Brex 3.0: Inside the Radical Turnaround with Pedro Franceschi

34:03It's going to be all around the work product first and then everything else follows. Yeah, you're working backwards from how can I put together a group of people narrowly focused on creating the best work product? Yeah. Yeah. And just like... And your answer to that is find the person in the org, whoever it is, that you think has the best eye for great work as defined by a set of things that you've seen them do whether that's in sales marketing or engineering yeah elevate them if there's floors along the way to the top you remove the floors yeah and and the thing is like people like i mean james and then bet on them to learn how to hire people they will learn how to do that um and and and obviously there's a minimum right so i think like someone that has no aptitude for managing people probably like an ic engineer probably shouldn't be the cto of brex well even though the current cto was an ic engineer he was but was he a manager after that he was a manager after that yes it's like something something for sure but but i think like the way a lot of people like do that is they say like well like does this person have the experience of managing an org of this size and i'm like why does that matter right it's like this person was this person was managing an org of like maybe 25 30 people before and now an org of like 350 400 um and and and when you look at it you're like what changes about the physics of the problem that requires like it's so much easier to say okay i'm managing a team of 50 now a team of 350 um then say i need to learn what great work is.

35:52It's almost like a different thing. It's almost like a completely different category of challenge. And I think most people that have that understanding and understand how to identify great people, also, I think they have to have that eye for which other people are also great and been able to bring that along, of course. But I think people over-index on like how much does this person know how to manage a large org or a large team? And all that stuff is like not that hard. People learn that. They're smart enough, I think. And so is the net takeaway that you've had from this that experience is grossly overrated around anything other than taste for the work?

36:39I think that's pretty close to right. I would say experience matters to the degree that it exposes you to great work. And I think maybe the perfect example of that is you go to someone that's like, oh my God, I hired this great growth PM from Meta. And you're like, sure, but this person didn't do the thing that made Meta grow. That person worked in 2009. right unless you're hiring the person from 2009 that actually the cmo of meta today uh so that's like a pretty hard person to hire uh you're not getting the person who actually was exposed to the great work directly you're getting someone that was exposed to an like a layer on top of a layer on top of a layer on top of a layer or something that was already working and scaled so that person had like less exposure to that so i think experience matters to the degree that it exposes you to that so you have more of a palette to identify what it means in different contexts but I think the maybe the other common trend besides great work and great taste is like you hold yourself to a much higher bar than anyone else could ever hold you to right and the way I describe this is like you know someone f***ed up on something, someone made a mistake and then you can go to the person, give them feedback and you know they didn't have to be any harsh on them because they are like killing themselves inside and they're like oh my god like this is like so stupid i wish i had done this differently here's the 10 learnings and they're like thinking about the shit in the shower they're thinking about like how could i avoid this again how could this possibly happen like how can i change this next time how can i learn better and i think if you have like taste for the work uh and and great taste in general and hold yourself to the highest bar possible.

38:38So then I even me or your manager, anyone can hold you to a higher bar. These, those are typically some of the ingredients that I think tend to work. Yeah. My, my definition of this is the dolphin. Like if you imagine a dolphin going up and down in the water, like they're up in the air and then they're all the way submerged way under the ocean. And an executive it's the number one thing. may be the only thing that I look for in an executive. And an executive generally, by definition, has no problem being up in the air, like at a strategic level. But getting underwater is often the thing. Maybe that's your framing of the taste for the work.

39:23And in many ways, it's even more pernicious because if you don't get close to the work, How can you be strategic? Yeah, 100%. Strategic is not a euphemism for a big team that gives you leverage. You know, like strategic is deeply understanding the end problem and the path of least resistance to solve it elegantly. How can you do that if you're not very tactical? Yeah, 100%. And often those people do not have the LinkedIn's that you would necessarily expect a person to have that's the cto of brex and i think the problem compounds even more when you feel all of this pressure to your point about like what doesn't compound like what people think about you like this is where this gets really bad where now you have a board and you have other people in the company and you have your own ego that you feel like you need to satisfy that says you got this person who has this pedigree and it's actually the worst thing you could do yeah 100 it kind of feeds on itself 100 i i think i think like there's definitely you know to some degree like again i think pedigrees are a measurement of like the person being exposed to great work right i think that that is really all it means and i think like the question is like when someone says oh this person worked at this amazing company right and you're like okay like were they like and the thing is when a company when a company is doing really well there's this phenomenon that happened that people associate their presence with the success of the company right but the reality is like was the company successful because of them regardless of them or despite them and that is something that's actually really hard to assess and but but if you go a little bit deep you can actually get a sense of like was this person directly involved uh in in what was successful or not and a good proxy is like a lot of times when you hire you know the leader of a company that grew really fast typically it's very hard to find a leader but sometimes you can find a number two that was like right underneath that person and saw everything and had direct exposure to the work um and now it's maybe looking to be the number one in a new role as an executive for example but like someone that was like well like i i i was i worked at the company during those years of like very fast growth that that's meaningless on its own i think it's like where were they actually engaged in the thing that made the company successful or not that's like what matters you've referred to brex 2.0 and 3.0 what is that yeah so uh we when we made a bunch of changes in the company uh why end of 2023 well we were not growing very fast burning a lot of money um and uh and and we got to a point that was pretty clear that like i wasn't enjoying the work i wasn't enjoying what it meant to be to work at brex i wasn't proud of what we're shipping and and it just took um a reset to be like let's put a stake on the ground and this is what the company will mean moving forward.

