Launch HN: Brex (YC W17) – Corporate Credit Card for Startups
We are Henrique and Pedro of Brex (https://brex.com/). We've built a corporate credit card for startups that has high limits, an instant online application and no personal guarantees.
Pedro and I built our first payments business in Brazil, Pagar.me, when we were teenagers. We came to the U.S. to attend Stanford. We joined YC W17 and realized quickly – even with a seed round in the millions – that we could not get a corporate credit card. We are Brazilian, young, and do not have U.S. credit. Even if we did have credit – we know that personally guaranteeing a credit card makes no sense for a business (more on that later).
In Brazil, we raised $300K initially (when we were 16) from an investor that was willing to take a chance on us. In Brazil, even though there are 200 million people, there is very little venture capital financing and limited startup infrastructure (accelerators, resources, technical talent, executives experienced with high growth). We knew that $300K was all we were getting, so we had to find a business that could be cash flow positive quickly. It was easier to do that accepting payments online (which naturally generates cash), but it was an operational challenge for sure. We were able to grow quickly in Brazil because we hit the market at the right time, as ecommerce was transitioning to online payments and because we, better than any of the foreign competitors, understood the nuance of Brazil. Specifically on that point, in Brazil the consumer has the option to pay for any card transaction in installments, and that requires a cash outflow for the merchant. Pagar.me figured out how to productize that best to the online market there.
When we got to the U.S., we assumed that the payments system here would be significantly more mature and sophisticated than it was in Brazil, however that was not the case. Particularly on the issuing side (banks extending credit cards), there has been very little innovation or using technology to innovate on features. That is how Brex was born. Over the past year we’ve been incubating and improving and just launched with an online self-signup that lets you get access to a virtual card in minutes. We waited to launch until we had this feature, as we know how much of a pain it is to go through the back and forth of online and paper-based applications. Brex underwrites by connecting directly with your bank account, which means we can offer higher limits than other cards, often 10x-20x more.
From a software perspective, we rebuilt all of the payments tech from scratch, which we learned how to do in our last business. Even then, to build Brex it was still grueling having to deal with the obscure regulations surrounding Know Your Customer (KYC), heavy oversight from banking partners, and complexities associated with interacting directly with Visa. In doing so, we built awesome features like instant virtual cards issued to you and your team and we solved something this time that has been bugging us forever – the fact that you can never tell what a credit card charge is on your statement! We changed the data to give you the actual merchant / vendor and a link to the website. When we did this, we also realized we could do something really unique with receipts – because we know the actual vendor / merchant, we can match any receipt sent to us via SMS or email to your transaction immediately. No need to save receipts or deal with other integrations that have a huge delay between matching a receipt to a transaction, we do it in real time.
Interestingly, from a technical standpoint, we did all this in Elixir. We thought it would be a good choice (and so far we are happy with our decision) because of the distributed nature of the systems that we built and we could rely on the Erlang VM to provide that infrastructure out-of-the-box. Our domain knowledge from Pagar.me allowed us to anticipate the system boundaries and therefore we could build our backend as a dis...
127 comments
[ 3.2 ms ] story [ 206 ms ] threadIf so, is the phrase "credit card" in the FAQ a mistake?
You have protections under both systems (debit & credit), but the ones on the credit card are much more in your favor. With credit cards it's pretty hard to end up on the hook for the fraudulent charges (50$ limit on liability), while on debit cards you have to report the charges before a deadline.
Debit cards are always dumb. Think of it this way... if some skel gets ahold of your card and has a party, you’re stuck in a world of bureaucracy and problems. In my case, a stolen card or number on the 29th of the month means that my mortgage, car, possibly insurance, as well as one or more credit cards with automatic payment will be rejected for insufficient funds. I have a problem.
If somebody steals my Amex or compromises the number, Amex has a problem. I call customer service and wish them well.
