A Fika with Kristjan Vilosius, Co-founder and CEO of Katana

Kristjan, can you tell me what inspired you to found Katana? Was starting a company something you had already contemplated or was it hard to make that mental shift?

About 8-9 years ago, I was looking to start a modern direct-to-consumer manufacturing company in the Baltics. When searching for an ERP solution, I was blown away by how clunky, complicated, and expensive the market leaders were — both in the mid-market/enterprise space like SAP and Oracle as well as in the SMB market.

I felt strongly that despite the high barriers to entry, building an easy-to-use, modern SaaS ERP had to be possible. The frustration of not finding the right software and the huge market opportunity inspired me to leave my corporate career and pursue this idea.

I believed that with the right funding, people, and timing, we could build something with considerable global impact, making it easier for entrepreneurs to grow their businesses. Supporting entrepreneurs in this way felt like a very satisfying mission.

How did you go about finding the right co-founders and what skills you needed, especially in the early stages when you were still figuring out the market?

With my background in finance and accounting, I knew I needed a technical co-founder who had experience building complex, scalable systems. In the summer of 2017, I found that in Priit, who had previously led teams at Skype, Playtech, and Microsoft. For the customer-facing side, we brought on Hannes.  He had worked closely with SMB manufacturers at PwC. Together, the three of us had the right mix of skills to bring Katana to life.

Photo:  Katana Founders: Kristjan Vilosius, Priit Kaasik, Hannes Kert

Once connected, how did you build the right culture and align on values?

Having open discussions about what kind of company we wanted to build and work at was very important early on. Core values like customer-centricity, transparency, and thinking like a maker emerged.

For example, to this day, the monthly investor updates I send are also shared with the entire Katana team. We wanted to create a culture of ownership through radical transparency.

Estonia has an impressive track record of producing successful tech startups, with the likes of TransferWise, Bolt and Wise. How has being part of that ecosystem influenced Katana’s journey and ambitions?

Absolutely, tech disruption is in the DNA of most Estonian startups. There isn’t enough local demand, so to get VC funding and scale, you have to demonstrate that you can sell globally. It was clear to us from the start that we would target North America. 

Like most, we struggled at first to gain market awareness abroad, but the key is to start hiring people located near your target customers as quickly as you can. We began hiring team members in North America quite early for customer-facing roles in sales, support, and success. We then used their insights from customer conversations to improve our processes and buying journeys.

Today about 21% of Katana’s employees are based in North America, but it’s still an ongoing process to fully understand regional customer preferences. There is always room for improvement.

In your own words, Katana’s key differentiator compared to the clunky, expensive legacy ERP experience is your “easy to use on steroids” mindset. The ERP market is huge but challenging to break into. When did you gain that awareness and map out Katana’s strategic direction?

6-9 months after launching our prototype, we sought out our initial product-market fit. We realised we should focus on direct-to-consumer manufacturers using Shopify. From there, we put together a 5-year plan in terms of customer segments — starting with micro D2C manufacturers, expanding to SMBs, moving beyond just manufacturing, and eventually upmarket. That plan was key to raising our seed round.

To my surprise, looking at that original plan today, we are exactly on track, currently moving upmarket right on schedule. Some have called us boring because we have yet to drastically “pivot”! But that stability and clear direction has been a strength for us, especially in the current market. It also helps with pitching to investors and attracting talent.

What do you most enjoy about running Katana? 

Getting positive customer feedback — especially from the CEOs and founders who we work with directly — is extremely fulfilling. Seeing how we’ve enabled entrepreneurs to grow their businesses more efficiently is satisfying given my own experience as a founder and investor.

I also really enjoy collaborating with my leadership team and investors: the offsites, debates, and challenging discussions to tackle problems from new angles. It’s deeply rewarding.

How would your team describe you as a leader? And as a leader, what parts of the job do you enjoy least and how do you handle those?

I hope they would say I provide clear direction and create an open, transparent culture. At the same time, I suspect they might say I can be impatient when things aren’t working. 

I’ve learned the hard way to let go of areas where I’m not an expert and to trust my team to make decisions. I give them a lot of freedom in their domains while still holding them accountable.

You’ve been on both sides of the table, having invested in startups before founding Katana. What advice would you give to a new venture capitalist to be a good board member?

First, invest the time. Dig into the materials that are shared and don’t hesitate to ask difficult questions when things are off track. A lot of work goes into those board meetings. Second, know when to push versus when to back off. There are times to push founders to face harsh realities and make tough calls. But there are also moments when they need encouragement. Having that situational awareness of the founder’s headspace makes a huge difference in whether they feel truly supported.

Great advice. Thanks for your candour and insights, Kristjan. We’re proud to support your vision!