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Capital One to acquire Brex for $5.15B

reuters.com

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Re: Capital One to acquire Brex for $5.15B

#151

Post by vl »

maest wrote: post #142
SOLAR_FIELDS wrote: post #120

Earlier quoted context omitted.

The key with debit cards is the incentive misalignment. With credit, it’s the bank that loses out, not you. With debit, it’s you. Until the consequences are equaled by legislation, there’s no world where they get equal treatment by the bank

With credit, it's the merchant who loses out. They get bullied by the credit card provider to eat losses. Relatedly, the credit card system is truly a tragedy of the commons situation. It's a ~2% drag on the economy for what? For some silly points with constrained value and an excuse to not build better financial infrastructure. The frustrating thing is that, given the current equilibrium, you're a sucker for not usi…

What 2% drag? Aren't you using credit card with 2% bonus? Just see it as 2% reduction in prices.

Re: Capital One to acquire Brex for $5.15B

#152

Post by hibikir »

maest wrote: post #143
anonymars wrote: post #126

Earlier quoted context omitted.

To add on to that: if someone fraudulently uses your credit card, it's the issuer's money that's now missing and they need to get it back. If someone fraudulently uses your debit card, it's your money that's now missing that you need to get back. Hopefully things don't start overdrawing your account in the meantime.

How come this is not a problem in Europe? Credit cards make same promises there, but usage is greatly diminished.

A very big percentage of credit card expenses in the US come from cards with rewards programs, so you get money/gift cards/travel discounts in exchange for using the credit card instead of the debit card. A lot of this is funded from much higher interchange fees: It's ultimately the merchant you buy from funding most of the rewards. Since those very high fees are nowadays illegal in the EU, European credit cards cannot have this kind of generosity, and incentives are very different.

Re: Capital One to acquire Brex for $5.15B

#153

Post by greyw »

Twisol wrote: post #67
weird-eye-issue wrote: post #63

Earlier quoted context omitted.

Who in the world uses debit cards

Setting your incredulity aside, I'm curious why you think using a debit card would be so shocking. I effectively don't use a credit card at all: I use a debit card (or an equivalent Apple Pay representation thereof) exclusively. From my perspective, if I want something and I have the money, I'll pay for it. If I want something and I don't have the money, I won't pay for it. I don't often want things outside my budget…

Credit cards are strictly better in all aspects (rewards, protection, free working capital, etc) UNLESS you are bad with money/finances.

So there is actually no good reason to use debit cards. I say this as a former user. Makes no sense at all once you think everything through.

Re: Capital One to acquire Brex for $5.15B

#154

Post by vl »

marssaxman wrote: post #134
blonder wrote: post #107

Earlier quoted context omitted.

May I ask why you eschew the basically free money that comes from credit card rewards as a responsible credit card user?

Is it really free money? Actual cash ? I've always seen rewards programs advertised in terms of discounts on specific products or services: consumer electronics, cruise vacations, furniture, gift cards, and other things I rarely spend money on. I expect it to be an overstock clearinghouse, something like the old Columbia House record club, where you would page through a catalog of random stuff looking for anything yo…

Yes, on some credit cards it's actual 2% cash - Apple Credit Card, Fidelity.

Amazon gives you 5% back for using their credit card, it's criminal not to use it.

If you buy a lot of equipment or expensive equipment - B&H credit card covers sales tax! I.e. 10% for my area! (I don't use it since I don't buy that much, but still it's an option)

Re: Capital One to acquire Brex for $5.15B

#155

Post by nout »

verdverm wrote: post #14

They refused my business because I didn't have SV VC money Chase got it instead, but they are losing it next month because of their shenanigans and greed Wish crypto hadn't been co-opted by the same people and worse

Crypto is just extension of the banking system and VC powered money extraction schemes. Bitcoin is the only notably different thing in my opinion.

Re: Capital One to acquire Brex for $5.15B

#156

Post by hibikir »

marssaxman wrote: post #134
blonder wrote: post #107

Earlier quoted context omitted.

May I ask why you eschew the basically free money that comes from credit card rewards as a responsible credit card user?

Is it really free money? Actual cash ? I've always seen rewards programs advertised in terms of discounts on specific products or services: consumer electronics, cruise vacations, furniture, gift cards, and other things I rarely spend money on. I expect it to be an overstock clearinghouse, something like the old Columbia House record club, where you would page through a catalog of random stuff looking for anything yo…

Yes, there's quite a few that just give you actual money: You can get a check back. You often get a better return if you instead purchase things at a specific retailer or something like that, but it's not all gift cards and discounts.

Re: Capital One to acquire Brex for $5.15B

#157

Post by rahimnathwani »

itake wrote: post #139
rahimnathwani wrote: post #133

Earlier quoted context omitted.

Brex has been around for a long time, so employees will have been issued stock options with vastly different exercise prices. Early employees' options will have value, but more recent options are likely underwater.

options can only last 7 years, but brex was founded in 2017.

Who says options can only last 7 years?

Re: Capital One to acquire Brex for $5.15B

#158

Post by YetAnotherNick »

itake wrote: post #62
hn_throwaway_99 wrote: post #32

Earlier quoted context omitted.

Its not great for those who got in later rounds, but I would assume all the investors had at least 1X preferences, so they'll at least get all their money back. I think this is a pretty decent outcome for Brex. I read they received a total of 1.3 billion in funding, so a 5.15 billion exit isn't bad, especially since the bottom dropped out of the market for so many fintechs that were founded and had big raises between…

I'm curious how the employees faired. Seems like they may bet getting nothing out of the deal if the investors get their money back.

While I don't think it's the case here, but a lot of time there is more liquidity preference than the deal value so employees can only get what investor want them to pay.

Re: Capital One to acquire Brex for $5.15B

#159

Post by [deleted] »

hibikir wrote: post #145
anonymars wrote: post #130

Earlier quoted context omitted.

> Chase got it instead, but they are losing it next month because of their shenanigans and greed Well, on a related note: https://oag.ca.gov/news/press-releases/attorney-general-bont... "Capital One marketed its 360 Savings accounts as “high interest” accounts with “one of the nation’s best savings rates”...However, while interest rates rose nationwide...Capital One kept the interest rates for its 360 Savings account…

America's banks enjoy pulling a bait and switch on HYSAs: They will create new account types with better rates, while they let their old ones become uncompetitive. Citi has pulled this too. Unless you really think you might need the money immediately, chances are that keeping your money in a brokerage account and using a money market fund (say, VMFXX or something like that) will lead to less headaches with rate manip…

[deleted]

Re: Capital One to acquire Brex for $5.15B

#160

Post by gabaix »

manquer wrote: post #64
rvz wrote: post #17

Earlier quoted context omitted.

That is a 50% discount, which isn't great for those who got into the latest round. Seems like Capital One is very excited on the deal and announced it earlier while Brex hid the announcement and made it hard to find. (It's on the Brex [0] journal directory, but you cannot see it featured on its front page) What (really) happened? [0] https://www.brex.com/journal

> 50% discount There are liquidity preferences, nobody took a haircut, they may not made a lot of money as long as the sale price($5.1B) is greater than funds raised($1.2B) everyone made some money not as much as they thought, but nevertheless some. The reason may be different than you think, Capital One is known for its aggressive marketing campaigns and physical mail spam, it is more likely they didn't want to upse…

Liquidation preferences may have multiples. A 3x liquidation preference would have erased most gains for anyone who didn’t raise in the last round, employees and founders included.
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