People who don't have credit? I used a debit card at one point, though I don't anymore.
But also, they're looking at moving their credit cards to Discover as well, which would make huge waves (both in the credit card/banking world, and for their customers, who would probably find it very annoying).
Setting your incredulity aside, I'm curious why you think using a debit card would be so shocking. I effectively don't use a credit card at all: I use a debit card (or an equivalent Apple Pay representation thereof) exclusively. From my perspective, if I want something and I have the money, I'll pay for it. If I want something and I don't have the money, I won't pay for it. I don't often want things outside my budget (and I am not well-off, as a grad student), so I don't often feel any pressure to amortize the purchase over time with a credit card. And I prefer that state of affairs, because I don't want to get in the habit of using someone else's money if I can't afford to pay them back.
This isn't a value judgment on people who do use credit cards. There are plenty of reasons why using a credit card by default would be appropriate, and I'm not shocked to hear of someone who does so. But I am curious where your shock comes from.
If they really only raised $1.7b, per Crunchbase, then this seems to me like a very good outcome for everyone involved except its late stage investors. And, even for the late stage investors, they're breaking even.
I assume if you put in 100 mn at a 12 bn valuation in the last round, you're either getting 100 back at 1x pref or you're screwing over the common even more?
Considering the 12bn round was back in 21, I'd expect most of the employee base to be taking a haircut on the value of their options.
No. The last two investment tranches will get back their money, based on 1X liquidation preference. Employees who joined in the last 5 years if they got options are fucked. If they have RSUs then they will take a fraction of their equity.
It sounds like investors got out okay, but employees got fucked big time. It's a terrible exit and Brex waited too long until their growth stalled.
Ramp valued at $32B is a joke. Hopefully this sets a realistic benchmark for valuation. All Ramp did was spend more on ads and marketing. And CEO is now claiming their "AI Agents" are going to do something meaningful.
Feels like a great outcome for Brex. Mercury and Ramp seem to have been chipping away at their leadership position in recent years, so I wonder how their growth trajectory changed over that period.
Fintech exuberance was a symptom of zirp. Brex enabled more credit to folks who couldn't otherwise get credit without a personal guarantee. Zirp and exuberance is over at this point in the credit super cycle. AI doesn't help those fundamentals. Valuations are trending towards fundamentals (based on interest rates, discounted cash flows, etc).
Capital One is paying a fair price for the customer base and infra imho to add to their business customer portfolio.
Congrats to Brex et el on their incredible journey.
> Brex is a financial technology company, not a bank. The Brex business account consists of Checking, a commercial checking account provided by Column N.A., Member FDIC, and Treasury and Vault, cash management services provided by Brex Treasury LLC, Member FINRA/SIPC.
Stripe has for years helped non-EU companies to do tax fraud in the EU, and in a just world their management would be charged.
Every time a customer in the EU pays with Stripe, they exactly know if they are a private customer or not and in which country that customer is located in. Stripe also knows who the counterparty is ("their merchant").
Yet Stripe systematically enabled their merchants to avoid paying appropriate VAT for sales to private customers in the EU. The merchants would send you a "receipt" and then go dark, no proper invoice provided and no appropriate VAT payments to the EU made.
Their merchants could write fantasy names on the invoices, Stripe would not check or correct anything. They simply ignored the whole Mini-One-Stop-Shop in terms of VAT.
That's the "benefit" of using Stripe, they had very happy merchants who didn't need to pay taxes when selling digital products to EU customers.
I had to light a very big fire under their ass for them to provide proper invoices. I have zero indication they systematically remediated the tax fraud situation and actually paid the EU the VAT that Stripe merchants owe if you'd look into Stripe's accounting.
Years ago I took a chance on hiring an engineer fresh out of a software bootcamp. Turned out to be one of the best engineers I have ever worked with - so much tenacity and thirst for learning new things. They went on to join Brex when the company was just starting out. What an awesome exit!
