Table of Contents
Pedro Franceschi transformed Brex from a bloated, slow-growing fintech into a lean growth machine by eliminating two management layers, implementing controversial compensation changes, and demanding that every leader "operate at all levels"—proving that sometimes the most dramatic changes yield the most dramatic results.
When Brex was burning hundreds of millions annually with decelerating growth, CEO Pedro Franceschi made a bet that would either save the company or destroy it: strip away the bureaucracy, cut management layers, and rebuild the culture around work product quality rather than people management.
Key Takeaways
- Brex reduced burn by 90% while growing 3x by eliminating two management layers and requiring all leaders to maintain hands-on expertise in their functional areas
- The "operate at all levels" philosophy means every executive must retain individual contributor skills—CTOs who can code, VPs of Sales who can close deals themselves
- Franceschi personally became "editor of the roadmap," implementing three major product releases per year instead of continuous shipping to create customer-focused development cycles
- The company shifted compensation from cash-heavy to equity-heavy for top performers, implementing salary caps that applied to everyone including the CEO
- Mental health struggles affected Franceschi during peak growth periods, leading to disciplined daily routines of meditation, exercise, diet control, and therapy that became essential for leadership effectiveness
Timeline Overview
- 00:00–10:00 — The startup roller coaster from golden child status to near-failure, plus the evolution from co-CEO to single leadership model
- 10:00–25:00 — Franceschi's early life in Brazil, losing his father at age 8, and finding control through computer programming and entrepreneurship
- 25:00–40:00 — The "operate at all levels" philosophy and why Brex eliminated traditional people manager roles in favor of craft-focused leadership
- 40:00–55:00 — Brex 3.0 transformation: cutting burn 90%, growing 3x, and implementing controversial changes to compensation and culture
- 55:00–70:00 — Leadership philosophy around believers vs non-believers, going public timing considerations, and the importance of business predictability
- 70:00–85:00 — Personal discipline systems including daily meditation, exercise, diet, and mental health management during crisis periods
- 85:00–END — Hiring philosophy, company vision for the next decade, and defining grit as resilience through difficult periods
The Startup Roller Coaster: From Golden Child to Near-Death Experience
Pedro Franceschi built Brex into one of Silicon Valley's most celebrated fintech companies by solving a fundamental problem: getting corporate cards was nearly impossible for startups without extensive credit history or personal guarantees from founders. The solution seemed elegant—use real-time business data and bank account information to underwrite corporate credit instantly, targeting the exact companies that traditional banks ignored.
The early results were spectacular. Brex reached $100 million in revenue in roughly eighteen months, becoming the poster child for product-market fit in financial services. The company's growth trajectory attracted massive investment rounds and positioned Franceschi and co-founder Henrique Dubugras as the next generation of fintech visionaries.
But success bred complexity, and complexity bred problems. The company expanded rapidly across multiple product lines, hired aggressively during the zero-interest-rate environment, and built layers of management that separated decision-makers from the actual work. By 2023, Brex was burning hundreds of millions annually while growth decelerated dramatically.
"I wasn't enjoying the work. I wasn't enjoying what it meant to work at Brex. I wasn't proud of what we're shipping and it just took a reset to be like let's put a stake on the ground and this is what the company will mean moving forward."
The transformation that followed would become one of Silicon Valley's most dramatic turnarounds, proving that sometimes the most radical changes produce the most sustainable results. Franceschi's approach involved simultaneous organizational surgery, cultural reconstruction, and personal discipline that challenged conventional wisdom about scaling technology companies.
The Brazilian Hacker: Finding Control Through Code
Understanding Franceschi's leadership philosophy requires understanding his origin story. Born and raised in Rio de Janeiro, he lost his father to cancer at age eight, creating an early need for control in an unpredictable world. The family computer became both escape and laboratory—a place where variables could be controlled and outcomes predicted through pure logic and skill.
"Software engineering is one of the few professions that you can control all the variables almost literally. When people are not compensated enough for their roles of course that affects them, but you don't control all the variables. So I think software engineering has this characteristic where you have a higher feeling of control."
This need for control manifested early in entrepreneurial ventures. At eleven, Franceschi was hired by a Brazilian company that discovered his online coding projects without knowing his age. His mother faced a pivotal decision: protect her child from premature adult responsibilities or support his obvious talent and passion. Her choice to attend the job interview with him and negotiate appropriate boundaries changed the trajectory of his life.
