- The podcast episode features Henrique Dubogras, co-founder of Brex, and Anu Hariharan, a partner at Y Combinator.
- Brex provides corporate credit cards for startups and recently closed their series B funding led by YC Continuity.
- The discussion covers the process of building Brex and the challenges of building a fintech startup in 2018.
- Henrique shares advice for young founders based on his experience starting his first company at 16.
- Henrique and Pedro, his co-founder, started their first fintech startup at ages 15 and 16.
- They had previous experiences in tech and started Pagarme, a payment processor in Brazil, which they sold after growing it to a team of 100.
- After attending Stanford, they applied to Y Combinator with an augmented reality startup idea but pivoted to focus on redefining the corporate credit card experience.
- The idea for Brex came from their own struggle to get corporate credit cards without personal guarantees and seeing the same problem among their YC batchmates.
- The team size of Brex at the time of launching during YC and after Demo Day is not specified.

- The founders of Brex believe that the first 10 employees are crucial in setting the foundation for the company's success.
- They hired the smartest people they knew, even if they didn't have coding experience, and trained them.
- The first two hires were a CFO and a general counsel, which is unusual for a startup.
- Being a second-time founder helped in attracting experienced hires.
- They were able to convince hires to join by clearly outlining the company's long-term vision and how they could contribute to it.
- The founders were generous with compensation and had a unique pre-offer approach to ensure that candidates were genuinely interested in joining the company.
- Recruiting is a top priority for the founders, and they spend around 35-40% of their time on it.

- The speaker believes that success-based fees are worth paying, but not fees that were previously required.
- They emphasize the importance of not compromising on the quality of hires, even when there is urgency to fill a position.
- The speaker discusses their fundraising history, including a series A round led by Ribbit after YC and ongoing relationship-building with VCs.
- They highlight the need for transparency and credibility in the fintech industry, recommending that founders gain experience in the field before starting their own startup.
- Understanding financial systems, market knowledge, and regulatory requirements are crucial skills in fintech.
- The speaker shares examples of navigating constraints in building a fintech product and the importance of credibility in convincing others of your knowledge and expertise.
- Brex is a fintech company that focuses on building a better version of existing financial products.

- Brex offers a quick and easy process for startup founders to get a corporate card, with sign-up to virtual credit cards taking only 4 minutes.
- Unlike other options, Brex does not require a personal guarantee or security deposit, and offers higher credit limits.
- Brex also automates expense management tasks that other software cannot do, integrating them directly into the credit card.
- Founders can invite others in their company to get a card, with the ability to set individual spending limits.
- Brex's underwriting process is based on cash and investment history, allowing for quick KYC checks.
- The company took time to rebuild their systems from scratch, rather than relying on existing financial products, to ensure a better user experience.
- Brex emphasizes the importance of setting up accounting processes correctly from the beginning, offering tools to track spending by vendor, automate receipt matching, and categorize expenses accurately.
- The product has been piloted with early-stage startups, but is also suitable for later-stage companies.

- Brex is an accounting solution that helps companies with their financial management.
- Many YC companies and other larger companies like Firm, SoFi, and Color Genomics use Brex for better controls and reporting.
- Brex can scale with companies as they grow, eliminating the need to migrate to a different solution.
- Paying B2B with cards has grown in popularity over the last 5 years, leading to a demand for new technology in the space.
- The flexibility of the new tech stack allows for better expense management at an employee level.
- The discussion focused on starting a fintech startup.

