Innovating Spend Management through AI with Pedro Franceschi from Brex

Hunting down receipts and manually filling out invoices kills productivity. This week on No Priors, Sarah Guo and Elad Gil sit down with Pedro Franceschi, co-founder and CEO of Brex. Pedro discusses how Brex is harnessing AI to optimize spend management and automate tedious accounting and compliance tasks for teams. The conversation covers the reliability challenges in AI today, Pedro’s insights on the future of fintech in an AI-driven world, and the major transitions Brex has navigated in recent years. Sign up for new podcasts every week. Email feedback to [email protected] Follow us on Twitter: @NoPriorsPod | @Saranormous | @EladGil | @Pedroh96 Show Notes: (0:00) Introduction (0:32) Brex’s business and transitioning to solo CEO (3:04) Building AI into Brex (7:09) Solving for risk and reliability in AI-enabled financial products (11:41) Allocating resources toward AI investment (14:00) Innovating data use in marketing (20:00) Building durable businesses in the face of AI (25:36) AI’s impact on finance (29:15) Brex’s decision to focus on startups and enterprises

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:05Sarah Guo?

  Hi listeners and welcome to No Priors. Today, we're talking to Pedro Franceschi, the co-founder and CEO of Brex. Since its inception in 2017, Brex has been building fintech tools that make employee and employer lives easier when tracking and paying expenses and beyond. So it makes sense that they're now implementing AI to make this process always annoying even more automated for their enterprise clients. We'll talk about that and the business overall. Welcome, Pedro.

• 0:29Speaker 01

  Glad to be here. Thanks for having me. Vegas, yeah.

• 0:31Sarah Guo?

  So just as a context, I think the vast majority of our listeners know, but for any new customers or potential ones, can you tell us what Brex does and what scale it's at today?

• 0:40Speaker 01

  Sure. Brex is a corporate card and spend management platform, and we help companies make better financial decisions and push every dollar of spend further. We serve companies from all sizes, from, you know, two founders out of YC all the way to, you know, large public companies like DoorDash's of the world, Coinbase's of the world, and everything in between. We have, you know, tens of thousands of businesses as customers. One in every three startups uses Brex today. 130 public companies are also in Brex. So we have this sort of wide range of customers, which means we're pretty proud to, you know, be able to scale of our customers from inception all the way to really large global scale.

• 1:23Sarah Guo?

  Recently, you and Enrique shifted from co-CEOs for a long time to solo CEO. It's an uncommon arrangement, and I think a lot of founders would love to hear any advice you have on both that and then how the transition has worked.

• 1:40Speaker 01

  Yeah, so I think for many years, we were the poster child of co-CEO success. So now, now it's changing that. Maybe we're, you know, just changing that pattern, I guess. But so for us, honestly, not a lot has changed in how we actually run the company day to day. So we had this co-CEO structure where Enrique was more external, I was more internal. And the reality is, at some point, we, you know, we've been doing this for really 10 years almost, since our Previous company in Brazil. And I think the learnings for us were at some point, you know, we massively simplified how we run the company over the past seven months.

• 2:19Speaker 01

  Streamlining, you know, layers of management, priorities, fewer decision makers. And, you know, there were a few decisions that, you know, there was a need for more clarity on how decisions got made. And, and even though Enrique and I, I think, figured it out ourselves super well over the many years as the company scaled and we started to getting a bit closer to a different level of maturity as a company, closer to being public and, and things like that. It became, you know, relatively clear that it would be good to go back to the traditional governance model of CEO and chairman. And we're happy about the change, but definitely changed about how we run the company, how we handle customers, how we talk to investors or anything. So it's been mostly a formalization of what's been true for a few years now.

• 3:04Speaker 02

  That's interesting because when I look at European AI companies, there's an increasing number of them that actually have the co-CEO structure. And often it's a very technical founder plus a more business centric or business background founder. And so that's companies like Helsing, H, like there's a couple of these actually, and it's some of the leading companies in European AI. And I don't know why it's so Europe specific. Obviously in the US there was Robin Hood and others where, you know, that a co- structure as well. But I find it striking that in Europe, it seems like a more and more common pattern. So it's just this kind of an interesting aside. Could you tell us a little bit about how Brex is starting to think about AI and some of the innovations and approaches that you're taking there?

