Brex CFO Michael Tannenbaum on what he’s learned driving the majority of Brex’s most ambitious (and effective) marketing initiatives.
If you live in San Francisco or New York City, you may recognize Brex from its giant billboards or sprawling subway ads.
The Y-Combinator-backed startup provides corporate credit cards for other startups, and was valued at $2.6 billion just last week. It turns out, those out-of-home ads worked wonders for the company’s initial launch and subsequent success, as Brex is one of the fastest growing startups of the moment.
The company’s founders — Henrique Dubugras and Pedro Franceschi — are only 22- and 23-years-old, and have built a scrappy culture from the start. Beyond a $300K billboard campaign, the company has given their investor decks to the press, scraped LinkedIn for potential leads, and hosted events with high-quality speakers to get the word out early on.
We caught up with Brex CFO Michael Tannenbaum, the earliest employee at the company, on what he’s learned driving the majority of Brex’s most ambitious (and effective) marketing initiatives.
On Brex’s initial marketing strategy: We initially focused on friends and family that were either founders or finance people at small companies and asked them to test it out. We then broadened to focus on international founders (who had a harder time getting credit cards given they typically lack FICO scores). We scraped LinkedIn for contacts of thousands of foreign founders and emailed them asking if they’d be interested in the product. We also formed a partnership with First Republic very early on. We solved a specific problem for their banking clients who expected a corporate credit card, but First Republic wasn’t offering one at the time. Brex filled that void.
On getting users attention at the beginning: The hardest thing was that we were in stealth for about a year during the entirety of our private beta (first 100 customers) – which meant we had no website or information about us online. We couldn’t even put a company description online. This made it really hard to generate “social proof” among our customers as they would search us on the internet and find nothing. While it did make early acquisition more difficult, waiting to do a concentrated launch was the right decision, because the combination of press, out of home advertising and the online presence that proliferated during our launch made a huge impact on growth once we came out of stealth.
On unintentional marketing discoveries: Paid advertising is hard in small, niche markets like Brex’s initial early-stage startup market. Our intuition was that our buyer would be easily identified online based on site visits, search terms, affinity groups. However, when our customer was taking an action that indicated they were in our market (searching for a related term or joining an affinity group), they likely did not have intent to purchase our product. Furthermore, what we found was that many ad products are better at targeting big markets because online ads don’t have the highest click-through rates, which means that bigger markets are naturally going to scale better.
So we migrated most of our online strategy to either awareness building (brand advertising in targeted YouTube channels) and then mid-funnel conversion and retargeting once someone had been to our site. For example, our online content strategy is to create a “loop” by targeting what our demographic is searching for, serving them content to bring them to our site and then retargeting them with paid ads.
On if those SF billboards *actually* work: Yes, they unequivocally have. Typically, Out of Home advertising goes in the category of “brand advertising,” which is at the top of marketing funnel (generating awareness). Brex was able to achieve awareness, but also significant customer acquisition this way. The customer acquisition alone justified the investment, regardless of the branding impact.
For Brex, we came out of stealth and wanted to create impact around our launch. Moreover, our first market was serving startups which tend to be concentrated in a few geographies, and in particular, in the Bay Area. Moreover, there is a lot of self-identification among startups — if you use the word in an ad, people for whom it is applicable will clearly identify with the term. That helped make the campaign effective. Lastly, with Out of Home, we find that takeovers tend to be the most effective. Go big or don’t go out of home ... 😊
On how Brex’s marketing strategy has evolved: We have always been highly focused on attribution. This helps make sure we know which of our initiatives are working and are cost-effective. We make constant improvements to our marketing attribution model to determine where to invest. As we expanded, Brex focused on trying to identify marketing “loops” like referral, paid, content and affiliates that would help us scale as we grew. In the beginning, we were very scrappy about getting any leads and customers we can, but as we’ve scaled, we have prioritized channels that allow us to put in one unit of input and get five-10 units of output.
On current marketing projects: Big focuses for Brex in 2019 include updating our website and SEO strategy to help our site serve more companies than just startups as we expand our target market. We’re also developing a lead scoring model to help us more effectively personalize and route leads through our funnel. And we’re learning to better leverage events and conferences as we go more upmarket. Events can help unlock customers we might never see and by creating a formulaic approach with standardized collateral and outreach tactics.
On the company’s marketing spend: Our initial outdoor campaign was $300,000 which is definitely significant, but not the millions of dollars it may seem like we spent to blanket San Francisco for a few months. We also have used a lot of low cost “earned” channels to help get the Brex name out there. Press has been at the core of our strategy and we’ve used it to get outsized reach. We also set up a referral program early on which is a low cost way to capitalize on word of mouth. Events with high quality speakers also helped spread the word about Brex, and we did them early and often.
In general, our marketing budget approach has looked at the lifetime value, in terms of both revenue and gross profit to determine how much it could spend to acquire a customer. We targeted around six months payback of gross profit in the beginning of the company.
On his advice for early-stage startups who think they need to do more marketing: Focus on what you have; your data, your leadership, your past experience, your fundraising decks (we released this to get press) or anything you have done as a company that is unique and could get attention. You are in the scrappy phase and need to use what limited resources you have to generate awareness. These assets can be converted to online content (a blog or a podcast), events, press or other free / inexpensive media that can help raise awareness and attract additional customers. Partnerships are also a great way to leverage existing networks without spending money to create them. Determine what existing companies or networks can benefit from the product or service you are offering, and try to leverage those relationships to expand your company’s reach.