With a charge card I can just make the purchase willy nilly and transfer out of my savings the exact amount of money I've spent all at once at bill pay time. If I get an unexpected charge then my mortgage doesn't bounce and I don't get hit with overdraft fees. Not only that, the statement only closes once a month, so I have a pretty significant interest free period; which is great if I'm fronting money for work expenses and have to wait for the reimbursement, for example.
There's also better fraud protection, rewards, and other benefits (rental car insurance, extended warranties, purchase protection, trip delay insurance, return protection, etc. etc.) that I don't get with a debit card but I do get with a charge card.
Your debit card use doesn't effect your credit score/history but using a charge card does since it still is a credit line, even if the loan term is very short.
I am curious about the language that you have used - in particular the use of word "marijuana".
What is the reason to use such derogatory, offensive and deeply racist term for cannabis?
I thought that in 2018 tech companies wouldn't be using language of the 70s that has been used to promote hatred towards the users of this plant.
> What is the reason to use such derogatory, offensive and deeply racist term for cannabis?
Your username, "merinowool", is deeply offensive to animal rights, is derogatory toward animals and objectifies them as producers of things to be owned instead of real beings.
But that's okay because I won't pretend that if you don't agree to my moral worldview then you must be bad and therefore you need to change to become more like myself. Because why would I be so sure that my views are some objective source of moral truth? But I get if you need to feel that way. Everyone needs their comforting stories, man. And it's an awfully great payoff when others are wrong and you can feel right by comparison! Keep getting high on that morality, man!
More addictive than smoking "weed", ooops, I mean "marijuana". Just curious what year you think "tolerant liberalism" became "fascist groupthink moralism"? Around 1997 was it?
https://news.ycombinator.com/newsguidelines.html
Is brex a fit now, or in the near future?
It would be great if you could clarify what the rewards actually are (especially since they are highlighted quite a bit).
eg: Are the rewards on AWS double/triple points on your spend? Or do Brex members received some amount of free compute credit?
I’d encourage you guys to try to keep innovating on the rewards side though (like you are with the current rewards). It seems like one trick is that it has to scale to businesses like ours that are still smallish but have significant spend.
I'm a founder searching for a corporate credit card, so naturally I'm comparing benefits with other cards.
The rewards page boasts "Brex gives you valuable rewards equivalent to 500,000+ points on competitor card programs.", but gives no specific information about these rewards without signing up. This felt deceptive / scammy to me, and I instinctively closed the page.
Later I found the rewards FAQ question, but the statement "Like our cards, our rewards are different. They offer valuable savings to companies on the products they use most, like software, servers and advertising. These rewards help build the company, rather than competitor rewards programs that offer consumer-oriented benefits for individuals." again was too vague to know whether it was worth signing up to learn more.
Just my anecdote, but I would suggest offering more details on the reward program pre-signup.
Although we're building a new rewards program that will launch later this year, would love to hear your thoughts on what a great rewards program looks like for you.
And thnaks on the feedback on the clarity around the rewards - will improve!
1. Tell me what the rewards are. Right now I get credit card reward points worth ~1.5% of my monthly spending; I'm not going to switch cards based on "we have fantastic rewards, trust us!"
2. Find a way to integrate with Stripe! They've already done all the AML/KYC stuff, and they also have plenty of information about my revenue. For that matter, why have money bounce via a bank account -- find a way for me to have the money I receive via Stripe pay off the Brex card first.
3. Seconding the request to support people outside of the USA. My company does its banking via a US bank account but both I and my company are based in Canada.
2 - Interesting thought on the payment! Will investigate it. On the AML/KYC by regulation we can't rely on another party, we have to do our own :/
3 - Working on it!
That's a hell of a sign up bonus! Is the $5K for entirely new AWS accounts or do existing accounts that sign up and update their current account with the new payment option as the primary get it as well?
Honestly, dollars are fungible. For less sophisticated customers, points which can be redeemed specifically for travel are attractive because people anticipate getting better deals than they end up with; but I'd be disappointed if that works well for the audience you're targetting here. Just make it a cashback %age based on the fees you get from the card network.
