Brex 3.0: Inside the Radical Turnaround with Pedro Franceschi

It's easy to like grow fast, burning more, burn less, growing slower. It's very hard to do both. When both are happening at the same time, I think it's a sign that something fundamentally changed about the structure of the company. 3 years ago, I think we had like 5 public companies on Brex. Now there's like over 150. I spent a lot of time reviewing work, and reviewing work is like a team comes to me and it's like, hey, we're gonna ship this, or thinking about this marketing campaign, or this offer. It's not about like managing a team of people, you're just critiquing the work. We're putting like hundreds of millions a year in product investment, but why the quality of the experience isn't improving. And when we zoomed out, it was just because we were spread ourselves across so many things that didn't matter. And we concentrated the resources and said, these are the bets we're going to take, and we're going to like have the courage to focus on very few things, and things move a lot faster and better.

Welcome to Grit. I'm Jubin, partner at Kleiner Perkins, a show where we go beyond the highlight reel and explore the personal and professional challenges of building history-making companies. Today we have Pedro Franceschi, CEO and co-founder of Brex, the company that started with a corporate card for startups and grew into a leading financial platform, helping companies like Anthropic, Arm, Plaid, Robinhood, and more manage their spend every day. It's an epic story. Enjoy.

How's your day? Uh, busy. Like a day in Breck's life, uh, typically. So, uh, but it's good.

Yeah? How are you feeling these days?

Uh, busy. It's been a good year, but, uh—

It's been a great year.

It's been a great year. Can't complain.

I'm really happy for you guys.

Thank you.

Is it odd, like, going from the golden child of the Valley, right? Like you have some of the craziest growth you've ever seen. You go to $100 million in like whatever, a year and a half, just like it just goes, right? I don't know how long it was. It was pretty quick, right? Year and a half, something like that. And then, you know, um, the COVID years happen, right? Then things keep going and then all of a sudden Startups are going out of business. You guys have this huge team, big burn. Then all of a sudden all the articles come out, everyone starts to think, oh, they're done, it's over. And then now you guys are on fire. It's such a roller coaster, isn't it?

I think startup roller coaster is, it's never You know, when you're in it, you're like, oh my God, we're the best company on the planet, or like, we suck, right? There's sort of very bimodal. There's the sort of in-between states get longer and longer. But I would say, I think it's, you know, the beginning of Brex, we were just very fortunate to find a problem that was so deep and so entrenched into every single company, right? It was like getting a corporate card. And we found product-market fit really, really quickly. Like we just, we sort of launched and it kind of worked. And of course we iterated and made it better, but I think we thought we could do more than we actually could. And 2022 and '23 to some degree was a moment of, you know, just coming to realization of like what is the future of this business going to be and specifically what is the ethos of the company? And that was enlightening because I think, you know, to some degree we can talk about 2018 and 2019 and say, you know, like this was sort of an accident to some degree. But I think now there's less of that and there's a better understanding of the physics of the company and the customers and why they care about what we build. But it took some painful years to get to that realization, I would say.

Crazy. When did you and Enrique stop being co-CEOs?

That was, uh, early last year, early 2024.

Was that painful?

Uh, I think it was more of an evolution of the model than like a particular pain.

You guys are like brothers.

Yeah, we've sort of grew up together. Uh, we built the first company in Brazil, uh, and then we built Brex, of course. Uh, and you know, we're friends. I was talking to him right before coming here. And I would say it's the kind of thing that, you know, I think like there's a thing that people talk about marriages of like, you know, you have to sort of like learn how to change with your partner, right? It's just like you obviously you meet when you're really young and then like if you want to stay married for like 10, 20 years, right, there's— you change in one way, your partner changes in another way, and then like, you know, eventually you will have to learn how to reconcile both, both changes. And I think that was, that was a little bit of happened to us. The difference of a co-founding relationship is you have a third entity, which is the company, and the company changes and the company matured and got bigger and, and the needs of the company change and that affects the relationship to some degree as well.

Yeah.

So, so I think, I think it's more of an evolution. Yeah. Then like a pivot, if that makes sense.

Yeah, it makes sense. How do you enjoy what you're doing now?

It's pretty great. I have a lot of fun.

Do you have fun?

I have a lot of fun.

Yeah, like you enjoy this.

I enjoy this. Yeah. It's a different, I think it's like, the way I would describe it is like, you have to make it, I had this like conversation with Paul Graham once that was like, you know, Brex was like, maybe like $100 million in revenue, maybe $150 million in revenue. And sort of scaling and growing really fast. And I came to him once and I said like, hey, like, what's the job of a founder in this new scale? Because early on it's like product market fit and like, you know, hire your team and start scaling. And he said, well, the job of a founder is to figure out how to be happy. And I was like, what? Like, what do you mean by that? And basically what he said is like, look, like the reality is if you believe in founder-led companies, right? The thing that matters the most is like you being there to like lead it. And if you don't like it, you're not gonna do it because people don't do what they don't like for a long time. And sort of he followed that, you know, what's impressive about, you know, obviously the Kalisim brothers at Stripe or even like Zuck at Meta, it's like, it's not that like, you know, Facebook is like a, Meta is like a trillion-dollar company. And, and, and, you know, and growing and doing all that is that it is a trillion-dollar company growing and all that, and the founder is still there. Yeah, 20 years later, right? Maybe 24 years later now. Um, and, and that is the part that's really impressive. And, and I think like the, the sort of secret to some degree is like how to make the day-to-day something that is aligned to what you believe, so actually enjoy it. So I think a lot of it is like how do you manufacture the culture and the way of working and the way of building to be something that gives you energy so you can do it for a long time.

Yeah. Did you have a belief barrier if you could do it yourself? Like, has— like when you started your business in Brazil, it became a pretty big business, right?

For Brazil standards. Yeah. Yeah. The third largest payment processing company there.

I guess it's like pretty legit. And at that point you probably thought, man, can I even be the CEO? Like, can I even run this company? Like, like, I can't believe this company. How old are you? Like 19?

When we started, I was like 16 or 16. So there I was, 19.

Maybe the— what I'm really trying to ask you is like, has your belief barrier of what your abilities are changed?

I think, I think like for sure, I mean, I think the— I don't think anyone is born a CEO or even a founder. I think you— I think there's just like early like rebellion of like you want to, you want to see something different about the world, and that's the, the what I call it the build instinct. It's just like you just want to build something, and I— the biggest luck of my life is like I found— I find out what I wanted to do when I was 9. I just had— I was just fortunate to have a computer at home, and I wanted to control the computer somehow, and I figured out that coding did that, and I learned how to code, and I got really into that world. And the feeling is the same since like I was 9. The how changed, right? It became initially like jailbreaking iPhones, and then like building, you know, things on top of this jailbreaking community. And then it became building a payments company in the acquiring side for online processing. And then it became corporate card issuing. And then it became a management platform and a lot of the things that we do at Brex. And obviously the company maturing changed the how, right? I think initially it was like I started Brex as like basically the CTO, like building a lot of the product myself. And over time, as the needs of the company changed, you adapt the how around the building, if that makes sense. Like, what does the build require of you versus like, what do you enjoy doing, if that makes sense. So I don't think there's anything that I dislike about doing. I think it's just like a necessary condition of what you're trying to build. And then orienting everything around that makes the how just sort of a means to that end.

Give me an example.

Like, I don't know, I think a lot of people may say, you know, early on at Brex, people tried to build this before and they couldn't get a product in market. And when we look, when we ask people why, it was because they got sort of completely overwhelmed by the regulatory barrier, right? They were like, oh, you need to have, you need to be a bank to issue a card and you need to like have a banking license and you need to have, or a banking partner that lets you like build your own systems. That's a really complicated thing. So like no one's ever going to do that. And what we did is like, you know, we sort of, you know, I had like, there's like MasterCard manuals of all the rules of MasterCard and Visa. And we read, I basically, I sort of read them over the years and And we sort of looked at exactly like what are the rules of what you can and cannot do as an issuer. And went to a banking partner and said, hey, like, we believe these things are actually totally fine. But we knew exactly the page and the line in the page where the things that we needed were listed. And a lot of founders, I think, are like, oh God, like, this is like a lawyer's job or compliance job. But it's just like, I think it's like, You have to sort of almost be a generalist of everything to do this across multiple domain, multiple functions. But to some degree, like the bottleneck of the business changes over time. Early on, it was just like, can you even build this? Because there's a barrier in finance and regulatory. And then it became, can you scale it? And then it became, could build more products? And it became, can you serve an enterprise customer? And then, so it changed over time. So I think you have to have some ability to step into a new function and a new domain and kind of think about it from first principles and understand how to make sense of it to some degree. And that's fun. That is a challenging part. It's just like, hey, here's a new thing that I never heard of. Like, how do you like learn and make sense of it? And sometimes in first principle, there's a beginner's mind and there's some benefit that you get from having seen it before. But I think there's just like value in in doing that and across multiple different things over time.

