[HN Gopher] About Last Week's Announcement
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About Last Week's Announcement
Author : collectedparts
Score : 52 points
Date : 2022-06-23 18:26 UTC (4 hours ago)
(HTM) web link (www.brex.com)
(TXT) w3m dump (www.brex.com)
| colechristensen wrote:
| The issue is not at all transparency, if your company once
| creates a business emergency by firing a significant portion of
| your customers, there's really no reason for anyone to trust you.
|
| If you're doing it for money, you're either financially weak or
| just cheap and looking to save cash by making your fired
| customers reengineer to accommodate a new provider.
|
| The only way you can fire a huge swath of customers like this is
| to provide them with an essentially unbounded offboarding runway
| and being willing to grandfather many in, perhaps raising rates
| after a generous grace period to encourage departure.
| bound008 wrote:
| This point is very interesting. I was watching a PG interview
| on YC's resources for startups.
|
| An audience member asked about how to get pricing right early.
| Part of PG's answer (from autogenerated CC):
|
| you can always change your prices later though if you want to
| lower your prices no one's gonna complain and if you want to
| raise your prices you just grandfather your existing users
| which if you have exponential growth will always be a tiny
| subset of your total users and then no one will complain about
| that either
|
| https://www.ycombinator.com/library/85-a-conversation-with-p...
| whiskeytuesday wrote:
| Brex was pretty rude to me in twitter DMs about two and a half
| months ago when I had had trouble trying to sign my startup up
| for their services. They said that my business wasn't appropriate
| for their service even though they had no information about what
| my business is or was, and when I asked for details they said
| that couldn't be shared with me.
|
| Parts of my messages to them are pasted below, the responses were
| to say the least unhelpful.
|
| > ...We tried to apply for a Brex account last night but our
| application was automatically declined with no explanation as to
| why. I have read your FAQ closely and believe this must be a
| mistake as your company claims to be essentially designed for
| scalable software start-up companies, even prior to incorporation
| and without so much as a website. We are incorporated, have a
| website, and have a significant codebase already. Please let me
| know if you can figure out whether this was a mistake or not, and
| if not by what criteria we were disqualified.
|
| > Your team's response does not answer any of my questions. It's
| just a longer version of the automated response given by the
| website in the first place. Your marketing disagrees entirely
| with your company's actual behavior.
|
| > I don't think you are [sorry]. You have no idea what my
| business is or how it operates. You have no way of knowing that
| information and therefore no way of making that determination now
| or at any time in the future. Your website is completely
| contradictory to your behavior. If I ever do manage to get ahold
| of anyone accountable in your organisation I will be sure to
| share screenshots of this completely user hostile customer
| service. If not, I'll be sure to publicize these interactions
| when my company has found someone more reasonable with whom to do
| business. I'm literally trying to give you money and being
| refused for reasons which cannot be shared with myself. This is
| absurd and exactly why people hate bankers. Isn't this exactly
| what you people set out to change?...
| r2sk5t wrote:
| We switched to Ramp earlier this year because Brex couldn't get
| their banking integration to work, which impacted our credit
| limit. Fortunately, we moved everything to Ramp long before the
| recent email from Brex firing us as a customer. We like Ramp
| because the banking and Quickbooks integrations work.
| gjs278 wrote:
| mherdeg wrote:
| Hard to avoid the appearance that they:
|
| * paid $1000+ per "small business" acquired in early 2021 (those
| were some sweet signup bonuses over on the travel blogs!)
|
| * raised $700M+ cash in Apr + Oct 2021, and negotiated a higher
| price per share by adding a slide showing exponentially more
| "small businesses" on board
|
| * got them all offboard once the accounts no longer had value
|
| This feels a little conspiracy-theory'y. I guess you would want
| to validate this view by
|
| * waiting until the recession has started and finished
|
| * watching for them to pivot and re-onboard this customer base
| again with more sweet offers
|
| * expecting them to be in the middle of another funding round
| when the deals come back
| bombcar wrote:
| Wait $1k per? I bet half or more of those "small businesses"
| are just people getting the bonus.
| fooobar124 wrote:
| Not only that, but the deal terms and conditions quite
| explicitly didn't include industry-standard rules limiting
| bonuses to one per person... many many many people got
| multiples.
| bombcar wrote:
| THAT starts to sound suspiciously like intentionally
| encouraging multiple signups to juice numbers. Shades of
| the dollar coin fiasco again.
| eins1234 wrote:
| I don't know... If I had to guess, this sounds more like
| incompetence than malice to me.
| nick__m wrote:
| It almost sounds like brex took a page from Bre-X1 !
|
| 1) https://en.wikipedia.org/wiki/Bre-X
| indymike wrote:
| Announcing you are doing something bad to customers, and then
| having to publicly justify it again might be a signal you need to
| revisit the decision.
|
| Firing customers is a great thing to talk about at seminars, but
| in reality, every relationship you end unilaterally has ripple
| that can turn into choppy seas in the future.
| absherwin wrote:
| These criteria are such a low bar that merely stating them
| upfront would have changed the discussion last week.