- The podcast episode features Henrique Dubogras, co-founder of Brex, and Anu Hariharan, a partner at Y Combinator.
- Henrique shares advice for young founders based on his experience starting his first company at 16.
- Henrique and Pedro, his co-founder, started their first fintech startup at ages 15 and 16.
- They had previous experiences in tech and started Pagarme, a payment processor in Brazil, which they sold after growing it to a team of 100.
- After attending Stanford, they applied to Y Combinator with an augmented reality startup idea but pivoted to focus on redefining the corporate credit card experience.
- The idea for Brex came from their own struggle to get corporate credit cards without personal guarantees and seeing the same problem among their YC batchmates.
- The founders of Brex believe that the first 10 employees are crucial in setting the foundation for the company's success.
- They hired the smartest people they knew, even if they didn't have coding experience, and trained them.
- The first two hires were a CFO and a general counsel, which is unusual for a startup.
- Being a second-time founder helped in attracting experienced hires.
- They were able to convince hires to join by clearly outlining the company's long-term vision and how they could contribute to it.
- The founders were generous with compensation and had a unique pre-offer approach to ensure that candidates were genuinely interested in joining the company.
- Recruiting is a top priority for the founders, and they spend around 35-40% of their time on it.
- The speaker discusses their fundraising history, including a series A round led by Ribbit after YC and ongoing relationship-building with VCs.
- They highlight the need for transparency and credibility in the fintech industry, recommending that founders gain experience in the field before starting their own startup.
- Brex is a fintech company that focuses on building a better version of existing financial products.
- Brex offers a quick and easy process for startup founders to get a corporate card, with sign-up to virtual credit cards taking only 4 minutes.
- Unlike other options, Brex does not require a personal guarantee or security deposit, and offers higher credit limits.
- Brex also automates expense management tasks that other software cannot do, integrating them directly into the credit card.
- Founders can invite others in their company to get a card, with the ability to set individual spending limits.
- Brex's underwriting process is based on cash and investment history, allowing for quick KYC checks.
- The company took time to rebuild their systems from scratch, rather than relying on existing financial products, to ensure a better user experience.
- Brex emphasizes the importance of setting up accounting processes correctly from the beginning, offering tools to track spending by vendor, automate receipt matching, and categorize expenses accurately.
- The product has been piloted with early-stage startups, but is also suitable for later-stage companies.
- Brex is an accounting solution that helps companies with their financial management.
- Many YC companies and other larger companies like Firm, SoFi, and Color Genomics use Brex for better controls and reporting.
- Brex can scale with companies as they grow, eliminating the need to migrate to a different solution.
- Paying B2B with cards has grown in popularity over the last 5 years, leading to a demand for new technology in the space.
- The flexibility of the new tech stack allows for better expense management at an employee level.
- The discussion focused on starting a fintech startup.

Henrique Dubugras - https://twitter.com/hdubugras - is the cofounder of Brex - https://brex.com/ - which provides corporate cards for startups.

Anu Hariharan is a Partner at YC - https://twitter.com/anuhariharan

Brex went through YC in the Winter 2017 batch and just closed their Series B, which was led by YC Continuity - https://www.ycombinator.com/continuity/

In addition to discussing how the Brex team built out their service, Anu and Henrique also cover the specifics of what it takes to build a fintech startup in 2018. And Henrique shares advice for young founders, as he started his first company at 16.

Read the transcript on our blog - https://blog.ycombinator.com/henrique-dubugras-and-anu-hariharan-discuss-brexs-corporate-card-for-startups

This is Craig Cannon, and you're listening to Y Combinator's podcast.

Today's episode is with Henrique Dubogras and Anu Hariharan.

Anu is a partner here at YC, and Henrique is the co-founder of Brex.

Brex provides corporate credit cards for startups.

And they went through YC in the winter 2017 batch and just closed their series B, which was led by YC Continuity.

So in addition to discussing how the Brex team built out their service, Anu and Henrique also cover the specifics of what it takes to build a fintech startup in 2018.

And Henrique shares advice for young founders because he started his first company at 16.

Hi everyone, I'm Anu, a partner at YC Continuity, and we have Henrique here, who is the founder of Brex, which was a YC Winter 17 company.

The exciting news about Brex is they're actually launching soon and they offer corporate credit cards.

They're basically redefining how corporate credit cards work for startups.

So we're very excited to have Enrique here.

Enrique, let's talk a little bit about your background.

We obviously at YC have known you for a very long time, both you and Pedro.

And you guys started your first fintech startup when you were at the ages of 15 and 16, which is not, you know, something we see every day.