• 3:41Speaker 01

  There's three big areas for us. One is the obvious, which is products. So how we come and improve the product and, and, and make the experience of essentially expense management better, right? And, and within product, there's two areas where we spend a lot of time.

• 3:58Speaker 01

  Accounting is one, and the other one is essentially expense assistant and expense management, basically what EAs would typically do. Second big bucket besides product is go to market and operations. So things that are very ops intensive internally, prospecting, KYC, underwriting, compliance, lots of use cases there. And the third broad bucket is developer productivity. So how we can help engineers be more successful. And there, I don't think we've done anything particularly remarkable in this third one because we're using the same tools that folks have used, GoPilot and things like that. We're experimenting with new tools, but I would say buckets one and two is where we spend the majority of time so far.

• 4:39Sarah Guo?

  Maybe even one step back from that, like at what point did you say internally at Brex, like I'm going to get up to speed personally on this or we're going to make this part of the product?

• 4:49Speaker 01

  Probably 18 months ago, I think right after ChatGPT launched, we started to just play with ChatGPT online and I had played with GPT-3, 38 APIs before ChatGPT was out. And obviously it was impressive, but ChatGPT was that moment that everyone started to think, okay, what does that mean for my business now? The mental model that I don't think is particularly unique that we have is if we were to think about humans that are free, what would we do? Turns out there's a lot of work in expense management and accounting that people would automate, right? And the one that was really obvious to us early on is if we think about what is the best customer experience when it comes to expense management and corporate cards is essentially what executives have, which is there is no experience.

• 5:34Speaker 01

  You just swipe and it's done, right? There's an EA in the background that will figure out how to get a receipt for that, how to categorize this expense, how to get it approved, right? I prototyped something on the weekend with in Python with GPT-3.5 on can we just get someone's calendar and use that context to generate a memo, categorize an expense and potentially find a receipt on someone's email? And the results were surprisingly good. And it took me, you know, probably, I don't know, 48 hours to get something working. And we tried in a few transactions. And then, you know, probably in a week, we had a team try to build that on a side of Brex. And I think, you know, that was sort of the original impetus of us trying to get some of

• 6:18Speaker 01

  these things out because we knew that it could essentially give this pretty amazing customer experience for everyone. And today, you know, we have, you know, roughly 30,000 customers on Brex that use Brex Assistant for expense compliance. And, you know, over a third of their expenses today are completed by Brex Assistant automatically, which is basically something that would require them for going immediately doing. And, you know, over time, we want to get this number higher, but it's, you know, basically a net new product that we build by just playing out of a model in the beginning, seeing what works and getting it out there.

• 6:52Sarah Guo?

  That's really impressive velocity, especially in an area where, you know, I like from other fintechs to those sort of traditional financial services companies, a lot of them feel like they cannot use AI because it is probabilistic and there's like risk and reliability issues. Like, how'd you handle this or get something into production relatively quickly?

• 7:13Speaker 01

  So for us, that is sort of the holy grail of AI and fintech, I would say, is like, how do you build this degree of conviction that what you're suggesting is correct? Right? And maybe it's interesting to talk about accounting, which is one that people are fired if the results are wrong. But basically, the way we thought of it is twofold. One is, how do we expose ambiguity to the user? Right? So instead of saying, hey, let me just try to predict something and put it in front of you and say, hey, you know, this is what we generated, you know, good luck. We thought it would be a much better customer experience if instead of having, for example,

• 7:57Speaker 01

  like, you know, chatbots are particularly bad at this, where, you know, a chatbot gives you something, an answer, there's no affordance, you can't understand other potential options that are generated, you can't understand context. So a lot of it is just like building ambiguity into the UIs and into the flows. And for example, like our expense assistant, when we're generating a memo, if we have really high conviction... In a suggestion, we can go and say, hey, this is what we strongly believe is the answer. And we automatically apply it for you. If we're not that confident, we show you suggestions in the bottom of like a field. And if we're not confident at all, we don't show you anything. And then probably the second bucket, which is really interesting, is how to use traditional data science on top of these AI models to build good results.