When you were in Brazil and you picked up the computer at 9, like, where in Brazil were you? What was your state of life at that point?

Yeah, so I was born and raised in Rio, and my dad had just passed away. My dad passed away when I was 8. He had cancer. And, you know, he was sort of a nerd and had, computers at home and all that. And to some degree, I think I sort of was attracted to computers because of that. And I had a lot of free time, so I was just very curious about how the computer worked and what could you do with it, what was happening under the hood, because it just felt really magical that you could just have this device that just did all these things. And I had this, like, uninteresting obsession about, like, how it worked and why it was doing these things and how could I change what it was doing, right? And yeah, I think like I just had a lot of free time and internet, thank God, existed. And there was not a lot of materials in Portuguese, which forced me to learn English, which in hindsight was a good thing for sure. But yeah, I think the internet's amazing, just allows people like me to change where they came from based on what's available there.

Do you, you, you use the word like mastery of, of the computer. Um, I don't know, maybe I'm wrong, but like, do you feel like maybe the passing of your father created some void of control that the computer kind of gave you?

Oh, for sure. For sure. For sure. I think like the, I think you wanna have some, you wanna control something in your life, right? And then the computer is like one of the few, I mean, I think software engineering is one of the few professions that you can like control all the variables almost literally, right? If you think about like, you're like a structural engineer or an architect or you're a doctor, right? Like you can do your profession to some degree and then there's variables that are outside of your control, right? Like the weather if you're building a building, or, you know, like someone's health if you're a doctor, right? Like, and you don't control all the variables. So I think software engineering has this characteristic where you have a higher feeling of control, and that probably attracted me to some degree that it was almost like its own universe. And once again, absorbed into it, there's like its own community of people that like, um, obsess over different parts of the craft. So like, you know, I think I was very interested in operating systems and distributed systems and, and things like that. And, um, you know, and programming text editors, like how to really build a workbench that was, uh, very, uh, efficient to, to, you know, produce high-quality software fast and, and and sort of trying out different tools and things like that. But it almost came from a place of like play that I was just so curious about it and sort of try to get better at it. But the sense of control, I think, was maybe the initial impetus. Yeah.

Yeah. Yeah. It's almost like the real world was painful and this was a way of going into a different world and kind of getting lost in it and being great in that world.

For sure spending a lot of time in it. So yeah.

Is your mom still in Brazil?

No, she's actually in Italy now.

What?

Yeah.

Do you see her?

I see her. I see her a few times a year. Yeah. Okay. She—

does she know what you're built like? Does she like— does she actually know how important the company that you're building is?

I think so. I think she— I mean, I think she knows, like, she reads articles. Yeah. She, she, she, she like sends me the links and it's like, oh, you didn't send— you didn't send me this thing that happened. And I'm like, well, like, You know, I don't know, I'm not gonna send you everything that comes out, but I think she gets it. She loves Brex swag. We have great swag at Brex. So she loves like, you know, hoodies and t-shirts and stuff like that. She has all of it. So, but yeah.

Were you like middle class, poor, rich by Brazil standards?

By Brazil standards, like probably middle class.

And now when she sees the way that like, you know, Brex is a whatever, $12 billion company. Like, it's going to go public at some point. Like, I don't know when, but at some point it's like one of the darlings of Silicon Valley. Does she look at— I don't know. Is she just like, I don't know, as a mother, like, does she like in disbelief?

I don't know. I think like, I think, I think my mom had a, you know, like she had a different she was more supportive of my— I don't know more, but she was definitely supportive of my journey growing up in a way that maybe wasn't necessarily expected from someone in her position, right? So I actually, I went to work for, like, as a sort of professional software engineer for the first time, like, in a company, right, when I was 11. And the way it sort of happened is this company saw that I was doing these things online and, you know, someone that worked there was actually involved in very early on in building iPhone apps. No one knew how to build iPhone apps in Brazil back in 2008 or '09. And they went after me and they were like, "Hey, like, we wanna hire you." And I actually didn't share my age online, so people didn't know whether I was like 10, 20, or 30, right? And they sort of sent me an email saying, "Hey, like, we'd like you to come work with us and, you know, like, we'd love to meet you for an interview." And I told my mom like, hey, these guys want to interview me. And I think like she had a decision that's like, well, you could either like shut this down and be like, well, definitely don't go there, right? Like you're not gonna work, you're 11. Or there's a supportive version of it, which is what she did. So she actually went to the interview with me and she said, hey, like, I think it'd be beneficial for him to be amongst like better people than him, but he's a kid, right? So she had this sort of way of dealing with it and, you know, like, At the same time, I remember back then that like this article came out that like Bill Gates's daughter could only spend 45 minutes a day or like 15 minutes a day on the computer. And my mom was like, well, if Bill Gates's daughter can only spend 45 minutes a day, like maybe you can spend 30. And that would've just like ruined my life because I was spending 12 hours a day on the computer learning how to code. And like, had she done that decision differently, like, probably the rest of my life would not— would have been completely different than it is today. Um, like that one decision, uh, completely changed the course of my life, even though it seems, uh, inconsequential when you just think about, well, like how much you limit your kid's ability to be in the computer. But I think she had some, um, foresight in, in just understanding what I was doing and that I was actually trying to build something. Like, I wasn't like playing games online. I wasn't like, you know, just sort of on YouTube. I was actually trying to create something, and I think that, uh, uh, ability to discern what I was doing from a very early age made her more supportive early on, which was like very impactful for sure.

This idea of small decisions seeming big in hindsight, how often do you think about that now? Like, how many decisions do you think you make a day?

I mean, it's everything, right? I think it's like, I think like the, the Like, I think, I think, I think there is a very small number of decisions that matter a lot, right? But, but the thing that— but on the other hand, there's a million decisions to do every day, right? And I think these are sort of paradoxical statements, right? You're choosing a bunch of things every day, um, and very few things matter. And I think like the way I reconcile that is like, at the end of the day, like you, you live like these very big decisions, they sort of set the broad strokes of where you're going. But the reality is like, you sort of live in a single day. And the way like any big plan happens, or any big thing happens is by like a series of deliberate decisions that happen as well. In a day, right? And, and, you know, there's this quote, I think it's from Tim Urban, that I really like, which is like, you know, life is a picture but you live in a pixel. And the idea is like, when you sort of zoom out and you look at a big outcome, you're like, wow, that's like a really big picture, that's a really beautiful picture. But when you zoom in, it's a bunch of pixels, and you actually live in each pixel, which is today. So on today, Tuesday, like, or Wednesday or Thursday, What are the decisions that you're making that actually contribute to that outcome? And these are things like, you know, what kinds of things to spend time talking about. You know, one of the things I talk a lot about at Brex is like, things take the importance you give to them, right? So it's like, if you talk a lot about something that doesn't matter, people perceive that that's important. If you talk a lot about something that matters, people also perceive that to be important. So, so it's almost like how do you distill those big decisions almost in a belief system that sort of shapes the way all the small decisions happen almost automatically, right? So I guess like the way to think about it is these small decisions compound into bigger decision that actually really matters, but the big decision is just a lot of small decisions combined.

Yeah, but using the analogy or the metaphor of your mom making the decision to just let you run wild on the computer as much as you wanted, whereas she reads an article that Bill Gates's daughter is, you know, only spending 45 minutes, and so should you be spending 30? That probably seemed like a pretty small decision for her at the time.

