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Brex founder here. We've made the difficult decision to no longer offer services to the small business market. Back in April we launched Empower, and we decid

• danial 4y ago
  I was in the middle of transitioning my existing account to Brex. I have many things to do and so this lower on my priority list. I'm glad I was only in the beginning of the transition and that I hadn't moved over completely. While I wasted a few hours of my time, nothing near what I would have wasted if you had pulled this on me later. Good riddance. I dodged a bullet.
• duped 4y ago
  How do you distinguish between a tech startup and small business? Not to doxx anyone but I'm familiar enough with the financials of several businesses that would call themselves either depending on the context, and the only meaningful distinction I can think of is venture funding
  • draw_down 4y ago
    Growth rate
    • cvccvroomvroom 4y ago
      Yeap. Small businesses will likely stay small because the key differences are in the founders' mindset. Both can start out at leveraged brokeitude.
      • cto_of_antifa 4y ago
  • localcrisis 4y ago
    bank account. tech startups have huge balances compared to lifetime
  • paulcole 4y ago
    When I want to sound cool I say I work at a tech startup. When I want to sound likable I say I work at a small business.
    • lewisl9029 4y ago
      Haha this is awesome! Totally gonna steal this for the next time I want to be liked. :)
  • friendzis 4y ago
    Those are orthogonal classifications. Startup is an early stage company, bootstrapping income/revenue flows. Small business is well... small, usually in terms of money flows and number of employees. In contemporary usage "tech startup" usually means an early stage company expected to relatively quickly grow their money flows and have high opex-to-capex and incoming-to-outgoing transaction ratios.
• anonymouse008 4y ago
  So current costs vs. revenue mean you can't service your current customer base? Specifically, the customer base that punched the growth numbers to achieve many millions in funding?
  • eins1234 4y ago
    I would guess they probably found that the "small business" segment of their customers ended up contributing to a disproportional percentage of fraud, support requests, etc, to the point they were net negative? Though I still wonder if they considered just closing off to new customers instead of closing accounts of existing ones, since the fact that the latter would blow up in a nasty PR nightmare like this and do massive damage to their brand was pretty foreseeable.
  • deleted 4y ago
    [deleted]
  • Rastonbury 4y ago
    Charitably for Brex, if I am to guess the decision was not taken lightly, it possible the company cannot raise as much as it hoped, is running out of runway and has to cut costs and this is how its doing it - by downsizing, possibly layoffs in post-Aug
    • tadfisher 4y ago
      They've raised $1.5 billion in 12 rounds. I don't think this decision is due to a lack of funding; in fact, I think so much funding has significantly encouraged it. Unit economics and customer acquisition costs/lifetime total value become a lot more important when you're leveraged, doubly so with a recession looming.
  • wombatpm 4y ago
    Always a sign of questionable strategy when step one is fire your existing customers.
• deleted 4y ago
  [deleted]
• sam0x17 4y ago
  AKA they lose money on smaller customers to customer support requests and most likely wire transfer fees since they offer wire tranfers for free. They almost definitely lost money on my LLC I bet they only made $5 in interest after a year and probably spent $100s investigating my various customer support requests. Plus I made several thousand off of their rewards program. So yeah, bummer, but it makes sense. It's too bad I'd be willing to pay like $100/month to keep my account going.
  • deleted 4y ago
    [deleted]
  • moneywoes 4y ago
    This is it, a biz would never remove a customer otherwise
  • chii 4y ago
    > It's too bad I'd be willing to pay like $100/month to keep my account going. they probably would still lose money off you even if you paid $100 a month, given what you've described.
  • mousetree 4y ago
    They make money on the interchange too. When you're spending on your card, they're making money. At least for their credit cards, no idea how their cash/banking product works. Source: We're a neobank too (and we use Brex cards for company purchases)
  • sam0x17 4y ago
    Edit: very disappointed to see Mercury denied my LLC as well. I guess they don't care about small businesses either?
• MaxGabriel 4y ago
  > We're doing all we can, and working with other financial service providers to make this transition as smooth as possible. The biggest thing for us would be if you could support Plaid's Identity product by returning names and emails when someone links a Brex account with Plaid. When someone links an account using Plaid, having this data available means we can compare that to the names/emails we have on file and have verified. If it's a match, this makes it _dramatically_ less likely someone is trying to commit ACH fraud against a Brex customer. This makes it safer for us to offer higher ACH pull limits to that customer. Even for customers who never switch away from Brex, this would significantly increase protection from ACH fraud. - Max T, CTO Mercury
  • xur17 4y ago
    I just wanted to say that I absolutely understand why you prefer users to use Plaid's identity product (the startup I work at does this as well), but I HATE that it's becoming the standard way to link checking accounts. Both from a data sharing perspective, and from a training users to enter login information into random forms perspective. There has got to be a better way for us to accomplish this.