• 8:42Speaker 01

  Right? Because there was this phase when, you know, large language models came out where, you know, original data scientists were like, oh, my God, before, you know, I was the only one that knew how to do machine learning. And now everyone can do something that looks pretty good. And, and, and, and they were like, oh, what is my role in all of this? And, and obviously, I think as time matured, we, we going from my prototype in my laptop to something that works across 30,000 customers, you know, and, you know, hundreds of thousands of transactions a month, uh, requires a level of statistical rigor and analytics that I don't think most people appreciate. So over time, you know, those skill sets became really valuable in us scoring results from these models and understanding what is a good result. And understanding how users rank a good result, which is different than what we believe is a good result also.

• 9:25Speaker 01

  So I think there was a lot of that of like, uh, like solving for ambiguity into results and the quality of the results. And then the, the other thing that I think we, we spent a lot of cycles on is, is trying to think through how to, how to add and contextualize suggestions that AI provides into a workflow that already exists. Because I think, for example, if you're thinking about an accountant, right? I think very few people will be comfortable saying, hey, you know what? You used to categorize these expenses now by hand and, and enclose your books by hand. And now we're going to press this button and this bot's going to go in a corner and do everything. Very few people are comfortable with that.

• 10:01Speaker 01

  What people are probably more comfortable with is as we're going through a workflow, uh, if you're categorizing expense and we say, hey, uh, we noticed you did this same categorization three times. We believe there are 15 other transactions that apply to this. Uh, would you like to apply the same logic? Click here to review. And then it opens a nicely modal with all the expenses that are going to be affected and you can review. That's like a lot more palatable. So, so, uh, I, I think it's like the small things in like UI and, and these interaction patterns. That go really far. So and you know, I was I was looking at the metrics right before we jumped into this call. But we were looking at AI suggestions today and we have, using the strategy, we climbed to 80% suggestion acceptance rate on the accounting side today.

• 10:46Speaker 01

  Wow. And I think if I started by saying, you know, let's go from, you know, click here and we're going to close the books for you automatically. There wouldn't be enough trust in the platform to do that. And what happens over time is as people start just saying, okay, this is correct. I'm just going to click done. Then you can start, you know, building something that skips a step effectively. So I think it's something just that that gets user comfortable with the the level of ambiguity that these results can can provide.

• 11:11Speaker 02

  Yeah, there's really interesting historical precedents to this too, where I feel like with each technology wave, there's things that users have to get used to and also new UI to help navigate them. And so, for example, in the 90s, people used to be uncomfortable putting credit cards into websites. Right. The credit card number because they're worried it'll get stolen. And you know, there's other examples like that throughout history. And here, you always hear people really worry about hallucinations or ambiguity in AI output. And it'll both get solved from a technology perspective. But to your point, there's really smart UI things that you can do. How did you think about where to allocate time from a AI application perspective? Or how did you prioritize what to focus on?

• 11:48Speaker 01

  So for us, I would say the biggest driver was where can it create the biggest difference in customer experience? And and and again, unsurprisingly, we're pretty customer obsessed at Brex. And and for us, we were just starting thinking about what are the things that touch the largest number of people? And, you know, basically creating an EA for everyone that has a Brex card was a pretty high leverage initiative. And then obviously, accounting is something that every single admin on Brex does every month, right? Everyone has to close the books. So so I think it was very much, you know, thinking about just like impact and where can we lift the large number of hours in the system away from from these folks doing these things annually?

• 12:34Speaker 01

  I think then the other sort of side of the brain where we went also was, you know, what does it mean for us internally, right? Because at the end of the day, there's there's sort of two ways of, you know, cutting costs and automation and from customers and from us is obviously, you know, directly putting that in the product and enabling customers to save time themselves, but also what are the things that we can do internally to help us serve customers better, right? And that's sort of the second big bucket where we spend time on things like go to market, prospecting, demand generation and operations and compliance where a lot of the the brain went. I would say my original impetus was and was very product oriented.

• 13:17Speaker 01

  And then right after most of the times where we spent time was on the marketing side where we we had a lot of a lot of a lot of sort of early thinking to do there, given that not a lot of people were actually thinking about how to apply this on a B two B setting.

• 13:31Sarah Guo?