So can you tell us a little bit about what was the first company you founded and then how did you find your path to Y Combinator?

And so Pedro and I, we both, we both started coding pretty early.

So I started when I was 12 because there was this game I wanted to play.

It was like a paid game and my parents didn't want to pay for me.

And I figured I have to learn how to code.

And Pedro, like nobody knows how he started coding, but he started coding when he was like 9 years old.

And then during our teenage years, we did a lot of interesting things.

So I participated in building this emulator for this game, and I learned a lot of Coda because of that.

Pedro, on the other hand, when he was 12, he found the first jailbreak for the iPhone 3G, which got a lot of attention.

And so we had during our teenage years a bunch of experiences already in tech that led us to believe it's possible to start a company.

So for me, it was that I was working at this startup and did the founder.

And my thought was like, if he can do it, I can do it too.

And then I tried to start an education company and that didn't work out.

And then I met Pedro in the end of 2012, basically fighting on Twitter, programming text editors, Vim versus Emacs.

And we basically became super friends and decided to start a company together, which was Pagarme.

Pagarme was like a payment processor, online payment processor down in Brazil.

I think the comparables here would be like something like Stripe or Braintree or WePay or like those kind of companies.

And we grew that company to a pretty reasonable size.

It wasn't by option that much at that point.

So we were 15 and 16 when we started the company.

So it's not like a lot of people in Brazil were willing to give us much more than that.

And then after we raised the money, we were like, oh, this is so much money.

Like we can do whatever we want with this.

And we were lucky that payments in Brazil, it's in terms of margin, a better business than most of the world.

So we were able to have a profitable company since I think the end of the first year.

And that was super helpful because then we just grew with our own profits.

And profits solve a lot of problems if you can have them.

And you sold the company 4 years later when your team size was around 100.

I feel the stats for the time we sold it.

We're doing a little bit over 1.5 billion in transaction volume.

We had, I think, a little bit over 100 people, I think 110, 115, something like that.

So that was probably like 3 years and a half, almost 4 years.

Not a lot of people have built a hundred people team and they're less than 20.

I think that we always thought that Pagarme could be a big business, But it couldn't be something I think as big as our ambition, because I don't think we had a lot of edge internationally.

So Brazil is a pretty big market for payments.

You can see like Pax Segura just IPO'd for $9 billion, right?

But I didn't think we had enough edge to go international.

So we were kind of curious to see how that went.

And like from international, it was my dream scene when I was 14 to go to Stanford.

And I remember, you know, right from your application days, 1 year into Stanford, you guys had applied to YC with actually an augmented reality startup.

And by the time you graduated from YC, that's how the, you know, you launched Brex, or you were working on the Brex idea, hadn't launched yet.

Can you talk a little bit about like, how that transition happened?

You know, you coming from AR as an idea and then saying, no, you know, we are going to work on the corporate, redefining the corporate credit card experience.

So after we got at Stanford, we were like, we're not going to do payments anymore.

FinTech, too complicated, you know, there's like old banks, you know, like that's, we're not going to do that anymore.

We're going to do something new, something easier.

And then we started thinking about these ideas, etc.

And then it was actually 3 months into Stanford that we decided that we wanted to apply to YC.

And we applied and we got into YC, this AR idea.

And then a few weeks in, we were like, okay, this is complicated.

Like we could only build the software, but like if Apple killed an API or Google killed an API, like then the business would be ruined, you know?

Like it is all these things that we started to think about.

And then we're like, okay, that's not what we want to do.

So then we were like in this limbo and we're super worried as, oh, sure, we took YC money, should we give it back?

Like, is that something that we should do?

And we talked to the person like, no, no, no, go figure out something.

And then we started thinking about things we wanted to do.

We went through like a bunch of ideas and then we went back for an idea we thought for a long time.

And we're like, in Pagarma, we were a payment system, right?

So we received the money and then we paid out the, the, the merchants.

And we're like, well, why do I need to pay out the merchants?