    • MaxGabriel 4y ago
      > There has got to be a better way for us to accomplish this. One path forward is Oauth, which several major institutions use on Plaid (Capital One, Wells, Chase are ones I know of). This definitely solves “entering login information into random forms”. I’m pretty sure I have seen these institutions offer you some control over what data you share when you link, but it was minimal control, and didn’t work well. Ideally that would be more fleshed out. You’d still be sharing balance and transaction data with Plaid though, that part isn’t solved by Oauth. I think to solve that you need to have a European style standard banking API that makes direct bank-to-bank data sharing tenable?
      • ncallaway 4y ago
        There should be a law for this. The EU as an open banking API law, that requires banks to make this data available electronically over an API. The US needs an open banking law. This should not be an optional feature for banks to offer. It should be an absolute requirement. I think it's insane to enter your credentials into Plaid. Almost every banking agreement I've ever seen disclaims liability if your account is breached because you shared your password. So, if you share your password with Plaid, and Plaid is breached, and someone uses your banking credentials to drain your account, I think a bank could wash their hands of it and walk away in that situation. I'm sure the Plaid engineers are great, and that their data is stored securely (and maybe they don't store the password at all in there systems). But I'm not willing to bet my entire bank account on them being perfect.
• perrohunter 4y ago
  how hard do you think it will be for all your customers to move out in 2 months?
• axg11 4y ago
  Why do this rather than offer customers a chance to continue service at some higher cost?
  • duxup 4y ago
    Perhaps they know they can’t offer a cost that makes sense / is competitive for those customers and would rather devote resources to a product that is competitive?
    • axg11 4y ago
      Why does the cost have to be competitive? Price it at a level that covers all costs. If the price is uncompetitive, 99% of users will not take it, however, that 1% that _really_ need to continue using Brex (for whatever tail reason) can continue to until they're ready to migrate.
      • true_religion 4y ago
        It’s always bette for your reputation to cut a product entirely, than to come back and say it’s $1000 per support ticket when support tickets were previously free.
      • moneywoes 4y ago
        Would it be bad PR? Then it could also make enterprise customers worry about the same happening in the future. Love these strategy discussions
      • duxup 4y ago
        Because you want to make a product that doesn't look silly / is worth all the effort to maintain it. Having an noncompetitive product means fewer and fewer customers so the cost keeps going up per customer. It also looks really bad. I know when I'm shopping around if I see sticker shock for some service even when it isn't exactly what I"m buying that is a big turn off for me as I assume that's how they price things ...
      • ZWoz 4y ago
• ss3000 4y ago
  I have an LLC on Brex, but haven't gotten an email yet. I'm not sure if that means if I'm in the clear or if the email just hasn't rolled out yet. Would be great if you could send an email to _all_ customers, including the ones who weren't affected as a reassurance, so we could either rest in peace or get the migration started ASAP.
  • cbreynoldson 4y ago
    Have you logged into Brex? I didn't receive an email, but got a notification in the website.
    • cycomanic 4y ago
      That is ridiculous. I think closing down someone's account especially if there is still money in it warrants registered mail (even email is not sufficient) and definitely not a note on the web page.
    • raverbashing 4y ago
      For real? Communicating such business impactful decision through a pop-up is ridiculous Older banks may have lots of problems, but they usually don't get those fundamentals wrong
• tomc1985 4y ago
  As someone who got dumped when Crashplan decided to no longer offer service to individual users, regardless of the business realities, this is a universally shitty thing to do to your supporters. Why should anyone do business with you if you might pivot away from them (on such short notice, no less) in the future?
  • cvccvroomvroom 4y ago
    Yeap. It's sends out bad karma. If the estimated total net profit % per user is low single digits, keep them like "white elephants" or move them somewhere else where they can be serviced with continuity. Pulling the rug out from under customers with little or no warning is a terrible practice.
• mizzao 4y ago
  Mmm... if we're an early-stage startup, is that a small business? And if the answer is no, then does that mean if we're not growing fast enough / raising money fast enough, you will kick us out? Please clarify.
  • aaaaaaaaata 4y ago
    ^
• SmellTheGlove 4y ago
  Seems like the right thing to do is to stop signing on small businesses but continue to serve the ones you’ve already committed to.
