The construction of an innovative product does not begin with a brilliant idea, but with active market listening. That was the premise that guided the most recent episode of the Start Growth Talks, a podcast by Start Growth and presented by Marilucia Silva Pertile and Carlos Castilho, who welcomed economist and investor Léo Jianoti, angel investor at Curitiba Angels and professor at the Federal University of Paraná (UFPR), for a discussion on the concept of Product-Market Fit.
The term refers to the stage at which a product effectively meets a latent demand, generating legitimate and sustainable traction. “Product-Market Fit is when your problem and solution thesis is validated in practice. A single sale is not enough, it is necessary to observe the recurrence, the adoption rate, and the customer’s willingness to pay for the real value of the solution”, explains Jianoti, who is also the managing partner of Zetta Venture Capital and venture partner at Honey Island Capital.
Only 1 in 10 startups reach PMF
Although essential, reaching this maturity point is rare. A survey by CB Insights shows that 35% of startups fail due to lack of market demand, that is, for developing solutions to non-existent or irrelevant problems. Another study by the Harvard Business School estimates that only 10% of early-stage startups actually reach PMF before exhausting their financial capacity.
To avoid this outcome, Jianoti argues that the entrepreneur should be more passionate about the problem than the solution. “You need to have clarity about the pain you want to solve and then test until you discover how to solve it in a viable way. Success is a consequence of this process,” he evaluates.
In practice, PMF is manifested through specific metrics, which vary according to the business model. In the case of SaaS startups (Software as a Service), for example, Jianoti mentions as fundamental the Churn Rate, which indicates customer retention and is one of the best signs that the product generates value; the Net Promoter Score (NPS), which measures customer willingness to recommend the service, highlighting satisfaction; and MRR (Monthly Recurring Revenue), which reveals the scalability of the business and its financial predictability.
“It is necessary to have true traction. It is not enough to have sales driven by bonuses or aggressive marketing. A customer who returns, recommends, and pays again is the best validation,” emphasizes the investor.
Another highlight in the episode was the importance of team formation. According to Jianoti, the founding team is the first gauge of execution capability. “You can have the best product, but without a resilient, complementary, and purpose-engaged team, there is no business that will survive,” he says.
The co-founder of Start Growth, Mari Pertile, complements with a practical approach: “When I led a team of 265 sellers, I realized that engagement came when we connected the personal dreams of the employees to the business objectives. This applies to any startup that wants to grow with a solid culture.”
Furthermore, the economist draws attention to the size of the market as a prerequisite. “Excellent teams operating in small markets often fail. Scalability depends on a broad market with relevant gaps,” he notes.
The role of the investor and the ideal timing
With experience in investments in startups like James Delivery and Contabilizei, Jianoti states that timing is one of the least measurable but most decisive factors. “We have invested in right businesses at the wrong time. Or worse, we missed investing in solutions that, years later, became market leaders. Timing is the invisible wind that speeds up or knocks down a startup.”
According to the report State of Startups 2024, prepared by First Round Capital, 42% of founders point to timing as the main reason for the success of their companies – above the product, team, or business model.
For experts, Product-Market Fit is not an isolated event but a continuous journey. “Finding PMF is just the beginning. Then, it is necessary to maintain, adjust, and expand it. It can be lost at any time if the market changes and the product does not keep up,” Mari warns.
The episode also brought a series of reflections on organizational culture, purposeful leadership, and the importance of constantly talking to customers. “Great businesses are born from listening. An entrepreneur who does not talk to the customer is inventing for themselves, not for the market,” Carlos concludes.