42:44And I decided to call it Brex 3.0. 1.0 was sort of the early innings of Brex, like the sort of credit card for startups. 2.0 was like the sort of Zerp growth that came a lot after that. And 3.0 was like the rationalization at the end of 2023. And when you say like growth slowed, burn was high, can you quantify that? i mean we were burning a lot of money like hundreds of millions a year uh and growth was you know brex was doubling every year for a while and then brex was growing you know uh poorly way less than that way less than that yes and what did you grow so that was 23 that's the end of 23 yeah and what happened in 24 before growth accelerated a lot from there back to what it was pre not not exactly but the base is much larger totally so the base is like probably three times four times larger than when we started so uh you know growth accelerated you know almost 3x since where we were before wow and burn went down yeah like close to 90 close to 90 and is that as a uh is that a byproduct of the reduction of layers um like not directly right the reduction of layers reduced some of the cost maybe like 20 of the cost and 5 of the cost but 90 90 okay um but that was i i think like you know someone someone sort of said this to me which is like it's easy to like grow fast burning more it's easy to like burn less growing slower it's very hard to do both.

44:31And I think when both are happening at the same time, I think it's a sign that something fundamentally changed about the structure of a company, fundamentally changed about how people are actually approaching the work. And I think to some degree, that's what I think happened. And it started with a big cultural change of saying, hey, every leader has to operate at all levels of the organization, number one. Number two is like, we wanna meet the customer where they are at all times. So we wanna start by every time we sell something to a customer, we have to be solving a problem they have today. And because over time, Brex built a lot of products and the company had this habit of like effectively selling everything we had into the customer on day one, which meant we didn't really solve any problems they came to us with.

45:24the individual pain that was like actually making their lives very hard. So we decided to just meet the customer where they are first and win the customer first in one problem and then earn the rights to give them more and sell them more things over time.

45:44Three, we did a lot of cleanup in terms of like the comp model and incentives and incentivizing go to market on like revenue versus other metrics that were not revenue. We rebalanced a lot of people to be more equity oriented than cash oriented in their comp. So I would say a lot of like comp hygiene and incentive hygiene. And we just like narrowed down the focus on how to build a product. And what we used to do, and we did a lot of stuff on the product side. And what we used to do, which I think is what a lot of companies do, is like we had a bunch of teams and I kind of joked that in the past, we had like one team working towards five initiatives and now we have five teams working towards one.

46:32So we just like completely channel, funneled down their resources towards fewer things and did them really well. We changed the way we build products to instead of shipping every time, we still do that, But we actually now have three major product releases a year that we release a massive number of changes in the product. I'm actually the editor of the roadmap. I spend a lot of time with the team thinking we want to ship in each release and why. And what it does is it creates this ability to do a company affecting investment on the very few things that matter versus like spreading your resources across a number of things that don't actually matter at all.

47:14because I remember just like using our product and being like, we're putting like, I don't know, hundreds of millions a year in product investment, but the quality of the experience isn't improving. And when we zoomed out, it was just because we were spread ourselves across so many things that didn't matter. And we concentrated the resources and said, these are the bets we're going to take. And we're going to like have the courage to focus on very few things. The amount of like leadership bandwidth and talent density and these problems just increases dramatically and things move a lot faster and better.

47:50And is that also when the CEO, when you became the sole CEO? Yeah, these things are all connected. Yeah. Yeah. And so you changed all these things. You become the editor of the roadmap. In many ways, it reminds me of like, you're taking the best of a lot of different companies. like, you know, like Salesforce is famous for doing a big thing once a year. Dreamforce. Everybody marches towards that. That drives all product, sales, marketing, everything. You know, Brian Chesky is pretty famous now for at Airbnb. Brian influences a lot. So yeah, for sure. A lot of the same ideas. These ideas have existed because it's not just you.

48:39like so many people like what what happened i think it's pretty simple i think it's like people people um mixed uh your ability to ship software fast with the customer's ability to use it and and what i mean by that is we ship like hundreds of times a day and the product's getting better every day but but the thing that a release process helps um is back in the day you had no option but to ship software every year with like a cd a physical cd of the software right um and and i think like the the downside is obvious that the product cannot get better you know quickly as you learn things and cloud made that better right all the things that we know about already but but the there was a good thing which is like the customer had very clear sense of when things would change and how should they change their behaviors to use these new things and benefit them so so what the release process does is it allows us to coalesce everyone around one moment in time that we actually deliver things to customers in a very big way and not just a delivery from a sort of shipping the code standpoint, but from a go-to-market enablement, marketing, support training, implementation help, and all of these things that enterprise customers need.