• KennyBlanken 4y ago
  > We've made the difficult decision You hear that? That's the sound of my eyes rolling. Dude, stop saying cringe shit like "we made the difficult decision." You dumped your least profitable customers in the gutter. > We know how changes in financial services can be disruptive – especially in a moment like now. We're doing all we can Like giving people two months notice? Seems like a perfectly calculated move: be a jerk to a small number of small-fry customers so the rest of your small-fry customers freak out and leave on their own accord and have much less negative stuff to say about you. You're going to kick out some people that end up succeeding big. They will never forget what you did to them, and they will go out of their way to tell others about it. You should have just changed the bennies for accounts under a certain size, instead of booting accounts and making even a small number of people enemies.
  • parkaboy 4y ago
    I'm one of those people who got similarly jerked around last year (https://news.ycombinator.com/item?id=31774174 https://news.ycombinator.com/item?id=31774174)
• Aeolun 4y ago
  > We're doing all we can Except, you know, not kick people off your platform.
• bradgessler 4y ago
  I don’t understand why you’re still not laying out the new criteria for being a Brex customer? It’s a wasted opportunity. Whoever approved this communication squandered a chance to reframe what Brex is now about. Had the announcement said something like, “what’s the new criteria? $1m deposits … blah blah blah … we actually lose money on smaller customers … yadda yadda … it’s not sustainable”, you could have established yourself as transparent with a tough choice that you had to make. People can understand that. Instead you post platitudes like “We’ve made the difficult decision” with nothing substantive and are establishing Brex as cagey, opaque, and unnecessarily defensive. Not a good look for your banks existing customers. Now you’ve got a PR mess on your hands to clean up. Please consider a transparent postmortem on this blunder instead of doubling down on more corp PR speak.
  • retcon 4y ago
    >I don’t understand why you’re still not laying out the new criteria for being a Brex customer? In a bygone era I'd have suggested that shame came into it. It's because you can't convince anyone you're competent whilst acting up like this.
  • retcon 4y ago
    >PR mess on your hands The idea that this doesn't require face to face handling simply chills me to the bone. Is this how we're preparing for the worst economy in fifty years? edit: PR used to begin with word of mouth. Just because we're online doesn't mean you can sh*post excuses and be done.
  • bradgessler 4y ago
    After reading a few articles about how poorly Brex has handled this, I learned the Chief Communications Officer had 12 years of formative experience at Oracle (https://www.linkedin.com/in/karen-tillman-776a08/ https://www.linkedin.com/in/karen-tillman-776a08/) and since worked at only large corps. That would explain the heavy corp speak and complete lack of transparency. I don't expect them to budge or concede on any of this since the playbook is double-down, deny, and let it blow over. Blah. I'm moving my funds out of Brex and will never bank with them. If you're in the same boat transferring founds out, be sure to leave a penny in your account and take a look at: - https://www.mercury.com https://www.mercury.com for small business banking. This is who I bank with now for small accounts and it works great. My only complaint is they don't yet have a credit card product, which makes purchasing online slightly riskier since debit disputes are harder than credit. - https://www.airbase.com https://www.airbase.com if you're looking for Brex Empower that doesn't have a track record of pulling the rug out from under people and need to control spend, etc. I've had experience running millions of dollars through Airbase and its great. No complaints. They're also great at responding to the needs of users.
• gjs278 4y ago
• blitzar 4y ago
  Why Brex? [0] > Brex makes it easy for founders, finance teams, and employees to spend smart, grow fast, and enjoy the ride. Maybe you should pivot your (customer) marketing material as well as your pitch deck. [0] https://www.brex.com/product/ https://www.brex.com/product/
  • redisman 4y ago
    They were marketing hard at one of the coworking spaces I was at which was full of tiny companies that didn’t make Much revenue . Couldn’t they figure out the math doesn’t work out prior to doing all this work and then backtracking ? I’m guessing they were just chasing vanity metrics for a funding round
• nicbou 4y ago
  What language is this, marketing? I can't be the only one who finds these heavily sugarcoated weasel words annoying.
  • agluszak 4y ago
    You're not the only one. But I find it very sad that so many people don't mind such PR-ese non-apologies and damage control
  • AvocadoPanic 4y ago
    May the guillotines feast until this language is is no longer spoken.
• mongol 4y ago
• chews 4y ago
  Your “partner” bank ratcheted account minimums upward. It’s no longer profitable in a modern inflation scenario to service the accounts you built your business on. Bankers be hankering for more bankering.
• retcon 4y ago
  What were your reasons for attempting to sell your services to smaller businesses in the first place? You have made decisions capable of inflicting tremendous pain on entirely innocent people eg employees. How are you to be believed that you will not randomly hurt more people? Buddy this isn't PR this is proving you're not a dangerous child entirely before you defend your job.
