Outsmarting Uber: Why Bolt Wins in Europe

0:00The mobility market in general is the least competitive in the world. Bolt is the leading shared mobility business. We operate in more than 50 countries with a mission to replace people's private cars. A lot of the taxi companies obviously saw this as a threat. And then they started blocking their drivers from joining. When I was in Serbia, I was trying to sign up the local biggest taxi company there. I realized clearly these guys are the mafia. They don't care about the customer experience whatsoever. and that's when we pivoted back hard into just working directly with individual drivers. You have raised, I believe, around$2 billion.

0:33They raised$24 billion before IPO. Do you want to share a little bit more about what that capital efficiency taught you? Constraints really force you to be innovative, force you to be efficient. When you're starting a business as a 19-year-old in a small country with barely any VC ecosystem, obviously you got to make by with being 10 or 100 times more clever than your competition.

0:56Markus Villig:Bolt started in Estonia, a country of just over a million people. Today, it operates across more than 50 countries, competing in ride hailing, food delivery, scooters, grocery delivery, and increasingly, autonomous mobility. In this conversation, Gabriel Vasquez speaks with Bolt founder and CEO, Markus Willig, about scaling globally from day one, competing against much larger rivals, and why operational excellence can become a lasting competitive advantage. They also discuss AI, self-driving vehicles, building in Europe, and why Marcus believes the next decade of transportation will be defined as much by execution as by technology.

1:38We're here today with Marcus Velik, the founder and CEO of Bolt. Marcus, welcome to the A16C Show. Great to be here. For those of us that haven't heard about Bolt, can you introduce what Bolt is and give us a little bit about the scale of the business? Sure. Bolt is the leading shared mobility business coming out of Europe. We operate in more than 50 countries with a mission to replace people's private cars. And we cover services as diverse as ride hailing, car rentals, scooters, electric bikes, restaurant delivery, grocery delivery. So it's quite a wide breadth of products across a massive geographic diversity.

2:15Awesome. And let's get a little bit about the story of how old were you when you started the business? How did the idea came about? Where were you at that moment in time and how did everything get started? Sure. I was born on a tiny island in Estonia with about 30 ,000 people. So I was growing up there, passionate about science, technology, reading up on all the science fiction literature as a kid. And I really dreamed of becoming a scientist and an entrepreneur. And then Estonia got very lucky. So in 2003, Skype was founded there with the main product headquarters being placed in Tallinn. And my older brother was one of the early employees there.

2:53So I was about 10 years old, and I was already ambitious about getting into tech. And then seeing that journey, how Skype became one of the biggest tech success stories, not just in Europe, but around the world, gave me a lot of confidence that I want to get started in the space as quickly as possible. So as a teenager, I learned to code, started building websites for local companies to make some money and get some experience. And then I did my first startup when I was 15 years old in education tech. That was a funny experience because, I mean, I was in sort of, what, seventh, eighth grade and going to headmasters and trying to sell them like a new system to run their schools.

3:28Eventually I realized it's very hard to make money there, especially as a kid. So I pivoted a couple of years later to looking at the next idea. And then when I was just wrapping up high school, I realized transportation is the best place to be where you can make a massive impact the next 10 years. And that's how I got into Bolt. And I've been doing that ever since. That's an awesome story. It's very interesting to hear, obviously, that you've always been into entrepreneurship at such an early age. This became one of the most competitive markets, but we did a lot of research on how you started the business.

3:57And there was this dynamic at the beginning where you were dealing with the taxi operators. And then there was this incident that happened that kind of changed your perspective. And you decided to go direct with the drivers. So do you want to talk a little bit more about that and how that affected both the earlier leadings? Sure. So we always had the idea that for the network to be effective and for us to provide the best utility for customers, you've got to have all the supply in the network you can. So that any driver that's in your spine in the city can pick you up. And so at first, I had no budget to begin with.