The contrast with conventional parenting wisdom was stark. While Bill Gates limited his daughter's computer time to 45 minutes daily, Franceschi's mother allowed him to spend twelve hours a day coding and learning. This single decision, seemingly small at the time, enabled the compound learning that would eventually create billions in enterprise value.
Franceschi's subsequent path through building Brazil's third-largest payment processor, gaining admission to Stanford, dropping out for Y Combinator, and co-founding Brex represents a masterclass in how early clarity about core interests can guide major life decisions. The common thread remained constant: using technology to solve complex coordination problems that traditional approaches couldn't address.
The "Operate at All Levels" Revolution
The centerpiece of Brex 3.0 involved a radical restructuring around what Franceschi calls "operate at all levels"—the belief that great leaders must maintain hands-on expertise in their functional domains rather than becoming pure people managers. This philosophy emerged from analyzing which executives succeeded versus failed at Brex over multiple growth phases.
Traditional organizational theory suggests that senior leaders should delegate execution while focusing on strategy and team management. Franceschi discovered the opposite: the most effective executives remained deeply connected to the craft of their functions while scaling their organizations. Great CTOs could still write exceptional code, great sales leaders could close complex deals personally, and great designers could create world-class product experiences.
"A great head of sales is someone that can actually go and close deals themselves if they need to. And doesn't mean they're going to do that all the time, but it means that they know the nuances of what makes someone great at the craft."
The implementation required eliminating two entire management layers and promoting individual contributors who demonstrated both craft excellence and leadership potential. The current Brex CTO joined as an individual contributor engineer four years earlier, was promoted two levels up the reporting structure, and now runs engineering for a multi-billion-dollar company.
This approach violated conventional hiring wisdom that prioritizes experience managing large organizations. Franceschi argues that understanding how to identify and develop great work matters more than experience coordinating teams at scale. Someone who knows excellent engineering can learn to manage 350 engineers more easily than someone who knows people management can learn to identify excellent technical work.
The cultural shift extended beyond hiring to daily operations. Rather than managing through functional leaders, Franceschi maintains fifteen direct reports spanning operations, technology, sales, and regional teams. Instead of receiving filtered information through management hierarchies, he participates directly in work reviews and strategic decisions.
"There's no such thing as converting people. All you can do is tell them, hey, here's how we see the world. Here's how we're going to do things. Some people will self-select out. And that's a positive."
The Editor of the Roadmap: Centralizing Product Vision
One of Brex 3.0's most controversial changes involved Franceschi personally becoming "editor of the roadmap"—directly controlling product development priorities rather than delegating these decisions to product management teams. This centralization replaced a distributed model where individual teams managed their own shipping schedules and feature priorities.
The new approach implemented three major product releases annually, coordinating all development efforts around company-wide launches rather than continuous shipping. Each release required extensive cross-functional coordination between engineering, design, sales, marketing, and customer success to ensure unified customer experiences rather than fragmented feature rollouts.
"What the release process does is it allows us to coalesce everyone around one moment in time that we actually deliver things to customers in a very big way and not just a delivery from a shipping the code standpoint but from a go to market enablement, marketing, support training, implementation help."
This shift reflected Brex's evolution from serving small startups to supporting enterprise customers including over 150 public companies. Startup customers can adapt to frequent product changes and experiment with new features independently. Enterprise customers require coordinated implementation support, training programs, and predictable feature rollouts that align with their internal planning cycles.
The centralized approach also addressed resource allocation problems that emerged during rapid scaling. Rather than spreading engineering talent across dozens of parallel initiatives, Brex concentrated resources on fewer high-impact projects with clearer success metrics and customer outcomes.
Franceschi jokes about the transformation: "In the past we had like one team working towards five initiatives and now we have five teams working towards one." The focus improvement accelerated development velocity while improving product quality and customer satisfaction.
The philosophical justification centers on the belief that financial software requires unified experiences rather than modular components. Unlike Amazon's business where AWS and retail can operate independently, Brex customers expect seamless integration between corporate cards, expense management, banking, and bill payment functionality.
The Compensation Revolution: Equity Over Cash
Perhaps the most controversial aspect of Brex 3.0 involved restructuring compensation to emphasize equity over cash, particularly for high-performing employees. This change required reducing base salaries for many valuable team members while significantly increasing their equity allocations, betting that long-term wealth creation would exceed short-term cash flow reductions.
The philosophical foundation rested on Franceschi's belief that exceptional companies create generational wealth through equity appreciation rather than high salaries. Cash compensation covers immediate living expenses, but meaningful financial outcomes for employees come from ownership stakes in successful businesses.