  • michaelt 4y ago
    > What were your reasons for attempting to sell your services to smaller businesses in the first place? People don't change banks very often - a lot of banks offer child and student accounts because they know a decent % of people who bank with them at age 15 will bank with them at age 35. Perhaps their intention was to get in early at 3-person companies that were on their way to becoming 300-employee companies; but they actually found a bunch of 3-person businesses like barber shops and food trucks signed up.
  • joshribakoff 4y ago
    They were trying to execute the principles in “the innovators dilemma” by acquiring customers while they are small and helping those businesses grow. I speculate that the sudden pivot came from the VC investors not the founders. First the drive for profitability most likely stemmed from emerging competition like ramp, and the now with growth stocks losing momentum and the credit market drying up, the VCs have more leverage to run things the way they want.
• ludwigvan 4y ago
  > This has been an incredibly difficult decision for me Could you elaborate on the “incredibly difficult” phrase? What pain did you go through to make this decision? Do you mean this is a risky move for you?
• tzs 4y ago
  > Back in April we launched Empower, and we decided to put the full weight of Brex towards building the best global payments platform for tech startups and larger companies. The "larger companies" part is surprising to me. I would have expected that larger companies have already figured out good ways to handle global payments. Global commerce by large companies has been common for decades and so I'd expect there would be large, efficient, well established services supporting that. It is smaller companies being able to participate in global commerce that is still fairly new, and I'd expect that many of the older global payment services that served the larger company's global payment needs aren't designed to scale down for smaller customers. Thus I'd expect that global payments for smaller companies is where the opportunity lies.
• b33pr 4y ago
  As a startup CEO that uses Brex and hasn’t been kicked off I have to say that I’m strongly considering self-evicting. What a shitty way to handle this.
  • jmcwjmcw 4y ago
    Same, I am presuming that they will be kicking off all startups at some point so may as well move now.
  • bjacobt 4y ago
    Same here, looking at alternatives
• blagie 4y ago
  Brex non-customer here. 1) If I were doing due diligence on a vendor, and ran across something like this, I wouldn't buy from them. It's unlikely to come up (I've never done due diligence on a CEO), but if I learned a CEO had pulled a stunt like this, I wouldn't buy from a new company. 2) Actions like this bias my judgements to the entire buy vs. build decision, and the SaaS space. My experience is that each time a service provider pulls something like this, the cost is higher than any net benefit from having worked with that provider. There are exceptions. There are vendors with long track-records of stability. I happily use AWS, and would happily use Azure. But I don't do business with Google because of a history of stunts like this (several affecting me), and I avoid small startups for anything business-critical for the same reason. In finance, stability is especially key. In the same way as firing employees impacts the morale of existing and potential employees, firing customers does the same.
  • Invictus0 4y ago
    I can't stand comments like this, pointlessly berating the CEO when you're not even a client. This is a forum for startups: startups frequently pivot in their search for product market fit. What do you expect him to do, have the company go under to maintain an unprofitable business segment? Have a layoff to cut costs? Who would that benefit? Guess what: if every time a CEO writes a comment on this forum, angry-for-no-reason people show up to hurl vitriol at them, then eventually they will stop showing up to write comments. Stop it.
    • ouid 4y ago
      >hurl vitriol. This is criticism and advice. It is not this forum's job to tell people that their ideas are good and their business models are sound when they arent. It seems like the claim is that it is a worse idea than you think to fire your customers.
      • blagie 4y ago
        That's the exact claim. It's not a pure calculation on individual customer ROI. In most cases, grandfathering in existing customers (keeping in mind I'm not one of them for Brex, so have no axe to grind) is simply good business. The reputational benefit far outweighs the cost. The flip side is that if you are evaluating vendors, this kind of stability is worth looking at: - Do they have a track record of customer-disruptive pivots? - Are they structured (e.g. have revenues or funding) to be around for the long-term? Or might they disappear overnight, taking your business down with them? - Are you being subsidized for growth? Do you expect for this to flip to being a cash cow at some point? The wisdom when I was younger was "No one got fired for buying IBM." It annoyed me at the time, but having done a few ventures, I understand that wisdom now. It takes 10-20 years for a unicorn to exit. If you have a dozen vendors who are positioned such that a pivot on their side can cripple your business, and those vendors have a mean time between such pivots of 5 years, you won't last long. With both employees and vendors, a good thing to look at is history of value-creation. If an employee created value everywhere they've worked, they're probably a good hire. If they've burned value at each place they've been, they're probably a bad hire.
• bradrydzewski 4y ago
  while on the topic of business focus, is Brex still in the restaurant business? https://www.sfchronicle.com/food/article/Multibillion-dollar-startup-Brex-opens-a-14432276.php https://www.sfchronicle.com/food/article/Multibillion-dollar...