50:12So a lot of it came from us maturing as well and the kinds of customers we serve because, you know, three years ago, I think we had like five public companies on breaks. Now there's like over 150. And our enterprise business is almost double last year and it's growing very, very quickly. And more and more companies, some of the most important companies on the planet are choosing to use Brax to run their finances. And that warrants a level of thoughtfulness about how we release and build software that this process allows you to do on not just shipping, but delivering value, which includes, of course, delivering the solution on your mobile app and website and et cetera.

50:56but most importantly making sure they get value they use that the right way um and and maybe the last thing i'll say is the other thing it does like i really believe that like the company needs like rhythms to function um and and and the rhythms have to come from the top and i i i at some point in my life i was like fascinated by like the sort of hyper distributed model like Amazon, like the two pizza team kind of story. And I think for their business that works really well because things are so segregated, right? Like one product category is very different than other product category, right? AWS is very different from retail, but in the business like Brex where customers are really buying a unified experience of financial services and software, you need a singular product vision for how all these pieces fit together.

51:47And that articulation has to come from the top all the way down into every layer of the organization. And what the release process allows you to do is to coordinate everything from the top versus expecting teams to coordinate stuff on their own, which is really timely, really costly. And it's just far more prescriptive about what you want done and what you want shipped, which I think just creates clarity for where the company's going. As a part of 2.0 to 3.0, did you change your day-to-day of leadership? Did you change how you think about organizing your day, your months? What? What did you do?

52:25I spent a lot of time reviewing work. A lot of time. Of just like probably half of my time. And reviewing work is like a team comes to me and it's like, hey, we're going to ship this. or thinking about this marketing campaign or this offer or just like whatever, like anything or just PR strategy, whatever it is. And just spending far more time actually reviewing the work itself with people that I trust and reviewing, but also jamming on things with the teams that are actually doing it. So I spend probably, I would say a third of my time on sort of traditional CEO duties, like running the leadership team, running my direct reports and all hands, things like that.

53:16Then a third in like reviews and then another third in like one or two projects that I'm typically involved almost as an IC, actually, you know, pushing things forward in a direction that I believe in something that is like company affecting to some degree. And two thirds of that, if you think about it, It's like, it's not about like managing a team of people. It's just like, you're just critiquing the work. And a lot of it is the taste making of like saying, this is the bar for what we want in terms of the things we ship and the reviews that we're doing. And here's the ways in which I want to personally influence the direction of this initiative or project that we're building.

54:00Are you writing code? I actually am now because I'm getting pretty involved in the AI coding tools. cursor I played a windsurf a little bit over your weekend it's good it's pretty good both of them are pretty good I played a little bit of Devon and verse cell and v0 yeah we've been pretty impressed on the prototyping side so retool one of our customers we've played with it as well a lot in some in some interesting things internally so I'm actually doing but but not as much from the perspective of shipping things but from the perspective of like learning the physics of what he means to be a soft engineer in this new ai era were you worried about the perception of this extreme level of change internally externally either both both no i think like actually not really because like the thing is like people also to be fair you didn't have much to lose at that point like it was not like you were doing it during the yeah i mean i think i think growing 3x i think people people forget a few things like first is um

55:23um people complain a lot about change but not changing is so much worse because when we did brex 3.0 like we didn't know it would whether it would work or not i just knew it'd be different it's like maybe like maybe it's not gonna work but it's for sure gonna be different than where we are now um and and i think like that's a good thing because like if you if you have enough of a growth mindset and you're like trying to learn from mistakes and like seriously internalize them and understand how to change or pass decisions to get to a better place, change is effectively the clock speed of the engine.

56:08It's essentially the speed in which everything is happening in the company. And I think, of course, there's too much change, and I think things need to compound, and I think now things are compounding in a very different way than it used to in the past, at least in the last few years. But I think people are more afraid of change. And I actually think companies can take far more change than people think, far more. And I remember this, like, you know, first time we did a layoff in like 2020, you know, someone told me, oh, you know, like companies never recovered from a layoff. And I was like, what?

56:44And it's like, yeah, you know, X company, Y company, Z companies did layoffs, they never recovered. And then people told us again. And then people said, well, companies never recovered from like more than a 50 % change in the leadership team. And it's like, these things are not true. Or companies never recover from slowing growth. 100%. That was a big one. And that everybody was like, yeah, companies, like, you know, it's really hard to reaccelerate growth at scale. You know, the sort of hundreds of millions of dollars revenue range. And you're like, sure, like I hear you, right? But you're talking about like, this is like, you're talking about the stats.