"People are not going to get rich here on cash. They're not going to make money on cash. Cash will be the way they pay for their everyday expenses but you're going to build generational wealth through your equity."
Implementation involved analyzing every employee's total compensation, ownership percentage, and performance level to restructure packages around long-term incentives. The company established maximum salary caps that applied to everyone including Franceschi himself, creating collective investment in business success rather than individual cash optimization.
The changes particularly affected employees who had previously chosen cash-heavy compensation packages during the zero-interest-rate period when many companies offered flexible cash-versus-equity elections. Brex eliminated these choices, standardizing compensation philosophy around equity-first wealth creation.
The approach reflected broader cultural shifts from Brex 2.0's growth-at-any-cost mentality to sustainable, profitable expansion. Rather than competing for talent through salary bidding wars, the company positioned itself as a long-term wealth creation vehicle for people who believed in the mission and execution capability.
Resistance was inevitable and welcomed. Franceschi expected that some employees would prefer cash-heavy packages elsewhere, viewing their departure as cultural self-selection rather than organizational failure. The remaining team would share stronger alignment around building lasting enterprise value through disciplined execution.
Mental Health Crisis: Leadership Under Extreme Stress
Behind Brex's external success, Franceschi experienced severe mental health challenges that nearly derailed his ability to lead the company. During 2021, as the business scaled rapidly and navigated pandemic-related market volatility, he developed debilitating anxiety that prevented basic work functions like opening his laptop or focusing on simple tasks.
The crisis manifested as physical symptoms including cold sweats, inability to concentrate, and sleep disruption that created cascading performance problems. Despite being twenty-four years old, leading a celebrated company, and enjoying perfect health, Franceschi found himself unable to function professionally for several months.
"I remember being inside my house and it's like gosh like I'm like 24 years old. I have a great job. I'm perfectly healthy and I cannot function right now because I'm too stressed. The only thing that would calm me down was go watch a movie like a Pixar movie, like a very dumb children movie to just calm down."
The experience taught crucial lessons about sustainable leadership under extreme pressure. Recovery required professional psychiatric care, medication, therapy, and fundamental lifestyle changes that became permanent leadership practices. Rather than viewing mental health management as weakness or distraction, Franceschi reframed it as essential infrastructure for effective decision-making.
The insights proved broadly applicable to other founders facing similar challenges. Through conversations with successful entrepreneurs, Franceschi discovered that mental health struggles were nearly universal among people building high-growth companies, despite public reluctance to discuss these experiences openly.
Current prevention strategies involve daily meditation, exercise, diet discipline, regular therapy, and sleep optimization that function like professional athlete training routines. These practices create resilience during inevitable crisis periods while maintaining decision-making clarity under pressure.
"I think every single successful founder I know, every single one, 100% of them had some mental health struggle building their company. And there are people that talk about it and people that don't talk about it but no one that didn't have anything."
The Radical Restructuring: Eliminating Management Layers
The most dramatic aspect of Brex 3.0 involved removing two entire layers of management across the organization, promoting individual contributors directly into senior leadership roles, and eliminating traditional "people manager" positions that separated craft expertise from organizational authority.
This restructuring challenged fundamental assumptions about how technology companies should scale. Conventional wisdom suggests that growing organizations require additional management layers to coordinate work and maintain communication flow. Franceschi discovered that these layers often created barriers between decision-makers and actual work quality.
The transformation elevated engineers, designers, and salespeople who demonstrated both craft excellence and leadership potential while removing managers who lacked deep functional expertise. Rather than managing teams that execute work designed by others, the new leaders managed work directly through teams of experts.
"There's no way to manage people divorced from the work. You're managing the work itself. A great head of sales is not managing the team that goes and then closes the deals. He's managing the deals through a team."
This approach eliminated meetings where multiple management layers discussed work without direct involvement in execution. Instead of rooms containing three individual contributors and six managers representing different functions, decisions involved the people who actually understood customer problems and technical constraints.
The cultural shift required redefining career progression around craft mastery rather than team size management. Instead of promoting excellent engineers into pure management roles where they lost technical skills, Brex created leadership paths that maintained and deepened functional expertise while adding organizational responsibility.
Resistance came primarily from managers who preferred coordinating teams to doing the underlying work. Franceschi viewed their departure as positive selection pressure that strengthened cultural alignment around work product quality rather than process management.