Why can't I just pay out the suppliers directly, right?

And we started grasping this idea of, oh, what are the B2B financial services that we can generate value, right?

And we actually thought about creating a bank.

But creating a bank is very complicated, as we went to find out in the US.

And then we were like, okay, especially in the US.

So we went and said, okay, let's do a product of a bank.

All these products are super, super good.

And then we looked at credit cards that seemed like a 1 of the product, but we didn't actually go too deep into it.

And then, but we kind of had this landscape of like B2B financial products.

And then we wanted to get a corporate credit card like ourselves.

And then we were talking to 1 YC partner, Dalton, who also said, hey, all these startups, they have a lot of trouble getting corporate credit cards.

We're like, okay, let's investigate that.

And then figured out that 1, we couldn't get 1.

We went there and they're like, well, you don't have any financial history.

Like, you can just give me $5,000 in limit, I'll be fine.

And it was like, no, we won't give you it, unless you personally guarantee.

But we didn't have FICO score because we had just moved to the US.

So we couldn't personally guarantee the card.

And then we went to talk to a lot of our batch mates and a few of them were like, oh yeah, I can get a card.

No, none of the international ones could get a card.

And the other ones, a lot of people chose not to get a card because they didn't want to personally guarantee the card.

Because as I agree with them, the whole point of building a corporation is not having like personal liability attached to it, right?

So there was all these people who just using debit cards and like just walking around of debit cards with $120,000 in the bank or just using their personal cards and all these things.

It's like, okay, that has to be inefficient.

Like there has to be a better way to do this.

And then that's kind of like how Brex came to be like by seeing that problem of our batchmates and ourselves, not being able to get a corporate credit card or having to personally guarantee that we had the idea of building something better.

1 of, you know, you guys launched, you launched recently, but you've been there for 18 months or now.

And so how, when you launched Brex during YC and right after Demoday, How big was the team?

And can you also talk about your first 10 employees?

Like how did you hire them and how did you decide who they would be?

I think that 1 thing that we really believe, and I know everybody says that, is that the employees, the 10 first employees are going to set a foundation for later.

And I think that we really took that to heart when we got our first 10.

So in procurement, we did have a lot of options in the first 10.

So we just got the smartest people we know.

There was even this guy who didn't know how to code at all, but he was like a physics Olympics champion.

Coding I think is easier than physics, so we might as well just hire him and teach him how to code, right?

So we hired like people that we knew that were the smartest and we just like made it work.

On Brex, I think we were a little bit more targeted.

We were like, okay, those people were really good and they're doing really well now.

But like, if I could do it the right way from the beginning, what would I do?

And our first 2 hires were actually like a CFO and a general counsel.

I mean, I know that now because we know you guys, but like I know most startups are not hiring a CFO and a GC.

Because going with that, I think about getting a really good partner and being able to rebuild everything from scratch and having like the good flow and all of that.

Having a staff that, like we're still young, right?

So it's not like We're older, but like not that old.

So when we go to bank, having people who are more experienced than you are and having them be the people that actually help you like do the plan and describe everything is really, really valuable.

And we were very generous of the offers and the packages for these people because we really believe it could change the way the business went.

It is very hard for a founder this early to be able to hire a really credible GC and a CFO, right?

No matter even if the offer or the package is attractive, because they probably have multiple options.

So How did you get them over the line to believe in your mission and join Brex?

So I think this is a little bit of the advantage of being a second time founder is that I think people who are experienced, they want to work with other people who are experienced.

So I think that basically, so Usually founders, they have this, right?

Like they have this first product and that may or may not have product market fit, but they have this thing.

And then they have this like long-term vision and that's like very, very far away.

And they usually don't have the plan in between that much.

I think these like more executive level hires, they want to understand better to plan in between.

I think that's something we had really well defined since early on is like, okay, we're starting with like this credit card for startups, which is, I think it's a great market.

But like, and then we have this big long-term vision.

I think making that very clear and like how they could, like how they would be the difference between getting there and not getting there also, like if they could add a lot of value there was something that I think got them across the line.

