Grit Podcast - Founder and co-CEO Brex, Henrique Dubugras

Isn't it funny how we were just talking about LA and you growing up your dream was to be in Silicon Valley and then you get to Silicon Valley and then all of a sudden you just can't wait to not be in Silicon Valley over time yep isn't that funny how life works that way not just necessarily where you live but generally speaking yeah I would say you know but look I'm very grateful to the place you know it's just like but I I used to sell Like hey I'd never want to sell bricks except if

I have to be here in San Francisco my whole life you know that's that would be the uh the only reason I do it isn't it weird like I bet when you were a kid and when I say kid like in your teens you probably thought boy if I had this this type of company right if I could get out of Brazil and do this thing then this and I bet that feeling just kind of never really ends does it like this this Feeling of the way that I describe it is a little bit of

dissatisfaction maybe that's how I always feel so I'm just projecting it on you but kind of living in the gray area between your current state and your desired future State I don't know your La comment made me think of that you know that like I think I used to think that way and I would say that 2022 is when I saw change a little bit yeah Um and I think I don't know if it's a combination of covid or you know or the macro or whatever was that you know like I in or therapy whatever

it is that like I kind of internalized the fact that look if I want to get to a desired outcome I just need to do the inputs right every day and so I just like focus on that so much because otherwise it's just so anxiety generating right like are we gonna get out of this macro environment what is Going to happen what's inflation covid was the same thing like what's gonna happen with the world yeah and you know and then I think that there's this book Atomic habits that's really good that you know talks about

this but like hey what are the habits that you need to have to make sure that you do it every day you know you're going to get to the outcome that you want and I just spend probably most of my energy now thinking About my day and thinking okay will I get to do the things I want to do today that will lead me to the outcome of the future on the therapy piece do you find that therapy gives you something that a professional coach does not um yeah I think that like when I'm with

a coach and we had great coaches it's very much about the way that work impacts me um I think with therapy you know you go more into the personal stuff and then You kind of figure out that things are intertwined more so I did think it helped me in a different way and I think with you know with a coach we spend a lot of time at least of our coaches talking about specific organizational challenges or how to do feedback or how I was feeling about this or that versus in therapy you actually do go

into you know your childhood stuff and all that stuff I do think though that the childhood Stuff is deeply intertwined in the way that you build the company 100 no yeah did it take you a while to figure that out yeah yeah I think so can you um can you tell me about what ask me out is yeah yeah so um so basically like when I was uh I think I was 15 or 16 um I had a big fight with my mom because uh she was not in I was trying to build companies and

go to school in the U.S And she's a labor judge in Brazil so if you can imagine not super she's a labor judge in Brazil yeah she's a labor judge so if you can imagine not super pro entrepreneurship she was more into Union side let's put it like that um and so you know at some point uh we he she got and had a conversation with me that was Enrique like if you're adult enough to make your own decisions you know you need to go support yourself so I got emancipated and I kind of move

Out and started supporting myself and I was running out of money and because I had made some money in the past through some gaming stuff and I saw this hackathon in Miami that was worth fifty thousand dollars and I was like wow if I could win this thing is more time supporting myself right so okay I'm gonna bet a bunch of bet a bunch on winning this hackathon so I went with two friends and I had this friend of mine who was at MIT at the time and he Was kind of crushed on this girl

that was his neighbor but he was super shy guy so he didn't want her to know that he had a crush instead she had a crush back which she didn't um and so we had this idea okay let's build an app that you can like like people that you know right from Facebook friends or and if they like you back you both know And we did that in that hackathon as you can imagine not super hard to build um when Facebook apis allow you to do this and uh and we won the hackathon so that

was the that was the story and that was your first company technically uh technically that was the second trial of a company yeah I had tried one before it I failed what um what was conversation like for you at the dinner table growing up in Brazil was it a nice area was it a shitty area was your was it just your Mom was it more than that who else was there yeah I was my mom my dad and my brother yeah um I would say that conversation when I was growing up was very much about

kind of like school and normal stuff and I had achievement stuff no just moral like my mom was a labor judgment so she as a judge or like a big part of she's like analyzing people she needs to tell like someone's lying not lying what do you think so I think like We talked a lot about what happened in school and like analyzing the situation uh which I think was actually really good for me in that respect um so that was a lot of it and then just activities and you know it was pretty chill

my dad was there too but my mom was the breadwinner so she like told everyone what's up you still stay close with your mom now yeah I would say we had a falling down around that time so we didn't talk much for a few years and Then I would say we started getting closer maybe two years ago and you know pretty close now and was that falling out uh and do you mind if I asked yeah was the falling out a function of you being frustrated that she couldn't understand this itch for entrepreneurship for lack

of a better word this was the career path that you wanted that she didn't understand well the lack of understanding was annoying but then the like you need to I'm not gonna pay any of your bills you need to move out of the house and do your own thing you know that was that was a bit much in my view yeah yeah unless you get a like traditional job type thing and like no no if I wanted to you know just go to school and get a nutritional job and do you know do kind of

like the traditional path yeah then it's fine but if I wanted to go do this crazy stuff then it needs to be my own dime yeah and at what point did you feel Like she maybe the framing of it wasn't crazy stuff anymore was it when you made it to Stanford you know like at what point did in her eyes you feel like okay maybe this is a this is my path I think when we sold my first company that like actual dollars came in yeah and that was yeah can you tell me about that

