When I co-founded Conta Simples, at the beginning of 2019, together with Rodrigo Tognini, Fernando Santos, and Ricardo Gottschalk, we received many recommendations from angel investors that we needed to niche the company and not simply be a “PJ Digital Account” in order to be able to scale and Have a strong value proposition.
Identifying customer needs to find Product Market Fit
Task
Conta Simples was founded with the goal of standing out in a highly competitive market of digital accounts for companies. The idea was not to be just another “digital company account”, but to build a specific value proposition for small and medium-sized companies, aiming to achieve Product Market Fit.
As we were in an early stage, we only had 3 collaborators helping us to build the product (devs). In this way, I was responsible with the partners in validating the value proposition of the Simple Account.
Before starting, it is worth giving a little context to understand the problem more in-depth. We didn’t have enough capital (money) to fight in the market as a digital account for companies. This happens because we are entering a very competitive and capitalized market.
When typing in Google “Conta Digital PJ” we, Nubank, and Itaú, among others…Conta Simples was already running in the beta phase, about 2 months ago, with approximately 7,000 active customers, but with no differential.
The initial value proposal was a digital account for companies with no annual fee, with immediate account opening, with a corporate prepaid credit card, and with a daily income from the account balance with 100% of the CDI.
We knew that competing with the big banks and startups would be a game we couldn’t win. And the product “Conta Digital PJ” has always been seen as a commodity, this definition is used for a product that becomes massified and not differentiated for our customers.
After all, every customer who uses a digital account wants to receive and send money (Cash-in and Cash-out). And when you’re building a startup, you’re looking for the blue ocean, that is, differentiation to gain market share and growth.
To understand the problem, we first devised a strategy to understand how our first customers related to our account (behavior).
Based on this, we have structured the following strategy:
- Quantitative research will tell us what people are doing.
- Qualitative research will tell us why people are doing this.
- Business analysis and revenue drivers
The best result comes from combining the three types of data.
Search triangulation is like having different camera angles in a movie. It would be difficult to understand the full picture of what is connected in a movie if all the frames were shot in a single perspective.
As there were few of us in the company, in a meeting, we included the answers that would help us understand the behavior of our customers using the account.
Reason for registering for the Simple Account:
- What is the main reason for the client to open a Simple Account?
- What is most important to our customers in a PJ Account?
- Use of products and features:
- How many slips do our customers issue per month?
- How many payments via TED does your company receive per month?
- What type of credit card do our customers prefer?
- How many limits do our customers need?
- How many physical cards do our customers need?
- How many virtual cards (for online purchases only) do our customers need?
Market / Competition:
- Do our customers use another PJ account at a bank? Which?
- Who are our customers:
- What do our customers do?
- How much do our customers make monthly?
- How many employees does your company have?
We sent it to the entire base and had 3973 responses. An excellent 56.7% response rate.
Survey response: What is the main reason for you to want to open a Simple Account: 22% to be able to use the corporate physical credit card.
We understand that a good part of our base needs to use the corporate card.
The reason for this is the company’s delay in receiving credit cards from the major banks.
We realized that if this was a pain that the market wasn’t sustaining solving, we explored this audience in more detail.
Survey answer: How many slips does your company issue per month? with 50% it was from 0 to 5.
The vast majority of our customers, 75% said they issue between 0 and 10 slips per month. Revenue from paid bills did not have a high margin and, considering the volume, according to the responses, it would not make sense to continuewith a solution that was treated for bills.
Survey response: 59% of our customers said they do not have an account at another bank, this being their first experience with a PJ account.
Which showed that it was managing to bring in customers who had just opened a CNPJ. However, almost half of our base (41%) said they have relationships with other banks.
Survey response: 18% Banco Inter, 16% Itaú, 12% Santander and CEF 11%.
The vast majority use large banks such as Inter, Itaú, Santander, CEF, Bradesco, and Banco do Brasil. This in the future also showed that we would have a competitive advantage in the digital experience and service.
I started filtering the behavior of customers who, for the most part, wanted to use our corporate card (22%) and saw that as a value in opening an account with us.
Survey response:
The vast majority of customers did not need such a large limit to get the company’s operations up and running, 42% responded that a credit limit between R$2,000.00 and R$5,000.00 would be enough, and 27% responded that up to BRL 2,000.00.
Survey response:
The great challenge and concern we have with this data are that our credit card was prepaid, and there was practically a strong behavior of customers in wanting a credit limit on their cards, representing more than 80% of customers.
Survey response: 55% of customers said they did not want a prepaid card in the absence of a physical card with a credit limit.
Survey response:
And again we have a pattern, the vast majority of customers needed only a virtual card and a physical card to carry out the management and control of the companies.
