Contxto – One step forward, two steps back. In May, fintech Brex disclosed a US$150 million investment. Although last Friday (29), it announced 62 people would lose their jobs. Likewise, there would be some internal changes at Brex.
These changes are part of the unicorn’s shift in focus from growth to building its product. As with previous cases, Brex’s layoffs are a consequence of the Covid-19 pandemic.
“Some teams will, unfortunately, need to be reduced, some roles changed and some people asked to move teams,” said the fintech’s co-Founders in a blog post.
- Related article: Fintech Brex raises US$150 million in Series C extension
Brex layoffs—Expectation versus reality
“We started this year with big goals for Brex,” stated co-Founders, Pedro Franceschi and Henrique Dubugras, in the blog post. “As the extraordinary events of the last few months unfolded, it became increasingly clear that our plans for 2020 would have to be different.”
The Brazilian-founded fintech is best known for its startup-geared credit card. And like many other startups, Brex kicked off the year with growth in mind. In fact, it expected to hire 400 more people for its team. The only trouble is that for Brex to obtain a healthy cash flow, its customers needed to make purchases using the card.
But Covid-19 is the ugly reality that’s changed startups’ spending habits.
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Realities of isolation and spending
The pandemic and self-quarantines have led to startups to reduce their budgets.
Previous expenses like corporate luncheons, company events, new office equipment, it’s all lost relevance. Moreover, with so much uncertainty in the air as to its customers’ ability to pay Brex back, it began cutting credit limits. Though it did so unexpectedly and left some of its users upset.
As it’s shifting its focus to match the Covid-19 reality, come these recent layoffs.
Undoubtedly whatever products it’s working on, they’ll correspond to the slowdown scenario most startups are facing in a post-Covid era.
Don’t stop believing, says Brex
The fintech will provide those 62 former employees with severance packages.
In addition, they’ll also be allowed to keep the computer or any other equipment Brex provided them during their time at the startup. Its team of recruiters will also help these individuals find new employment as well as keep tabs on them if there’s a chance of rehiring them.
“Please continue dreaming big and don’t lose the ambition that attracted you to Brex. Don’t let anything, not even a global pandemic, take that away from you,” concluded Franceschi and Dubugras.
There’s wisdom in these words. As grim as things look, don’t let Covid-19 infect your goals, whatever they may be.
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