Hopefully they had the confidence/insight to negotiate properly. I went through BN$ exit (was employee 19) early in my career and unfortunately, only select people at the top got retirement money. The most frustrating part was the Big Co. execs that came in much later, did literally nothing, and got a massive payday. Lesson learned though...
whatever they value their options at in negotiations, multiply that by 0.1-0.25 to get the real value in the best outcome for a late stage startup (series B-C+) as a common employee
Without information about the cap table and liquidation preferences, assume the cash you are getting is the only compensation you will receive. To make it easier, if you are not using your lawyer during negotiations, I would assume the cash portion is the only compensation.
Now I'm wondering if I should've accepted an interview with them. For a while Brex was spamming me with recruiter emails like no other company had done before it.
Pretty steep haircut from their $12b peak in 2022. And that's before you factor in their revenue that's grown 2.5* from ~$312M in 2022. If their figures are to be believed, Capital one is getting an asset growing 50% YoY, for just 7* revenues.
Maybe just pull a Bending Spoons after the acquisition, layoff most of the staff, and bring a lot of ops in-house and they'll be in profit ASAP.
I guess it's not a bad Brexit.
Capitalone is going to need something to make up for switching all their debit cards from MasterCard to Discover
Who in the world uses debit cards
People who don't have credit? I used a debit card at one point, though I don't anymore.
But also, they're looking at moving their credit cards to Discover as well, which would make huge waves (both in the credit card/banking world, and for their customers, who would probably find it very annoying).
Setting your incredulity aside, I'm curious why you think using a debit card would be so shocking. I effectively don't use a credit card at all: I use a debit card (or an equivalent Apple Pay representation thereof) exclusively. From my perspective, if I want something and I have the money, I'll pay for it. If I want something and I don't have the money, I won't pay for it. I don't often want things outside my budget (and I am not well-off, as a grad student), so I don't often feel any pressure to amortize the purchase over time with a credit card. And I prefer that state of affairs, because I don't want to get in the habit of using someone else's money if I can't afford to pay them back.
This isn't a value judgment on people who do use credit cards. There are plenty of reasons why using a credit card by default would be appropriate, and I'm not shocked to hear of someone who does so. But I am curious where your shock comes from.
Brex's CTO recently came on LS to talk about their AI strategy and tech: https://latent.space/p/brex
Tough outcome for many involved given peak valuation @ 12B
For many?
Why are people saying this seems like a bad deal?
If they really only raised $1.7b, per Crunchbase, then this seems to me like a very good outcome for everyone involved except its late stage investors. And, even for the late stage investors, they're breaking even.
I assume if you put in 100 mn at a 12 bn valuation in the last round, you're either getting 100 back at 1x pref or you're screwing over the common even more?
Considering the 12bn round was back in 21, I'd expect most of the employee base to be taking a haircut on the value of their options.
assume it's the $1.2bn paid back to investors and then some divvying of the remaining amongst investors, founders, and common
No. The last two investment tranches will get back their money, based on 1X liquidation preference. Employees who joined in the last 5 years if they got options are fucked. If they have RSUs then they will take a fraction of their equity.
It sounds like investors got out okay, but employees got fucked big time. It's a terrible exit and Brex waited too long until their growth stalled.
Hopefully those who joined took the all-cash option when that was still available.
Should they have continued growing for a while before selling or was now the best ever time?
I feel like one of their primary investors wanted out. It was probably not the opportune time considering the cost of money right now.
Do you think the founders were strong-armed and are pissed at this outcome?
Economy’s maybe at risk… see housing starts esp.
Ramp valued at $32B is a joke. Hopefully this sets a realistic benchmark for valuation. All Ramp did was spend more on ads and marketing. And CEO is now claiming their "AI Agents" are going to do something meaningful.
If Ramp is getting all the business, is there any reason to think they wouldn't command a much higher valuation?
Brex killed a ton of their customer relationships to "refocus" on larger biz. That created a lot of negative sentiment for the brand.
> All Ramp did was spend more on ads and marketing
That's distribution. It matters.
Ramp has a much more synonymous name, better recognition, and less bad reputation.