company yeah it was kind of like the stripe of Brazil's probably how old were you when you started it uh that was like maybe Three months after asking me out so this was like maybe 16 to 17. okay um and that worked really well I think it was like probably similar to why stripe worked here um very you know kind of easy integrated apis for businesses to accept payments and then we did really well because uh and you know is there a technical but in Brazil like there's like all these marketplaces coming up kind of

like here and but the thing is like the tax slot There said that if you have a Marketplace and the gmv of marketplaces are taxable so if a Marketplace received the total like let's see it's Uber and the Uber received the money first from the um from the transaction they would have to pay taxes on top of it so we had this technology in which we could split that transaction to pay for example if we if Uber were a customer we had a competitive as a customer we would Pay the the driver sum and then

the platform sum and then the platform never touched the money um then that would be they would only pay taxes in their own stream and no one else was doing that so that actually grew a lot and when you say grew a lot can you contextualize that yeah so um you know we we only raised three hundred thousand dollars because you know that's what people were willing to give us at 16. Um and then we got to like a billion and a half in transaction volume yeah like in tpv like tens of millions in revenue

is very profitable so it was it was a good company and who's we me and Pedro my co-founder the same co-founders here and who's Pedro so Pedro is my co-founder um across several companies you caused these two companies yeah yeah exactly exactly exactly and I would say that you know we've been working together since Then now it's gonna be like 12 years now yeah and how did you meet him we met over Twitter so basically Pedro was very hacker famous um worldwide actually because when he started coding when he was nine when he was 12

he found the first jailbreak for the iPhone 3G in the world um and then that was all over the news because usually these things come out of China or Russia or something and it was all over the news and then he Got very hacker famous and then like I reached out to him on Twitter and we started fighting text editors Vim versus emacs and got too complicated to fight over 140 characters went to Skype on Skype we became best friends and decided to you know start programming together and that is a nerdy story I know

I know and uh is it um is it public what you did you sell it yeah is it are the numbers public like was it good how like how big did the Company get in terms of people yeah I was 100 I would say that like um it was a big company with not as big as acquisition as it should yeah uh I think it sold for like five times profit yeah okay which is if it was these days it would solve a lot more yeah or a year ago a little bit more than that

yeah yeah you're a little bit more than that um uh but at the time you know like there's a lot of other reasons why that Happened but the company is a big company so like the company who bought is this company called Stone yeah um that uh you know it's like when a big company public company in the US a big company in their entire online arm is pagar man you know and I think I don't know if they break down the numbers but you know it's very big now in Brazil and the company got

to 110 120 people you're like 16 17. well it took three years right so maybe it was like 20 by that Time yeah is that awkward like uh did you have deep imposter syndrome no man I had an ego the size of like no kidding Manhattan Sky you thought you were entitled to it yeah 100 no way yeah why is that well I think like that's different than normal you know yeah I think so um I I probably had like a bigger you go then yeah um I think it's because so when I Started my

first company I was like 14 or 15. um and I was in the press a lot when that happened and it presses a weird thing uh maybe in the US they're more used to it but like it's like this massive validation to everyone around you that what you're doing is kind of serious um so I had like journalists calling me like the next Mark Zuckerberg and you know the genius prodigy or Brazil got Into the hype when I was 15 and I totally believed them you know like I was like oh yeah that's what I

am you know like and then I had a lot of ups and downs since then but I would say that at that point I'm like yeah [ __ ] yeah I'm like awesome but you know so yeah and your co-founder um what like uh was the relationship always was it very clear When you decided that you were gonna start a company together the delineation of responsibilities for that company especially uh the reason I ask is because you know you have a big ego at the time he is this incredible already renowned coder right so you're

both already something at a nothing age yeah does question make sense yeah absolutely um I think that at the time even though I had a big ego I knew very instinctively that the only way to be very successful is by having the smartest person people around me so I was actually deferential to him um more than uh the the deference uh definitely spoke a lot higher than my ego yeah and I actually like that with a lot of people that worked for us I felt lucky that they were working for us and when you say

successful what did that mean to you at like the only way for me to be successful was to get the best People what did that mean to you at that time is it Financial yeah I think at that time like you know kind of like proving to my mom in the world that like that was a really a career path that was decent yeah um so and then after we raised money is like getting a good outcome for the company right and you know having profits and all that um has that and we'll get into

brexon Whatever it's a huge company now it's huge in terms of like market cap and whatever um has that definition of success having gone through what most would Define as successful until now changed meaning I'll give you I'll give you a pretty tangible example um and this is maybe too close to home no pun intended but Parker at Rippling talks about how his original um he's very open about this how his Original uh motivation for starting Rippling was really a revenge tour against a bunch of people that he thought screwed him over yeah that was

the Chipmunks yeah exactly yeah and uh and some other VCS and he was very clear about that and he says now listen now I'm way away from that like I'm not trying to prove anyone right or wrong in the same way that I was then that's all I cared about so I wonder how much have you disassociated From the original thing oh yeah dude honestly like if we're going to be very blunt like and and I say this to a bunch of people it's like your original motivation almost doesn't matter as long as you have

it and I think that you know I think in VC World a lot of people like they try to find these like super Puritan Mission oriented Founders that their life's work is this etc etc and every successful founder I know when they started they Had like a [ __ ] up motivation you know like and mine was like I wanted to get rich because like I want to pay my bill so I don't have to go to my back to my mom that was my thing you know I just want like Financial Independence so I