57:21Like, oh, these are the stats against you or in favor of you. And I think, like, as an operator, right, I think, like, you don't live in a world of stats. You live in a world of black and white. Like, things are going to work or not going to work, right? And you're trying to make them work. Whereas, like, I think investors are looking at it as a sort of a range of outcomes and a range of probabilities of what could happen. but but i think like at the end of the day like it's all about the work that you ship and the work you put out there so it's like so it's almost like reducing to a very simplistic framework and and and it's almost like what is the quality of the product we're putting in front of a customer and if that gets better like everything should get better and what is the quality of how actually selling and explaining the value of this to customers versus everything else that exists is that experience getting better and if it is getting better everything should get better so i think you almost have to be uh sort of ridiculously reductionist to say like okay if the building blocks if the atoms of what constitutes the company's success are working well and i think that's like the quality of your product the quality of your go-to-market and the quality of your people right so if these three things are there um it's almost like just give things time and the results will probably come but but but but it's like but the thing that's hard is there's no feedback loop until things are working right and i think like i remember like three months into brexit 3.0 or four months into brexit 3.0 people are like are things working and people ask me in turn like is it working or not i'm like i don't know if it's working i just know that like the quality of the product is higher and I just know that the quality of the people is higher and I just know that the quality of how we're selling and the go-to-market execution is higher.

59:16That's all I can tell you. And I believe these things to correlate very highly with a company being successful. But that's all you have, right? There's not much more than that. So I think these are the things to focus on and change everything in service of these three things working and kind of ignore the noise. when you promote the engineer engineering manager into the cto were you not worried about backlash internally or perceptions around to move that extreme yeah i mean first like our our our previous cto was like very much on board with a plan and very involved in the transition right so so he was very so i think like his support probably helped internally sure um two like i one of the things that i this may be a little controversial but um i think it's true is like like you as a leader like you are not in the job of converting people right and i think a lot of people are like oh like you know come here do a save call because this person is like supposed to leave and they may go to a company and it's like you can't control that like people like all you have to do is say here's the way we're going to do things and if you believe in that that's awesome we're going to go crush it and if you don't believe in that honestly you should probably go and i think the a lot of the psychological challenge of turning the company around, and I think of doing any kind of big change in a company, is that you see a lot of people leaving because they don't believe in the thing.

1:01:17And they say, well, you know, like and there's all these reasons of like, well, this other offer is great or, you know, like, I've been here for too long. And I think the only way to not be psychologically crushed is if you say, look, there's going to be believers and non-believers. And it's actually fine if they leave. And it's not frowned upon. And I'm friends with a lot of people who left the company. And they don't believe in the direction that we're going. And we have great relationships. And that's great. but there's a very big difference between whether they believe in the way you're doing things or not and and and there's no such thing as converting someone all you can do is tell them hey here's how we see the world here's how we're going to do things and of course you have to live by these things you can't just say them and not do them but assuming that it's actually happening uh some people will self-select out and that's a positive right that that is the culture uh creating enough pressure in itself that people are saying, maybe that's not for me.

1:02:23And we did a lot of things that were unpopular, right? We said, hey, I'm going to be the chief product officer and I'm going to edit the roadmap and say exactly how I want to build things. A lot of people said, this is not for me. A lot of people in product said, this is not for me, right? Then we said, we're going to go back in person. A lot of people said, this is not for me, including a lot of leaders in the company that said, hey, I like working remotely. And we're like, we think a culture of intensity is important and intensity is easier done in person and and building connection amongst the people that are working really hard is easier in person um another thing that we did is we said hey like we we will we will we will focus a lot more on the actual work than on managing the people that do the work doesn't mean managers not important but it's going to be secondary to what we ship a lot a lot of people don't like that a lot of people believe that their careers are being managers and managing people building teams and and and and and also something unpopular and every time you do one of these things some people leave and and the thing is like you have to almost reframe it and be like that is actually the system self-correcting itself and people uh choosing to be aligned to people that have similar beliefs and they're going to hire other people to have those beliefs and will actually amplify the thing they're trying to do forward because that is what the culture is the culture is like It has to have some level of antibodies to things that you don't tolerate, right?

1:03:51Because otherwise, if it's like bland and something that like anybody can fit in, anybody can belong, anybody can do this, then there's no meaning behind your choices, right? Because it's not creating the right selection pressure. What else did you do that you think was controversial? Maybe controversial internally. um like on the comp thing did you actually reduce people's reduce people's cash to some people yeah and increase their equity a lot of people and you increase a lot of people's equity people that you thought were valuable they're valuable like that you would have promoted 100 and you said hey we think you're one of the best stars in this company we're gonna lower your cash yeah and and we had this model that feels controversial yeah it is controversial and and i think like the belief that i had is like people are not going to get rich here on on cash they're not going to make money on cash cash will be the way they pay for their everyday expenses and their life and you know their sort of immediate life needs but you're going to build like generational wealth through your equity and and i think like people believing in the value of the equity is like a very important thing in a company and and and you know and we wanted to make sure that everybody had that to some degree so we looked at how much people owned and their ownership and their stake and different valuations and things like that and and we sort of readjusted some of that and a lot of people in the past model you know back in the day you could basically choose freely between how much cash and equity you wanted in your comp model which was kind of a Zerp idea.