4:32I was 19 years old. So I went on the street trying to sign up taxi drivers one by one. And that worked for a while. But then after a couple of months, I realized... This was the original pitch to the taxi driver. Effectively, it was that today you're stuck under this taxi company You pay them a massive fee each month as a fixed fee normally. And it doesn't matter how many trips you get, you're still going to pay it. So you're sort of locked up into this company. And what we're going to offer you is you can download this app, which is a much better experience, and you only pay as you go. So there's no risk for you.

5:00So you can just take this for incremental income every day. And that actually resonated quite well. But the problem was a lot of the taxi companies obviously saw this as a threat. And then they started blocking their drivers from joining. So then we had to pivot the strategy. and then what we tried to do was actually that we built a tool and we thought we can get the taxi companies to join because of the tool but then we're going to stick around for the network. I think this is actually something one of these A16Z partners likes to explain. How for the tool is safe for the exchange. Exactly, so I think 100 % that was the paybook we did back in 2013 before I think he even popularized it but effectively what we did was we built fleet management and taxi dispatch software for local taxi companies all across Eastern Europe.

5:39So we got them onto the network, They saw it was great. Then after a while, obviously, they realized, hey, we don't need these human dispatchers anymore. Let's pivot to focus on the car rental business. And that was a great way to get going. But after a while, I realized that it's very hard if you're limited by these external partners who are oftentimes slow moving, very legacy. They don't really care about the customer experience. And I think that the last drop in the bucket for me was when I was in Serbia. I was trying to sign up the local biggest taxi company there. I realized clearly these guys are the mafia.

6:12They don't care about the customer experience whatsoever. And that's when we pivoted back hard into just working directly with individual drivers in most markets, because that was just the only way you could actually offer a great, compelling customer value proposition. So you started a business in Estonia, which is one of the largest countries in the world. But obviously it's 1.2 million people in Estonia, not a large market. you have to think immediately about expanding. And I believe that you started in Western Europe, but that was almost a very, very costly decision. So you want to talk a little bit more about that?

6:49Sure. I think actually what I've observed is that most startups are having the biggest issue going from zero to one. And then once they've cracked it, then you have a public market fit. And after that, the scaling is relatively easier. I think for us, it was the other way around. So the zero to one in Estonia was quite simple. I mean, it was a lot of work, but it was pretty straightforward. and we got the network going in about six months. And about 12 months in, we were the biggest provider of taxi trips in the whole city. But then what we really struggled with was how to scale the model. So we raised our first street round of about a million bucks.

7:18We thought that that's going to be all the money we'll ever need in the world. We were very ambitious. I mean, I was 20 years old. How did you find the first investor? It was actually mostly local angel investors with actually Skype background. So that's where many of them had made their first money, and then they were investing in local startups. So we thought, hey, let's try to conquer the world. that tried to launch in about a dozen countries at once. And that was a very silly idea for two reasons. First of all, we couldn't really at first identify which were going to be the successful markets because we didn't yet know what are the characteristics that actually correlate with success.

7:48So we just waste a lot of money going into markets where we actually shouldn't have gone to at all. And second, even in the markets that turned out to be good markets, we just had no idea how to scale. So we were just wasting money on sort of silly tactics of how do you get drivers and taxi companies on board and it didn't work. And it almost bankrupted the company in six months. So then we luckily stopped that quickly. We realized that going in parallel doesn't work. We got to go sequentially. So let's pick one market at a time, really optimize the playbook, figure out how it works. And then it took us about 18 months of doing that one by one.

8:22What was the market that you guys decided? I mean, it was a big market. It was Latvia, right next door. Now you have two powerhouses. Yes, exactly. So me and my brother, we basically worked there. I mean, we literally slept in the office for a couple of months, basically figured out the model, how do you scale the city? And then after a while, we got a playbook going and then we could really start to scale. And today we've gone from that to operating in more than 52 countries now. That's amazing. And we're going to touch a little bit more about how you literally have expanded to pretty much every region in the world, having started in Estonia.