|
| I wonder if these were the original criteria or if this is a
| partial walk back. The SBA usually defines a small business as
| having less than 500 employees even if it has significant
| revenue.
|
| If I had been asked to guess the criteria based on the initial
| announcement, I would have guessed 500 employees, $100MM in
| revenue, or $5MM in money raised with some exceptions for top-
| tier investors or other judgmental criteria.
| bfgoodrich wrote:
| sithlord wrote:
| It's always hilarious to see these blogs from companies who are
| trying to save face. Literally no one would be wise to use Brex
| at this point. What are you going to do next, change it to 750k
| in cash - because 500k isn't your definition of a startup or a
| scaled company anymore?
|
| What happens if my annual revenue drops from 1 million to 990k,
| is there some leeway there? where does the leeway stop?
|
| The more concerning one is this:
|
| >Tech startups who are on a path to meeting the criteria above,
| and are referred by an existing customer or partner.
|
| So - is this your way of saying, if we have a well established
| company and they recommend there company they invested in, you
| are going to hold onto them even if they are no where close to
| the "criteria" because you are scared you'll scare off your whale
| of a customer? .....i mean at least you very willingly admit to
| nepotism.
| KennyBlanken wrote:
| Don't forget that the CEO came onto HN and posted a comment
| talking about how _difficult_ a decision it was.
|
| Dude's a walking poster-child for why someone who is in their
| early twenties should not be worth hundreds of millions of
| dollars.
| corywatilo wrote:
| "which created confusion about which companies Brex would still
| serve."
|
| Created confusion?? Brex literally sent out an email telling me
| my account was being closed. But yeah okay, let's call it
| "confusion". This is a non-admission of guilt.
|
| Don't put it on your customers failure to understand what you
| mean when this is literally what you sent:
|
| https://twitter.com/watilo/status/1537513616324415492
| pavon wrote:
| Yeah the fired customers had clarity. The confusion was among
| all the existing and future customers that Brex wants retain,
| but who now question whether their business is still supported
| and for how long.
| smegsicle wrote:
| hahaha that's brutal
|
| last week: "we've decided to close your account, you have one
| month to f off"
|
| this week: "We didn't clearly communicate who qualifies as a
| Brex customer moving forward, the truth is you're dead weight
| so f off (you have three weeks)"
|
| edit: lol whoops deadline was aug 16, but i read it as july 16,
| which made the numbers sound a lot punchier.. still brutal tho
| hansword wrote:
| They have this great quote on their site:
|
| > 95% of customers say switching to Brex is easy.
|
| (1) apparently getting kicked out is easy too. a bit tonedeaf it
| is.
|
| (2) those who thought it wasn't easy likely aren't your
| customers.
|
| I don't know anything beyond what is written on their website,
| but everything I see sounds far too buzzwordy for my taste to
| really take seriously.
| namecheapTA wrote:
| 75% of people assembling a kit car said it was pretty easy!
|
| Ignoring that 95% of people looked at the parts requirement
| list and instructions and ran away.
| MikeBVaughn wrote:
| "We set a high bar for ourselves, and we didn't live up to those
| standards last week. We're approaching this moment with a Growth
| Mindset, and squeezing every drop of learning from the
| unfortunate situation we put our customers in."
|
| _We, us, our. What can WE learn from this? How do WE grow as a
| company? We, us, our._
|
| This is a case study in poor messaging. Look how much of the
| writing is about Brex, and how many sentences use one of 'we,'
| 'us,' or 'our,' and how little is about the actual customers.
| colechristensen wrote:
| Classic case of the attempted response being strictly worse
| than saying nothing.
| [deleted]
| xvedejas wrote:
| Isn't this language exactly what you'd expect from a moment of
| reflection? Pointing the blame back at oneself, and
| contemplating one's own values? I'm not sure that the over-use
| of 'we' is much more than some metric you're making up to be a
| convenient score card for apologies. At least, I'd find a
| criticism of the actual content more compelling.
| MikeBVaughn wrote:
| Tone and semantic content are inseparable, whether we want
| them to be or not, particularly in damage control situations.
| I can envision ways of writing this article that I would read
| with a much less cynical lens.
|
| In particular, I find the emphasis on growth particularly
| galling for the following reason: If I'm a fired customer,
| and you're the company that fired me, what do I care about
| _your_ growth? That 's worth _nothing_ to the fired customer,
| any argument to the contrary is thoroughly illogical. Thus, I
| 'm forced to conclude that it's only about assuaging the
| concerns of the customers they're currently willing to
| retain. The customers Brex left in the ditch still matter
| just as little as they did last time around. I have no stake
| in any of this, but reading their communications over the
| matter leaves a sour note in my mouth, and it seems like a
| completely unforced error. YMMV, naturally, but I don't
| respect their approach at all.
| [deleted]
| RyanShook wrote:
| Funny how just a few months ago Brex was handing out signup bonus
| offers to anyone with an EIN. This move probably makes sense for
| them but wow did they do a poor job of explaining it.