The Growth Acceleration: 90% Burn Reduction, 3x Revenue Growth
The results of Brex 3.0's radical changes defied conventional wisdom about the relationship between cost reduction and growth acceleration. While most companies face tradeoffs between spending efficiency and revenue expansion, Brex achieved both simultaneously through fundamental structural improvements rather than operational optimization.
The burn reduction from hundreds of millions annually to sustainable levels came primarily through workforce rationalization enabled by management layer elimination. Rather than reducing capability, the restructuring removed coordination overhead that had accumulated during rapid scaling without corresponding productivity improvements.
"It's easy to grow fast, burning more, burn less, growing slower. It's very hard to do both. When both are happening at the same time, I think it's a sign that something fundamentally changed about the structure of the company."
Revenue growth acceleration to roughly 3x previous levels resulted from improved customer focus and product quality rather than increased marketing spending or sales team expansion. By concentrating development resources on fewer high-impact initiatives, Brex delivered more valuable features that drove customer adoption and expansion.
The customer base transformation illustrated this improvement: Brex grew from serving five public companies three years earlier to over 150 currently, with enterprise revenue nearly doubling annually. This shift required product sophistication and implementation support that the previous organizational structure couldn't provide effectively.
The dual improvement created a virtuous cycle where better financial discipline enabled higher-quality hiring, which improved product development, which attracted better customers, which generated more sustainable revenue growth. Each element reinforced the others rather than creating internal tradeoffs.
The success validated Franceschi's belief that most scaling problems result from organizational structure rather than market conditions or competitive dynamics. By optimizing for work quality rather than team coordination, Brex built competitive advantages that compounded over time.
The Public Markets Philosophy: Predictability Over Timing
Unlike many private companies that view IPOs as fundraising mechanisms or exit opportunities, Franceschi approaches going public as an operational decision about business model predictability rather than market timing optimization. This perspective reflects his intention to run Brex for decades rather than achieving short-term liquidity events.
The readiness criteria focus on multi-year revenue forecasting accuracy, customer acquisition predictability, and operational leverage rather than achieving arbitrary revenue milestones or favorable market conditions. Brex wants to become a public company with low volatility and high predictability rather than riding market momentum with uncertain fundamentals.
"Going public is very easy. Going public is you hire a bank, you run a process and you're public. The question is what happens after you're public. You want to be a public company with low volatility and very high predictability in your business."
This philosophy emerges from observing companies that went public during favorable market conditions in 2021 but now trade at fractions of their initial valuations because investors lost confidence in business model sustainability. Market timing without operational readiness creates long-term shareholder disappointment.
The approach also reflects Franceschi's personal commitment to running Brex long-term rather than viewing the IPO as graduation to professional management. Since he expects to lead the company for twenty more years, short-term market conditions matter less than building sustainable competitive advantages and predictable growth engines.
Current progress toward these goals includes consistent forecast achievement, enterprise customer base expansion, and financial discipline that demonstrates business model maturity. Rather than rushing to market during favorable conditions, Brex continues building predictability that will support decades of public market performance.
The philosophy extends to shareholder base construction, seeking investors who appreciate long-term value creation rather than quarterly earnings optimization. This approach mirrors successful technology companies that maintained founder leadership through multiple business cycles rather than optimizing for immediate market reception.
The Discipline Systems: Mental and Physical Infrastructure
Franceschi's leadership effectiveness depends on rigorous daily routines that function like professional athlete training programs—creating physical and mental resilience necessary for sustained high-performance decision-making under extreme pressure.
The five-component system includes meditation, sleep optimization, diet discipline, exercise, and weekly therapy sessions that provide non-negotiable structure regardless of business demands or travel schedules. Each element addresses specific aspects of stress management and cognitive performance that compound over time.
Meditation receives the highest priority, involving thirty minutes of daily practice for five years without exception. This routine creates mental clarity and emotional regulation that improves decision-making quality during crisis periods when clear thinking becomes most crucial and difficult.
"I meditate takes half an hour a day, but I do it every morning religiously for the past five years. Doesn't matter which day, doesn't matter where I'm at, doesn't matter anything. I just sit down and meditate for half an hour in the morning."
Sleep optimization involves extensive hygiene practices including device elimination from bedrooms, pre-sleep meditation, and journaling routines that combat the natural tendency for racing thoughts during high-stress periods. Sleep represents the most challenging discipline due to work-related anxiety but provides the foundation for all other performance systems.
Diet discipline eliminates sugar and minimizes carbohydrates while emphasizing protein intake that supports stable energy levels throughout demanding work schedules. The approach avoids substances like alcohol that create sleep disruption and cognitive impairment that compound stress effects.
