So much of the purchasing for tech startups and small businesses is online. Yet they often struggle to pay for the services and platforms they need because they don’t have business credit cards.

This problem is especially acute for startups that lack credit as they’re more likely to have a hard time securing financing from banks than startups with good credit scores. FinTech giant Brex seeks to address this problem by supplying startups with the banking stack they need to scale.

In today’s episode of The Modern CFO, host Andrew Seski talks with Brex COO & CFO Michael Tannenbaum about how Brex empowers startups, the global nature of startups, how he thinks about growth in different market cycles, and more.

Show Links

• Check out Brex
• Connect with Michael Tannenbaum on LinkedIn
• Check out Nth Round
• Connect with Andrew Seski on LinkedIn

Transcript

Please note that the transcript is AI-generated and may contain errors. The content in the podcast is not intended as investment advice, and is meant for informational and entertainment purposes only.

[00:00:00] Andrew Seski: Hello, everyone. Welcome back to another exciting episode of The Modern CFO Podcast. As always, I'm your host, Andrew Seski. Today, I'm thrilled to be joined by Michael Tannenbaum, CFO of Brex. Michael, thank you so much for being here. 

[00:00:21] Michael Tannenbaum: Thank you for having me.

[00:00:23] Andrew Seski: So, today, I'm excited to talk about a myriad of topics, including leadership, rise to the CFO, what excited you about Brex. So, we've got a ton to cover today and I kind of want go back in time to leaving undergrad and kind of your first roles. It's always interesting to hear kind of how people cut their teeth, whether it's in finance. We've had a number of CFOs who actually went into, you know, service first and others who started in, you know, the typical Big Four. So, I'd love to go kind of hear about your early career and, you know, walk us through the rise to your position today.

[00:00:58] Michael Tannenbaum: Sure. Thank you for having me. I actually wanted to be an economist when I was in college. But my thesis advisor at school thought that academia would be not a good fit because I was too commercial and I enjoyed working a lot and, you know, in that profession, not that they don't work a lot, but, you know, you have summers off and there's a lot of lifestyle benefits to being part of university and he didn't think that those would resonate with me as much. So, he had pointed me into investment banking, which obviously was something I was aware of. And my research was heavily on like housing markets and mortgage. And I went into the Financial Institutions Group at JPMorgan in investment banking. So, banks, insurance, mortgages, all those kind of companies. And it was an interesting time 'cause I graduated from college during the GFC and, you know, banks were going under or being bought and sold. And so, I started in regulated financial services, M&A. And then I worked in a private equity company out in San Francisco where I focused largely on financial services also. And then, I went to a company called SoFi, which is now a public company, and I joined there relatively early, about 75th employee. And I kind of worked my way up through that company, starting in the capital markets team, and then took on additional roles, ran the mortgage business, which was kind of a nice round trip from my undergrad. And then, I was the chief revenue officer there. I met Henrique and Pedro at Brex. They were just coming up with an idea at the time. They were, I think 20 years old, and I was 29 or so, maybe 28. And they compelled me to come and join them as the first employee of Brex. So, that's how I got here. And I started as a CFO, and I always say this, but since it's a podcast about CFOs, I think it's even more relevant. My dad, who's also a CFO, always said to me when I joined, you know, "You're the CFO of a three-person company. It's kind of like being the CFO of nothing. So, you can call yourself chief if you want but." So.

[00:03:05] Andrew Seski: Before we go back into Brex, I'm kind of curious. Do you think that sitting across the other side of the table on the investment side was informative or, you know, gave you some perspective as to what it's like to be, you know, more of an operator on the private company side?

[00:03:18] Michael Tannenbaum: I think when you're just starting in your career, you look at the senior-most people that you see, at least I did. So, for me, that would be like the heads of the groups that I worked for or some of the senior people and the clients. And you ask yourself like, do I want to be that person, you know? Is that a role model for me? And I think, for me, I definitely gravitated more towards, I was always excited by, you know, the banker that had gone and became a CFO. I think that was a path that I wanted pretty quickly. And I, you know, as I mentioned, I kind of grew up with that, so it seemed very natural and attractive to me. 

[00:03:57] Andrew Seski: So, for everyone who doesn't know, I mean, I know I remember earlier days of learning about Brex, but, you know, now, I think you've got an incredible brand and it's very well known. But for those who are just learning about Brex for the first time, can you give us a bit of a summary of what was exciting to you first to make the leap to be that early?

[00:04:15] Michael Tannenbaum: I think like a lot of good companies, you know, you start in a very specific niche and then expand out. There's a lot of, I didn't go to business school, but there's a lot of, you know, academic textbooks about business that talk about that, you know, crossing the chasm, etc. concept. And I think Brex when I joined it was really focused on startups and this need in the market for a credit solution and really a payment solution for startups. So much of the purchasing for technology companies is online, right? You can't buy Google Ads, for example, or Amazon Web Services without a credit card. They don't give small companies net 30 payment terms. You just have to pay on card. But at the same time, you have all these, you know, certainly at least 50% foreign entrepreneurs that are trying to start tech companies with a couple million dollars in the bank and can't get a credit card. And so, that was like a very hair on fire problem for that segment. And we really doubled down. And that was the Brex that I joined. 

[00:05:17] But the promise that I signed up for was always that credit card and expense management together would be more powerful than them separate, meaning that, you know, at SoFi when I was responsible for determining who got credit cards for example and expense management reporting as part of being the VP of Finance, it was such a challenge to wrangle everybody and get these receipts and ensure that there was spending controls. And so, with the broader promise that I think Brex has now realized, which is that you can combine expense management software and corporate card payment services in a way that is more powerful than either of them separate has proven to be true. And I think that's where, you know, Brex has moved and really defined this catego...