8:55But I want to talk like on what was a pivotal moment in this industry, which was COVID. During that time, I believe 85 % plus of the business obviously suffer because of this pandemic. How was that for you? And what are some of the lessons that you want to share with some other entrepreneurs that when you face the situation? So first of all, of course, it was a disaster. First and foremost for our drivers, because suddenly when cities went into lockdown, we lost 85 % of revenue, but obviously that was happening with our drivers as well. They couldn't really make any income. And the company was already fairly large by then.

9:33We were in about 25 countries or so. We're probably doing more than 100 million of commissions in terms of actual lower take rate revenue. So it was pretty meaningful as a drop. And we pivoted and we did two things. So first of all, we realized that food delivery was growing through the roof, as was general e-commerce, obviously, during these lockdowns. And we launched that and we scaled it to 16 countries in about four months. on the back of our existing ride-hailing network. And that turned out to be quite a massive success story. We went from zero to well more than a billion of gross bookings on the food platform very rapidly.

10:08And we were able to do that because we had a couple of key components. One was we had these great operational teams all over the world, and we could just effectively use them to pivot those people to work on the food business instead. And second, the hard thing about this business on the food side is it's getting merchants on board. But then they were so desperate to join any network to get any orders. So it was very easy for us to go and sign up tens of thousands of restaurants extremely rapidly. So that was our wedge, how we got going on the food delivery side. And how many countries were you operating at that point in time?

10:41And did you apply some of the same lessons where you roll it out in a few countries and then went aggressively? Or how was that? I think we launched food in about 60 % of the existing rights footprint we had at the time. And it worked out really well. But that basically sort of softened the blow a bit for the first year. But then the other thing where really that moved the needle for the company was that when this lockdown started to end, we were much closer to the markets to understand from the politicians which cities are going to open up. And we were very aggressive. So effectively, we tripled our market share that we had pre-COVID to post-COVID because we were just much faster at investing in the right markets exactly when they opened up on the day.

11:24so when people were coming back after months to use ride hailing like we were the top of mind app that they wanted to come back to and I think there's a great saying about it that it's very hard to overtake somebody in a race when everything is smooth but you can overtake a lot of cars in a race when it's raining that's Ayrton Senna the Brazilian driver

11:48so let's touch a little bit about this because you know there's a lot of debate right now when it comes to building in Europe versus Silicon Valley and the differences. Obviously, here at ACCNC, we have backed amazing founders that have been in Europe, even though we're predominantly based in Silicon Valley, and what we want is to serve as a bridge. One thing that we've noticed, and kind of like the main differences, is when you're building a business in the U.S., obviously you care about a lot of different dynamics, like your product, go-to-market, but you don't have to worry about multi-currency, you don't have to worry about multi-jurisdiction and operating in multiple countries.

12:29That is not the case in Europe where a lot of the businesses from the get-go have to deal with these complexities early on. What are the things that this multi-country barrier helps you focus on in the short term and in the long term? I'd say it has its pros and cons, right? So on one hand, if you start in a country like Estonia with barely more than a million people, you have to think global from day one. So the entire tech architecture, how you design the firm, everything is already on the premise that you want to be in dozens of countries. And that's a massive advantage because you're already thinking that you have to have this great product flywheel where you understand what's going on on the ground and you incorporate these localizations very quickly.

13:19And that's very different than if you're starting in a massive home market like India or the US, where effectively you're the customer, you think you know the market well, you don't really need to worry about these localizations that much. So I think that can be a great strength of these European companies that operate in these diverse geographies. At the same time, though, when you actually then look at the arc of history in tech, in most of these consumer internet industries, the US companies have completely dominated. it. And I think the reason oftentimes is that you have strong network effects and economies of scale in this type of businesses.

13:52And then the problem is you might have two equally good companies, one that starts off in Europe, one that starts off in the US. Because the US market is just so homogenous, you can grow much faster. And therefore, what typically happens is that by the time, three or five years in, the US player is going to be double the size of the European player, because they've had to deal with all this complexity and then all these 27 markets at once and therefore they're oftentimes growing much lower. And then typically what happens is by that time they're double the size, they can effectively go and then just out-compete them just based on having more capital oftentimes.