could like do whatever I wanted without having to get permission from my parents yeah I actually find that it's often motivated by something unhealthy like insecurity is a big one yeah that I see it's a pretty consistent theme of like a Deep insecurity of trying to prove others or yourself that you can be something it's not necessarily that you were born in this world with a mission in mind that you're now going to go solve I actually think that's a little over glamorized that happens but I think it's the exception not the rule I 100

agree and covet for me was actually like uh a super interesting year because you know like 2019 is a [ __ ] awesome Year for Braggs like it was amazing like you know we started out 2019 you know like we had just raised our Billion Dollar Round We Grew revenue from 10 to 100 million in one year everything was amazing we hired like a ton of people you know everything was going great and then 2020 came and then like covet hit and we were definitely not coveted beneficiaries you know like people were spending Less on

their credit cards doing cohort as you Can imagine right tne went to zero all right etc etc and so a lot of the motivation that I had at the time was like of growth and like wanting to grow even more and you know the financial kind of had to be replaced of something because that was not happening and they needed to be happy so I need to come to the place and I was traveling a lot like I think I I flew 600 hours in 2019 because we had four offices I was flying between them

I've seen customers I've seen investors I would do everything I flew 600 hours and 2020 like I was I flew a little bit maybe like 100 hours because it's moving around a bit but like a lot less and I was in these places for like months in a row right I used to go out a lot because I was 23 and that's what 23 years ago I didn't go out for like two years right so and then that just gave me a lot of time to kind of reflect and I would say over That that

period like after covet is when really like I kind of like got out of the financial success motivation and got into the mission orientation motivation um but it took a while you know yeah um when you sold and I appreciate you sharing that um when you sold uh pagarme and you came what'd you do did you come to the states yeah in Stanford you went to Stanford are you in uh you and your co-founder Yeah together together both of us got involved and was like this the dream like was this the mecca come to Stanford

that was the mecca this was it that was it yeah like part of your motivation was like all right if we build this company maybe Stanford will let us in yeah kind of oh yeah yeah yeah um so the first company I started that was this the the first first one when I was 14 15 was this study in the U.S one came from hey I you know my grades are not that great so I kind of need something else for my application maybe starting a company would be a good idea like that was literally

the original thing I thought yeah so funny and what's even more ironic is you show up to Stanford which is the goal and then you dropped out like like how long did it take you before you dropped out it was six months six months yeah you spend your whole life waiting To get to Stanford and then six months six months later yeah yeah um I would say that like you know all in man I don't like school you know like I never liked school yeah like I didn't like school because it feels too theoretical a

couple of things I actually like learning I found this out like recently but I have pretty strong ADHD and I never knew because like I could have Since I was 12 I was like how the [ __ ] Can I code and have ADHD right yeah just sitting in classroom for like two hours I could not for the life of me pay attention and then like having to then read the books of stuff I was like not interested in I couldn't do that for the life of me so it was just so painful to go

through school even though I like the stuff that I was interested in I really liked and I enjoyed but then There's all this other stuff you have to do for school right like there's nothing to do with what you're interested in yeah I uh I say that I'm an outside cat not an inside cat it's hard for me to just sit inside one of the things that you know Naval you know who Naval is yeah he um one of the things that was so weirdly liberating that I'd never heard of until he said it was

the pressure of finishing a book and I don't know if there's anything to do with my ADD or Whatever it is I've never obviously been prescribed for it but I definitely have a hard time sitting there doing anything for long periods of time and when he said hey you don't have to finish a book you don't like like you can just put it down I realize that it's very selective if I'm like into something I can sit there forever probably not too dissimilar from coding but if it's something that you even acutely don't understand why

you're doing it school Being a good example there's not a chance exactly exactly exactly and look what it didn't happen and I don't think I ever share this on podcast but I'll show here because you're good at interviewing but um so and after a while I I was diagnosed and I got medicated and I took Adderall for like six months and dude like for the first while it felt like a superpower I read I had barely read any books in my life I read 17 books in four months like finish book to cover 17. and

I felt it was this like massive superpower you know like oh my God how can I live with this like how could I survive without this but then what I realized is that a lot of the superpowers that had gotten me so far here was this fact that not spending time on things that I'm now supposed that I didn't want to made me focus on only the most important things So even though that like I got some new superpowers I kind of lost my original superpowers you know that or for example if I was connecting

and talking to someone or selling someone when I was an Adderall my head was like thinking about five different things I had to do that same day because I wanted to do work when I was me I was like fully present and thinking about that conversation and by getting that so I stopped and I kind of like the conclusion that I got is you Know a lot of what got me to where I am today is because of my deficiencies and not you know in spite of them I guess yeah that's an interesting framing meaning

one interpretation of that could be because you're let's say let's use impatience as one derivative of what we're talking about like yeah I guess impatience can be a very negative thing but impatience can also be positive applied to the right things exactly Exactly exactly the thing about being a CEO is that you know and this is people sometimes people ask me what's the best advice I ever got from someone and um I was lucky like I got introduced to Evan Spiegel in 2016. and from snap and you know he gave me probably one of the

best advice I forgot which is the cool thing about being CEO is you know the best Yos are extremely authentic to themselves you can build the entire company the entire organization around You if you try to emulate being Elon Musk and you're not like that you're just gonna fail so the only way do you succeed is to be 120 version of you and kind of build around it so um I think that's kind of has to do with it right like if I know that I'm impatient I know the settings in which I'm useful but