1:05:33And that created people that just selected more cash. And some of them were low performers and we just ended up parting ways over time. And others just had sort of historical baggage that we said, hey, we're changing our philosophy and we'd love to have you on board, but there's going to be a change. And by the way, everybody's changing. So the other thing is doing consistently and we said hey there's a max salary cap in the company of x um no one makes more than x including me including everyone and you're gonna be at that max because you're above the max today um and that was like really healthy just creating that like um collective sense of like everybody's giving up something in order to get the things that were actually what about what about bonuses um can you we don't do bonuses today uh nobody except for sales except for sales yeah uh i i don't really believe in bonuses personally um i i think they have a role when the company's cash flow positive and profitable we're not there yet although well we're getting closer um i would say like i think like bonuses can create a culture of like rewarding like spot performance versus a consistent performance and and i think like the fundamental belief that i have is like i think comp is like a hygiene factor not a motivating factor which means like um uh sort of uh

1:07:17too much comp doesn't mean job satisfaction just means lack of job satisfaction

1:07:28so said differently when people are not compensated enough for their roles of course that affects them because there's a sense of fairness and there's a sense that they're not being rewarded but once they are at a threshold and I really believe in paying people really well when we do that um i i believe the best people are not motivated by the money they're motivated by the sense of doing great work and and and being part of something that is aligned to their values and something that is aligned to their sense of identity of what they are putting out there in the world um because i am that way you know if i were to do this for money i would have stopped uh um and i think a lot of founders are similarly right and and and and and i think that's true for for a lot of people uh that are great at their work like and and and of course like people make a lot of money at breaks of course like there's going to be a lot of like people that you know create generational amounts of wealth through the company and and we're really excited and proud of that but but that said that's not the why that is the outcome the why is because they believe in that way of working i think um are you in the talk about this however much you want are you in the camp of like you want to take this company public are you in the camp of a stripe like i want to stay private for longer i don't know do you have a philosophy around that i'm not actually asking you when yeah um our philosophy is like whatever like how how do we compound this thing for a long time right and um and and you know we're gonna go public at some point um the timing is dependent on the predictability of the business on the market there's a lot of variables there um but for us like we're religious about like but the market's ready right now.

1:09:23I think there's a ton of appetite. Yeah, I think for like quality growth companies. And you could argue that you're like your business is in a pretty good spot. Part of me is like, I just had the amplitude founder and CEO on Spencer, do you know, Spencer? Yeah. And they went out at 100. And what was really interesting was he was like, Look, I view it as my fiduciary duty to take this company public. Like, I think that what we have lost in company building today is this implicit agreement that I make with my stakeholders, whether it's employees or shareholders, to take this thing out. Like, I think when you raise an A, that's, like, the agreement that you're going to really try.

1:10:04Yeah. And I don't know. It seems like nobody really cares about that at all right now. I think we definitely care about it. The thing for us is, like, and I talk a lot about this, is, like, going in public is very easy. going public is you hire a bank you run a process and you're public the question is what happens after you're public and and the thing that matters i think is like you want to be a public company with low volatility and very high predictability in your business because the the the way i think a lot of people have done this wrong in the past in my opinion is you go public when the market conditions are right but the company conditions are not right right right and i think you have to time both right and and the market being right is great like but you know brex for example today like we're actually ahead of the plan this year uh and we're ahead of the plan last year but two years ago we're behind the plan so so then the question becomes like to what degree can you predict the business ahead to to to to build a level of confidence yeah to be a public company that people understand exactly the trajectory of the business and can model that out and essentially have lower volatility than a lot of companies that went public in 2021, for example, that today traded a fraction of the value, not because the fundamentals of the business are worse, but because the confidence that you can have in the security, in the stock, in the underlying business model are just not there.

1:11:29And I think that's like a lot of what we spend cycles on. How do we build this level of rigor and confidence? So the business is also ready, not just the market. Yeah. But like, let's take, we were talking about Zuckerberg and Meta earlier. like do you think that's a high predictability like do you maybe do you see that as a low volatility business i mean given the scale they operate uh uh for sure right i think like when you think about like the like the the they're taking big swings the volatility of the stock is different than the volatility of the business right i know but even the volatility of the business is what i'm talking about like they're doing big swings 100 and by the way their volatility when they went out was also quite high because they didn't have a good mobile story 100 100 but they said screw it like like to your point about like going from 2.0 to 3.0 you don't know the outcome but you know it's going to be change yeah and change is good like you rationalized it once already yeah i don't know i'm just spitballing with you i don't actually like i have no yeah we we definitely want to go public uh it's definitely the future for us i think the The timing is something that we want to do it when the level of predictability in the business is very high.