I think it's just like which things compound, right? That's the only way to go about it is what are the things that if you do every day they get you to like dramatically different places, right? If you do it in— if you do it, if you do a lot of it, if you do a little bit of it, or if you do none of it. And I think like, um, learning a skill, including learning how to code, it's probably similar in the sense that if you're spending— and I'm sure I spend more than 10,000 hours coding in my life— but like, if you spend— and probably, you know, in sort of early ages of my life. So I think like to some degree And when you do that, like, if I had done this over the course of 5 years versus 10 versus 15 versus 20, you get to very different places. And I think like, I really don't think— I think the biggest luck that I had was just like knowing what that is very early. And, you know, comparatively speaking, sort of having a 10-year head start on most people that are my age today. And to some degree, that all sort of boils down to having compounded that skill for longer, right? And having compounded that learning and the sort of sense of building from a younger age. So I guess the framework is like which things compound and which things don't.

What are like practical things that do compound that you think about, that you focus on? Yeah. And what are things that you think most people think compound or think are bigger decisions that you tend to not think about?

Yeah, um, uh, I think learning compounds a lot, like the ability to learn and, and, and, and how to learn things. I think quality compounds. I think like the degree to which you raise the bar for what matters in your company and, and the bar for what great looks like I think this compounds immensely because companies, like the only thing you have as a founder that no one else has in the company is this thing that I call like the moral imperative. You get to dictate what's right or wrong and dictating the right things to be right and the wrong things to be wrong compounds a lot because that's the kind of thing that people learn and you can put it on paper, is just like when someone comes to a review with a product that's shit and they say, hey, this is just not at the bar. Like setting that bar really clearly and really deliberately compounds because everybody's learning from that. It's almost like, it's almost like the judicial system that people are learning from the examples of like past judgments and past decisions and past mistakes. And creating their own understanding of what the bar is for things. I think that compounds a lot. Things that don't compound. I think, I think like in general, like things that are very like focused on what other people think or like perception. Versus reality, right? I think like there's a lot of people that like, and you know, we were definitely prey to that in the past of like, you know, you want to be the fastest company to X, or you want to raise the highest valuation, and be at the forefront of like, you know, the sort of perception of the kinds of customers you serve, and you want to seem bigger than you are. These things are like, they definitely play a role in the edges, but I think the substance of what compounds is like, are you like delivering a 10x customer experience to someone? And is that getting better and better every day? And I think quality, the sort of first point I had, has— is sort of the thing that compounds and all the rest that sort of creates a perception of that, but not necessarily the substance probably doesn't compound.

How do you compound the bar raising? Like, maybe I understand how you— how bar raising compounds, but how do you be deliberate about raising the bar? Maybe with people?

I think, I think you have to create a very clear rubric for what kinds of people tend to work in your company, and it has to be simple. And I think for For us, like, what we did is there was one day that I was like, we had a lot of leaders in the company that have like worked, some that, and a lot that haven't worked. So one day we, I sat down and I wrote a list of all the people that have worked and the people that didn't work. And I was trying to find like, what is predictive of leadership success? What are the things that only the people that worked have in common and the people that didn't work do not have in common? And a lot of things are not, a lot of things are important, but they're not predictive. right? So for example, someone that's like customer obsessed, very important, but there's people on both sides of the list that have that. So it's not exactly predictive. And the only thing that we found at Brex is this, this trait that we call operate at all levels, like someone that has the ability to operate at all levels. And the way we define it is someone that even at the highest levels of leadership has a deep understanding of the details of execution at an individual contributor level. So what that means in practice is like a great CTO is someone that's actually a great engineer first and can actually write great code and design great systems. A great head of design is someone that can actually design amazing products. A great head of sales is someone that can actually go and close deals themselves if they need to. And doesn't mean they're gonna do that all the time, but it means that they know the nuances of what makes someone great at the craft, someone great at selling, someone great at writing code, someone great at designing great products. And if you don't know how to identify greatness because you know how to do it yourself to some degree, or you know what the bar is yourself to some degree because you're intimately connected to it, there's no way to build a team that's great. And so I think the first thing is, Identifying, creating a very clear sense of like, who are the people that actually understand the craft and the specific nature of what is great work in this function that they're doing? And then the second thing is how to be very consistent of that across every layer of the company and painfully so. So one of the things that we did in Brex 3.0 when we did a big cultural reset is we basically said, hey, we went through every leader in the organization and said, can they operate at all levels or no? And a lot of people couldn't. And we had this, like, a lot of companies have this over time, this role that people call it like a people manager. It's like someone that's like, well, this person is like, they're sort of a, they're like a director of engineering, but they can't really code because they manage people now. Or this person's like, they're like a VP of sales, but they can't really sell because they're now managing the team. And that concept is just something that we eliminated. There's no role for that anymore because what it means to be, at the end of the day, there's no way to manage people divorced from the work. You're managing the work itself. A great head of sales is not managing the team that goes and then closes the deals. He's managing the deals through a team, right? It's like, you know, Brian at Airbnb talks about this, like, you know, it's almost like imagine like Jony Ive at Apple, like designing the iPhone, managing the team that goes and designs the iPhone in the corner. No, look, he's designing the iPhone with a group of people. And it's just, it's sort of simple, but it is a very profound change in how you orient your relationship with the work and your relationship with what you put out there in the world. And I think you just have to select for people that appreciate the actual output of the work and the work itself and not the process of doing the work, not the team that does the work, and not what people perceive internally about who does the work. All these things are accessories. They don't matter. What matters is, do you know what great looks like? Can you do it yourself and bring people along with a really high bar? For doing it at that level.

And if you get rid of that director of engineering or that VP of sales, what's the trade-off to that? What's like— what was your perceived opportunity cost, whether that played out or not?

I don't think there was one. I think— I think—

did you eliminate that layer? Did you back—

we just— we just took out two layers of the company. Two layers, almost two layers entirely of management. Yeah.

So it would be you.

So I'll give you— I'll give you one example, like the person that our CTO right now was 2 layers removed from me. He was someone that reported to someone that reported to my CTO back then. And I remember I came to him and I was like, hey, I think you should run engineering. And he was like, let me guess, the reason why you want me to run engineering is because I don't wanna run engineering. And I'm like, that's right, that's exactly right. Because you're gonna build it for someone like you that actually is, and by the way, he joined the company as an IC engineer. He joined as an individual contributor writing code, I think 4 years ago. And the reason is, the reason I elevated him was because he knew what great engineering was directly. He experienced it himself because he knew how to do it. And he could bring and inspire other people to do that as well. There was like almost universal respect for the bar that he set for what great execution means. And I think the other thing that happens is like, I think companies have this very pervasive structure where, where you are in the org chain means how involved you are in a decision. And I think what happens is you have a lot of companies that have really talented engineers, really talented salespeople, really talented designers, and those people get pushed down to execute on orders that the management chain gets to them. And one of the things that this model breaks is that because there is no perceived superiority in anyone based on their position, right? Because at the end of the day, everybody's focused on the work product. The work product is king. So the work product is what dictates who gets involved in a decision or not. So it's not like you're saying, well, like we're gonna go build this product, this feature on this product. Let me get the manager of that team and the manager's manager and the director and the VP. And then in these rooms where there's like, I remember these rooms in like Brex 2.0, like 2 and a half years ago where I'm in a room and there's like 12 people and like 3 ICs and like 6 or 7 managers from the design manager and engineering manager, a product manager, maybe a sales manager. And there's like 3 engineers. And I'm like, those are the people that actually know the problem. And when you take all this fat away from the system, what these people start doing is like they start taking far more initiative and they take a much bigger role in your organization because they know the problems. Like they know what the bar is. And all you have to do is just create space for them, elevate some of them in leadership roles, which we've done. but the reality is the work product and the output and the quality of what you're shipping is king. And we're gonna subordinate everything on having the right people involved to that work, not to make it easy to manage the org, not to make it easy to hire people, not to make it easy to deal with the project management. It's gonna be all around the work product first and then everything else follows.

Yeah, you're working backwards from how can I put together a group of people narrowly focused on creating the best work product?

Yeah. Yeah. And just like—

and your answer to that is find the person in the org, whoever it is, that you think has the best eye for great work as defined by a set of things that you've seen them do, whether that's in sales, marketing, or engineering. Yeah. Elevate them. If there's floors along the way to the top, remove the floors.

