Bolt ft. Markus Villig - From Bootstrapping in Estonia to a Global Leader in Mobility

0:00So the very first meeting with the taxi company in Serbia, we go to this address, but it's just an old school, Soviet era apartment building. And then me and this young sales guy walk in. I think both of us were about 22 years old. We're obviously quite nervous about what's the situation we walked into. There's a couple of guys who look like bodyguards, sitting on a sofa. There's a gun on the table, a big safe in the corner. And we're wondering, what did we just walk into? Welcome to Crucible Moments, a podcast about the inflection points that define some of the most consequential startups of our time.

0:37I'm your host, Rolof Boetam. Markus Willig was still a teenager when he became frustrated with a dysfunctional taxi service in Tallinn, Estonia. Bootstrapping his startup with 5 ,000 euros he borrowed from his parents, Markus dropped out of college and against the odds, scaled Bolt into a top ride-hailing service across much of Europe, Africa and beyond. The company's path to success, propelled by Markus' grit and ambition, was unconventional. and in many cases, counterintuitive. It began with the decision to partner with the taxi industry in Eastern Europe, and then pivot to compete against them.

1:22With his data-driven strategy, Marcus proved skeptics wrong by launching in overlooked countries he'd never even visited, and where his competitors hadn't yet entered. As the business grew, he made bold bets on new verticals, which ultimately save the company from the tumult of the pandemic. Today, Bolt offers ride-hailing, micromobility, and food delivery services in over 500 cities worldwide, many of them in emerging markets underserved by big tech. In this episode, we'll explore the crucible moments that catapulted Bolt from a small Eastern European success story into a global force in transportation.

2:06And we'll peek around the corner at how Bolt is navigating autonomy. My name is Markus Willig. I'm the founder and CEO of Bolt. From the age of 10, I knew I wanted to be a tech entrepreneur. I remember as a kid, I was selling collectibles at school. Then I progressed to learning to code, starting to build websites as a teenager to local businesses. It was especially exciting seeing how Skype was being founded in Astoria. My brother actually was one of the early employees, and that just gave me a further confidence that the first chance I get, I want to go and start my own business as well. Markus, still in high school, knew he wanted to start a company, but he didn't know what kind.

2:48Lacking a driver's license, his reliance on and frustration with local taxis eventually spurred an idea. Getting a taxi in Tallinn was a horrible experience, and looking back, if anybody wanted to design a bad service that's what they would do. And it was bad on every step of the journey. So if you wanted to fail a ride, you had to call a dozen companies and they wouldn't pick up. Even if they promised the car is going to get you, they oftentimes picked up another passenger on the way and never actually made it. And then in the rare cases when you managed to get a car, it was in a horrible condition.

3:22The driver was quite rude and oftentimes smoking in the car. And you could just forget about paying with a card. They always wanted you to take out cash from an ATM. So it was very obvious that there must be an opportunity here. It was 2013 and Uber and Lyft had already begun to disrupt the taxi industry in North America. Uber had even entered the market in Western Europe. But Markus' concept was different. He hoped to work in tandem with existing cab companies in Estonia, selling them dispatching and fleet management software to streamline the experience for both riders and drivers. But first, he needed seed money.

3:57So the first fundraising was very difficult because I was 19. I didn't have any experience, any connections, any resources to speak of. And I figured that I needed the first 5 ,000 euros to get the product off the ground, to hire a developer, to help me build a prototype and also have some money for initial marketing. And since I didn't know any investors, I went to my parents and asked if they were willing to lend me about 5 ,000. And that was a funny episode where they thought about it for quite a while, because that was a big sum of money for us back then. And initially they said that they're willing to make this loan for me, but that comes at my own personal risk.