1:12:49And we can see years ahead, not just like a quarter ahead or two, but we can understand the physics of the customer acquisition and everything that's happening to a degree that can allow us to predict many years ahead. Yeah. And the markets are in a good place. and and and i think you know the way i've always sort of build this company assuming that i'm going to be the one running it later so a lot of companies see an ipo as like a destination yeah and the reason why this discussion for me is like a little harder to engage is like i see an ipo as a point in time because i'm going to be the one later totally dealing with whatever happens right so so i think like the to me the maybe to compliment spencer i think like if you do share duty is taking the thing public and being a great public company, right?

1:13:36And being a great public company that people are excited to double down and invest on. And I think a lot of what we're thinking about is like how to build the shareholder base and the mindset and everything in service of compounding, including the decision of going public. And I think honestly, when it gets to a higher level of predictability, which I think now we're getting to, public markets are actually better to compound right versus private markets that that are more used to volatility there's more reward if you are if you're very predictable in in public markets compared to private markets in my opinion yeah i totally get it this is not like a gotcha when are you going out but but i do think it's interesting like this idea of predictability i wonder if we oversubscribe to how much control we believe we actually have around the future state of these businesses and And, you know, like part of the reason I'm asking myself this question and then kind of just thinking out loud with you is like, I don't know.

1:14:35There's like 50 macro things that are very unpredictable right now. Yeah. That could change a lot for you as a business. Like we are at the whatever top of the first of the biggest technology change that you and I will probably ever see in our life. Yeah. I don't know what that means for your business, but it's probably going to lead to some unpredictability. you know like like there's just all these things that are good and then let's just say like then something happens in the funding markets yeah right like it was predictably good in the zirp area and now it's then it became predictably bad it's like kind of unpredictable you know like it happened like that yeah so that's my only like i don't know i'm just like thinking out loud about those like how much control do we really believe we have yeah is good timing ever a thing yeah uh i believe in bad timing you know but is good timing ever really a thing yeah and i think like we we when i when i think about like look i spend like so much more of my time internally than externally right i spend like 80 of my time maybe 90 of the time inside a company uh and the 20 percent the 20 percent i spend outside is like almost exclusively with customers and and and and rarely doing things like that and like like this and i think like part of the the the reason why is is because like that is what we control right the only thing we control is like our execution right and and the way to your point about like the the stock stock going up or down and all that in in in in in public markets like the only thing we control is like how many customers are we acquiring?

1:16:18Are we serving them really well? Are we shipping a world-class product? That is, to some degree, the only things you control. And there's something freeing about saying the market dynamics are what they are. Banks will worry about that. What we're going to worry about is the operational levers that the business has. And I think that is what we obsess over. And the markets are eventually going to be in a position that's like sort of an obvious decision. And by the way, I'm not saying like, I think the takeaway for me, hopefully from this, is like we want to go public when we can be a great public company for decades.

1:17:01Totally. And that's like the promise, I would say. Yeah. And by the way, I actually think most of the companies that could be public right now that aren't are almost without exception, the ones where the founder is like, I'm going to be running this company in 10 years when we are public. Like, I have to bear the weight of this decision. And to be clear, I think there is no fear in running a public company. I think the fear is that the bar gets sufficiently higher in the level of predictability of the business. And I think we take that very seriously. Yeah. More than anything. I think like, you know, we see exceptional founders.

1:17:46We see like Zuck, obviously, Meta. We see Elon and Tesla. We see so many people compounding in public markets. And that's totally possible. And eventually the outcome for us, I think, is just a matter of like, when are we at the bar to clear the hurdle? Yeah. Do you think about what you, if you're running this company in 10 years, like let's imagine yourself in that seat. Yeah. Do you think about what would have to be different? maybe what you would have to be doing differently to think about the idea that you have been at the helm of brecks for at that point it'll be basically 25 years no 20 years 20 years 20 years like you're at your half-life now you think about yourself in 10 years continuing to run this company like do you think about what how you would have to readjust your life in order to get to that point i mean i don't think that much changes right because like it's just like you know i'm i'm getting married this year and it's like probably thank you i'll probably be married to the same person with a family hopefully um you know living in the bay area coming to an office working people i like so so i think it's like again the sort of point earlier like life is a picture but you live in a pixel right and i think it's like do you enjoy the pixel that you're in right now and i think like i enjoy it right and i think like as long as you're compounding it into something bigger and more impactful and more meaningful, right?

1:19:12I think like that is the limiting factor in terms of, you know, what does the sort of overall picture look like? And I think if you're compounding the picture, there's no reason why the picture wouldn't look good, I believe. And do you enjoy the pixel that you're in right now? I'm excited about a lot of things that will change with AI, obviously. We think a lot about it in the business internally and in our product. but and what it means for customers um but but that's like the fun part there's like some a little bit of volatility in terms of the world right now so it can take bigger swings have you changed anything from 2.0 to 3.0 or even as you've evolved that running the company on your on your personal side like how you think about your sleep how you eat how you wake up like how you bring all the juice to your work?

