Creandum has agreed to exit opinion insights platform Cint, a company the fund invested in eight years ago.
Serving on the board of Cint taught me a few lessons I think entrepreneurs can learn from, especially if they’re in it to build a true sustainable business. But looking back, the experience has made me more humble when it comes to the time it takes to build global leaders, while at the same time, making me significantly more bullish on why many more will come from the Nordics.
First, let’s talk about growth. Cint has grown more than 10x from the €2–3M it posted as revenue the year Creandum invested. The team has significantly improved the product and its geographical coverage. They have industrialized their operating processes. They have scaled up sales dramatically. And lately, the marketplace dynamics of Cint’s model have ultimately made gravity for business significant. It’s paid off: buyers and sellers now proactively join the platform from all over the world, which means the company is now realizing the real power of network effects
.…in 8 years
But, it takes time to get that tailwind, and there are few shortcuts on the road if you want to build a sustainable business.. As much as ‘liquidity’, ‘transparency’, or ‘instant access’ promise to bring great efficiencies, the reality of any b2b business — and in particular that of a b2b marketplace — is that it is the speed at which you can change processes with customers is the real growth determinant. And here is a real paradox for high-growth companies: easy come, easy go. The deeper you are entrenched with your customers’ processes, the lower your churn.
What can we learn from that? Sell right. And sell to the winners.
The one thing I regret in the Cint journey is in 2010 we decided to compromise quality of revenue for growth. The bet was that once customers see the efficiency of our platform, we could change from servicing them on top of our own software to making them use it themselves. Our revenues grew far quicker than expected, but the customers we got were in hindsight largely the wrong ones. These were customers who wanted service, not ones that were truly changing their ways of working into the efficient, future-proof model Cint enables. Put simply, the new customers joining were overweight towards laggards, not future winners. To correct this, we later needed to reset our sales model — lowering growth and selling only to those customers who wanted the real benefit of our platform. Today, they are what is driving Cint’s phenomenal business, and solidify Cint as the backbone of the future market research industry.
This is an elementary learning and one I really want to share: as a startup: make sure you sell to the future winners. And adapt your go-to-market to enable that.
Nordic loyalty vs US exuberance — 1:0
As Cint’s model gained traction, North American competitors launched and raised substantial funds which helped them reach broad awareness in a short time. I was particularly anxious after seeing Creandum’s US radar screens light up, but it turned out to be the classic scenario of inferior products marketed in a superior way. As time went on, Cint and its competitors saw firsthand how marketplaces take time to build, which places extreme demands on management’s ability to motivate and keep team spirit alive when numbers aren’t growing 250% year-on-year.
This is such an important factor: In the Nordics, loyalty to the employer and the company’s cause is stronger than in the US. I am convinced this means employees are much more likely to dig in one extra turn when things get tough instead of leaving for the next impressive resume line item.
This culture, in particular when paired with a leader with such a big heart as Cint’s founder Bo Mattsson – proved to be a major advantage. Bo lead the company according to his core beliefs, and on top of the Nordic corporate culture, pushed Cint through to global leadership. He led by passion and example. He made sure everyone was seen and felt included in the larger mission. He gave (trust and responsibility) before expecting to get (results). Cint’s culture was result-oriented, but always warm.
All this translated into a management team and an organisation that made better decisions. Because of what I am sure is a much stronger joint emotional commitment to the ultimate vision, all the small decisions were easier and, in the end, built a better business.
Nordic roots, Nordic future
I am thrilled that Cint keeps its Nordic roots as the ownership changes. Nordic Capital will provide a great platform for the company to continue its growth, and the management team under the capable hands of Morten Strand is better equipped than ever to leverage its position and build out its dominance. It’s a true Nordic success story. From this transaction great returns from Cint’s success have been delivered to Swedish, Nordic and European pension takers through the Creandum funds. And I’m happy to conclude that the next investor will see even more success out of Cint.
— Fredrik Cassel (@_fredrik) January 11, 2016