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It was an event. Year for fintech Brex.
The startup started the year by securing $300 million on a $12.3 billion valuation. In April, the company announced a change in strategy – a new emphasis on software and the organization. In June, it sent shockwaves through the startup world when it announced it would no longer serve small businesses funded outside of its venture capital structure. It recently laid off 11% of its workforce.
One of the buzziest fintechs out there, Brakes is known for more than just its product offerings. Its charismatic co-founders and teenage hackers Henrique Dubugras and Pedro Franceschi dropped out of Stanford to start the company in their early 20s as part of Y Combinator. Years later, the new startups on the YC team still call themselves “Breaks for X.”
At TechCrunch Disrupt 2022, I sat down with the refreshing Dubougras and Anu Hariharan, managing director of YC Continuity and an investor in Breaks, to unpack the context surrounding this year’s storm. The interview has been edited for clarity and brevity.
“[We] They were anti-remote work. We do not believe it is a viable option for companies. Six months before the outbreak, we announced that Brax would be away – forever, first. So you know, talk about someone completely changing their mind. Henrique Dubugras of Breaux
Azevedo: Tell us when you started Brax. I believe you were in your early 20’s?
DubugrasI was born and raised in Brazil, and when I graduated from high school, I started a payment business in Brazil, a type of payment processing similar to Brazil Stripe. After I sold that company, I moved to the US to attend college and quit to start Brakes.
The original idea that got us into YC was not 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 too complicated. You know, we’re in Silicon Valley now. We want to do something about the technology bleeding. So this is what VR looked like. But after a few weeks into YC, we realized we had no clue what we were doing and decided to get into breaks.
At Breaks, 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 no sense. How can you raise 3, 4 or 5 million dollars and still not get a corporate card? So, you know, that’s what we decided to do early on.”
So the last time you were on a rampage was three years ago when you launched Brex Cash. Around that time, you had billboards all over town – you couldn’t pass a bus stop without seeing BRAKES on the billboard. For starters, they marketed aggressively in an old-school way. But earlier this year, you had a change in strategy: you announced that Brax was pushing software and focusing on the enterprise. And this summer, they talked about not working with SMBs and non-professionally funded startups. Now this surprised – and upset – a lot of people. What prompted this change in your strategy?
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