1:20:09Do you think about that stuff? A lot. I mean, my mental model is like, I think like the CEO job is like kind of like a professional athlete in the sense that like you have to take a lot of boring but important steps in order to be able to like go out and run. right um and to me it's like there are things i do pretty much every day religiously um what meditate sleep diet exercise and and i do therapy once a week um and if i don't do any of these five things like typically things like start to uh fall the wagon a little bit uh meditate sleep eat workout therapy yeah I'm not I do all those every week do you do all I do all four every day every day every day no matter what what are you the most psycho about of those four meditating meditate meditate like I I mean I'm pretty focused on diet and exercise is the hardest to fit in but I but I do fit in like it takes the most time good four times a week yeah meditate Meditate takes half an hour a day, but I do like every morning religiously for the past like five years.

1:21:34Wow. And it's like, like, doesn't matter which day, doesn't matter where I'm at, doesn't matter like anything. Doesn't matter what's happening in the world. I just like sit down and meditate for half an hour in the morning. And it just helps you like surround yourself. Eating? What about eating? I try to eat very cleanly. I don't eat sugar. I try to eat not a lot of carbs. More sort of protein heavy diet. Um, no sugar. I try to avoid sugar a lot. Yeah. Uh, drinking, no drinking. I don't drink at all. Uh, have you, zero? Did you used to, uh, I used to until like a couple of years ago. Okay. And then I just like fully stopped.

1:22:13It's really, really hot right now in Silicon Valley. I mean, I've been, I've been, I've been out of it for like a while. I don't miss it at all. Yeah. Honestly. My fiance misses that I don't drink probably more than I, that I do to be honest. Uh, uh, you know, she was in New York for a while. Uh, and that's harder there. um so uh what else um and a lot of sleep hygiene uh sleep is hard for me uh is the one that i actually because your mind's racing yeah i i just put like a lot of you have to put a lot of like work in the sort of sleep hygiene like no device in your bedroom i try to meditate before going to bed like journaling some things like that help uh but sleep is the i would say the most challenging one for me i think it's the most amount of cycles to get right yeah um but yeah when you work out so maybe actually when you um when you don't do one of those things is it punitive do you beat yourself up um i mean meditation i just like i just i just i just can't function as well so it's just like i just sit down and do it i just sort of stop what i'm doing and go do it um the other ones i would say it's like it's not like punitive but it's just like there is a tax that you're taking right and there's like a debt that you're accumulating and i think like the like it doesn't mean debt is bad but it can be bad if you do a lot of it right so i would say it's something that you almost you almost keep a balance and i try to be disciplined about it i think it's also like the the thing of like you know i think the job is pretty stressful um and i think it's almost like you have to take care of yourself first before you can take care of others and the sort of expectations or your bandwidth your availability that people would take care of uh you know the amount of energy the company consumes from you right like i think effectively the a lot of the CEO job is just like energizing the company.

1:24:15You just go in and say like, we're going to do this. It's going to be fast. It's going to be good. Right? And these things take energy from you. So I think it's almost like the sort of most selfless thing you do to some degree is take care of yourself because that's what allows the rest to happen. But Pedro, like on a, when you have a shit day, you didn't sleep well the night before, a terrible meeting, somebody quits, you're fiance is like mad at you for something you uh had a worse workout than you wanted to yeah and like do you not want to go and like just eat pizza or something or like go have a drink like do you have like do you not like there has to be some outlet i mean sugar sometimes is an outlet uh i the other one is walking i actually like walk a lot uh uh not not i mean i mostly on the weekends these days but like i try to do everything i do in sf walking um there's something like physiological about you just go out on a walk and you come back and things are like slightly calmer slightly more in place um drinking drinking and and like binge eating especially like things that are very fatty like typically make me sleep worse and make the problem worse um sugar is just like good uh so it's a little different but um i i would say i i think i'm trying to be very mindful like which things actually help and which things which things make the problem worse and some things just makes it worse and then have to deal with a bigger thing later um but uh but you know all that and you know of course like in like i had like mental health crisis in the past and then you know having a psychiatrist involved and potentially taking medication i've taken medication in the past like these things like help as well as a result of work yeah 2021 you went and saw a psychiatrist i mean i saw i see a psychiatrist for the past like four years and a therapist um do you believe that you should have been on medication uh during a crisis absolutely yeah absolutely uh anyone should um yeah stress it's like what was the crisis just deep anxiety like deep deep anxiety like getting in front of a computer opening the screen and like literally not being able to focus you're just like sweating cold um of anxiety um and there's there's a way out of it uh it just takes time and patience and work and great doctor uh and you know a great support system around you of course but your solution wasn't let me not let me stop working uh you have to do that as well the problem is it comes back right you have to sort of integrate the you have to sort of make sense of what's happening why it's affecting you and treat the symptoms and uh and and do things that make you more manageable every day right but but it was like a moment like i had i had a girlfriend back then we had just broken up companies went through a lot of change and you know I sort of sensed some of the things that ended up creating big issues starting to like brew and just like affected me a lot and yeah I was like very anxious very very anxious couldn't sleep yeah couldn't sleep taking meds every day and it's a very shitty state how long did it last?