Yeah. And the thing is, like, people like, I mean, James or CTO, and then bet on them to learn how to hire people. They will learn how to do that. And obviously there's a minimum, right? So I think like someone that has no aptitude for managing people, probably like an IC engineer probably shouldn't be the CTO of Brex. Well, even though the current CTO was an IC engineer.

He was, but was he a manager after that?

He was a manager after that, yes.

It's like something.

Something for sure. But I think like the way a lot of people like do that is they say like, well, like, does this person have the experience managing an org of this size? And I'm like, why does that matter, right? It's like this person was managing an org of like maybe 25, 30 people before. and now an org of like 350, 400. And when you look at it, you're like, what changes about the physics of the problem that requires— like, it's so much easier to say, okay, I'm managing a team of 50, now a team of 350, then say, I need to learn what great work is. Like, it's almost like a different thing. Thing. It's almost like a completely different category of challenge. And I think most people that have that understanding and understand how to identify great people also, I think they have to have that eye for like which other people are also great and been able to bring that along, of course. But I think like, I think people over-index on like how much does this person know how to manage a large org or a large team and all that stuff is like not that hard. People learn that if they're smart enough, I think.

Hmm. And so is the net takeaway that you've had from this that experience is grossly overrated around anything other than taste for the work?

I think that's pretty close to right. I would say, um, experience matters to the degree that it exposes you to great work. And I think like maybe the perfect example of that is like you go to someone that's like, you're like, oh my God, like I hired this like great like growth PM from Meta. And you're like, sure, but this person didn't do the thing that made Meta grow, right? That person worked in like 2009, right? Unless you're hiring the person from 2009 that actually the CMO of Meta today. So that's like a pretty hard person to hire. You're not getting the person who actually was exposed to the great work directly. You're getting someone that was exposed to a layer on top of a layer on top of a layer on top of a layer of something that was already working and scaled. So that person had less exposure to that. So I think experience matters to the degree that it exposes you to that. So you have more of a palette to identify what it means in different contexts. But I think the, Maybe the other common trend besides great work and great taste is like you hold yourself to a much higher bar than anyone else could ever hold you to, right? And the way I describe this is like, it's like, you know, someone fucked up on something, someone made a mistake, and then you can go to the person, give them feedback, and like, and you know that you don't have to be any harsh on them. Because they are like killing themselves inside. And they're like, oh my God, like, this is like so stupid. I wish I had done this differently. Here's the 10 learnings. And they're like thinking about the shit in the shower. They're thinking about like, how could I avoid this again? How could this possibly happen? Like, how can I change this next time? How can I learn better? And I think if you have like taste for the work, uh, and, and great taste in general, um, and hold yourself to the highest bar possible so that not even me or your manager or anyone can hold you to a higher bar. Those are typically some of the ingredients that I think tend to work.

Yeah, my, my definition of this is the dolphin. Like if you imagine a dolphin going up and down in the water, like they're up in the air and then they're all the way submerged way under the ocean. And an executive, it's the number one thing, maybe the only thing that I look for in an executive And an executive generally by definition has no problem being up in the air, like at a strategic, strategic level. But getting underwater is often the thing. Maybe that's your framing of the taste for the work.

Yeah.

And, and in many ways, like it's even more pernicious because if you don't get close to the work, How can you be strategic?

Yeah, 100%.

Strategic is not a euphemism for a big team that gives you leverage. You know, like strategic is deeply understanding the end problem and then the path of least resistance to solve it elegantly. How can you do that if you're not very tactical?

Yeah, 100%.

And often those people do not have the LinkedIn's that you would necessarily expect a person to have. That's the CTO of Brex. Mm-hmm. And I think the problem compounds even more when you feel all of this pressure. To your point about like, what doesn't compound, like what people think about you, like this is where this gets really bad, where now you have a board and you have other people in the company and you have your own ego that you feel like you need to satisfy. That says you got this person who has this pedigree and it's actually the worst thing you could do.

Yeah, 100%.

It kind of feeds on itself.

100%. I think, I think like there's definitely, you know, to some degree, like, again, I think pedigrees are a measurement of like the person being exposed to great work. Right. I think that that is really all it means. And I think like the question is like, When someone says, oh, this person worked at this amazing company, right? And you're like, okay, like, were they like— and the thing is, when a company is doing really well, there's this phenomenon that happened that people associate their presence with the success of the company, right? But the reality is like, was the company successful because of them, regardless of them, or despite them? And that is something that's actually really hard to assess. And, but if you go a little bit deep, you can actually get a sense of like, was this person directly involved in what was successful or not? And a good proxy is like, a lot of times when you hire, you know, the leader of a company that grew really fast, typically it's very hard to find the leader, but sometimes you can find a number 2 that was like right underneath that person and saw everything and had direct exposure to the work. And now is maybe looking to be the number 1 in a new role as an executive, for example. But like someone that was like, well, like I was, I worked at the company during those years of like very fast growth, that's meaningless on its own. I think it's like where were they actually engaged in the thing that made the company successful or not? That's like what matters.

You've referred to Brex 2.0 and 3.0. What is that?

Yeah, so we, when we made a bunch of changes in the company. Why? End of 2023. Well, we were not growing very fast, burning a lot of money, and we got to a point that was pretty clear that I wasn't enjoying the work. I wasn't enjoying what it meant to work at Brax. I wasn't proud of what we were shipping. And it just took a reset to be like, let's put a stake in the ground and this is what the company will mean moving forward. And I decided to call it Brex 3.0. And 1.0 was sort of the early innings of Brex, like the sort of a credit card for startups. 2.0 was like the sort of ZERP growth that came a lot after that. And 3.0 was like the rationalization at the end of 2023.

And when you say like growth slowed, burn was high, can you quantify that?

I mean, we were burning a lot of money, like hundreds of millions a year. And growth was, you know, Brex was doubling every year for a while. And then Brex was growing, you know, poorly.

Way less than that.

Way less than that. Yes.

And what did you grow? So that was '23. That was the end of '23.

Yeah.

And what happened in '24?

Growth accelerated a lot from there.

Back to what it was pre—

Not exactly, but the base is much larger. So the base is like probably 3 times, 4 times larger than when we started. So, you know, growth accelerated, you know, almost 3x since where we were before. Wow.

And burn went down.

Yeah, like close to 90%.

Close to 90%. And is that as a Is that a byproduct of the reduction of layers?

Um, like, not directly, right? The reduction of layers reduced some of the cost, maybe like 20% of the cost, 25% of the cost, but 90%? 90%. Okay. Um, but that was— I, I think, like, you know, someone, someone sort of said to me, which is like, it's easy to, like, grow fast burning more. It's easy to, like, burn less, growing slower, it's very hard to do both. And I think when both are happening at the same time, I think it's a sign that something fundamentally changed about the structure of the company, fundamentally changed about how people are actually approaching the work. And I think to some degree, that's what I think happened. And it was, it started with a big cultural change. Of saying, hey, like, every leader has to operate at all levels of the organization, number one. Number two is like, we wanna meet the customer where they are at all times. So we wanna start by, every time we sell something to a customer, we have to be solving a problem they have today. And because over time Brex built a lot of products and the company had this habit of like effectively selling everything we had into the customer on day one. Which meant we didn't really solve any problems they came to us with, the individual pain that was actually making their lives very hard. So we decided to just meet the customer where they are first and win the customer first in one problem and then earn the right to give them more and sell them more things over time. 3, we, we did a lot of cleanup in terms of like the comp model and incentives and incentivizing go-to-market on like revenue versus other metrics that were not revenue. We rebalanced a lot of people to be more equity-oriented than cash-oriented in their comp. So I would say a lot of like comp hygiene and incentive hygiene. And and we just like narrow down the focus on how to build the product. And what we used to do, and we did a lot of stuff on the product side, and what we used to do, which I think is what a lot of companies do, is like we had a bunch of teams and, you know, and I kind of joked that in the past we had like one team working towards 5 initiatives and now we have 5 teams working towards one. So we just like completely channel, funnel down the resources towards fewer things and did them really well. We changed the way we build products to instead of shipping every time, we still do that, but we actually now have 3 major product releases a year that we release a massive number of changes in the product. I'm actually the editor of the roadmap. I spend a lot of time with the team thinking what we wanna ship in each release and why. And what it does is it creates this ability to do a company-affecting investment. On the very few things that matter versus like spreading your resources across a number of things that don't actually matter at all. Because I remember just like using our product and being like, we're putting like, I don't know, hundreds of millions a year in product investment, but the quality of the experience isn't improving. And when we zoomed out, it was just because we were spread ourselves across so many things that didn't matter. And we concentrated the resources and said, these are the bets we're gonna take and we're gonna like have the courage to focus on very few things, the amount of like leadership bandwidth and talent density in these problems just increases dramatically and things move a lot faster and better.

