Brex, on building the all-in-one finance for businesses
💡JC's Newsletter #98
Dear friends,
In JC’s Newsletter, I share the articles, documentaries and books that I enjoyed the most in the last week, with some comments on how we relate to them at Alan. I do not endorse all the articles I share, they are up for debate.
I’m doing it because a) I love reading, it is the way that I get most of my ideas, b) I’m already sharing those ideas with my team, and c) I would love to get your perspective on those.
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💡Must-read
👉Henrique Dubugras (CEO of Brex) - Building the Financial Center of Gravity (Join Colossus)
The vision is basically, all-in-one finance for businesses, and what that means is integrating financial services, so traditional bank products like credit cards, business accounts, lending with traditional software products such as expense management, bill pay, payroll.
➡️ We are the all-in-one healthcare (one-stop-shop) for our companies
We have great partners for some of these things today. If we find a great partner that works really well with us, we're happy to do that. If we don't find a great partner, we'll build it ourselves in an integrated way. But we want to create this single place people can go to manage their finances.
➡️ Interesting to see how they approach partnerships. I tend to focus on building ourselves.
A dynamic model instead of a static model. A dynamic model means that we re-underwrite every business every day. Every day we're getting new data about the business and we're making the decision.
➡️ What would dynamic mean for us? For your business?
A core premise of Brex is we're going to rebuild all the infrastructure from scratch. We're not going to rely on any legacy technology from anyone else. It took us a while to launch because we had to rebuild a lot of that infrastructure from scratch. By infrastructure, I mean, hey, the KYC engines.
AML risk models, the core ledger to know how much is the balance. The authorization system to see which transaction can go through, which transaction can't go through. Fraud systems to detect which transactions are fraudulent.
We basically rebuilt everything from scratch, and that took a long time, but it's what allowed us to innovate.
➡️ About the importance of rebuilding the full stack. It is what we need for our claim management system, leading to incredible outcomes for our members and our scalability.
We have very, very aggressive outbound sales from the very beginning until this day.
➡️ Their growth is mostly outbound.
People after they joined Brex, they love all of our software features but a lot of times when you're signing up, you're excited about the rewards, you're excited about the limits.
The thing that gets you in the door is typically not even the thing you buy or ultimately care about or go back for, but you need to get somebody in the door. Simple and attractive and unique is good.
➡️ How to simplify marketing & sales?
The hardest decision that we've made was building cash for our business account.
We diverted all the resources and started building it. Honestly, man, it took twice as long, three times as many people, it was a lot harder than we expected. But it works really well now and it's growing really, really fast and I don't regret it one inch, but it was probably the most non-obvious decision we had to make.
➡️ I love those hard decisions that make a big difference. When you invest a lot on something you believe matters, where the competition would stop, and you keep going.
I think the most important thing for us is have a talent first culture, which is adapt your processes, adapt your stuff in order to have the best talent. I think a lot of times HR teams come in and they want to standardize everything and they want to make everything a process because it makes their life easier. I don't know, our head of people has been amazing about this, that he doesn't let administrative burden prevent us from doing the decisions that are the best to recruit talent.
➡️ Very connected to our work from anywhere policy.
We're making decisions at Brex today that we think are going to be valuable in 10 years." If I don't think in that horizon, I'm not going to make those decisions. Then the things that take a long time and a lot of effort is what changes the world.
➡️ We love spending time on our strategy and its impact 10 years from now. Our 2030 plan is a great way to work backwards and see what needs to be true to achieve it.
🏯 Building a company
👉 Dustin Moskovitz - Eliminating Work About Work (Join Colossus)
You get diminishing returns as you go beyond, call it 50 or 60 hours per week, you can actually get to negative returns quite quickly.
Maximize your output, and in particular, over the long run.
➡️ Maximizing the output over the long-run means understanding yourself and how you work, when you are in the “zone”, or not, what gives you super-powers.
I think that the zeitgeist right now is to have these very simple axioms or single metrics that you optimize for, and to be as simple as possible. In Asana, we embrace complexity and nuance a little more.
➡️ I am very much aligned with the importance of understanding the world is complex, and that nuance in the way we build the company is important. We want to build tools for every Alaners to understand complexity and make the best decisions in its context.
So around 2014, 2015, we had a pivot-or-persevere conversation and realized we needed to start over, and we knew it was going to be a very big painful project, and we knew we wouldn't be able to do a whole lot else. Basically we had half the engineering team or so working on this rearchitecture while the other half was trying to meet customer demands and advance the product and help us compete in the market.
➡️ Super interesting how they made that massive decision to re-build solid foundations.
👉 How to get noticed by the press (Newsletter Sifted)
Pitch to humans, not journalists. Remember that when you pitch to a journalist, it’s an actual human being on the other side of the email. Personalize it: go to their Twitter page, look at their author bio on the publication they work for to see what their beat is and how they write their pieces. What are they interested in?
Personalize your subject line. Make sure it doesn’t look like a mass email. I’d write ‘One for Sifted?’ and then the news hook.
Do more than just send a press release. ‘Hello, my name is X, I do this, I thought you’d be interested in this because of this...’ Address the five Ws: who, what, why, where and when.
Look beyond yourself and your product to the great problem you’re solving in the world. And illustrate that with statistics.
🗞In the news
📱Technology
👉 ByteDance AI
The former director of ByteDance’s AI lab took a job at the University of California at Santa Barbara. Li Lei worked at ByteDance for five years and helped develop the company’s famously powerful recommendation algorithm.
➡️ Very interesting to see this move to academia.
👉 Amazon expands deliveries to serve unlikely clients: its rivals (Financial Times)
The Etsy seller had used Amazon’s logistics to get the order to her.
Amazon steps up its efforts to deliver not only its own orders but also those of its rivals.
Amazon’s Multi-Channel Fulfillment program is looking to redefine how businesses utilize our supply chain capabilities.” (...) “Our vision is ambitious — to fulfill orders for customers around the world, regardless of where the transaction occurs.”
MCF offers much the same for sales on other websites, such as Walmart, eBay, Etsy, Shopify and several others.
MCF has existed in some form since 2007.
Packed in Amazon boxes
➡️ Other customers ETSY, Walmart, Ebay end up delivering Amazon boxes to their customers.
🏥 Healthcare
👉Matteo Franceschetti (CEO Eight Sleep) - Modernizing Sleep (Join Colossus)
Tips about your sleep:
The heart rate at rest is really important because it's a metric that changes when there is something wrong.
When I started looking at my heart rate at rest, I noticed that it started changing three days before I got the flu.
Go to bed at the same time, and more than anything, wake up at the same time every single day, also during the weekend.
Alcohol has a huge impact on your sleep, and your recovery in general.
You should stop eating a couple of hours, at least, before going to bed if possible.
➡️ Helping our members with their sleep will be a very interesting topic in the future. There are simple tips we can already share.
EightSleep:
This is not an impulsive purchase, so our customers, before buying, they want to hear from other people, secondary voices that they trust, that the product is good. They don't want to spend blindly, 3K.
So what we understood is to focus on a smaller community, and really own that community.
It's better to own small community that is still large, because it's still millions of people, and make sure that people keep talking about the product, because that will create the snowball effect. Instead of just doing TV, radio, this, this, and that, but you don't create multiple touchpoints with the same customer.
➡️ I like how they built their community.