14:25And we've seen this pattern just happen time and time again. And I think that you need to have a very unique set of characteristics in your business for that not to be the case. So this larger scale player just doesn't wipe you out. It's very, very interesting. Let's talk a little bit about Estonia because within Europe, Estonia Estonia is a very particular country, I think one of the highest per capita, unicorns per capita in the world. Estonia has been so good for us as a firm. You know, we're investors in Skype and we're also investors in TransferWise. And one thing when I was mapping out the countries that we were going to go spend time last year, it was very clear that Estonia had to be a top priority for us despite the population.

15:12so small compared to other countries. I'm curious from your perspective, why do you think this is the case in Estonia? What drove this innovation? And yeah, like what are some of the key ingredients to make this small but very mighty ecosystem work? High level, I guess it boils down to three things. One is ambition. I think that you have the strong flywheel going in Estonia for the last 20 years of us building great tech companies. so young founders coming up they've seen the success of companies like Skype and then Wise and us who built into the tens of billions of scale and I think they just have this feeling it's absolutely possible to do and their ambition of course is to even surpass everybody who came before and they're willing to work very hard to make it happen so that's a key ingredient second I think Estonia has some of the best software engineers in the world and in general that applies to Eastern Europe when you look at where most of the successful programmers have been coming from the last 20 years.

16:13I mean, there's so many great ones from the region. And then third, I'd say specifically in Estonia, we have this massive benefit of being a digital first nation. Arguably, Estonia is the most technology-wise advanced government in the world. We've been having online voting for more than 20 years, online taxes, et cetera. Like every single government service you can do online at the top of a button. So I think we've already just grown up in this environment where consumers have extremely high expectations for digital services. And we're so digitally native. So for us to build these tech companies is a very natural career path.

16:47And, you know, you mentioned this point about recruiting because one of the key questions that sometimes people that are not familiar with Europe and, you know, they say they started a business in Estonia is about recruiting. So it sounded like you started with a lot of, like a great pool of talent in Estonia. How did you then expand it to continue to recruit maybe outside and how did you prioritize those markets? I'd say that there's some pools of talent which are great in Eastern Europe and others less so. Specifically in terms of software engineers, again, I think it's one of the best places in the world to hire from.

17:22You can really find absolutely fantastic product talent there. The hard thing is to find commercial leaders because obviously we've only had our independence again since 1991. Before that, entrepreneurship was largely banned in most of these Soviet Union countries under the occupation. So we just haven't had the track record and the time to build these massive corporations where people have experience of how do you scale and how do you operate an organization with thousands of employees. So it's generally been harder for us to attract execs, but I think that's actually been getting much easier now every year because just the economy is booming in Eastern Europe and there's more companies you can recruit from.

18:01Let's talk a little bit more about the point where you mentioned that you have to defend yourself against a player that has been born in Silicon Valley, and obviously the name is Uber. You have raised, I believe, around$2 billion. They raised$24 billion before IPO. But somehow, obviously, you were able to maintain the ground, and that was like a very interesting dynamic, I'm guessing, between the two companies. Do you want to share a little bit more about what that capital efficiency taught you? And if you feel that Europe should change the dynamic to maybe enable companies to raise the same amount of capital, or do you think that this is more of a strength of the European ecosystem?

18:47It's a big debate, really. There's pros and cons. I'd say, first of all, constraints really force you to be innovative, force you to be efficient. And when you're starting a business as a 19-year-old in a small country with barely any VC ecosystem around, obviously you got to make by with being 10 or 100 times clever, more clever than your competition. Otherwise, it's just not going to be competitive. And that was the situation we were in for the first few years where we were on a budget of a couple of million and they'd raised more than a billion. So it was extremely hard to go head to head. You had to be just having a frugality that's really not seen in this industry ever by any other company.

