It’s been an eventful 12 months for fintech Brex.
The 12 months started with affirmation that the startup had raised $300 million at a $12.3 billion valuation. In April, the corporate introduced a shift in technique — a brand new emphasis on software program and the enterprise. By June, it despatched shock waves within the startup world when it introduced it could not serve small companies funded exterior the enterprise capital construction. Extra not too long ago, it laid off 11% of its employees.
One of many buzziest fintechs on the market, Brex is thought for greater than its product choices. Its charismatic co-founders and teenage hackers Henrique Dubugras and Pedro Franceschi dropped out of Stanford to begin the corporate as a part of Y Combinator of their early 20s. Years later, newer startups in YC cohorts nonetheless tout themselves because the “Brex for X.”
At Fintech Disrupt 2022, I sat down with a refreshingly candid Dubugras and Anu Hariharan, YC’s managing director for continuity and an early Brex investor, to show the context round this whirlwind of a 12 months. The interview has been edited for readability and brevity.
“[We] had been anti-remote work. We didn’t imagine it was a viable choice for firms. Six months into the pandemic, we introduced that Brex was going to be remote-first without end. So you recognize, discuss somebody altering their thoughts utterly.” Brex’s Henrique Dubugras
Azevedo: Inform us about whenever you first began Brex. I imagine you had been in your early 20s?
Dubugras: I used to be born and raised in Brazil, and out of highschool, I began a funds enterprise in Brazil that did fee processing, so form of like a Stripe of Brazil. After promoting that firm, I moved to the U.S. to go to varsity after which dropped out to begin Brex.
The primary concept that we acquired into YC wasn’t really in fintech. It was a VR firm. After we offered the final firm, we had been bored with fintech. We’re like, “All these banks and regulators are so sophisticated. You understand, we’re now in Silicon Valley. We need to do one thing on the bleeding fringe of expertise.” So VR appeared prefer it. However a couple of weeks into YC, we realized that we had no clue what we had been doing and determined to pivot into Brex.
In Brex, the primary worth proposition was once we realized that there have been all these startups that had raised tens of millions of {dollars} and couldn’t get a company card. We had been like, “That makes completely no sense. How will you have raised 3, 4 or 5 million {dollars} and nonetheless not be capable of get a company card? So you recognize, that’s what we determined to do early on.”
So the final time you had been at Disrupt was three years in the past whenever you had been launching Brex Money. Round that point, you had billboards all around the metropolis — you couldn’t go a bus cease with out seeing Brex on a billboard. You had been aggressively advertising and marketing to startups in form of an old-school manner. However then earlier this 12 months, you had a shift in technique: You introduced that Brex was making a push into software program and that you simply had been going to be specializing in the enterprise. After which this summer time, you talked about not working with SMBs and non-professionally-funded startups. Now this shocked — and upset — lots of people. What led to this choice of such a change in your technique?