I also notice there is a settings in which I'm not helpful so I don't participate in those and I focus On participating on the settings in which I'm useful right so I think as CEOs you actually do have the power to build a company in a way that fits you really well and like leverages your superpowers and you hire people to complement you on the things that you don't have and I would say the advantage that I have is like Pedro is the complete opposite of add he can like re do whatever it needs for

as long as it needs for like 14 hours in a row no Matter what it is and he's super smart you know so we compliment each other really well in that respect you know what my hunch is I think that um people aren't maybe let's use CEOs as an example aren't super super authentic because if you are and all of a sudden people start judging you people don't like you if they're actually it's you all of you meaning you don't have any code of armor if you try and be Elon Musk and they Don't like

your leadership style you always in the back of your mind are like well I can just do a different leadership style and they're still me they're not actually attacking me they're attacking the leader version of me it's just actually I think somewhat of a defense mechanism that's what I think I think there's a separation of your identity as a person and then as a worker or as a leader and I think that's separation of space gives people a Little bit of a protective shield but I actually think it inhibits them from being the best version

of what they can be I think so too and I think there's like another piece which is you know um what I always thought is like you know and now I've been public about this the fact that like I don't uh you know I didn't enjoy reading books and like because like it's such a pattern for successful CEOs to read a lot right like there's literally ads Saying that and so I always thought I was like I can't tell this to anyone because who's going to want to work for a guy like this who's going

to want to invest a guy like this you know because he has a CEO you're proving yourself all the time you're selling recruits you're selling the entire company you're selling investors you're selling customers and they're you know especially like employees and investors they're betting On you so you feel like you need to be a version of you that they would buy um and how can I be a version that doesn't read you know like that sounds like terrible um and so I think that's the other thing is like you you need you feel you need

to fit to the mold of Silicon Valley and if we're going to be real Silicon Valley does have a mold you know like it's not that this is like completely inaccurate you know and I think Pedra and I we Benefited a lot from it in the sense of like yeah we are you know to like Stanford dropouts that know how to code right like that are you know 20 and 21 where people took a shot on you and threw a lot of money your way yeah exactly like I can't think of anything more stereotypical than

Silicon Valley than that right like yeah so I I definitely acknowledge that that exists and you know it's a thing and we definitely got leverage of it but I also Think that people who are not like that they feel they need to somehow mold into that you know which it's a thing yeah I totally agree can you talk about applying to a firm when you're when you're were you at Stanford yeah go ahead yeah so the story was uh the firm is Max left and fintech Company yes yes yes yes yes um so we knew

we were going to start a company Silicon Valley right like that was already a thing and everyone says oh Recruiting Silicon Valley is impossible okay so like if recruiting Silicon Valley is impossible we should try to go through a few recruiting processes to then learn how to do it and then when we start our own company we can copy it so that was the theory so we went to the Stanford recruiting career fair and um talk to like maybe like 20 companies 18 of those rejected us because we were freshmen they say we don't have

a Freshmen um and then the only two that said yes I I don't remember what the other one was I think it was WhatsApp and affirm I think those are the only two that um that said yes and um so as we started talking to recruiter we went to the process and in the end we're like oh okay like we kind of want to start our own company you know Etc and then but we wanted to meet Max and they're like okay so they kind Of like let us meet Max um and then he's like

oh so you guys don't want to work here or something no we want to start our own company okay whenever you guys do come come chat with me and uh yeah and then maybe a few months later we had the idea for brecks we wanted to chat with him and he see it and he seated you yeah the Trojan Horse your way in yeah it's pretty good and you started brexit what 22. this was five years ago 2017 yeah I think uh 21 at the time both of you uh picture was 20 20. yeah yeah

um so this company for those uh maybe listening that don't know it's almost weird I gotta be honest talking about using valuations as a framing mechanism for companies today I gotta be like I gotta pick something you gotta pick something um so I'll I will use the valuation Which was around 12 billion at the last round um the well you've kind of had the who's who of investors um we did the series c c yeah C two point something billion 2.2 2.4 whatever um came out a y combinator um is it um is where you

are now weird I'm not exactly sure how else to [Music] In what sense where I am like uh over the last three years do you ask yourself what the [ __ ] just happened like what the [ __ ] just happened in this business like it went like you were building one of the hottest tech companies riding the wave of these insane like the valuations and the money flowing in directly like tailwinded your business right yeah because your corporate credit cards for startups so the more money startups raise the more they spend on their cards

Originally right and this was the craziest years we've ever seen and you're the direct beneficiary of that and the business as a function of that was also the beneficiary of that it went insane and then halfway through that covet hits and then a year after covet's gone the business is like ripping even harder than it was before and then now you you know you just do layoffs right you're like everybody including you grew Too quickly like like we thought this was going to be a forever Tailwind basically turns out it wasn't you know valuations have

completely changed public markets like snowflakes trading at like 12x Revenue that's Casey you know like like the world changed like Fast many times over in several years I just wonder I I just want you to reflection on that that that's my really long-winded question Yeah um this is my so look I think Brax um we did a lot of stuff right until 2019. [Music] when you went from 10 to 100 yeah and then we [ __ ] up a bunch of stuff from 19 till mid 21 and I think we're doing a lot of stuff

right from mid 21 till 22. And I think that a lot of the the success they're like so like the so strong product Market fit that we had in our first product made so that even if we were [ __ ] up a bunch of other stuff it still worked and I think that's hard to see from the outside so like sometimes I I get VCS that give advice about to Founders about brex and they're like oh look at what brex did that was right I was like no no That's the part we [ __