Survey response: However, when we started to make different clusters with the database we noticed an interesting fact:
For customers looking to better manage the company’s costs, there was a feature of having larger physical cards.
At the same time that we were trying to understand the profile of our customers, we also went after the company’s revenue data to understand who were the customer profiles that were generating the most revenue for the company at that time.
Every Digital Account, which is not a Financial Institution (FI), that is, which cannot grant credit, or loans or manage the money in custody, needs to focus its energies on creating a value proposition beyond the account.
In the case of Conta Simples, as we were at the time plugged into a Payment Institution (PI), we had our revenue lines in the use of financial services.
Survey response: Profile of customers with the highest revenue – by product. Interchange was our biggest source of revenue. Interchange is our biggest source of revenue, accounting for 82% compared to other services. Interchange is a fee that the company receives every time the end customer uses the card.
That is, the customer used R$ 10,000.00 reais on the card, and the Simple Account keeps a % of this commission (between the brand, IP, and who prints the private label card)
and the Simple Account keeps a % of this commission (between the brand, IP, and who prints the private label card).
In addition, the use of the liquidated bill (9%), and transfer between accounts using the TED modality (7%) also come in second and third place, respectively.
So, by better understanding our revenue lines, we investigated who were the customers that represented the highest volume within Interchange.
Survey response: And look how interesting this data is, 40% of all Interchange revenue came from the Digital Marketing segment followed by 20% from Startups.
In the text you wrote about the 7 deadly sins of research, I speak of the second sin which is dogmatism, which means the tendency to establish principles as undeniably true, without considering them as proven or as the opinions of others or believing that there is a “right” way to do research.
The objective of this research had 3 focuses:
- Find out why you use the Simple Account
- What would you use more?
- How did you arrive at the Simple Account? (Find the channel to attract more)
We separated interview planning, general questions, product questions, channel questions, and general questions into 3 moments.
General
How does your business work?
Product
- What made you use the Simple Account?
- What is the main product? Why do you use this product?
- What bothers you the most about this product?
- What do we need to do to be perfect for you?
Channel
- How did you hear about the Simple Account?
- What made you open an account? What was the motivation for opening?
- Would you indicate? What would you recommend?
- Where would we explore?
There is a really cool article by NN/g showing why in qualitative tests you can reach saturation with few interviews. But that amounts to usability testing. There are two cool texts to understand more about how many people to recruit:
The key to understanding how many interviews would be optimal was — to start small and analyze as you go. Right now we start with 5 companies, which we analyze as we go along. producing many things and in the end, we talked to a total of 8 companies.
In addition to including information about the purpose of the interview, communication log and attendance record in the invitation description, we also asked the interviewees for permission to record the session for future reference by the team.
At the time of the interview, there was 1 interviewer and one person taking notes.
At the end of the interview, when we gave the customer the opportunity to make any comments or ask us questions, some customers mentioned how important the product was to their lives and work routine. We wrote down all the comments and passed them on to the company as a way of motivating them to build what we were building as a company.
During the interviews, shown in the image below (Figure 17), some customers shared their screens and showed how they used important features for their work routine, opening account balances and confidential data. This showed how much they wanted to stop depending on big banks.
Furthermore, the functionality of registering more than 1 virtual card proved to be important during conversations and feedback, and card categorization attracted a lot of attention in the analyses, as cost center control for a company for different areas within the company would help the financial sector.
Based on the interview, we were able to understand that the majority of customers categorized as Digital Marketing were actually DrogShipping professionals, who sell without stock.
This means that they only work with the intermediation of sales, while inventory management and delivery logistics are carried out by the suppliers of the products you sell.
Understanding how this Dropshipping professional works (jobs to be done), made us understand his pain in relation to the credit card.
Most platforms like Facebook/Instagram and TikTok only let you register a card, which can be blocked or deleted by the ad company. So, there was a great need for flexibility in creating different virtual cards for managing online campaigns.
For companies, there was a pain in Google, and Facebook campaigns or in paying for cloud services (Amazon, Atlassian, Slack). And in almost all the interviews, 97% of the participants were using a personal card, until they found the Simple Account.
Another point was in management and control since the personal card mixed PJ account and PF account. Even making this mixture of control between work and
personal accounts is also a reason for the mortality of companies in Brazil.
In addition, startups with more than 10 employees had the challenge of controlling corporate cards by company areas, such as marketing, finance, technology, and customer service. Each area needed to control its budget.
Position and responsibility of the interviewee
- Small startups that have received investment in the market and are experiencing rapid growth. The entrepreneur personally manages the company’s accounts to control cash flow.
- Marketing professionals who work independently, i.e., operate the entire company alone. There is a large concentration of professionals who do DropShipping within the customer base.
