It’s been an eventful year for fintech Brex.
The year began with confirmation that the startup had raised $300 million at a $12.3 billion valuation. In April, the company announced a shift in strategy — a new emphasis on software and the enterprise. By June, it sent shock waves in the startup world when it announced it would no longer serve small businesses funded outside the venture capital structure. More recently, it laid off 11% of its staff.
One of the buzziest fintechs out there, Brex is known for more than its product offerings. Its charismatic co-founders and teen hackers Henrique Dubugras and Pedro Franceschi dropped out of Stanford to start the company as part of Y Combinator in their early 20s. Years later, newer startups in YC cohorts still tout themselves as the “Brex for X.”
At TechCrunch 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 expose the context around this whirlwind of a year. The interview has been edited for clarity and brevity.
“[We] were anti-remote work. We did not believe it was a viable option for companies. Six months into the pandemic, we announced that Brex was going to be remote-first forever. So you know, talk about someone changing their mind completely.” Brex's Henrique Dubugras
Azevedo: Tell us about when you first started Brex. I believe you were in your early 20s?
Dubugras: I was born and raised in Brazil, and out of high school, I started a payments business in Brazil that did payment processing, so kind of like a Stripe of Brazil. After selling that company, I moved to the U.S. to go to college and then dropped out to start Brex.
The first idea that we got into YC wasn’t actually in fintech. It was a VR company. When we sold the last company, we were tired of fintech. We’re like, “All these banks and regulators are so complicated. You know, we’re now in Silicon Valley. We want to do something on the bleeding edge of technology.” So VR seemed like it. But a few weeks into YC, we realized that we had no clue what we were doing and decided to pivot into Brex.
In Brex, the first value proposition was when we realized that there were all these startups that had raised millions of dollars and couldn’t get a corporate card. We were like, “That makes absolutely no sense. How can you have raised 3, 4 or 5 million dollars and still not be able to get a corporate card? So you know, that’s what we decided to do early on.”
So the last time you were at Disrupt was three years ago when you were launching Brex Cash. Around that time, you had billboards all over the city — you couldn’t pass a bus stop without seeing Brex on a billboard. You were aggressively marketing to startups in kind of an old-school way. But then earlier this year, you had a shift in strategy: You announced that Brex was making a push into software and that you were going to be focusing on the enterprise. And then this summer, you talked about no longer working with SMBs and non-professionally-funded startups. Now this surprised — and upset — a lot of people. What led to this decision of such a change in your strategy?