] up you know this is the other thing that was right but that one don't copy that part you know and I think that look we definitely benefit got a lot of benefit from it I would say like the best part is like the talent you get to hire amazing people right you have a great brand have a lot of money to pay for these people so the talent allows you to build amazing things But also like I think will happen to us a little bit was when we um we had such a success in

our first product that we thought that everything else we ever did was gonna work so we did too many things and we just started too many initiatives hired too many people to do too many things and honestly look we did the layoffs obviously twice now and then covid one there and obviously like I wish we Hadn't hired that many people but more than like how many people we hired it was like how many different priorities we had because the reason we hired that many people was to support the the initiatives that you're taking yeah I

was like just too many things at the same time you know like it was just like too many new products too many new segments like trying to like go everything in parallel instead of like more sequentially Um and I think that now on the other hand even though it seems that things are harder because you know the markets the valuation Etc look we raise a billion dollars last year we still have most of that in in on our balance sheet right like we have and now all those you know not all of them we laid

off 11 but like a lot of the people that we hired are now hyper focused and building few Initiatives that matter are hard a matter a lot right like we've never been more focused as a company everyone is now you know focused on the customer and like because you know you can't focus on the stock price because who the hell knows what's going to go with that right so everyone is focused on building and a customer like we're not hiring that much so people are not spending their whole days doing interviews so we've never produced

so much as a Company as we're producing now and that feels amazing in some ways I bet it's a little bit of a burden off your shoulders getting back to this Simplicity like this idea I remember you were credit cards for startups that was the pitch yep that's it that was on every billboard in every freaking exact corner of San Francisco exactly and I bet there was some version of clarity that gave you superpowers you're spot on exactly that and you know You listen to if you listen to a lot of advice they would say

focus on what you can focus on nail your core then steadily over time continue to build out yeah and you know maybe that didn't apply for this business or maybe it did but it just happened too fast you know I think that um I think that you know and it's hard to say VCS do tell this to entrepreneurs but they don't believe it which is if you do raise money at really High prices you have to grow from somewhere you know and if your core is not going to provide that in time because irr is

there's a Time component to it yep you need to Branch out so I think that was also like part of it in the sense of like and again thank God that our business our Core Business is really good so even if we were you know these other initiatives weren't working super well The core one was still growing a lot more than we expected that product Market fit was so pure yeah it would just mask all these other things yeah yeah it would obviously what's actually happening in the business yeah in some way exactly exactly exactly

um going back to so I talked to was scale your first customer yeah so talk to the CEO Alex and um he was reflecting back on the time when you were earning their business and he was saying how you Would just show up not tell him go to their office and just talk to the office manager yep and you know I go back to this beauty of Simplicity like that's what you were doing you just show up and talk to the office manager that was your customer yep and you just listen to them and learn

you know and you had one value prop you had one customer and you just go there you just show up to their office And look my honestly my job today it looks more similar to that than it did you know like last year because like you know in September so you know we launch Empower which is our new spin management product and uh doordash is our first customer then we announced coinbase and we have a bunch of you know that these Enterprises a little bit uh more annoying of letting us announce them but we have

a bunch like that that are signed up and using Now and I think that the product that we built is amazing like it's really really transformational to the industry but I think our go to market is Is Not Great yet like we're building it and we want to scale it but it's not where it was so in September I decided that I was going to be a sales rep and I did 70 sales calls like literally seven zero in one September in September You figure out what is the best pitch that positions Rex the best

way that customers relate the most that then we can go and like translate it down to all of our sales people and I had an amazing month like I had so much fun doing it and you know and I think like after that Pedro my co-founder did a similar thing with implementation he's like look our product's great but people are implementing in like some weird ways Like let me go and find like what's the best way to implement so he did like I think 30 implementations by himself you know just to figure that out and

I think that that level of like going to the ground and really understanding the customer um is both fun but it also like that's how you get really good right because if you have the right foundations executives are really good at building the machineries you know Like if you have the right ideas your Chief product officer your cro your CFO they can all go and scale it out and make it really good but the going to the ground and coming up to the right ideas that's what Founders are very uniquely positioned to do and I

think when the business goes the way that yours did it becomes easy to get away from the ground yeah because you're just managing all the time you're just like Dealing with stuff you know like I actually also argue that I think that's a lot of reason why Founders kind of get fried because they don't like the managing necessarily as much as they like going to the ground understanding what's happening and coming up with Solutions based on what the market is telling them like I think that's what a Founder does yeah totally totally totally and I

think look the thing that um and then Pedro and I are different Here but like Pedro really loves uh system building so he really Geeks out on the incentive structures and the okrs and like how to create a writing senses and the clarity and the All Hands he loves internal coms like he's never met a Founder just more obsessive internal comes in Pedro I love meeting of customers I love sales I love talking to customers all the time I love figuring out what's wrong and how we're going to build to be different right Like I

love um also you know coming up what's kind of the investor pitch what's the sales pitch what's the Press pitch like all these things I really enjoy and I just do that a lot more right so I think like it's a little bit founder to founder what you kind of like doing but and both are important you just need to again know what you're authentically and what you're good at um I give a talk to our portfolio and it's the uh quality of seven seven qualities of the seven companies that I think really highly of