Work routine
- All interviewees take care of the company’s financial area, which showed the care taken with the cash flow of what comes in (looking at the commercial/sales area) and what goes out (each area uses it).
- The entrepreneurs frequently access their Internet Banking several times a day, for different routines (paying bills, checking payments).
They all use Microsoft - Excel software to perform controls and filters.
- There are controls by area to have an understanding of how much each area is controlling its budget.
Business challenges and pains
- Not having a credit card with a limit is something that entrepreneurs really miss, because most banks take a long time to get a business card. This happens because when opening an account, the bank needs to analyze the company’s financial transactions before granting credit.
- The fact that entrepreneurs don’t have a business card with a limit means they have to use their personal card, which creates cash flow conflicts and requires complex control.
- The platform doesn’t offer the option to pay the DAS (tax) bill directly through the app, which means entrepreneurs can’t leave all their money on the platform.
- Startups can’t leave the big banks using the Simple Account as their primary account, because the payroll payment functionality is provided by the big banks (e.g. Itaú, Bradesco, Santander, etc.). This is another reason why the account doesn’t have an inflow and outflow in the same application.
- The Statement doesn’t have OFX and XLS export, which makes it impossible for companies to analyze more complex data outside of the application.
- The platform provides 5 virtual cards for entrepreneurs to use, however, marketing professionals in particular need to use many cards for marketing campaign approval purposes.
- The 5 cards do not have names, which would help to understand which card (or cost center) is being used or which caused problems in the campaigns.
- Include the name of the physical or virtual card in the export to facilitate future data analysis.
Why did you choose Conta Simples?
- Daily profitability of the account balance with 100% of the CDI.
- Very fast account opening (2 days), unlike other traditional banks that can take up to 30 days to approve the account opening.
- Creating virtual cards for marketing campaigns is a differentiator. All competitors only have the possibility of creating one.
Places you access to absorb content from the area
- Para as startups eventos como Fever, The Conf, SVWC, Case ajudam a se conectar com empresas e criar parcerias.
- Os investidores anjo e aceleradoras também possuem grandes conexões com o mercado.
- Para os profissionais de marketing, os grupos e comunidades de WhatsApp e Facebook ajudam muito a se conectarem.
When we do research, the main challenge is not to just sit there with the data and not take any action plan. To do this, we use the Goal Statement in UX tool, where we describe the product we are about to design and its benefits to the user.
It is a one or two sentence structure that identifies what the product will allow the user to do, who the user is, and how the action is beneficial to the user.
We start a problem statement by understanding the situation the user is in [1], which includes data collected through empathy maps/interviews [2], user stories [3].
After 4 weeks of research with over 4,000 users, we discovered that corporate card management offers a value proposition beyond digital accounts focused on digital marketers (drop-shipping) and startups.
Just as Andreessen said that to first launch a new product for consumers, you have to go a long way to try to find people who would actually pay for something, we sought to understand the real needs of users and build the right product.
The research had a rich discovery for the company, causing a major impact on the company’s actions. Understanding the company’s main segment and the main levers that boost revenue with the use of the card had a major impact.
It was a unique study where data becomes facts and facts become actions.
Startups and digital accounts are two fundamentally connected and innovative aspects of the current economic and technological scenario. As drivers of innovation, startups often introduce new concepts, products and business paradigms that challenge established conventions, transform industries and create new opportunities. Digital accounts, in turn, are part of this evolution, redefining the way people manage their financial resources, offering flexible, practical and accessible financial solutions.
Companies find digital accounts an opportunity to develop and implement their proposals and services more quickly, eliminating bureaucracy and time to support their operations.
However, both areas face challenges. Startups face pressure to create truly disruptive solutions, find the right financing and navigate growth cycles. Instead, digital accounts must address cybersecurity, universal accessibility and appropriate regulatory challenges to build user trust and meet legal requirements.
In an increasingly digital and interconnected world, collaboration between startups and digital account companies can create great synergies. Startup innovation can fuel the continuous improvement of digital account solutions, making them more efficient, secure and convenient for an ever-growing user base.
Finally, after this study, in addition to finding the product market fit, we were able to raise more than R$120 million in investment, in addition to being part of the Y Combinator ecosystem. This proved that research, testing and studying what was important to our customers and what their real pain points were not only very important, but also a case of the company’s survival.
The study went beyond a product solution, as we expanded our relationship with our customers on the same channels they access, visit and interact with. We grew in partnerships, acquisition channels, marketing positioning, communication, in addition to the product. In other words, finding the product market fit goes beyond improving your product; it evolves your company in a 360-degree way.
And looking back, I was able to see the impact we can have on people’s lives as we build new products and services, in addition to driving significant advances in transformation in the way we work, live, consume new services and manage financial resources.