  If you were going to look at sort of outside of the product to, as you said, go to market and the operations intensive parts of the business, do you have like a rank ordering of like where you think it's going to have the most impact?

• 13:42Speaker 01

  In general, scaling marketing is is the biggest one. And the way the way I frame it internally to folks is like, you know, if you look at, again, the same framework applies everywhere, right? Which is just like, what would we do with infinite humans? And back in the day, if I think about marketing 10 years or 15 years ago, you and you were at like Salesforce and you were trying to close, you know, Coca-Cola or a really large enterprise customer, you literally had an account based marketing team where you literally have a PMM, a product marketing manager, working alongside with a sales rep to market to that account, right? They were literally creating a pitch deck, they're creating materials, they're creating, they're going to Coca-Cola and meeting the executives of like very specific pitch of

• 14:24Speaker 01

  like the value that Salesforce can provide and so on and so on. And really, the way I think about it is like, there is a world now where you can generate effectively account based marketing for any accounts, because the cost of doing that is is marginal, right? So. The way we think about this is like, how can we prospect across accounts that never got the level of personalization and that level of care with a lot of these tools? And really, in a really specific way, provide value to these accounts in ways that we couldn't provide before. So, you know, for example, one of the things that we have done in the past is, you know, we're pretty, we started to, this year, to quantify, literally, how much value customers

• 15:09Speaker 01

  get from Brex. So, you know, effectively, how many dollars have helped them control spend, how much dollars they own budget, you know, how many hours they save, how many dollars they save, right? And over time, we were able to start being a lot more rigorous around, you know, folks in these industries, in these verticals, folks, companies that have these characteristics, companies that are global, for example, right, tend to have a lot more affinity and get a lot more value from Brex. So, you know, now we can say, you know, hey, X, Y, Z company, we know that your peer in your industry is actually using Brex, and they also have a lot of global employees just like you, and, you know, if they don't pay any FX fees because they use Brex for doing this on a global scale, right?

• 15:51Speaker 01

  And this level of personalization is something that an SDR, for example, if they're just trying to outbound email someone, they would never be able to come up with. And a lot of the challenging part of what we're doing now is how do we build the systems that allow you to think of demand effectively as a system, where, you know, you're basically tracking your entire TAM in your own systems, and then effectively thinking how to target each account in a way that is highly relevant to the value they can get from Brex. And a lot of the content and a lot of the insights and a lot of the things that allow this to happen is effectively, you know, large language models because you can process not only a lot of structured data. So, for example, is there any job postings about this company hiring somewhere else?

• 16:35Speaker 01

  Or even, you know, whenever I go write an coded email to an account, like, can I, how do I write something that's relevant to them? And so on and so on. So that's like a big area where we're spending a lot of cycles on now, and we think there's like a lot of lift in terms of just creating a new playbook that hasn't been possible before.

• 16:52Sarah Guo?

  Yeah, I think that's really compelling because there are, and I'm not saying that these things are not valuable, but I think they are quite commoditized. There are many companies that are doing some version of like... Email generation that can plug into an existing email orchestration system.

• 17:09Speaker 01

  Yep.

• 17:10Sarah Guo?

  And they'll call it AI SDR and maybe they'll like plug into LinkedIn, right?

• 17:14Speaker 01

  A lot of those. We've tried a lot of those.

• 17:16Sarah Guo?

  There's a lot of those. You know, what that means is there's it's very commodity. And not very different from like one overworked SDR sending a spam campaign themselves, right? But what you're talking about requires like much more insight into like, what is a demand signal? A value signal, like specific data that Brex itself has to collect because it understands that signal and wants to meet it now. And so I think like that should be much more powerful.

• 17:44Speaker 01

  A hundred percent. There's this book like Crossing the Chasm that is like a kind of classic go to market started book. And it talks about this idea of like, what is the definition of a market, right? And a very important concept is the idea of a customers that can reference each other. So like it's not, you're not really in the same market if this customer can't go talk to this other person about your product. And here's something, right? You know, like, do they know someone that uses it? And effectively, like, I think now there is this ability of creating like almost an infinite number of markets. Where effectively like, you know, I want to create a market of like construction companies in Missouri. That, you know, are high spenders on card or, you know, they have complicated accounting needs, they may leverage Brex.