that each do one thing incredibly well and then seven qualities and characteristics of individuals at startups that I think are basically lowest common denominator and one of the companies that I highlight is brex and the quality that I really admire in brex that I've been looking at pretty much since the early days Is that there is no recruiting fee internally and the quality that I'm distilling down is the way that you recruit Talent meaning what most companies do is if you if I go and work for brex and I call my buddy and my buddy

comes and works for us I'd get a ten thousand dollar referral fee you don't do that and I think it's a very simple message that you're sending to the organization that's in the DNA from the company in the company from the Beginning right that says in your base salary you are paid to recruit we all recruit all the time it is a part of your job and we're not going to reward you because it's a part of your job like this is part of the expectation is that fair yeah I think that's fair I think

like um that's part of it and then the other part just being super pragmatic about it is like look that money is going to come Out of somewhere I rather just pay that to the people you know like if you just get everything we're gonna pay on recruiting fees and just pay to get the best people so we always been like aggressive and comp like our view on comp is especially like leadership hiring is like hey if you're good you're worth every dollar if you're bad we just need to get a rid of you fast

you know and then you'll you'll be out of here uh That that it there's no it's not a 20 difference in comms it's gonna make or break this company but you being really good at your job at this growth is actually going to make or break the company in a lot of leadership roles so we've always been like hey let's hire the best people and that you know and then let's go from there and if you do that and you're actually paying people really well there's not a lot of money left for this kind of

stuff You know it's uh it's very uh if we we rather in general like benefits and things like that like you know perks we put most of that money back into people's comp and you structure comp in an interesting way do you still do that yeah yeah until this day uh you can choose how much cash home and check whether you want um and Shopify launched something the other day I was like oh I know where this came from Um and uh yeah we you you get a tcv so let's say you're a tcv is

let's say two hundred thousand dollars to make the math easy you can pick how much cash how much Echo you want because I think the the thing that we realized is one you know there's this kind of like myth and Silicon Valley that like hey if you're really hardcore you take all Equity you don't take any cash um and if you want more cash it means You're a mercenary right I think that's like the general kind of like myth in in Silicon Valley seemed to be true because when we actually talk to the people who

like took more cash you're like dude I have a mortgage what do you want me to do you know I bought this house like yeah maybe I shouldn't have bought it but I did you know like you want me to sell my house and we realized that there's like a lot more to how people picks cash comp it's Just like whatever their existing personal expenses already are and we were missing you know companies miss out on a lot of people because they don't want to pay 30k more in cash for that roll because and that

person just can because they have kids in school or they haven't any or they have a mortgage or whatever it is so anyway so we had that hunch and we did it now five years in we looked at the data and we were like okay So is there any correlation between people who pick more cash or more equity what we found is that there is some correlation with performance on the edges so people who pick like 90 cash which is the maximum perform worse people who picked the minimum Equity perform better but in the vast

majority in the middle there's absolutely no correlation neither of retention nor with uh Norm of performance so and the people that chose 90 Equity are they the best not all of them are the best but it it's positively correlated from being really good and I'm curious it's more correlative of age usually younger people right that makes sense and I'm I'm curious from an absolute perspective uh were did more people pick more cash or more equity um the average skus but I think historically it's been 65 35 the average towards Equity towards cash towards cash Yeah

if you were doing it all over again would you structure it that way again yes if you were doing all of this all over again what would you restructure is there anything like you learned some interesting lessons from comp or no no just like going through the ride dude just do less things like like that's the key lesson yeah I think Frank's lootman has this is just like do things sequentially You know just a sequence it instead of paralyze it I think that's the main lesson so if you it's not again don't hire that many

people you can hire people as long as you feel you can do the same thing with them you know like they're actually working on the one thing that's your priority yeah your first two hires were first two first two-ish were a CFO and a GC right yeah and the CFO that you hired was no Joke no joke he was like one of the rising stars at Sofi right yeah he's Chief Revenue officer there he's a chief Revenue officer of a much bigger company than you at the time well we were free everything so yeah right

right your kids how um how did uh how did that go down I'm super curious um because a lot of people a lot of Founders ask me how did these guys recruit these people This early yeah so I think that like a couple of things so one is we we met him through a lawyer funny enough um that introduced us and you know we started talking about it and I think you know he was definitely like he was young so he was like 29 even though he was like a rising star but he was still

like 29. and You know he was interested in doing something different something earlier higher upside but didn't know exactly what he was thinking about starting a company I think the first thing when I I tell Founders is like we actually gave him a lot of the company I won't say here how much because you know his privacy but like any any founder when I tell them they're like what the [ __ ] you gave that to that Guy and you're like yeah man like honestly wouldn't be here without him so I'm super happy we did

um because look the risk for an executive it's like 10 times higher for them than it is for you like if they don't work and let's say it's a year yeah maybe you lost 25 of that Equity but if they work they're worth a lot but if you fire them within a year or right before they've lost their job that they were before in their High position and They have no job they're like screwed you know like there's 10 times more risk for them than there is for you so if you think someone is amazing

again I'm really big on this is like just do whatever it takes especially in the early stages like to get them and if they're bad get rid of them fast but if they're really good you know just do whatever you can so I think that was like one thing that like when I tell most genres they're Like surprised um the other thing is you know we were always like super generous of titles and I think that's like probably counter-intuitive to what most people advise again it came from our perspective like we just need to give