And is that also when the CEO, when you became the sole CEO?

Yeah, these things are all connected.

Yeah.

Yeah.

And so you changed all these things, you become the editor of the roadmap, You're, you're, in many ways it reminds me of like you're taking the best of a lot of different companies. Like, uh, you know, like Salesforce is famous for doing a big thing once a year, Dreamforce. Everybody marches towards that. That drives all product sales, marketing, everything. You know, Brian Chesky is pretty famous now for at Airbnb.

Brian influences a lot. So yeah, for sure. A lot of the same ideas.

These ideas have existed because it's not just you, like so many people. Like what happened?

I think it's pretty simple. I think it's like people, people mixed your ability to ship software fast with the customer's ability to use it. And what I mean by that is we ship like hundreds of times a day and the product's getting better every day. But the thing that a release process helps is back in the day, you had no option but to ship software every year with like a CD, a physical CD of the software, right? And I think like the downside is obviously the product cannot get better. Quickly as you learn things and cloud made that better, right? All the things that we know about already, but there was a good thing, which is like the customer had very clear sense of when things would change and how should they change their behaviors to use these new things and benefit them. So what the release process does is it allows us to coalesce everyone around one moment in time that we actually deliver things to customers in a very big way. And not just the delivery from a sort of shipping the code standpoint, but from a go-to-market enablement, marketing, support training, implementation help, and all these things that enterprise customers need. So a lot of it came from us maturing as well and the kinds of customers we serve because 3 years ago, I think we had like 5 public companies on Brex. Now there's like over 150.

Wow.

And our enterprise business is almost double last year and it's growing very, very quickly and more and more companies, some of the most important companies on the planet are choosing to use Brex to run their finances, right? And that warrants a level of thoughtfulness about how we release and build software. That this process allows you to do on not just shipping, but delivering value, which includes of course delivering the solution on your mobile app and website and et cetera. But most importantly, making sure they get value, they use that the right way. And maybe the last thing I'll say is the other thing it does is I really believe that the company needs rhythms to function. And the rhythms have to come from the top. And I, at some point in my life, I was like fascinated by like the sort of hyper-distributed model like Amazon, like the two-pizza team kind of story. And I think for their business that works really well because things are so segregated, right? Like one product category is very different than another product category, right? AWS is very different from retail. But in the business like Brex, where customers are really buying a unified experience of financial services and software, you need a singular product vision for how all these pieces fit together. And that articulation has to come from the top all the way down into every layer of the organization. And what the release process allows you to do is to coordinate everything from the top versus expecting teams to coordinate stuff on their own, which is a really timely, really costly and are just far more prescriptive about what you want done and what you want shipped, which I think just creates clarity for where the company's going.

As a part of 2.0 to 3.0, did you change your day-to-day of leadership? Did you change how you think about organizing your day, your months?

Yeah, like a lot.

What'd you do?

I spent a lot of time reviewing work, a lot of time, of just like probably half of my time. And reviewing work is like a team comes to me and it's like, hey, we're gonna ship this or thinking about this marketing campaign or this offer or just like whatever, like anything or just PR strategy, whatever it is. And just spending far more time actually reviewing the work itself with people that I trust and, reviewing, but also jamming on things with the teams that are actually doing it. So I spend probably, I would say, a third of my time on sort of traditional CEO duties, like running the leadership team, running my direct reports, and all hands, things like that. Then a third in like reviews, and then another third in like one or two projects that I'm typically involved almost as an IC, actually pushing things forward in a direction that I believe in, in something that is company affecting to some degree. And two-thirds of that, if you think about it, it's not about managing a team of people, it's just like you're just critiquing the work. And a lot of it is the taste-making of saying this is the bar for for what we want in terms of the things we ship and the reviews that we're doing. And here's the ways in which I wanna personally influence the direction of this initiative or project that we're building.

Are you writing code?

I actually am now because I'm getting pretty involved in the AI coding tools. Cursor, I played with Vinsurf a little bit over the weekend.

It's good.

It's pretty good. Both of them are pretty good. I played a little bit of Devin. And Vercel and v0, we've been pretty impressed on the prototyping side. Retool, one of our customers, we've played with it as well a lot in some interesting things internally. So I'm actually doing a bit, but not as much from the perspective of shipping things, but from the perspective of learning the physics of what it means to be a software engineer in this new AI era.

Were you worried about the perception of this extreme level of change internally, externally, either, both, both?

No, I think like actually not really, because like the thing is like people also, to be fair, you didn't have much to lose at that point.

Like it was not like you were doing it during the Yeah, I mean, I think—

I think growing 3x, I think people, people forget a few things. Like, first is, um, um, people complain a lot about change, but not changing is so much worse. Because when we did Brax 3.0, like, we didn't know it would— whether it would work or not. I just knew it'd be different. It's like, maybe, like, maybe it's not gonna work. But it's for sure gonna be different than where we are now. And I think like that's a good thing because like if you have enough of a growth mindset and you're like trying to learn from mistakes and like seriously internalize them and understand like how to change your past decisions to get to a better place. Change is effectively the clock speed, right, of the engine, right? It's essentially like the speed in which everything is happening in the company. And I think like, you know, and of course, there's too much change. And I think things need to compound. And I think, you know, now things are compounding in a very different way than it used to in the past, at least in the last few years. But I think people are more afraid of change. And I actually think companies can take far more change than people think. Far more. And I remember this, like, you know, first time we did a layoff in like 2020, you know, someone told me, oh, you know, like companies never recover from a layoff. And I was like, what? And it's like, yeah, you know, X company, Y company, Z companies did layoffs, they never recovered. And then people told us again, and then people said, well, companies never recover from like more than a 50% change in the leadership team. And it's like, these things are not true.

Or companies never recover from slowing growth.

100%. That was a big one. Like, and that everybody was like, yeah, companies like, you know, it's really hard to reaccelerate growth at scale in, you know, the sort of hundreds of millions of dollars revenue range. And, um, and, and you're like, sure, like, I hear you, right? But you're talking about like, this is like, you're talking about the stats, like, oh, these are the stats against you or in favor of you. And I think like the You don't, like, as an operator, right? I think, like, you don't live in a world of stats, you live in the world of black and white. Like, things are going to work or not going to work, right? And you're trying to make them work. Whereas, like, I think investors are looking at it as, like, as a sort of a range of outcomes and a range of probabilities of what could happen. But I think, like, at the end of the day, like, it's all about the work that you ship and the work you put out there. So it's like, So it's almost like reducing to a very simplistic framework. And it's almost like, what is the quality of the product we're putting in front of a customer? And if that gets better, like everything should get better. And what is the quality of how actually selling and explaining the value of this to customers versus everything else that exists? Is that experience getting better? And if it is getting better, everything should get better. So I think you almost have to be sort of ridiculously reductionist to say like, okay, if the building blocks, if the atoms of what constitutes the company's success are working well, and I think that's like the quality of your product, the quality of your go-to-market, and the quality of your people, right? So if these three things are there, it's almost like just give things time. And the results will probably come. But it's like, but the thing that's hard is there's no feedback loop until things are working, right? And I think like, I remember like 3 months into Brex 3.0 or 4 months into Brex 3.0, people are like, are things working? And people ask me internally, is it working or not? I'm like, I don't know if it's working. I just know that like the quality of the product is higher. And I just know that the quality of the people is higher. And I just know that the quality of how we're selling and the go-to-market execution is higher. That's all I can tell you. And I believe these things to correlate very highly with a company being successful. But that's all you have, right? There's not much more than that. So I think these are the things to focus on and change everything in service of these three things working. And kind of ignored the noise.