4:36And then if I screw it up and all this money is gone, then I can't cover my own rent during university. Armed with his initial investment and indebted to his parents, Marcus got to work building the company then known as Taxify. But he soon faced a crucible moment. The success of the business rested on his ability to convince the supply side of his marketplace, the drivers, to come on board. For a 19-year-old college dropout, that wasn't easy. So the initial sales for taxi drivers were extremely difficult. When we first started, I didn't have any experience, any connections, any real resources to speak of.

5:16And the initial start was very humble. I went on the streets of Thailand talking to taxi drivers one by one. So as it goes in most cities around the world, They're usually waiting in these hotspots around airports or other sort of train stations and so on. So I just went to them, got in the car and started pitching that I have this idea. Would you like to make additional income by joining this platform? You're going to get additional trips each day and you only got to pay a commission. So it's a very risk-free proposition for you. You don't have to join with any fixed fees or anything like that.

5:49Most of them back then were just using Excel or they were using even worse paper notebooks. So we actually had quite a lot of value to offer them even before we had a single customer to bring to them in the first place. And the sales went really poorly. Probably 90 % of them told me that they're not interested because they saw it so risky. I was just a kid. I didn't even have a product back then, so I was just pitching a concept. There were even more reasons for taxi drivers to be skeptical. Most of them didn't even have a smartphone. So for them, it was actually a fairly big monetary investment.

6:21They had to put down hundreds of euros to buy a new device just to be able to even use the app. So it turns out that there were some quite unexpected hurdles to actually get them on board. And that's what made the sales a lot more difficult than one might imagine. Even when the individual drivers did see the benefit of working with Marcus, they faced another obstacle. The legacy taxi companies had a stronghold over the market and over the drivers themselves. When I was asking some of these drivers whether they would like to join the platform, some of them were just categorically banned from doing so.

6:54So their owners had told them that under no conditions can you join any of these new entrants to the market, you have to stay loyal to the company, and so on. So it was really bad. There was many moments where I was very frustrated by the progress because we had spent months and we still had very little of these taxi companies and taxi drivers on board. But at the same time, it actually gave me quite a lot of confidence that we're on the right track, because I clearly understood as a customer that this industry is ripe for disruption. While the appeal to customers was clear, taxi drivers and their employers didn't always appreciate the benefits of this disruption.

7:30This is because industries can often ossify. Incumbents are loathe to change to embrace new technologies because they don't need to. But in Estonia, this began to change in 2015 when Uber launched. It was an existential threat to the taxi industry. Those same companies that were initially wary of Bolt's dispatch software didn't want to be left behind in the on-demand revolution. Uber's arrival prodded the taxi companies to act and paved the way for Bolt's initial wedge. We started off in a market that had relatively little competition. Back then, people were just hailing taxis on the street or calling local dispatch centers with a phone number.

8:13And then over a couple of years, the market, of course, transitioned to apps. So everybody started hailing Rai digitally. And we had counter-positioned ourselves in that market by working together with the taxi companies and taxi drivers, because they were very afraid that new entrants were coming in and they were cutting them out completely. They were hard to deal with, but eventually we got them excited. They came to see the value of the software it could provide. They saw the value of joining this digital ecosystem. They could get additional customers for applications. So it made quite a bit of sense.

8:44Bolt's newfound partnership with legacy taxi companies allowed it to gain a footing and initial success in Estonia. We started to see some trips happening every day and it was organically just growing and becoming quite viral because the baseline was so bad. So people are just used to having this horrible experience. At the moment, they experienced a new way to order a ride. You just tap a button, a car shows up. It was so great, so people were just sharing it without us actually having to spend too much marketing. But as Bolt looked to expand throughout Eastern Europe, the challenge of working with legacy taxi companies again reared its head, proving not just unsustainable, but also dangerous.

9:24So the very first meeting with a taxi company in Serbia, we go to this address, which is supposed to be the biggest taxi company in Belgrade. But it's just an old school Soviet era apartment building. And then we walk in there and there's an old woman there cooking food. There's a couple of guys who obviously look like bodyguards sitting on a sofa. And then me and this young sales guy walk in. I think both of us were about 22 years old. We're obviously quite nervous about what's the situation we walked into. We have a huge old guy sitting behind the table, smoking a cigar. There's a gun on the table, a big safe in the corner.