the best people whatever what whatever no matter what right and there's this myth in Silicon Valley oh if you care about titles you suck you know like that's the myth Again we measure this again it brags like there's just no correlation of anything like it's just like a thing I mean some people care about titles yeah they do whatever you know so we just gave the [ __ ] title I don't care uh they're free you know um we paid them and we gave the title and then um and then just like alignment of values

and you know and then the other thing I would say is like you know and then other people don't Like when I say this too but um in Silicon Valley brands do matter you know like people have very little information your startups so like who back to does matter and we had great backers right like we had Peter Thiel we had Max lab chin we have Ribbit we had YC we had like all these great people that understood about payments and we're saying they were good we had sold the company before so I think we

did a good job also kind of like leveraging other People's reputation to try to like build our own a little bit which is what every founder kind of needs to do uh a combination of that and just alignment of values right timing for him it wasn't that like he didn't want to do anything right you know in a bit a lot in luck so how long did it take you to build the conviction that this was the person that you were willing to give up you know I'm not going to say co-founder Equity but closer

to co-founder Equity Than it was probably like early employee Equity yeah probably took like three four months for you both to build the conviction yeah and was there anything that you were looking for that was uncompromising yeah I think um someone who both knew what we needed to do from a high level like good leader a good manager good knowledge of the space just knew what to do but also like he was like building Models on Excel himself before we even started right so like and we recruit for this in exact still this day of

brex but you know it's someone who can operate at all levels I think that's what we call they can go all the way from a strategy to doing the actual work you know so I call it dolphining ten thousand and one thousand feet yeah exactly like the rarest people can do that exactly when I see them like I tell our teams like run As fast as you can at that person it's just so hard to find you're so hard to find very hard and they are the rarest gift to startups the best the best and

I think we we've kind of intuitively knew that and we saw that because even when we were interviewing him he was like doing models but also like not only that he was very creative like coming like because we were doing a kind of like novel credit structure he was like coming up with our credit algorithm Before he joined you know so he's like very creative at the same time um the the when so you I guess the layoffs happen and then you pivoted the business that's partially why the layoffs happened is that fair uh we

pivoted the business and then okay okay pivoted the business and the pivot of the business like uh this is a 12 billion dollar company pivoting That is not typical nope and I will say you're getting a lot of [ __ ] for it I think it's incredibly Brave like it's a that's a big that is a very we'll see how it plays out but long-term orientation towards building a business like most people just don't pivot at this point they just don't why'd you do it um I think a couple things so and can you talk

about like this the structure of what your business happened yeah for sure so basically we had our core product corporate cover startups right and um and then we launched banking it's mostly for startups as well kind of like banking for startups so both of those were doing really well and that's honestly tilt today what pays the bills and then we try to expand from there we Had a couple options to expand right like we could expand to um corporate cards for startups now we're corporate cards for e-commerce we try to do that then we could

do like okay like startups are small businesses let's just do more small businesses so we did that and then we're like okay kind of like large businesses you know what do we do large businesses is that and um And what happened was even though we thought we were doing three of the same thing small businesses took such a scale that it became the entire business because we went from onboarding let's say I don't know like 700 800 customers a month which for startups is like a lot to like 10 000 customers a month and what

happens when that happens is everything breaks right all the support breaks all the scale you just need to rebuild everything for that scale So then even though we thought we were trying three different things at the same time we actually only did one of them because otherwise because it was breaking right like it was growing so fast and it kind of took priority and then what happened was when it got to maybe like August 21 um we looked at it and said okay uh we can't do all these things at the same thing we need

to pick And then I went to the you know Pedro and I both went to the ground to figure out and when we got to the ground we figured out two things one um the small businesses that we were serving they liked what we were doing but what they really wanted was Capital like what they really really wanted was like blending and when we went to the core startups That we were serving they were like guys it's not just you in the market anymore now there's like five different people trying to do what you're doing

and if you don't build all this stuff that I need as I grow I'm Gonna Leave and we found that out when we went to the ground and we're like okay what do we do now because we raised a ton of money saying we're gonna do this thing for small businesses And you know there's like 60 000 of them here already like six six months later right but our best customers that are saying that if we don't build stuff for them they'll leave and there's five different new competitors so we needed to make the hard

decision and the hard decision was let's focus on our core customers right and So we they say basically decide okay like two things we need to do one we need to exit the segment because it just takes so much of our resources and effort and mind share and Etc and we need to Pivot everything to serve our core customers as they grow and there were two things that mattered for our core customers one is as they grew they didn't need um just cards anymore they needed a way To control that spend so spend management and

number two is they were going global so they needed everything to work in multiple countries and those both of those were massive projects so we did the hard call and we said you know what we're gonna shut down these customers and it's going to be painful but it is what we need to do in order to serve our core customers Really well as they grow and focus on that part of the business and then when we realized when we did that is that startups when they're early they're actually kind of unique because there's not a

lot of small businesses that have two million dollars in the bank account lying around right which makes for the underwriting model to be very unique but when they grow they're actually pretty similar to other large companies they have Finance departments They have procurement they have controller ships they have all these things so whatever we build for startups that grow could actually be applied to the entire mid-market Enterprise industry so we decided to focus there on the core startups that we always served plus the kind of like mid Market Enterprise industry but then the next challenge