Exercise provides both physical conditioning and stress relief through four weekly sessions that require significant time investment but generate disproportionate returns in energy levels and mental clarity. The routine competes with work demands but ultimately enhances rather than detracts from professional performance.
The Believer vs. Non-Believer Philosophy
One of Brex 3.0's most psychologically challenging aspects involved accepting that cultural transformation would cause valuable employees to leave rather than adapting to new expectations. Rather than attempting to convert skeptics, Franceschi embraced departure of people who disagreed with the new direction as positive cultural self-selection.
This approach required reframing employee retention from universal goal to selective outcome. Instead of trying to accommodate different working styles and philosophies, Brex created clear cultural expectations that naturally attracted aligned individuals while encouraging misaligned people to find better fits elsewhere.
"You are not in the job of converting people. All you can do is say here's the way we're going to do things. And if you believe in that, that's awesome. We're going to go crush it. And if you don't believe in that, honestly, you should probably go."
The philosophy applied to controversial changes including return-to-office requirements, management structure elimination, compensation restructuring, and product development centralization. Each decision created natural selection pressure that identified people who thrived under the new model versus those who preferred previous approaches.
Implementation required psychological discipline to avoid taking departures personally or attempting to convince skeptics through individual discussions. Rather than save-calls and retention negotiations, Franceschi clearly communicated new expectations while accepting that some excellent people would choose different environments.
The approach strengthened remaining team alignment around shared working principles rather than accommodating diverse preferences that created internal friction. Cultural clarity enabled faster decision-making and reduced coordination overhead that had accumulated during rapid scaling.
Success required hiring replacements who naturally aligned with the new philosophy rather than people who might eventually adapt to it. This approach prioritized cultural consistency over short-term talent retention, betting that aligned teams outperform diverse but conflicted groups.
AI and the Future of Software Engineering
Franceschi personally experiments with emerging AI coding tools including Cursor, Windsurf, Devon, and various prototyping platforms to understand how artificial intelligence will transform software development and Brex's competitive positioning over the next decade.
Rather than delegating AI evaluation to product teams, he maintains hands-on involvement in coding to understand the fundamental physics of how software engineering productivity and quality are changing. This direct experience informs strategic decisions about technology investment and product development approaches.
"I'm actually doing it but not as much from the perspective of shipping things but from the perspective of learning the physics of what it means to be a software engineer in this new AI era."
The exploration connects to Brex's broader mission of using technology to solve complex financial coordination problems that traditional approaches can't address effectively. As AI capabilities expand, new opportunities emerge for automating accounting, compliance, and treasury management functions that currently require significant manual effort.
The learning also reinforces the "operate at all levels" philosophy by demonstrating how senior leaders can maintain technical competency while managing large organizations. Rather than becoming disconnected from technological change, effective executives must understand emerging capabilities well enough to make informed strategic bets.
Current AI experimentation focuses on prototyping and development acceleration rather than replacing human expertise. The tools enhance rather than substitute for deep technical knowledge, supporting the belief that craft mastery remains essential even as specific techniques evolve rapidly.
Common Questions
Q: How did Brex eliminate two management layers without losing coordination capability?
A: By promoting individual contributors who understood the actual work and eliminating managers who only coordinated without craft expertise, decision-making became faster and more informed.
Q: What does "operate at all levels" mean in practice for executives?
A: Every leader must maintain hands-on skills in their function—CTOs who can code, sales VPs who can close deals—rather than becoming pure people managers divorced from the work.
Q: How controversial was the compensation shift from cash to equity?
A: Very controversial, with salary caps for everyone including the CEO and mandatory equity increases for top performers, causing some departures but strengthening alignment.
Q: Why does Franceschi personally edit the product roadmap instead of delegating?
A: Brex customers need unified financial experiences rather than fragmented features, requiring centralized product vision that individual teams can't coordinate effectively.
Q: What mental health challenges did Franceschi face during Brex's growth?
A: Severe anxiety in 2021 that prevented basic work functions, requiring psychiatric care, medication, and lifestyle changes that became permanent leadership practices.
Franceschi's transformation of Brex from bloated bureaucracy to lean growth machine demonstrates that the most dramatic organizational changes often produce the most sustainable results. His approach of eliminating management layers, demanding craft excellence, and embracing cultural self-selection challenges conventional scaling wisdom while proving that aligned teams can achieve seemingly impossible performance improvements.
