SaaS Interviews with CEOs, Startups, Founders
1693 He Gives Founders a CC, No Personal Gauruntee, Will Pass $1B GMV in 30 Day Period by 2020.
13 Mar 2020
Chapter 1: Who is Henrique Dubugras and what is his background?
Hello, everyone. My guest today is Enrique Dubugres. He's the co-founder and CEO of Brex, the first corporate card for startups. A Brazilian entrepreneur, he built the payments company Pager.me, the stripe of Brazil, when he was 16. In three years, the company grew to 1.5 billion in volume of transactions processed.
Prior to Pager, Enrique built a number of online businesses in Brazil, including an education company and a dating application. Enrique, are you ready to take us to the top?
Yeah, thanks for having me.
You bet. What happened? And am I saying it right? Is it Pagar.me or Pager.me?
It's Pagar.me.
Pagar.me. That means to pay, right? In Spanish?
Yeah, correct. Portuguese.
Portuguese. Okay. So Stripe of Brazil, I mean, that's a big, bold vision. What happened with that company?
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Chapter 2: What inspired the creation of Brex?
Why'd you leave?
We sold it basically because we thought we could build something larger in the US versus, you know, building a company that was just in Brazil.
Interesting. Although Brazil has many intricate kind of details, but like those things like that, that Stripe probably hadn't thought of at the time. You could have built a nice beachhead there.
Well, that's why we grew a lot. But we know, we think that there's still a lot of opportunity to build in fintech on a global scale.
So when did you end up selling that company? What year?
September 16th.
September 2016? Correct. Interesting. And did you go right into Brex after that?
No. So we went to Stanford for undergrad for like six months or so. And in the middle of Stanford, we got into Y Combinator. And in Y Combinator, it was actually a virtual reality idea. And inside Y Combinator, we actually pivoted to Brex.
Interesting. Okay, cool. So let's pick up with the Brex story now. So you go through Y Combinator, you start working on Brex. What's the company doing? What's your revenue model? How do you make money?
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Chapter 3: How does Brex differ from traditional corporate credit cards?
And a lot of founders don't want to do that. And even if they want to do that, the limits that they get are so low because it's the limit you would get in a personal credit card. But, you know, as a startup, after you raise millions of dollars, you may need to invest much more than your limit supports.
So help me understand your model. You've raised a significant amount of capital. I think what's total today? I think 180, something like that.
I think 200 and something.
Okay, 200. And so why do you need that much money? I mean, what's been most expensive about getting growth here?
So I think for a few reasons. One is you as a fintech company, to all the banks we work with and things like that, you know, they don't want to work with a company that's going out way tomorrow. So I think just being a stronger counterpart in general for fintech is super important. Second is, remember, we're actually lending money for 30 days. So it's a corporate charge card.
So people have to pay it back in 30 days. But for 30 days, we're actually lending money. And we have a warehouse line, which means we take debt from another bank to be able to lend this money. But it's not 100%. I don't get 100% debt. A small percentage, I still have to finance.
What percentage?
I think it's 15% or something like that. It's pretty standard for FinTech.
So we also recently had Rob with Cabbage on, and he explained some of the same kind of stuff.
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Chapter 4: What is the revenue model for Brex?
They've done about $5 billion in lending to SMBs and articulated that they've got to keep some on their own balance sheet as kind of a backstop. You're saying you've raised a lot of this capital. That's kind of your 15% backstop.
Exactly, exactly. Part of the capital will go to that. Different than Cabbage and other online lenders, because our receivable is so short, right? So it's only 30 days, you know, we, it's a lower amount that they need to, um, because you know, that's like a longer period loan, but we still need to do it.
Yeah. Give me a general sense of scale. I mean, there's so many things you can measure in a business like this in terms of success or leading indicators or lagging indicators. What are the metrics you care about?
You know, there's a few things that we care about. We care about penetration within the technology market, for example. So we check, like, how many companies we have, you know, across sectors inside technology. Then the penetration, which went within YC, that we think is, you know, a good indicator of that. We care about, you know, our growth rate.
Wait, hold on. Sorry. Why is the YC penetration a key indicator? I mean, you should have 100% of those people. I mean, you're basically family.
Yeah, I think we should have 100% of those, too. So we're working towards it. We're close to 80 today. But, you know, there's still plenty left to go.
What else do you care about?
Growth rate. So how much we're growing month over month is super important for us.
On what, though? Growth rate or what? Cards issued? Outstanding?
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