1:27:54like three, four months. Did you think it was going to go forever? Yeah, for sure. I mean, I think it's like, it's not like, I think the thing is you, I mean, I was like, how old I was back then? 2021. I was like 24, 23, 24. And like, and there's a very debilitating feeling. And I remember like, I was in LA during the pandemic when that happened. It was like the middle of the pandemic. I remember like being inside my house and it was like, gosh, like, I'm like 24 years old. I have like a great job. I'm perfectly healthy. And I cannot function right now because I just, I'm too stressed. And I remember like, it's a very shitty feeling.

1:28:37I remember this feeling of like, you know, jumping in meetings and being so stressed. Like the only thing that would like calm me down was like, go watch a movie, like a Pixar movie. Like a very dumb, like, you know, sort of you know children movie uh to just like calm down um and that's like a shitty state to be in but you learn how to like it's definitely possible you can definitely see how people that don't take enough good care of themselves can get in that state and i do you think it was a result of not doing the things that you're doing now around eating sleeping working out not directly I think it was more like the jobs changed a lot.

1:29:19I think the complexity of the company changed a lot. I think the expectations and I didn't know how to be successful in the role that I was and the sort of scale of the company. And I think my personal life wasn't very clear. I had a relationship. I was then single in a different city. It was a lot of sort of more alone than you used to. So all these things compound. But I think the learning is like, I think you learn a lot about your psyche when you're like, you go through one of these episodes that you're like, gosh, this is like pretty close to the line. And you get out of it because then you're like, when shit hits the fan, and obviously sometimes it does.

1:30:03And I think a lot of what I've tried to do over the years and also Brex is reduce the stigma on mental health. Because every single successful founder I know, every single one, 100 % of them, had some mental health struggle within their company. And there are people that talk about it and people that don't talk about it, but no one that didn't have anything. And I think people don't talk enough about it. There's a big taboo for some reason in Silicon Valley. I think the reason is obvious. People think that it makes them seem less grateful or something for the position that they're in. I think I think it's like it looks everything looks sexy from the outside.

1:30:46Right. And then when you're in it and you see the day to day, it's like less sexy. You see a lot of the problems and a lot of the things that don't look great. But but but there's almost this thing of like, wow, like, am I alone in this? right and and i think like when you sort of go through it and you really hit pause and you like talk to other people about it and it's like this is like a very debilitating state um you learn that it's far more common than you think it probably was even exacerbated the feeling like you were probably renting in la at the time like rented a house yeah i was like renting a house probably like a sick house you know like i mean it was me was me and my co-founder and actually his girlfriend back then um and uh it's just got to be even lonelier when you're like i have it all like i'm living in this amazing place yeah covid times and you know rentals in the pandemic but yes yeah yeah yeah uh but you know what i mean like i'm the founder of what everybody is telling me is the hottest company you know i think it makes it worse it makes it lonelier it makes it makes it um uh probably more uh i i i think people have very um like reconciling like i i think the gap between external perception and reality is something that like keeping an eye on is like always like important because when the gap gets too big um in either direction typically it affects people in in some way right i think people are saying and and and sort of for a layer of that is like things are never as good as you think never as bad as you think right um most of the times so so but when you're in the verge of it and and things feel like oh my god i'm so anxious as like things are so stressful and so bad or like oh my god i'm so amazing and so good and everybody wants brex or you know the my my company or whatever it's also not that either right so i think it's grounding to understand that and especially with like social media and and you know the way we consume information today like you know uh extremes get far more weight than they probably deserve.

1:33:11Thank you for doing this. Happy to. This is fun. This is really fun. Great interviewer. I really appreciate it. I appreciate you. Thank you for having me. Are you hiring? We are hiring, yes. Brex.com slash jobs. Anything in particular or everything? Everything. And customers too. Anyone that needs to manage spend on corporate cards, banking, bill pay globally in the U.S., startups all the way to enterprise customers. All the way to the government? All the way to the government, hopefully. Hopefully, fingers crossed on that one. Shoot his back. So, yeah, looking forward to serving more companies.

1:33:48When you hear the word grit, what do you think of? Resilience. It's just like the ability to keep showing up. Even when like shit's not good. and uh and i think like people are i think like good i think like people get people are sort of known by like the best days right obviously but they are defined or shaped by like the really shitty days that are like not the ones people want to talk about or people thought about negatively and I think the resilience of like during those things is probably the way I think about grids thank you that's it for now if you like the episode please leave us a review or go back into the archives where we've done more than 200 episodes with some fantastic folks this podcast is a Kleiner Perkins production and I'm Jubin thanks for listening

1:34:56We'll be right back.