• 18:27Speaker 01

  And, you know, you can essentially like outscale your ability of doing this with humans in a way that you probably wouldn't be able to do before. And, and to your point on the, a lot of the tools doing that. The writing the email is the easiest part. It's actually not that hard. The part that is the hardest is aggregating all the data. And essentially building this, this database of your whole team. Like who is every account in the market that could buy Brex potentially? And what do we know about them? And how do we enrich them with signal that doesn't necessarily exist out there yet? That, you know, could give us a higher likelihood of converting those accounts.

• 19:09Speaker 01

  And, and I think the interesting thing there is, which I actually think is why this is really net positive is ultimately, your outreach becomes so much more relevant.

• 19:20Speaker 01

  That people don't actually treat it as spam because like it doesn't like, you know, at the end of the day, marketing is all about alpha, right? You want to be doing something that you are out, you know, you're being more relevant than someone, you're being effectively more specific to someone's pain points. And I think the degree of personalization that you can achieve now, when it comes to pain points, customers, you know, understanding of your business and specific things that are going on in your life as a company, I think is materially higher. So I just think there is, a lot of the work is the database. And AI helps you actually build the signals and write all the email, but the actual hundreds of tools that help you compose emails with AI are not that relevant to this specific problem.

• 20:02Sarah Guo?

  One of the challenges, the thing you're talking about feels like a very, it's a pretty big technical effort, right, to do this data consolidation. And I think that there's a prior generation of go-to-market infrastructure that will become less relevant.

• 20:19Speaker 01

  Oh, 100%.

• 20:20Sarah Guo?

  Because it doesn't support like the scale, intelligence of like, okay, I want all of these first and second and inferred third-party signals. The way I collect that signal has to be very conscious. I'm going to do it, I'm going to do intelligent analysis with LLMs in order to interpret that signal. I do think that it is a big strategic advantage for companies and then a big infrastructure project. And most, many companies will be unable to do it internally. But it is an advantage for anybody who does build it.

• 20:47Speaker 01

  And we had to build it internally. I mean, we effectively built our own customer data platform for this because it's, you know, you just can't use Salesforce. I mean, the tools just don't really work that way. You can't ingest a signal in the way you would want. And really, like, a lot of the alpha comes from the edge cases, right? So like, if you can just source this data through like ZoomInfo, for example, and just put it on Salesforce, everyone would be doing it. The alpha comes from what are the signals that you can gra, that you can gather that no one else is looking at. And because no one else is looking at, no one is reaching out to those people that way. And therefore, it's extra relevant for them to do this in a really specific way. So I just think a

• 21:29Speaker 01

  lot of the marketing playbooks are being rewritten. And composing the emails or the ads is actually the easy part. It's just the signal that you need to even write a prompt that we spent a lot of time figuring out to grasp.

• 21:44Speaker 02

  Yeah, I think one of the really cool things about Brex is that there's ways that AI can accelerate your business. But then there's also a lot of parts of your business that are very durable and robust in the face of AI. And I think these sort of AI durable businesses are increasingly valuable because you can't use AI to just directly attack what you're doing. Could you talk about the pieces of your business that are less impacted by AI or that you feel are really durable in the face of that?

• 22:06Speaker 01

  You know, people yawn at this, but you know, when we started Brex, the number one feature people talked about back in 2018 is that you could go to our website, sign up and get a card instantly. And we were the first financial service company on the planet that allowed you to instantly onboard and get a corporate card or literally a virtual card number that you can just swipe. And you know, I, I, there's this sort of the Jeff Bezos thing of, you know, what are the things that are not going to change in the next 10 years? And I think something that's not going to change is if we're still going to move money. And that is unlikely to, to go any, anywhere, anytime soon. And, and you know, there's crypto and, and you know, we, we're bullish on that. And there's a few things we're doing on that space.

