Dubugras said that he and his co-founder Pedro Franceschi made the decision in December as their start-up customers became increasingly demanding. Plunging valuations for public companies soon bled over into the private realm, hammering valuations for pre-IPO companies and forcing firms to focus on profitability.
At the same time, the traditional brick-and-mortar small businesses that Brex began adding in a 2019 expansion flooded support lines, resulting in worse service for the start-ups they valued more, he said. The initial news of the announcement caused mass confusion among Brex customers, spurring Franceschi to tweet about the move, Dubugras said.
The pair mistakenly thought that expanding services to more traditional small businesses would be a simple move. Instead, the needs of the two cohorts were different, requiring a different set of products, he said.