So I remember specifically of RGC, we were talking about how in order to be able to scale a lot we would do a lot of the regulatory things he didn't do in his last company.

And how that would change this part of the plan to actually work versus other companies that failed, that got him really excited because, okay, I learned so much from the experience, now I want the opportunity to make it right, to do it right.

So I think that's how I got across the line.

But also having a really strong set of investors helps a lot.

Being able to get where they need on cash.

Like a lot of times people want people to take huge pay cuts.

We always was pretty generous on cash, like those kind of things.

And then, so they were your third and fourth hire.

So who are they and where did they come from?

So we didn't have an easy time recruiting

Because we were from Brazil, so it's not like we knew a bunch of people.

People say, oh, what about your Stanford networkers?

I was there for 3 months and my network was all freshmen.

Yeah, you were going to be class of 2020, I remember.

Exactly, I was going to be class of 2020.

So maybe in 2020, I have a bunch of people I can hire.

We basically started skewing towards people that were similar to us in some sense, because it's what we could.

So we got a bunch of international folks.

So I think our first engineer was Uruguayan and then we got a French dude and we imported someone from Brazil.

I think we just did whatever we needed to do for the first 10, but we didn't have a quality bar that was lower because of that.

We still had like, okay, these 2 are really strong.

They came from really good companies, so find Stripe.

Maybe, and we didn't hire a lot waiting to find the right people and that paid off.

So you were slow at building the team versus trying to get the first 10 quickly.

Yeah, and we're just like working a lot ourselves.

Yeah, and how was your interview process, especially when you were trying to hire someone from Brazil or Uruguay or these different locations?

Like how did you actually test for that quality bar?

We had our, A little bit debatable, but we believe that a technical interview should be most similar to what the person will do in the day-to-day and should test the knowledge that they would most have to do most decisions with.

So we built this interview that actually they had to build a small credit card authorizer, which is like a part of it.

And it was the same interview for someone junior and someone senior.

The only difference was how well they did the architecture and like the edge cases based on how junior they are and how senior they are.

Like if they were a senior they knew like everything that would go wrong and they would build it or point it out if they didn't have time.

And if they were junior they would build a simple version of it.

But then I think the hard part was the selling, right?

Like how do you sell and get these people across the line?

And I think that for the first 10, it was really hard.

And we just like people join who believed in the team and believed in the mission.

And We never made compensation a problem.

We were always very generous of the initial packages.

So we were like, so we have this really different offer mechanism that, and this isn't until today, everyone that joined the company went through this.

It is different and it's very intriguing.

We call it a pre-offer, not an offer, which we say, hey, if compensation wasn't an issue, you have all these companies you could join, would this be the company you would join?

And let's discuss that Until you tell me that this is the company you would join if compression was solved, like I'm not going to show you an offer.

And that made the person get over the mental decision of like, this is the company I want to join.

And then we always gave a super generous offer.

It's not like we then low balled them, you know?

We always gave them a great offer, and they were always like very few times we hadn't negotiated.

Usually it was like above their expectations.

And then they joined, but we never had someone that after they accepted a pre-offer, they didn't come because of compensation.

We could always find a middle ground in compensation.

I think there are a couple of other YC startups that actually use a similar approach, but the large majority doesn't.

Yeah, it's definitely sometimes humbling because people sometimes say no to you before even seeing the offer.

Because they should go to the company that they believe more, right?

And then we were evaluating to see what was their problem.

Maybe they weren't interested in the domain, maybe they didn't believe us as much, like whatever it is, we try to learn from it.

But we know that it was about the company, not about a comp.

Imagine if they had come just to do the comp.

1 of the other things I've noticed, especially working with you guys closely, is both you and Pedro do spend a lot of time on recruiting.

And first time founders I've seen generally, don't do that, especially in the early days and then wait too long before they actually refocus their attention on recruiting.

Can you talk a little bit about why you guys do that?

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Henrique Dubugras and Anu Hariharan Discuss Brex's Corporate Card For Startups