When you promote the engineer, engineering manager into the CTO, were you not worried about backlash internally or perceptions around a move that extreme?

Yeah, I mean, first, like, our, our, our, our previous CTO was like very much on board with the plan and very involved in the transition, right? So he was very So I think like his support probably helped internally. Sure. Um, two, like, I— one of the things that I— this may be a little controversial, but, um, I think it's true— is like, like, you as a leader, like, you are not in the job of converting people, right? And I think a lot of people are like Oh, like, you know, come here, do a save call because this person is like supposed to leave and they may go to a company. And it's like, you can't control that. Like people, like all you have to do is say, here's the way we're gonna do things. And if you believe in that, that's awesome. We're gonna go crush it. And if you don't believe in that, honestly, you should probably go. And I think the, a lot of the psychological challenge of turning the company around, and I think of doing any kind of big change in a company, is that you see a lot of people leaving because they don't believe in the thing. And they say, well, you know, like, and there's all these reasons of like, well, this other offer is great, or, you know, like, I've been here for too long. And I think the only way to not be like psychologically crushed is if you say, look, there's gonna be believers and non-believers, and it's actually fine if they leave. And it's like not frowned upon. And I'm friends with a lot of people who left the company and they didn't believe in the direction that we're going. And we have great relationships and that's great, but, there's a very big difference between whether they believe in the way you're doing things or not. And, and, and there's no such thing as converting someone. All you can do is tell them, hey, here's how we see the world, here's how we're going to do things. And of course you have to live by these things. You can't just say them and not do them. But assuming that it's actually happening, uh, some people will self-select out, and that's a positive, right? right? That is the culture creating enough pressure in itself that people are saying, maybe that's not for me. And we did a lot of things that were unpopular, right? We said, hey, I'm going to be the chief product officer, and I'm going to edit the roadmap and say exactly how I want to build things. A lot of people said, this is not for me. A lot of people in product said, this is not for me, right? Then we said, we're going to go back in person. A lot of people said, this is not for me, including a lot of leaders in the company that said, hey, I like working remotely. And we're like, we think a culture of intensity is important and intensity is easier done in person and building connection amongst the people that are working really hard is easier in person. Another thing that we did is we said, hey, like we will focus a lot more on the actual work than on managing the people that do the work. Doesn't mean manager's not important, but it's gonna be secondary to what we ship. A lot of people don't like that. A lot of people believe that their careers are being managers and managing people and building teams. And also something unpopular. And every time you do one of these things, some people leave. And the thing is like, you have to almost reframe it and be like, that is actually the system self-correcting itself. And people choosing to be aligned with people that have similar beliefs. And then you're gonna hire other people that have those beliefs and will actually amplify the thing you're trying to do forward because that is what the culture is. The culture is like, it has to have some level of antibodies to things that you don't tolerate, right? Because otherwise if it's like bland and something that like anybody can fit in, anybody can belong, anybody can do this, then there's no meaning behind your choices, right? Because it's not creating the right selection pressure.

What else did you do that you think was controversial? Maybe controversial internally. Like on the comp thing, did you actually reduce people's cash?

To some people. Yeah.

And increase their equity?

A lot of people. And you increase a lot of people's equity.

People that you thought were valuable. Very valuable, like that you would have promoted 100%. And you said, hey, we think you're one of the best stars in this company. We're going to lower your cash.

Yeah. And we had this model.

That feels controversial.

Yeah, it is controversial. And I think like the belief that I had is like, people are not going to get rich here on cash. They're not going to make money on cash. Cash will be the way they pay for their everyday expenses and their life and, you know, their sort of immediate life needs, but you're gonna build like generational wealth through your equity. And I think like people believing in the value of the equity is like a very important thing in a company. And, you know, and we wanted to make sure that everybody had that to some degree. So we looked at how much people owned and their ownership and their stake and different valuations and things like that. And we sort of readjusted some of that. And a lot of people in the past model, you know, back in the day, you could basically choose freely between how much cash and equity you wanted in your comp model, which was kind of a ZIRP idea. And that created people that just like selected more cash. And some of them were low performers and, you know, we just ended up parting ways over time. And others just had sort of historical baggage. That we said, hey, we're changing our philosophy. And we'd love to have you on board, but there's gonna be a change. And by the way, everybody's changing. So the other thing is doing it consistently. And we said, hey, there's a max salary cap in the company of X. No one makes more than X, including me, including everyone. And you're gonna be at that max because you're above the max today. And that was like really healthy and just creating that like, collective sense of like everybody is giving up something in order to get the things that we're actually—

what about bonuses? Um, can you—

we don't do bonuses today, uh, nobody except for sales, except for sales. Yeah, uh, I, I don't really believe in bonuses personally. Um, I, I think they have a role when the company is like cash flow positive and profitable. We're not there yet, although Well, we're getting closer. I would say, like, I think, like, bonuses can create a culture of, like, rewarding, like, spot performance versus, like, consistent performance. And I think, like, the fundamental belief that I have is, like, I think comp is, like, a hygiene factor, not a motivating factor. Which means like, sort of a, too much comp doesn't mean job satisfaction, just means lack of job dissatisfaction. So said differently, like, When people are not compensated enough for their roles, of course that affects them because there's a sense of fairness and there's a sense that they're not being rewarded. But once they are at that threshold, and I really believe in paying people really well and we do that, I believe the best people are not motivated by the money. They're motivated by the sense of doing great work and being part of something that is aligned to their values and something that is aligned to their sense of identity. Of what they are putting out there in the world. Because I am that way. You know, if I were to do this for money, I would have stopped. And I think a lot of founders are similarly, right? And I think that's true for a lot of people that are great at their work. And of course, people make a lot of money at Brax. Of course, there's gonna be a lot of people that create generational amounts of wealth through the company. And we're really excited and proud of that. But that said, that's not the why. That is the outcome. The why is because they believe in that way of working, I think.

Are you in the— talk about this however much you want. Are you in the camp of like, you want to take this company public? Are you in the camp of a Stripe? Like, I want to stay private for longer. I don't know, do you have a philosophy around that? I'm not actually asking you when.

Yeah, our philosophy is like, whatever, like, how do we compound this thing for a long time, right? And, you know, we're gonna go public at some point. The timing is dependent on the predictability of the business, on the market, there's a lot of variables there. But for us, like, we're religious about like—

but the market's ready right now. I think there's a ton of appetite. Yeah, I think like for like quality growth companies. And you could argue that you're like, your business is in a pretty good spot. Part of me is like, I just had the Amplitude founder and CEO on, Spencer. Do you know Spencer?

Yeah.

And they went out at $100 million. And what was really interesting was he was like, look, I view it as my fiduciary duty to take this company public. Like, I think that what we have lost in company building today is this implicit agreement that I make with my stakeholders, whether it's employees or shareholders, to take this thing out. Like, I think when you raise an A, that's like the agreement, like, that you're going to really try.

Yeah.

And I don't know, it seems like nobody really cares about that at all right now.

I think we definitely care about it. The thing for us is like, and I talk a lot about this, is like going public is very easy. Going public is you hire a bank, you run a process, and you're public. The question is what happens after you're public? And the thing that matters, I think, is like you wanna be a public company with low volatility and very high predictability in your business. Because the way I think a lot of people have done this wrong in the past, in my opinion, is You go public when the market conditions are right, but the company conditions are not right. Right. Right. And I think you have to time both.

Right.

And the market being right is great. But like, but, you know, Brex, for example, today, like we're actually ahead of the plan this year and we're ahead of the plan last year. But 2 years ago we were behind plan. So then the question becomes like, to a degree, can you predict the business ahead to build a level of confidence?

Yeah.

To be a public company that people understand exactly the trajectory of the business and can model that out and essentially have lower volatility than a lot of companies that went public in 2021, for example, that today traded a fraction of the value, not because the fundamentals of the business are worse, but because the confidence that you can have in the security, in the stock, in the underlying business model are just not there. And I think that's like a lot of what we spend cycles on. How do we build this level of rigor and confidence? Yeah. So the business is also ready, not just the market.

Yeah. But like, let's take— we were talking about Zuckerberg and Meta earlier. Like, do you think that's a high predictability? Like, do you maybe— do you see that as a low volatility business?