was okay so we're gonna build this like spend Management and Global thing like what's different about it concurs is there expensifies there you know like and we had some competitors doing stuff so how how is what we're doing different and we went again to the ground right um because our initial intuition is like hey there's some competitors they're doing some stuff maybe we should just copy that right and I was like well let's go talk to customers and so we went down and when we talked To customers um this is what they told us which

is really interesting is we talked with like Finance people and CFOs Etc and we asked them hey what's your problem I use concur or like what's your problem well our problem is like we implemented this concur thing and people just don't do what they're supposed to do I'm like what do you mean like we have the app for them to upload the receipts and we have the policies And we send them over email we send them over slack but they just don't do what they need to do and we're like okay that sounds like a

pain point um so we we designed empowered to be uh how can we get people to actually do what they need to do and turns out very counterintuitive well very intuitively employees do it if it's easy right like if you make it easy for people to comply to comply employees are Not trying to like not comply because they're against the company they're trying to rob the company they're trying to comply it's just hard and if they don't understand if that's why that's important right that's like really hard so we did things for example one of

the main initiatives like automate receipts let's make sure you swipe your card you don't ever need a receipt again right like let's say man we realized That managers never looked expensive they just clicked a button and approve everything we're like okay what if we only showed you things that are out of policy so you have three things to review instead of 50 things to review right and a lot of things like that to get them to comply with the policies that these Finance people were building and that resonated a lot with customers you know because

like as we started implementing it you know we started Seeing the like compliance rates and all that go through the roof and these Finance people went from being the annoying you know receipt Chasers that are asking everyone what is this to like okay it's just the plus process that flows and you know they reach their goals and they're kind of more to superhero you know I think like but it just changed the business a lot because it's very much more similar to Enterprise software than fintech now Um but you know it was hard because like

it was a year until the product was ready and we were selling it and getting traction it was just a year of you know pain um now that it's in your words more of an Enterprise software company than a fintech company does that fire you up the challenge it's kind of mixed-mix it's both because in the end there's a daunting um it I like the challenge I would say Like it's uh it's it's its own complexities um you know like selling credit cards is so easy you know like you just call people up and say

hey I can give you a card of higher limits no personal guarantee great rewards yeah they started today now there's like all these like complex go to market issues you know and implementation and Contracting and customization and like all the stuff in Enterprise software which changed the Business law but I'm learning a lot so I'm enjoying it yeah and do you have to did you have to do anything did you and um and I know I'm conscious at the time did you and uh uh did you and Pedro have to do anything as Founders to

be like all right like we're gonna Reese like what a 12 billion dollar company in air quotes and we're gonna rebuild this business like did you almost have to like go on a yoga retreat or something like just kind of re-find The fuel to put back in the tank to get going again because obviously like you have to rebuild the whole organization no ground up honestly the urgency of It kind of like was the feel because like we're like okay like we have a thousand people here you know and like we need to be building

the right stuff we didn't even have time to think about it I think maybe over the summer a little bit we did that but like we just went so fast into like okay we need to Make a decision this decision we make okay what's going to be the product what's the pain Point how do we build it how we align what's the talent that we need you know who we need to hire who do we need to fire like it was just like because it had so little time to do it right because you know

we again we had just raised money we actually raised after this but like we had just raised money at 12 billion dollars and you know we had a bunch of growth goals and we Just needed to figure it out right like we just needed to do what we needed to do and there was not a lot of time for reflection but what happened as I said is we just went to the ground very closely we went to talk to customers like we were talking to customers many times a day for the first few months yeah

last one you joined the Expedia board and in the post when you announced that you said I promised myself I wouldn't join another board yeah why'd You do it also cool board to be on I mean yeah yeah besides the obvious of why'd you join because it's a cool board to be on and there's cool people on the board yeah um I think that there's a couple things one is uh our business has to do with travel right like we are selling tne Solutions in some ways to these companies right with corporate cards travel is

a big part of it and things like that so I just felt That like I wanted to learn more from the business of travel mm-hmm um number two is the guy who you know is on the board is this guy Barry Diller who invited me to join and I just think he's really good and I wanted to learn from him and there's other other people in the board I want to learn from and it's just such a different business um and I joined the mortar Mercado Libre last year and I learned a lot from it

And I felt that with him and this board I had the opportunity to learn just as much um so I thought that it might be you know I might give some and it's four times a year I need to go to Seattle I'm sure you're going tonight Seattle for the first one that's tomorrow nice um but also I think I can learn a lot and um and I think being in a public company board also has been teaching me how it feels to be in a Public company and I think that's going to be very

valuable for the time when we go public yeah totally man and mercado Libre is that like the Safeway of South America that's like the Amazon Plus PayPal of South America yeah dude I appreciate you I appreciate you coming in and doing this um this was fun I appreciate your candor I don't like um I appreciate that I didn't have to dig it out of you and that you're just so Willing to say it and be vulnerable about it it means a lot and I think a lot of people are going to learn from it I

wrap all these things the same way the first and um the answer default has been for the last three years always yes and it tends to not be necessarily now but are you hiring and if you are are there any key roles that you are hiring for that you want to use this platform to shout out uh yes we are hiring Um we are hiring in the marketing team right now okay awesome um last one what does the word grit mean to you hustle I don't know when you think of the word grit what do

you think of what comes to mind um it's probably cliche but just like finding finding a solution right like don't take no as an answer just like if something's hard just finding a way around it hacking your way into it just Figuring it out Enrique I appreciate you man thanks so much for having me