Feels like a great outcome for Brex. Mercury and Ramp seem to have been chipping away at their leadership position in recent years, so I wonder how their growth trajectory changed over that period.
Fintech trading poorly. Also Brex didn't successfully make the AI pivot like their competitors at Ramp
Fintech exuberance was a symptom of zirp. Brex enabled more credit to folks who couldn't otherwise get credit without a personal guarantee. Zirp and exuberance is over at this point in the credit super cycle. AI doesn't help those fundamentals. Valuations are trending towards fundamentals (based on interest rates, discounted cash flows, etc).
Capital One is paying a fair price for the customer base and infra imho to add to their business customer portfolio.
Congrats to Brex et el on their incredible journey.
This looks like a bad deal for Brex as they were valued at 12 billion.
Capital One got a nice discount.
Does this mean Stripe is worth $1B?
Different businesses. Stripe main business is a payment processor. Brex provides credit.
From website footer:
> Brex is a financial technology company, not a bank. The Brex business account consists of Checking, a commercial checking account provided by Column N.A., Member FDIC, and Treasury and Vault, cash management services provided by Brex Treasury LLC, Member FINRA/SIPC.
Stripe is a much bigger business with hands in all sorts of instruments, chiefly payments processing.
Do you know how many businesses move money on Stripe rails? It's wild.
Stripe has for years helped non-EU companies to do tax fraud in the EU, and in a just world their management would be charged.
Every time a customer in the EU pays with Stripe, they exactly know if they are a private customer or not and in which country that customer is located in. Stripe also knows who the counterparty is ("their merchant").
Yet Stripe systematically enabled their merchants to avoid paying appropriate VAT for sales to private customers in the EU. The merchants would send you a "receipt" and then go dark, no proper invoice provided and no appropriate VAT payments to the EU made.
Their merchants could write fantasy names on the invoices, Stripe would not check or correct anything. They simply ignored the whole Mini-One-Stop-Shop in terms of VAT.
That's the "benefit" of using Stripe, they had very happy merchants who didn't need to pay taxes when selling digital products to EU customers.
I had to light a very big fire under their ass for them to provide proper invoices. I have zero indication they systematically remediated the tax fraud situation and actually paid the EU the VAT that Stripe merchants owe if you'd look into Stripe's accounting.
Stripe aren't a MoR for most customers. This comment makes no sense.
Years ago I took a chance on hiring an engineer fresh out of a software bootcamp. Turned out to be one of the best engineers I have ever worked with - so much tenacity and thirst for learning new things. They went on to join Brex when the company was just starting out. What an awesome exit!
Hopefully they had the confidence/insight to negotiate properly. I went through BN$ exit (was employee 19) early in my career and unfortunately, only select people at the top got retirement money. The most frustrating part was the Big Co. execs that came in much later, did literally nothing, and got a massive payday. Lesson learned though...
That really sucks. Any advice on how to "negotiate properly" to avoid a situation like this?
Just assume startup equity will be worthless (which it almost always is).
whatever they value their options at in negotiations, multiply that by 0.1-0.25 to get the real value in the best outcome for a late stage startup (series B-C+) as a common employee
Without information about the cap table and liquidation preferences, assume the cash you are getting is the only compensation you will receive. To make it easier, if you are not using your lawyer during negotiations, I would assume the cash portion is the only compensation.
Now I'm wondering if I should've accepted an interview with them. For a while Brex was spamming me with recruiter emails like no other company had done before it.
https://www.ycombinator.com/companies/brex
https://www.clay.com/dossier/brex-funding
https://www.brex.com/
Brex post: https://www.brex.com/journal/brex-and-capital-one-join-force...
Pretty steep haircut from their $12b peak in 2022. And that's before you factor in their revenue that's grown 2.5* from ~$312M in 2022. If their figures are to be believed, Capital one is getting an asset growing 50% YoY, for just 7* revenues.
Maybe just pull a Bending Spoons after the acquisition, layoff most of the staff, and bring a lot of ops in-house and they'll be in profit ASAP.
If growth rate was really 50% YoY, their investors would not let them sell for $5 billion.