On the AML/KYC by regulation we can't rely on another party, we have to do our own :/
Ah, too bad. But even if you have to do your own AML/KYC paperwork, pulling data from Stripe should help with risk scoring, right? In particular, for those of us with unfunded but profitable startups.
2 - integrating stripe as a datasource for underwriting is definetly in our roadmap!
I have plenty of ways of making money, and trying to optimize for a %age of cash back is not particularly interesting.
Miles and points on the other hand can be used to get experiences that would otherwise be completely out of question due to their price. It adds something meaningful to my life.
Flying to Australia in first class on Emirates is more memorable than making $1,500 of cash-back.
If you have 115,000 points, you can use them towards a $1,150 cash credit. On the other hand, those points can also be used to book a Singapore to Zürich flight in their brand new first class, which would ordinarily cost $6,000+. one-way
An even more pronounced example: with just 30,000 points (or what would be $300 in cash-back), transferred to United, you can book HKG-SYD (a 13h trip) in business class, which would ordinarily cost $3,000+ one-way.
I cashed out a cash-rewards card recently, and bought a work chair with the proceeds; I don't think most miles/points plans would have let me get that.
Don't care about cashback cards under 5%. Earning miles and points is much more meaningful and attractive.
Did you guys sell this idea to the UK government?
2 - our credit algorithm is actually very different and the limit changes according to your bank balances.
3 - it’s actually a credit card (technically a charge card), so it has all the protections of a standard credit card, people dont have access directly to your balance like a debit card.
Does that make sense?
Ie, does Brex have some legal senior debt-holder claim against the company’s assets? And what happens to the personal credit history of the founders, does it remain untarnished since they were never personally responsible?
2 - you have 30 day float, so more time to pay the statement
Any chance of getting pagar.me to Argentina? Our options suck here
But: I highly recommend not having that per-user fee waive promo. You never know who might signup today. We would all happily pay anyway most likely :)
Correct. At $5/month per user I "assume" more people will sign up than if it were free. This is a corporate/business product, free does not yield more confidence.
Thanks for feedback on pricing! Promo will be over Saturday :)
I decided to trust you since you're a YC company, and put in my creds anyway. To log into my bank, they required me to send a verification code to my phone. The text never came, but your flow has no way to go back and either request the text message again or have them send an email instead, so I'm now stuck on bank account verification. :(
So, areas for improvement:
1) Use bigger text to show you're using a third party for bank login, and maybe some way to verify that.
2) Create a way to request another token via text or change to email.
Support should contact you soon to help fix it. Noted on making more clear that it’s a 3rd party!
I am not affiliated with Plaid.
I understand why they want it, but I wish there were a better way than "here is write access to my bank".
I've asked our bank to make all ACH transactions above a threshold require manual authorization to improve our risk exposure. While ACH transactions can be reversed, it wouldn't be pretty do be without funds during arbitration.
In our case, I used bank creds, and immediately changed them to something else.
One other point of feedback. The AWS rewards is a big draw, but you learn new conditions only after you sign up. I don't think it was intentional but it felt a little bit like false advertising. Be sure to state all the conditions upfront that are required to win the rewards.
About aws rewards - noted! Will improve clarity
I just signed up and after clicking the activation link in the email, I started the application. When it go to the step asking about my bank, I said it wasn't listed and then I typed in my bank name. Now I'm sitting at the final page with the 'Submit Application' button, but it's grayed out. I'm using Firefox Nightly on Ubuntu.
The rest of the flow was pretty easy though. Nice job.
EDIT: Larissa was able to help me via the intercom chat. Great support integration!
Congrats on your trajectory so far! You are a real inspiration.
Do you happen to have some published interviews or blog post sharing more about your history? I always hear good things about you both, but it is hard to find primary accounts of your trajectory.
I wish you the best of luck!
https://blog.ycombinator.com/henrique-dubugras-and-anu-harih...
Let me know your thoughts on it :)
Also, please don't use allcaps for emphasis; it's basically yelling, and the site rules ask you not to: https://news.ycombinator.com/newsguidelines.html.