How Two Stanford Dropouts Built a $2.6 Billion Company In Just Two Years

How Two Stanford Dropouts Built a $2.6 Billion Company In Just Two Years

How Two Stanford Dropouts Built a $2.6 Billion Company In Just Two Years

While most elementary school students spend hours playing in the park with friends, Brazilian wunderkinds Pedro Franceschi and Henrique Dubugras had a different pastime: coding. Pedro was the first to jailbreak the iPhone 3G and the first to build software to make Apple’s Siri virtual assistant speak in Portuguese, while Henrique was just 12 years old when he started coding and programming video games for himself.

The two met on Twitter, which was the beginning of a successful working relationship spanning multiple ventures. When they were just 16 years old, they started, Brazil’s first developer-friendly payments processor, raised $30 million for it and employed a staff of over 100 before selling the company and starting college at Stanford University. After eight short months at Stanford, they dropped out and started Brex, a startup that issues corporate cards to tech startups. In just two-and-a-half years, Pedro and Henrique grew Brex into a unicorn, as the company’s latest fundraising round values the company at a whopping $2.6 billion.

1. They started early.

Though starting to code early helped the co-founders from a technical perspective, getting involved in the business world before they even began their teens also paid huge dividends. Pedro told me that “curiosity and entrepreneurial spirits” compelled him and Henrique to “learn the ins and outs of the business world in Brazil in our teenage years.”

At this point, they didn’t know much. Pedro told me that when he and Henrique raised the first round for Pagar., “We didn’t know how to think through valuation, or what was a ‘fair’ deal.” To put it simply, the young co-founders knew how to code, but they lacked business savvy.

2. They took a risk and went all-in.

In just eight months at Stanford, Henrique says that the two “met great life-long friends and learned from outstanding professors.” But there was something off about college. Henrique told me that living out of a dorm room and attending classes made him realize that he missed the independence and entrepreneurial environment he had in Brazil.

3. They were flexible and pivoted quickly.

But before Brex was a fintech company specializing in corporate cards for startups (and before Pedro and Henrique dropped out), the co-founders thought that the payment woes they experienced in Brazil were already solved in the United States. Hence, they entered YCombinator thinking they would build a virtual reality startup. But just three weeks in, the co-founders quickly realized “we didn’t know anything about the market at all and needed to pivot,” as Henrique told me.

4. They built a strong industry-specific network.

With payments experience, a vision, and a $120,000 seed investment from YC, the co-founders knew they were on the right track but they had yet to gain industry validation. What they really needed to do was get in touch with Peter Thiel and Max Levchin, two of the co-founders behind PayPal.

5. They justified being highly capitalized.

With domain expertise and some of the fin techs best onboard with Brex’s mission, Pedro and Henrique needed to do one more thing to make its high-limit corporate card a reality: a lot of money. For many young entrepreneurs, fundraising is a huge pain-point. For Pedro and Henrique, it was no exception, but business fundamentals were on their side: in order to finance their growing payments operation, Brex needed to be highly capitalized. Fintech investors knew this.

Source How Two Stanford Dropouts Built a $2.6 Billion Company In Just Two Years

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