I mean, given the scale they operate, for sure. Right. I think like when you think about like the, like the, the They're taking big swings. The volatility of the stock is different than the volatility of the business, right?

I know, but even the volatility of the business is what I'm talking about. Like, they're doing big swings.

100%.

And by the way, their volatility when they went out was also quite high because they didn't have a good mobile story.

100%. 100%.

But they said, screw it. Like, like to your point about like going from 2.0 to 3.0, you don't know the outcome, but you know it's going to be change.

Yeah.

And change is good. Like you rationalized it once already.

Yeah.

I don't know. I'm just spitballing with you. I don't actually like, I have no—

Yeah, we definitely wanna go public. It's definitely in the future for us. I think the timing is something that we wanna do it when the level of predictability in the business is very high and we can see years ahead, not just like a quarter ahead or two, but we can understand the physics of the customer acquisition and everything that's happening to a degree that can allow us to predict many years ahead.

Yeah.

And the markets are in a good place. And I think, you know, the way I've always sort of built this company, assuming that I'm gonna be the one running it later. So a lot of companies see an IPO as like a destination. Yeah. And the reason why this discussion for me is like a little harder to engage is like, I see an IPO as a point in time because I'm going to be the one later totally dealing with whatever happens, right? So I think like the— to me, the— maybe to complement Spencer, I think like the fiduciary duty is taking the thing public and being a great public company, right? And being a public company that people are excited to double down, invest on. And I think a lot of what we're thinking about is like how to build the shareholder base and the mindset and everything in service of compounding, including the decision of going public. And I think honestly, when it gets to a higher level of predictability, which I think now we're getting to, public markets are actually better to compound, right? Versus private markets that are more used to volatility. There's more reward if you're very predictable in public markets compared to private markets, in my opinion.

[Speaker] Yeah, I totally get it. This is not like a gotcha, when are you going out? But I do think it's interesting like this idea of predictability. I wonder if we oversubscribe to how much control we believe we actually have around the future state of these businesses. And, you know, like part of the reason I'm asking myself this question and then kind of just thinking out loud with you is like, I don't know, there's like 50 macro things that are very unpredictable right now. Yeah, that could change a lot for you as a business. Like we are at the whatever, top of the first of the biggest technology change that you and I will probably ever see in our life.

Yeah.

I don't know what that means for your business, but it's probably going to lead to some unpredictability, you know, like, like there's just all these things that are going. And then let's just say like then something happens in the funding markets. Yeah, right. Like it was predictably good. In the ZERP area, and now it's— then it became predictably bad. It's kind of unpredictable. You know, like it happened like that. Yeah. So that's my only like, I don't know, I'm just like thinking out loud about those, like how much control do we really believe we have?

Yeah.

Is good timing ever a thing? Yeah. I believe in bad timing, you know, but is good timing ever really a thing?

Yeah. And I think like we, when I think about like I spend like so much more of my time internally than externally, right? I spend like 80% of my time, maybe 90% of the time inside a company. And the 20% I spend outside is like almost exclusively with customers and rarely doing things like that, like this. And I think like part of the reason why is because like that is what we control, right? The only thing we control is like our execution, right? And the way, to your point about like the stock going up or down and all of that in public markets, like the only thing we control is like how many customers are we acquiring? Are we serving them really well? Are we shipping a world-class product? Like that is to some degree the only things you control. And there's something freeing about saying the market dynamics are what they are. Banks worry about that. What we're going to worry about is the operational leverage the business has. And I think like, that is what we obsess over. And the markets are eventually going to be in a position that's like, sort of an obvious decision. And by the way, I'm not saying, like, I think the takeaway for me, hopefully from this is like, We want to go public when we can be a great public company for decades.

Totally.

And that's like the— that's like the promise, I would say.

Yeah. And by the way, I actually think most of the companies that could be public right now that aren't are almost without exception, the ones where the founder is like, I'm going to be running this company in 10 years when we are public. Like, I have to bear the weight of this decision.

And to be clear, I think there is no fear in running a public company. I think the fear is that the bar gets sufficiently higher in the level of predictability of the business. And I think we take that very seriously. Yeah, yeah. More than anything. I think like, you know, we see exceptional founders, we see like, Zuck, obviously Meta, we see Elon at Tesla, we see so many people compounding in public markets and that's totally possible. And, and eventually the outcome for us, I think it's just a matter of like when are we, are we, are we at the bar? Yeah, to, to, to clear the hurdle. Yeah.

Do you think about what you, if you're running this company in 10 years, like let's imagine yourself in that seat.

Yeah.

Do you think about what would have to be different? Maybe what you would have to be doing differently? To think about the idea that you have been at the helm of Brex for, at that point, it'll be basically 25 years. No, 20 years.

20 years.

20 years. Like, you're at your half-life now. You think about yourself in 10 years continuing to run this company. Like, do you think about what— how you would have to readjust your life in order to get to that point?

I mean, I don't think that much changes, right? Because like, it's just like I'm getting married this year and it's like probably— Congrats. Thank you. I'll probably be married to the same person with a family, hopefully, living in the Bay Area, coming to an office, working with people I like. So I think it's like, again, the sort of point earlier, like life is a picture but you live in a pixel, right? And I think it's like, do you enjoy the pixel that you're in right now? And I think like I enjoy it, right? And I think like as long as you're compounding it into something bigger and more impactful and more meaningful, right? I think like that, that is the limiting factor in terms of, uh, you know, what does the sort of overall picture look like? And, and I think if you're compounding the picture, there's no reason why the picture wouldn't look good, um, I believe. And, and, and do you enjoy the pixel that you're in right now? Um, I'm excited about a lot of things that will change with AI, obviously. We think a lot about it in the business internally and our product, but, and what it means for customers. But that's like the fun part. There's like some, a little bit of volatility in terms of the world right now. So we can take bigger swings.

Have you changed anything from 2.0 to 3.0, or even as you've evolved at running the company on your personal side, like how you think about your sleep, how you eat, how you wake up. Yeah, like how you bring all the juice to your work.

I, I think—

I do think about that stuff a lot.

Um, I mean, my mental model is like, um, I think like, I think like the CEO job is like kind of like a professional athlete in the sense that like You have to take a lot of boring but important steps in order to be able to like go out and run, right? And to me, it's like there are things I do pretty much every day religiously. What? Meditate, sleep, diet, exercise, and I do therapy once a week. And if I don't do any of these 5 things, like, typically things like start to fall off the wagon a little bit.

Meditate, sleep, eat, workout, therapy.

Yeah, I do all those every week. You do?

Do you do all—

I do all 4 every day.

Every day? Every day, no matter what. What are you the most psycho about of those 4?

Meditating? I meditate. Meditate, like, I mean, I'm pretty focused on diet and exercise is the hardest to fit in, but I do fit in like—

It takes the most time?

Good 4 times a week. Yeah. Meditate takes half an hour a day, but I do like every morning religiously for the past like 5 years. Wow. And it's like, doesn't matter which day, doesn't matter where I'm at, doesn't matter like anything, doesn't matter what's happening in the world. I just like, sit down, meditate for half an hour in the morning, um, and it just helps you like ground yourself.

Eating, what about eating?

Uh, I try to eat very cleanly. I don't eat sugar. I try to eat not a lot of carbs, um, more sort of protein-heavy diet. Um, no sugar. I try to avoid sugar a lot. Yeah. Uh, drinking, no drinking. I don't drink at all. Uh, have you— zero.

Did you used to?

I used to until like a couple years ago, and then I just like fully stopped.

It's really, really hot right now in Silicon Valley.

I mean, I've been out of it for like a while. I don't miss it at all, honestly. My fiancée misses that I don't drink probably more than I do, to be honest. You know, she was in New York for a while, and that's harder there. That's true. So what else? And a lot of sleep hygiene. Sleep is hard for me. It's the one that I actually 'Cause your mind's racing? Yeah, I just put like a lot of, you have to put a lot of like work in the sort of sleep hygiene. Like no device in your bedroom. I try to meditate before going to bed. Like journaling, some things like that help. But sleep is the, I would say the most challenging one for me. It takes the most amount of cycles to get right. Yeah. But yeah.