19:31I guess it would be interesting to double-click on some of those examples. Sure. It was a lot. I mean, like, first, I mean, obviously, what type of talent you can attract. You got to get in people where you're very clear, hey, we can't really pay you well in cash, but we're going to make it up in equity and you're attracting people who really are missionaries. They don't join for the money. Second, you have to be clever in how do you differentiate. So you can't just out-compete them on giving more vouchers because clearly they can just always out-spend you. So you have to be clever in how do you localize better.

20:02And for us, for example, the big reason we've been winning all markets in Africa is because we've just understood the local customer demands much better in terms of safety, in terms of payment methods, etc. So these are things that you can actually compete on as a small company when your bigger competitors are focused elsewhere. So I'd say that capital efficiency was a big constraint at first, but then eventually that turned into our greatest strength. Because if you work on this unit economics for a long time, for many, many years, it's extremely hard for a large company to ever get back to that level.

20:37Because when you're small, you can make these iterations, put in the foundations you need to be very cost-effective. If you already have thousands of them pleased, then changing the mindset, changing the culture is almost impossible. So we actually, even though it took us a much longer time at first to scale, once we had the infrastructure in place, then we were able to raise money and have far superior returns in the unit economics. That's really, really incredible. Maybe just to close the topic between building Europe and Silicon Valley, there's a lot of discussion right now online about the regulation that happens in Europe.

21:11And I'm curious from your perspective, what are some of the things that have to change in Europe for Europe to become a powerhouse? Because clearly the talent is there, The willingness is there. One can argue the capital is there. But what is it that has to change for Europe to be able to compete head-to-head with Silicon Valley? Well, first of all, I think that regulation is a symptom of the root cause. So I've yet to really meet a new entrepreneur who hasn't been able to compete with the U.S. because of regulations. It's rather they just often bring that up, I think sort of a red herring or an excuse.

21:52I think the much deeper issue we have is really the root cause is the cultural bit. And I'd say it's more disease in Western Europe, where I think just people have lost the ambition. They don't think that they can compete with the US. You have this fatalism. People don't want to work hard. I think in some ways, communities making money is a taboo. So I just think you have this sort of entrepreneurial commercial mindset in a lot of these markets that used to be there. luckily I think that's not the case in most of Eastern Europe and I think that's actually why we observe that most of the new successful startups in Europe are coming from Eastern Europe or from the Nordics which I think are still retaining a much more entrepreneurial culture That's a really, really great point Well now, shifting gears about the future of Bolt you know, you're being very vocal about autonomy and you guys just announced a massive partnership with a Chinese manufacturer Want to touch a little bit about that and your vision when it comes to autonomy because it's obviously a key topic for the industry.

22:56Absolutely. And I think here we might have views that are quite contrarian, but we think are going to turn out to be proven right the next couple of years. So first of all, of course, the big debate is what's going to happen on the software layer. Is it going to be commoditized or is there going to be winner-take-all effects where one or two companies are just going to dominate the software layer, like Waymo and Tesla. Our view clearly is that there's going to be a multitude of players because we don't really observe any of the dynamics that would normally correlate with the winner-take-all industry.

23:30So if you just think about it from first principles or intuitively, most people in the world can drive. You don't need to have very high intelligence. In fact, one could argue that effectively the dumbest people in the world can also drive a car pretty well. So I think the barrier or threshold of intelligence you need to drive is not that high. And then you contrast that, for example, to LLMs, where effectively the intelligence is unbounded. You can go from novice to Einstein level in IQ or far beyond it. And I think that you have this massive returns to just investing more and building a better model.

24:08In self-driving, that doesn't really apply. I think once you get to a certain level of safety and driving performance, then you will have very diminishing returns. So there doesn't seem to be this unbounded sort of ceiling that would somehow give anybody a runaway effect. So I think that's the first and really crucial point that's quite distinct from many other industries. The second one is that there's a lot of debate about there being some type of data flywheel. I think that's empirically just completely incorrect. So clearly, the amount of cars and the data you collect does not at all correlate with driving performance.