Brex is holding onto clients that have secured institutional backing of any kind, including from accelerator programs, angel investors or Web 3.0 tokens, he said. They are also keeping traditional companies that Brex deems midmarket in size, which have "more financial history so we can underwrite them for our credit card," Dubugras said.
The shift is the latest learning moment for the two young co-founders, Stanford University dropouts who took Silicon Valley by storm when they created Brex in 2017. The company was one of the fastest to reach unicorn status and was last valued at $12.3 billion.
The pair mistakenly thought that expanding services to more traditional small businesses would be a simple move. Instead, the needs of the two cohorts were different, requiring a different set of products, he said.
"We built Brex with 20 people, so we thought, why can't we just build a different Brex with another 20 people?" Dubugras said. "I learned that focus is extremely important; that's definitely a lesson I'm going to take with me forever."
While business leaders have been warning of an impending recession in recent weeks, the decision wasn't based on concern that small businesses would default on corporate cards, the co-founder said. That's because most small businesses had to repay their cards on a daily basis, leaving little risk Brex wouldn't get repaid, he said.
"It's terrible. It's the worst outcome for us, too," Dubugras said. "We invested so much money in acquiring these customers, serving them, building the brand, all these things."
Brex ranked No. 2 on this year's CNBC Disruptor 50 list. Sign up for our weekly, original newsletter that goes beyond the annual Disruptor 50 list, offering a closer look at list-making companies and their innovative founders. Brex is holding onto clients that have secured institutional backing of any kind, including from accelerator programs, angel investors or Web 3.0 tokens, he said. They are also keeping traditional companies that Brex deems midmarket in size, which have "more financial history so we can underwrite them for our credit card," Dubugras said.
The shift is the latest learning moment for the two young co-founders, Stanford University dropouts who took Silicon Valley by storm when they created Brex in 2017. The company was one of the fastest to reach unicorn status and was last valued at $12.3 billion.
The pair mistakenly thought that expanding services to more traditional small businesses would be a simple move. Instead, the needs of the two cohorts were different, requiring a different set of products, he said.
"We built Brex with 20 people, so we thought, why can't we just build a different Brex with another 20 people?" Dubugras said. "I learned that focus is extremely important; that's definitely a lesson I'm going to take with me forever."
While business leaders have been warning of an impending recession in recent weeks, the decision wasn't based on concern that small businesses would default on corporate cards, the co-founder said. That's because most small businesses had to repay their cards on a daily basis, leaving little risk Brex wouldn't get repaid, he said.
"It's terrible. It's the worst outcome for us, too," Dubugras said. "We invested so much money in acquiring these customers, serving them, building the brand, all these things."
Brex ranked No. 2 on this year's CNBC Disruptor 50 list. Sign up for our weekly, original newsletter that goes beyond the annual Disruptor 50 list, offering a closer look at list-making companies and their innovative founders.
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