Brex is Off-boarding Tens of Thousands of Small Businesses, Not Startups



Brex is Off-boarding Tens of Thousands of Small Businesses, Not Startups

Protocol | Benjamin Pimental | Jun 17, 2022

Brex CEO Henrique - Brex is Off-boarding Tens of Thousands of Small Businesses, Not StartupsIt’s been a rough week for Brex co-CEO Henrique Dubugras as he dealt with the fallout from a business fumble.

Brex had sent emails to tens of thousands of small businesses, telling them that the financial services company would no longer be able to serve their needs. After expanding its business from tech startups to traditional small businesses, including mom-and-pop shops, Brex had decided to pull back to its original core customers sparking harsh criticisms online. “This Brex account closure sucks,” one Twitter post read.

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What prompted this decision?

  • There are tens of thousands of startups in the U.S. versus tens of millions of small businesses. The scale that that took was very, very big. We thought it was going to be fine; we’ll just invest more to give them exceptional service.
  • At the same time, there was another effect that was happening. Our core customers, the startups, they were starting to grow. As they grew, they started having all these new needs. They’re like, “Look, we need you to solve these new needs that I have around spend management and global [expansion].”
  • What we realized was we couldn’t do both at the same time. We couldn’t serve millions of small businesses around the U.S. and create products for the needs of our best and growing companies.
  • Do we sacrifice experience for our core customer? Do we allow our best customers to leave because we’re not serving their needs? Do we build more products for everyone? Do we double the workforce? What do we do?

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How many will be affected and what will SME customers have to do?

I would say that the amount of companies that we onboarded every month multiplied by 25.  It’s definitely in the tens of thousands. So think of that and how that impacts a company.  Restaurants, retail shops, bakeries, florists, hairdressers, small design agencies. Small professional services, two-people design firms, things like that.  If you’re affected, you’ll “need to move your bank account to a different provider.”

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