Watching Silicon Valley Bank melt down from the front row with Brex CEO Henrique Dubugras

5 snips

Apr 4, 2023

Henrique Dubugras, the 27-year-old co-founder and CEO of Brex, shares his front-row seat experience during the collapse of Silicon Valley Bank. He discusses Brex's rapid transformation from a corporate card provider to a vital financial services platform. Dubugras reflects on the panic-driven nature of the crisis, the unique opportunities it presented for neobanks, and how digital banking reshaped customer behavior. His insights reveal the shifting landscape of the startup ecosystem and the innovative future of fintech.

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ANECDOTE

SVB Collapse: A Skeptic's Turn

Henrique Dubugras was initially skeptical of SVB's collapse, even consulting with banking experts.
However, after witnessing massive deposit inflows to Brex and widespread panic, he realized the situation's gravity.

ANECDOTE

Brex's Emergency Response

Following SVB's collapse, Brex saw zero deposits from SVB and a surge from other banks, as wires and ACH were blocked.
Brex prepared an emergency payroll line, raising over a billion dollars, but the FDIC's intervention made it unnecessary.

INSIGHT

Friction vs. Diversification

Henrique argues against adding friction to financial products to prevent bank runs, believing it could worsen panic.
A more diversified deposit base, like First Republic's, offers better protection by reducing reliance on a single, interconnected customer group.

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Brex CEO Henrique Dubugras found himself playing an important role during the Silicon Valley Bank collapse.

Brex is what you might call a neobank — not a traditional bank but rather a financial services provider that helps companies manage how they spend money, corporate cards, travel expenses and the rest. In the middle of the SVB collapse, Brex was more than just a spending management company. It was also a safe place to park money.

Brex saw billions of deposits in a very short period of time, giving Dubugras a bird's-eye view of what was happening — and what was happening was not great for the banking system, especially in Silicon Valley. (Our own Liz Lopatto has been covering this in depth.)

I wanted to hear Dubugras' perspective on SVB both as a fintech CEO and a founder himself, whether he thought the crisis was rational or just a panic caused by group texts and easy-to-use mobile banking interfaces, what he thinks will happen to the startup ecosystem next, and how much of an opportunity all this was for Brex.

Dubugras is a young CEO. He just turned 27. He really surprised me with his depth here, and he will probably surprise some of you as well.

Okay, Henrique Dubugras, CEO of Brex. Here we go.

Links:

The tech industry moved fast and broke its most prestigious bank

Liz Lopatto - The Verge

A fintech CEO is trying to raise more than $1 billion to fund bridge loans for startups impacted by the Silicon Valley Bank collapse

Robinhood Users Say The Trading App Won’t Cash In Their Profitable Bets Against Silicon Valley Bank

What Is A Neobank? – Forbes Advisor

Transcript: https://www.theverge.com/e/23433504

Credits:

Decoder is a production of The Verge and part of the Vox Media Podcast Network.

It was produced by Creighton DeSimone and Jackie McDermott and it was edited by Callie Wright.

The Decoder music is by Breakmaster Cylinder. Our Editorial Director is Brooke Minters and our Executive Director is Eleanor Donovan.

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