10:03And we're wondering, what did we just walk into? But when you're in that moment, we didn't really have a choice to back down. So we took a seat. We pitched him on why Bolt is a fantastic product and why he should adopt it at his company. Clearly, the meeting wasn't going anywhere. So after about 15 minutes, he just told us no and we walked out. And we were happy we were able to do that. But I think that really brought home the lesson that it's much easier for us to not try to work with these dinosaurs and bring these taxi companies to the future, but rather let's start to work directly with the drivers.

10:37And that was a crucial distinction. And it wasn't an easy choice back then. Because until that moment, we had been partnering with these local dispatch centers, building software for them. And then suddenly, we dropped that part of the business completely. And we tried to transition over to work with individual drivers. And you can imagine that was a massive transition. First of all, these taxi companies were upset with us about us changing the business. The employee base was worried whether we're going to have a business at all six months from now. The media was coming at us because they were thinking that so far, the value of the application has been that you can hail a ride from these companies.

11:15if these companies are going to get off the platform, what is going to be left of the service. So for sure, it wasn't a very easy transition, but it was one of those moments where we clearly knew that was going to be the future, and we just bet the company on that. This pivot meant that Bolt was now in direct competition with both the established taxi companies and ride-hailing giants like Uber, but the benefits easily outweighed the risks. The partnership with taxi companies was fraught with risk because of fundamental incentive misalignment. By cutting ties with them and going all in on private drivers, it allowed Bolt to control its future.

11:55Looking back, it was the right decision to do, both for the customers and for us. The lesson for me was that you got to stay very rigid on what you're trying to solve, what the problem is, but you can be quite flexible on the details of how you get there. I think we figured out the really clever way how to position ourselves and then build something unique. But of course, it was also very difficult, especially as most of the investors and employees from the outside might be thinking that how are you ever going to be competing with these giants that have a hundred times the funding that you do.

12:27Marcus and his team knew that in order to achieve their ambition of building a global company, one that could compete with fast-growing ride-hailing behemoths, they would need to expand outside of Eastern Europe and do it fast. So my ambition always was to build a company that's going to serve millions of people all around the world, hopefully make the world a better place for technology. So for me, I clearly knew that Estonia was just going to be the first test market to validate whether we have product market fit. But after that, the first moment we get, we're going to be scaling this internationally.

13:02And I remember when we had our first traction in Estonia for the first six months, we went out to raise our first funding round. We managed to scrape together about 1 million from local angel investors. And then we did a horrible mistake. So we tried to expand to nearly a dozen markets in less than a year. And it nearly bankrupted the company. I think I was expecting to kind of join an international startup. And then I think the day I joined, I opened up stats. And I saw that Amsterdam had like five trips a day or something like that. So it was, yeah, I think we were not doing too well. My name is Pavel Karagiaur, and I'm an SVP growth at Bolt.

13:46We had problems with traction internationally. Estonia was like 80-90 % of the volume, and then the next biggest market was Latvia, and it was like 10 times smaller than Estonia. I knew that product is really good. I knew that there are a lot of customers, there are probably a lot of drivers who can benefit from this product. We just need to find them. So we almost ran out of cash and we had to do a complete restart. So we shut most of those markets down. We had to downscale the team and go back to the drawing board. With the clock ticking, an all but one European market rapidly burning cash, Bolt faced another crucible moment.

14:29Successfully pivot their expansion strategy or risk collapsing the business. We first talked to people who built large businesses before, including many of our investors. And the conventional advice we got from all of them was that you should be looking at traditional markets like the US or Western Europe. And we tried to expand into those places, but it didn't really make any sense. Like already when we started to do the first pilots or just even the first research, we realized that we don't really have a clear differentiated strategy. How are we going to be winning in those countries? They were just very bad in terms of regulation and they were also highly competitive.