When you work out, so maybe actually when you don't do one of those things, Is it punitive? Do you beat yourself up?

I mean, meditation, I just like, I just, I just, I just can't function as well. So it's just like, I just sit down and do it. I just sort of stop what I'm doing and go do it. The other ones, I would say it's like, it's not like punitive, but it's just like, there is a tax that you're taking, right? And there's like a debt that you're accumulating. And I think like, The— like, it doesn't mean that is bad, but it can be bad if you do a lot of it, right? So I would say it's something that you almost keep a balance, and I try to be disciplined about it. I think it's also like the, the thing of like, you know, I think the job's pretty stressful, um, and I think it's almost like you have to take care of yourself first before you can take care of others, and the sort of expectations or your bandwidth, your availability, the people you take care of, you know, the amount of energy the company consumes from you, right? Like, I think effectively, a lot of the CEO job is just like energizing the company. You just go in and say like, we're gonna do this, it's gonna be fast, it's gonna be good, right? And these things take energy from you. So I think it's almost like the sort of most selfless thing you do to some degree is take care of yourself because that's what allows the rest to—

But Pedro, like, on a— when you have a shit day, you didn't sleep well the night before.

Yeah.

A terrible meeting. Somebody quits.

Mm-hmm.

Your fiancée is, like, mad at you for something.

Mm-hmm.

You had a worse workout than you wanted to.

Yeah.

And, like, do you not want to go and, like, just eat pizza or something or, like, go have a drink? Like, do you have, like, Do you not like— there has to be some outlet.

I mean, sugar sometimes is an outlet. The other one is walking. I actually like walk a lot.

Not—

I mean, mostly on the weekends these days, but like I try to do everything I do in SF walking. There's something like physiological about you just go out on a walk and you come back and things are like slightly calmer, slightly more in place. Drinking, drinking and like binge eating, especially like things that are very fatty, like typically make me sleep worse and make the problem worse. Sugar is just like good, so it's a little different. But I would say I think I try to be very mindful like which things actually help and which things make the problem worse. And some things just makes it worse and then have to deal with a bigger thing later. But, but, you know, all that. And, you know, of course, like, in, like, I had, like, mental health crisis in the past and then, you know, having a psychiatrist involved and potentially taking medication. I've taken medication in the past. Like, these things, like, help as well.

As a result of work?

Yeah, 2021.

You went and saw a psychiatrist?

I mean, I saw, I see a psychiatrist for the past, like, 4 years and a therapist.

Do you believe that you should have been on medication?

Doing a crisis? Absolutely. Yeah, absolutely. Anyone should. Yeah. Stress is like—

What was the crisis?

Just deep anxiety. Like deep, deep anxiety. Like getting in front of a computer, opening the screen and like literally not being able to focus. You're just like sweating cold of anxiety. And there's a way out of it. It just takes time and patience and work and great doctor and a great support system around you, of course.

But your solution wasn't let me stop working.

You have to do that as well. The problem is it comes back, right? You have to sort of integrate the— you have to sort of make sense of what's happening, why it's affecting you, and treat the symptoms. And do things that make it more manageable every day, right? But it was like a moment that I had a girlfriend back then, we had just broken up, company was going through a lot of change. And, you know, I sort of sensed some of the things that ended up creating the big issues starting to like brew. And just like affected me a lot. And, and yeah, I was like very anxious, very, very, very anxious.

Couldn't sleep.

Yeah, couldn't sleep. Taking meds every day. And it's a very shitty state.

How long did it last?

Like 3, 4 months.

Did you think it was gonna go forever?

Yeah, for sure. I mean, I think it's like, it's not like, I think the thing is you I mean, I was like— how old I was back then? 2021, I was like 24, 23, 24. And like, and there's a very debilitating feeling. And I remember like I was in LA during the pandemic when that happened. It was like the middle of the pandemic. I remember like being inside my house and I was like, gosh, like I'm like 24 years old. I have like a great job. I'm perfectly healthy. and I cannot function right now because I just, I'm too stressed. And I remember like, it's a very shitty feeling. I remember this feeling of like, you know, jumping in meetings and being so stressed, like the only thing that would like calm me down was like, go watch a movie, like a Pixar movie, like a very dumb, like, you know, sort of, you know, children movie to just like calm down. And that's like a shitty state to be in. But you learn how to— like, it's definitely possible. You can definitely see how people that don't take enough good care of themselves can get in that state.

And do you think it was a result of not doing the things that you're doing now around eating, sleeping, working out?

Not directly. I think it was more like the jobs changed a lot. I think the complexity of the company changed a lot. I think the expectations and I didn't know how to be successful in the role that I was and the sort of scale of the company. And I think my personal life wasn't very clear. I had a relationship, I was then single in a different city, right? It was a lot of sort of more alone than used to. So all these things compound, but I think the learning is like, I think you learn a lot about your psyche when you're like, you go through one of these episodes that you're like, gosh, this is like pretty close to the line. And you get out of it because then you're like, when shit hits the fan, and obviously sometimes it does. And I think like a lot of what I tried to do over the years and also Brex is like reduce the stigma on mental health because like every single successful founder I know, every single one, 100% of them, had some mental health struggle building their company. And there are people that talk about it and people that don't talk about it, but no one that didn't have anything. Um, and I think people don't talk enough about it. There's like a big taboo for some reason in Silicon Valley. But, um, I think the reason is obvious.

People think that it makes them seem less grateful or something for the position that they're in.

I think it's like, it looks— everything looks sexy from the outside, right? And then when you're in it and you see the day-to-day, it's like less sexy. You see a lot of the problems and a lot of things don't look great. But there's almost this thing of like, wow, like, am I alone in this, right? And I think like when you sort of go through it and you really hit pause and you like talk to other people about it and it's like, this is like a very debilitating state. You'll learn that it's far more common than you think.

It probably was even exacerbated the feeling like you were probably renting in LA at the time, like rented a house.

Yeah, I was like renting a house.

Probably like a sick house.

You know, like, I mean, it was me and my co-founder and actually his girlfriend back then.

And it's just got to be even lonelier when you're like, I have it all. I'm living in this amazing place.

Yeah, COVID times and, you know, rentals in the pandemic. But yes, yeah, yeah, yeah.

But you know what I mean? Like, I'm the founder of what everybody is telling me is the hottest company, you know. I think it makes it worse. It makes it lonelier.

It makes it lonelier. Yeah. And I think it makes it, um, uh, probably more, uh I think people have very, like, reconciling— like, I think the gap between external perception and reality is something that, like, keeping an eye on is, like, always, like, important. Because when the gap gets too big in either direction, typically it affects people in some way, right? I think people are saying— and sort of corollary of that is like, things are never as good as you think, never as bad as you think, right? Most of the times. So, but when you're in the verge of it and things feel like, oh my god, I'm so anxious, like things are so stressful and so bad, or like, oh my god, I'm so amazing and so good and everybody wants Brex or, you know, my company or whatever, it's also not that either, right? So I think it's grounding to understand that, and especially with like social media and, and, you know, the way we consume information today, like, you know, uh, extremes get far more weight than they probably deserve.

So thank you for doing this.

Happy to.

This is fun.

This is really fun. Yeah, great interviewer.

I really appreciate it.

I appreciate you. Thank you for having me.

Are you hiring?

We are hiring, yes. brex.com/jobs.

Anything in particular or everything?

Everything. And customers too. Anyone that needs to manage spend on corporate cards, banking, bill pay globally, in the US, startups, all the way to enterprise customers.

All the way to the government?

All the way to the government. Hopefully. Hopefully. Fingers crossed on that one. She is Brex. So yeah, looking forward to serving more companies.

When you hear the word grit, what do you think of?

Resilience. It's just like the ability to keep showing up even when like shit's not good. And I think like people are— I think like good— I think like people get People are sort of known by like the best days, right, obviously, but they are defined or shaped by like the really shitty days that are like not the ones people want to talk about or people talk about negatively. And I think the resilience of like enduring those things is probably the way I would— I think about grit.

Thank you, Pedro Franceschi. That's it for now. If you like the episode, please leave us a review or go back into the archives where we've done more than 200 episodes with some fantastic folks. This podcast is a Kleiner Perkins production, and I'm Juven. Thanks for listening.