events, and we stayed in touch. I think he can speak for himself, but at least I think that we had a mutual view on how to build software companies. We wanted to invest, but it's not always easy to find the timing and so on. We stayed in touch. In PinMeTo, they brought on some different investors in the early days and did a couple of rounds with both Angeland angels and investment companies. And then there was a point in time when actually there was a previous investor that backed the company very early on and they changed their strategy. So they actually did not want to continue investing in startups. And that was just a decision taken, not because they didn't like PinMeTo, it was just they changed their strategy for their investment company. And then Daniel came to us and asked us if we could consider buying the shares from those investors. And during that time, they also found... We also had started to be in touch more and more with Henric, who's now the CEO of the company.

Johan (18:43)
I think he actually joined the company as an investor from the beginning and he was a chairman, I think back in those days. But we were really excited that we liked the partnership between Henrik and Daniel, and then there was an opportunity to buy some shares from an existing shareholder. I think that's always the... I think this is a good example of why I focus on talking about Daniel and Henrik. We always want to understand the founders and their drive and ambition, of course, but also what company they want to build. And here we got the opportunity to follow them for quite some time. I think we followed them for like two years. And then this opportunity arose where one of the existing shareholders wanted to sell some shares and we could gather our capital and buy them out. And since that point in time, also my partner in Cloud Capital, Daniel, has joined the board and is now the chairman of the board. So I think they really enjoy working together. I know Henric, Daniel, from our side and also the founder, Daniel. So it's a lot about the people. And then if you look at it as an investment, I think that what we really enjoyed as an investment was they had proven a lot of things and they had built out both an interesting product that combined what we talked about earlier.

Johan (20:13)
It's a pretty messy world for the clients. They have a lot of data both internally and that they want to publish externally. And PinMeTo had this really wonderful product that Daniel was the architect behind. Right. So how do we help customers be more efficient? And this is not a core thing to work with all this data, but it's super important because it can drive revenue. So we really like this situation where you have a lot of different systems on one side, there's a lot of data to put in order, and then it's also a lot of systems on the other side. So you have all these integrations on both hands. Which makes this, of course, the product very sticky. When you're on board with the client, as long as you do a decent job and don't screw up, why will they change you? It's a very compelling value proposition. And it's a very sticky product. I think that's what we really liked about the model, the PinMeTo who has strong founders, a good product, very clear value proposition, and then an impressive roster of clients as well. But in the early days they had H&M, which is one of the top multi-brands, multi-location brands in Sweden, right?

Johan (21:37)
And it's a feat to land a customer so early in your journey as a company. So yeah, there were a lot of things that we liked about PinMeTo. And it worked out really well as well. We're still super happy to be shareholders and partners in the company.

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