| yodon wrote:
| > Last week we told some of our customers that Brex would no
| longer serve them. We did a poor job explaining this decision,
| which eroded some of the valuable trust we built over the years.
|
| Brex is an intelligence-gathering machine that exists to gather
| data on the finances and operations of your business,
| masquerading as a credit card. I understand why Brex would want
| to build that machine. I don't understand why businesses would
| want to divulge their data to it.
| mousetree wrote:
| Could you provide a bit more information on what information
| they gather (besides the merchants and amounts etc) and what
| they do with it? We're a Brex customer so would be great to
| hear more about this.
| toomuchtodo wrote:
| https://www.brex.com/insights/
|
| > Brex processes a lot of transactions for a wide variety of
| businesses including small businesses, venture-backed,
| ecommerce and larger mid-market clients. Here you can find a
| selection of insights from data we collect that offer a
| snapshot of where startups are spending their money. Check
| back often as we will continue to develop our insights with
| rich data-storytelling and interactive charts to let you dig
| into our data.
| UkrainianJew wrote:
| Therefore, we feel confident in delivering a best-in-class
| service to customers who meet any of the following criteria:
| * Received an equity investment of any amount (accelerator,
| angel, VC or web3 token); * More than $1 million a year
| in revenue; * More than 50 employees; * More than
| $500k in cash;
|
| This sounds like a panic mode statement from someone who never
| even bothered to do product/market/pricing research. If your
| service generates losses for 1-man freelancing shop customers,
| price it accordingly.
|
| Make tiers: unsupported fully automated service => service with
| human support per email => service with phone support and
| customizations.
|
| Price it so that the the first tier is somewhere near the
| breakeven point, and the next ones give you increased margins,
| since bigger customers tend to have larger budgets. Offer
| discounts based on the number of users/transaction volume.
|
| This way you won't need to be unprofessional and pick which
| customers deserve the honor of using your services, as your
| pricing figures it out for you with no drama!
|
| The only reason for this kind of announcement I see is that the
| company acquired lots of low-revenue customers at a loss hoping
| to fudge the growth numbers. Well, shame on them and shame on the
| investors that didn't see through the BS.
| mchusma wrote:
| I am a Brex user, but not an affected user, but I thought this
| was an incredibly dumb decision.
|
| Cut off future people that don't meet your criteria? Fine. If you
| need to cut people off, commit to servicing existing people for a
| really long time (like 3 years).
|
| My trust in Brex is very low, and I already started looking at
| alternatives. They have proven that if their whims change they
| will cut you off and fast.
|
| Contrast this with (for example) AWS. I at least believe that if
| they launch something they will support it for a long time.
| bombcar wrote:
| AWS doesn't launch money-losing services (and if they do, they
| either raise the price or eat the cost).
| Aeolun wrote:
| I love how this 'Sorry'ish' announcement doesn't really make
| things better.
|
| He could have said something like "sorry, but we're still kicking
| you off if you don't meet any of these arbitrary conditions" and
| it would mean the same thing.
| TSUTiger wrote:
| I wasn't even aware of last week's announcement and I don't meet
| any of the criteria...
| csmpltn wrote:
| > "Our decision wasn't driven by financial constraints, but by
| how many things we can do well at once."
|
| In other words - "our decision was driven by financial
| constraints; we can't do many things at once".
| strunz wrote:
| Gotta love internet snark. You really don't see a difference
| between multitasking and budget? They are not mutually
| exclusive or necessarilyeven related.
| imbusy111 wrote:
| Long term, financial constraints are the biggest factor. But
| short and medium term you can be more constrained by the
| organizational capacity to make decisions, hire fast enough,
| onboard new people, receive timely feedback, etc. We all have
| the same amount of time in a day +/- a few nanoseconds.
|
| I'm not in any way associated with Brex.
| smegsicle wrote:
| one might even say that confusing organizational/engineering
| constraints with financial constraints is what brooks's law
| is warning about
| mellosouls wrote:
| The controversial post discussed here:
|
| https://news.ycombinator.com/item?id=31772211
| lemiffe wrote:
| The target market of the business is a strategical internal
| investment from a marketing and product perspective; this is not
| something that needs to be communicated externally...
|
| Simply direct internal AEs/CS/PS + branding/messaging/content to
| target & serve specific segments whilst offering a very basic
| level of support towards SMBs, and remove free tiers (opting for
| "contact us for pricing" action buttons for example).
|
| Afterwards the organisation will organically shift towards that
| direction; but by making this a public thing it hinders
| opportunity and affects public perception.
| techcollector92 wrote:
| this is going to be good for Ramp. better platform anyway (happy
| I made the switch)
|
| https://ramp.com/
| Aeolun wrote:
| I note that Ramp doesn't have a cost associated with it either.
| What is to prevent them from doing the exact same thing...
| Imnimo wrote:
| >Received an equity investment of any amount (accelerator, angel,
| VC or web3 token);
|
| What I'm reading is that if you (inexplicably) wanted to keep
| your account from being closed, all you have to do is issue a
| single crypto token, and arrange for your friend to buy it for a
| dollar.
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(page generated 2022-06-23 23:01 UTC)