15:09And when we just ran the math, we couldn't figure out how are you ever going to get to the scale we aspire to be by doing that playbook. So then at some point we realized we have to restart. We have to think about the expansion in a different way. And what we did was that we threw away all of our biases. So instead of thinking about just going to the neighboring country, which is the closest geographically, we looked at the map of the world. We made a list of the top few hundred cities in the world and started to rank them by different characteristics. Well, I mean, we literally created a big Excel sheet.

15:41Each row was a city and each column was a parameter. and into the parameters we would put in labor cost, unemployment rates, car ownership rates, fuel price. And we tried to effectively quantify all of those areas. I remember how we were sitting in this office downstairs at like 8 p.m., 9 p.m., filling this out because we were just feeling excited. After actually just a couple of weeks of this analysis, all the African cities actually turned out to be the top of the list. large population, massive need for alternatives in terms of transportation, and very high unemployment. So clearly millions of people who would like to join these kind of platforms to make additional income.

16:22Expanding into Africa was not obvious, but Marcus decided to trust the data and lean into his team's research, even when those outside of the company cautioned against it. When we asked for advice from investors, they all said, for sure, don't go to any of these risky markets because anything can happen. You don't know anything about these markets in terms of payments and legal from the sort of superficial level might presume that it's very hard to make actually a sort of big business in some of these countries with fairly low income levels. But we thought that it's a much bigger risk not to try at all.

16:57So we thought, let's try to carve out the small budget, just a couple of thousands, tens of thousands of dollars and launch these markets and see what happens. What we realized was that the volume is so vast And these economies are growing so quickly that it makes sense for us in the long term to better these countries. And that's what we did. In 2016, Bolt set its sights on Johannesburg as its first point of entry into Africa. The company didn't have the resources to fly there and staff the operation in person. So they started advertising their services remotely. Keep in mind also when we were advertising, we were saying that the product is actually live.

17:34We didn't say we planned to enter. We were like, the product is live. So what started happening is that the drivers would sign up and we would like receive emails like, hey, why are you not operating? Like you promised me like whatever this 15 commission cash payment option and I can't go online. So we were like, let's just hire a person and let them onboard drivers. So we just ran these job ads. We found a young kid in university who applied. We figured out the way how to send him some credit cards so he could actually use it to make local expenditures and then get an office and so on. I think the first day he was at work, probably some drivers even came over because we sent an email and said, hey, go to this address, sign up.

18:14And we were open for business. I remember once we finally turned on the service, it took us just a couple of weeks and we realized the numbers are completely off the charts. We were seeing so massive customer adoption. It was so different than what we'd seen in Europe. Once we figured out that there's this huge new world out there in terms of these emerging markets all the way from South Africa to Nigeria to Kenya to places like Azerbaijan, we suddenly realized that the product market fit there is so great that we actually need to invest significantly less. And we were able to really accelerate the growth of the business.

18:52So we went from having no presence in these emerging markets to suddenly those being more than 50 % of the business in about six months. We really pivoted the whole management team attention just to double down on that and figure out how do we find even more markets like this to accelerate. As the new playbook brought successful launches in emerging markets, Bolt became one of Europe's fastest growing startups. It was a remarkable rise for a company that began by bootstrapping outside of a major tech hub with a few thousand euros. New investors took notice. investors in general you know used to pay a great deal of attention to the u.s app charts and maybe a cursory amount of attention to western european app charts but we all had access to app charts all over the world and you know as sequoia built out its data science systems and began to track you know what was happening in every part of the world uh it was very unique seeing Bolt's ascent in all these different places.

19:53My name is Andrew Reid, and I'm a partner at Sequoia. At first, it's easy to overlook because any of these markets, including Estonia, by the way, is roughly the size of Kansas. But the sum total is like a global market-leading business. And when you have a company that can compete and win in such diverse markets, it suggests that they will have the ability to compete and win in even more larger, more interesting markets over time. Bolt had achieved the seemingly impossible in dozens of emerging markets across the globe. Now, feeling emboldened, they set their sights on a major market closer to home.