• 22:49Speaker 01

  But I, I think the fundamental thing is at the end of the day, especially when complexity adds up on the money movement side, that is the sort of underpinnings of all this our software does. And, and the way, the way, you know, I sort of explain our business to new hires at Brex is, you know, fundamentally, the reason this business makes sense is because back in the day, you used to have, you know, your money moving on this side and that's where the banks were and all that. And then you have your software on the right side, which is where your controls were. And what we did at Brex is we just said, let's just do these two things in one. And, and when you do these two things in one, you have a lot more control and all that. And the software side, AI is going to change and make great. But the money movement is, is, is still, you know, challenging, especially when you,

• 23:34Speaker 01

  when you get at scale. So one example is like, you know, a lot of like large public companies, and we just closed a $100 billion market cap public company a couple of, well, a couple of weeks ago.

• 23:45Speaker 02

  Congrats.

• 23:46Speaker 01

  Thank you, thank you. We have 130 public companies on Brex today. And one of the main reasons they signed up for us was because they need a card that works globally. They have, I think they operate across 20 markets, 20 countries. Countries and they need to pay their card in local currency, settle in local currency. And the way we build our financial infrastructure, we don't rely on Stripe or Marketo or any of these vendors. We literally go straight to the metal and do the money movement directly with Mastercard and local payment rails. Allows us to do that at a really large scale. And that's the reason they signed up for us. And that has nothing to do with AI and it effectively becomes a really good mode for us to then go and build a great software business on top.

• 24:28Speaker 01

  But these boring things are really a lot of the value. The other thing which is interesting, which relates to AI in this parts that are not necessarily as sexy as a software is there are a lot of things there that are incredibly labor intensive. So for example, like compliance and understanding, you know, monitoring a business and understanding, you know, whether that business has any compliance issues. So, you know, one of the things, for example, that we use a lot of AI for is adverse media monitoring. So if a company has any news that they're doing something that's potentially shady or illegal, we need to act on that and companies have an obligation to monitor that. And which really meant that companies didn't really do it because it was really hard to operationalize at that scale.

• 25:13Speaker 01

  And we actually have one of the most robust programs now, I think in the country, on doing that because we started to apply AI there. So even that part has some AI, but I would say at the end of the day, money movement is money movement, so.

• 25:25Sarah Guo?

  Maybe if we just like expand out from that a little bit. How do you think AI changes like finance even beyond Brex's immediate plans?

• 25:34Speaker 01

  Yeah, I think, I mean, it's

• 25:38Sarah Guo?

  We're still moving money, but you know, is there, is there impact?

• 25:41Speaker 01

  Yeah, so we talk about this idea at Brex of like, there's like roughly three horizons in which we operate. And horizon one is like corporate cards, that's where we started. Horizon two is what we call total spend, which is the idea of how do we monitor every dollar spend, even if it's not on card? And bring that under our platform. And then horizon three is what we call continuous finance. And really the idea there is like, what would happen if you had this real time visibility into every single dollar that flows in and out of your business? And effectively like

• 26:15Speaker 01

  The way I think about it is, you know, what finance teams are doing at the end of the day is a reporting job. You're reporting to shareholders, you're reporting to your business internally. And you're trying to aggregate and make sense of data that exists in all different sources and all different places. And a lot of the work of essentially accounting is a data cleanup job, right? You're basically getting data from these different sources and trying to make sense of it and categorize it. And of course, you know, it's one that there are very high, you know, legal requirements and accounting requirements to be correct. But I think there is going to be a lot of new tools that will get built.

• 27:00Speaker 01

  And we want Brex to be that, actually, which allows you to have this very different degree of understanding of your business. When you effectively have all of what accounting and finance team does happening in real time. And I think once you start having that level of visibility into your business, like, you know, I kind of joke about this today, which is like, you know, if you go to a finance, if you go to a CMO in any company and you ask them, hey, how are you doing against your budget today? They can tell you. And the reason is because there are things happening in corporate cards, there are things happening on invoices, there are people traveling all over the map, right? And all this data is in these different systems. And then someone has to go clean it up by hand, you know, normalize it, put it into a database, which people call an ERP, and then make sense of it.

• 27:45Speaker 01

  And I think as you bring a lot of that data with, you know, assuming AI will get there and essentially operate with human level performance, you won't need anymore this concept of a ERP. And then you effectively have sort of this real time layer into what's happening in your business and be able to understand the data. In much more granular ways across all these different data sources that today require people to to clean it up. So that's that's that's effectively what we're building. And I think AI is is enables a lot of it. But that is that to me is the biggest thing. And of course, there's insights, of course, there's things like that. But I think fundamentally, a job of finance team is to understand what's happening in the business and report it and help the company make better financial decisions.

• 28:28Sarah Guo?

  I mean, you're you're you're trying to change the sort of core cadence of how business operates then.

• 28:34Speaker 01

  A hundred percent.

• 28:34Sarah Guo?

  If you're moving away from this like quarterly close and planning cycle and you know, if that's true, that's pretty big. That's very cool.

• 28:40Speaker 01

  That is effectively why we call it continuous finance, because you know, it's companies today operate the same way software companies operated, you know, 20 years ago, which is you have like a yearly release cycle, release software once a year. And then, you know, you you get a CD or whatever, and then you use that software. And then that's effectively how finance teams operate today. You do your plan once or twice a year, you, you know, put that in put it in stone, and then people operate using that plan. But you have new data every day. And that's not being used to to make your plan better. So continuous finance is effectively the continuous deployment, I guess, before finance teams, which is not possible.

• 29:15Sarah Guo?

  Several years ago, you all announced that you would no longer be serving like SMBs and focusing more on startups that were going to be high growth and enterprises. That's not like an easy decision, right? So I'd love to hear more about how you made and implemented that decision. And then, you know, obviously, the big enterprise piece is going well for you. But what what learnings would you offer other companies and founders making decisions about not serving certain customer segments? And any anything you would have done differently from the beginning or not?

• 29:43Speaker 01

  You know, it's that that old saying, you know, you can be anything, you just can't be everything. And and and I think we we had this this moment at Brex where we were just growing across all segments. And we said, you know, we can do it all. We can serve small businesses, we can serve in market companies, enterprise, startups, etc. And and I think the reality is like, you know, I think Focus is what gives meaning to your choices. And I think the fact that we were spreading ourselves across all these things meant that we were not deliberate about what we wanted to be world-class at. And I think we did an okay job across all these segments, but that wasn't the goal. And I think we had this moment of saying, where do we want to be world-class?

• 30:26Speaker 01

  And ultimately, the way we made the decision is by saying, what is the customer-focused thing to do? And for us, ironically, it was going enterprise because our customers are going there. So, for example, Scale AI, which I'm sure you all know, I met Alex when Alex was five employees in his office. And I went to physically deliver cars to his office. And then now we're five, six years later. And Alex is a massive company with a CFO and a global presence and with compliance needs and all of that. So for us, we had to scale with our customers, and which made the decision somewhat obvious that we had to go up-market with them as they continued to mature.

• 31:09Speaker 01

  And we knew that for us, a lot of the value of the company ultimately would be in our ability to stick with a customer and scale with them as they mature. So that made the decision easier. So I would say focusing on the things that... If you don't focus on fewer things, you're just going to do all of them poorly. And that happened to us very clearly. And the second one is just a really high degree of customer obsession on where can you truly be differentiated and continue to bet on the people that bet on you? And that's ultimately how I made the decision. And it was painful. We bite the bullet and unfortunately fired 20,000 customers. But it would not have allowed us to be where we are today if we hadn't done that before.

• 31:54Sarah Guo?

  Was the product for those 20,000 customers different? Or the go-to-market motion? Or simply it was attention that was the problem?

• 32:00Speaker 01

  I think there were differences for sure. But the biggest thing was leadership bandwidth. I think there's this belief that what bottlenecks a company is your headcount or your team size. And the reality is, I actually think it's not the chase. It's how many things your leaders can spend time on and do well. And we just found ourselves spread across four different segments that were completely different. And we just couldn't ever make the trade-offs work. And then at some point, we just decided to... You know, do fewer things and, and, you know, eliminate one and, and that's, that's how we got to it. But, but it was leadership bandwidth at the end.

• 32:37Sarah Guo?

  Well, I love that this conversation was as much about, uh, you know, complex decisions and hard decisions as AI. Though both are, both are amazing.

• 32:45Speaker 01

  Thanks so much for joining us. It's really good to have you on. Glad to be here. Thanks for having me.

• 32:50Sarah Guo?

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