20:32We clearly knew that we had to be in London over the long term. It's the single biggest market in Europe for ride-sharing, and we just didn't have sufficient funding to launch there before. And then once we had earned the track record of demonstrating we can launch this business in 100 cities, we can compete, we can build a category leader, then we earned the confidence from investors to invest in the business efficiently that we could go and launch London as well. So we applied for a license in the market, but it took us so long time to get it that we thought we can't wait forever. We're just completely going to miss out on the opportunity here.

21:06So we tried to buy a local company that had a license. So we did that, we launched, and then, of course, the local regulator didn't really like that because we bypassed what they thought was the legitimate way how you should be going about getting a license. In September 2017, Bolt launched in London. Less than 72 hours later, its operations were shut down by local regulators. Us launching in London and then having to shut it down a couple days later was probably the most frustrating experience in this whole 12 years of building the business. I remember that I had just flown to China to meet some of the players in the industry.

21:44And then we get this call that we're being forced to shut down in London. And I remember I just wanted to fly back and immediately meet with the regulators and explain to them that this doesn't make any sense and they should let us keep going. But since I was stuck in China, they couldn't immediately fly back. I mean, I had a couple of hours to do some reflection on it. And then eventually I realized that we do actually have to restart the ways of how we operate. Because we had operated with low regulation markets before, we had historically just underinvested into our policy compliance teams.

22:21And that was the root cause why we were not that well prepared. And that was obviously a big embarrassing moment for us and I think a big inflection point where we sat down with the management team and we had a long discussion about it that, hey, there's some countries where you optimize for speed. There's other countries where you got to optimize for risks and building a long-term great relationship with the city. And I think London was the first and biggest mistake we did on that front. Despite the sting of the public failure, the team refused to give up on London. They began working on a new plan to re-enter the market.

22:56We really had to pivot, build up a strong legal team, public policy team, invest in technology, like how do you verify the drivers, how do you make sure the platform is safe, how do we build reporting so the city can actually monitor and assess that we're doing what we're saying. A lot of software was created specifically for London. I'm Evgeny Kabanov, you can call me JK, president at Bolt. London for us was the first launch with very complex regulatory environment. Today, it's fairly routine, but at that time, it was really like a completely different animal. It happened that I was in London during the launch, and I thought like, okay, I'm going to test the product, and I'm going to drive as a driver, as a rider, and there was a few days before the launch, I actually found some bugs.

23:43If we would have fixed them, we would be in trouble. In June 2019, nearly two years after its first attempt, the company relaunched in London with the approval of the city's regulatory agencies. And they did so under their new name, Bolt, which they'd adopted to reflect the scope of their ambition. Yeah, it was exhilarating to launch in London because at that time we were really an Eastern Europe and Africa company and having this launch in the biggest European capital, seeing that people actually took up the servers, seeing drivers come out and seeing riders take the rides. I was really excited.

24:24We were all watching the graphs grow. It was very fun. My lesson in London and actually all across the business now is that you have to be very smart in terms of how you approach regulated industries. And I think there are some people who fall in the camp that they're too risk averse and they therefore move too slowly or they don't launch many products that would actually serve customers at all, just in order to make sure that they minimize all the risks. And of course, you have the other end of the spectrum where you ignore some of these regulations and you move so quickly. And that has its own benefits.

24:58So I think what we've learned as a company now is how to balance those things. My advice there is that you have to be smart about it. You have to find the right balances and you have to be patient with regulators. Since inception, Bolted focused solely on ride hailing. But as the company saw increasing success across multiple geographies, Marcus and his team started to consider new products. We actually had this ambition that we wanted to launch other modes of transportation on the platform for many years because we realized that ride sharing alone is not going to replace your private car. There needs to be other modes of transportation we offer.