20VC: Bolt; The Most Insane Story in Startups | Turning a $5K Loan into an $8BN Company | Why Every VC Turned Down One of Europe's Biggest Winners | Competing with Uber & The Future of Micromobility and Self-Driving AI transcript and summary - episode of podcast The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
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Episode: 20VC: Bolt; The Most Insane Story in Startups | Turning a $5K Loan into an $8BN Company | Why Every VC Turned Down One of Europe's Biggest Winners | Competing with Uber & The Future of Micromobility and Self-Driving
Author: Harry Stebbings
Duration: 01:29:09
Episode Shownotes
Markus Villig is the Founder and CEO of Bolt, a global mobility platform with more than 200 million lifetime customers in more than 50 countries and 600 cities. Bolt has raised over €1 billion in funding from investors like Sequoia, D1 and G Squared, making Markus the youngest founder of
a billion-dollar company in Europe. In Today’s Episode with Markus Villig: 1. Starting an $8BN Company: How did Markus come up with the idea for Bolt before Uber existed? How did Markus find his co-founder? Why did 30 people turn down the chance to co-found Bolt? What are Markus’ biggest tips on finding a co-founder? How did Markus use a $5K loan from his parents as the pre-seed round? How did Markus get the first riders for Bolt? What worked? What did not work? How did Markus get the first driver for Bolt? What worked? What did not work? 2. Expanding to be a Global Champion: How did Markus expand Bolt to $10M in ARR on just $1M of funding? What did the international expansion playbook look like? What worked? What did not work? How has it changed over time? What one simple change led to their becoming the leader in Africa? What was the best country to launch? What was the worst? What is the most profitable country today? What is the least? 3. The $8BN Company that no VC Wanted to Fund: Why did every large VC in Europe turn down Bolt early on? How did a real estate company in the Baltics save Bolt with lifeline funding? When did Sequoia come into the mix? Does Sequoia move the needle for your company when they invest? How do New York financially driven investors differ to the traditional VC ecosystem? What would Markus most like to change about the world of VC? 4. The Future: Micromobility, Self-Driving Cars, Uber: Will the rise of self-driving cars harm or help companies like Bolt and Uber? What is the future for micromobility? Does it cannibalise the core business for Bolt and Uber? What is Uber better at Bolt doing? What are Uber worse at than Bolt? How will that change moving forward? Waymo, buy or short? Why?
Full Transcript
00:00:00 Speaker_00
We tried to raise every way we could. I met all the VCs around Europe. No matter how many of these meetings I took, and it was dozens, maybe even a hundred, they all told us no.
00:00:08 Speaker_00
Probably got to the point of doing about 25 million ARR, growing multiple hundred percent a year, and still no VCs wanted to invest. We went from zero to two million ARR in about 18 months.
00:00:19 Speaker_00
And then from there, we went to about 10 million ARR in the next 18 months. And then we went from that to a hundred million ARR in less than two years. So now we have two billion ARR in sort of the next few years.
00:00:32 Speaker_00
So it was extremely rapid exponential growth throughout this whole business.
00:00:35 Speaker_01
This is 20VC with me, Harry Stebbings. Now, today we have Bolt. Bolt is one of the most incredible stories in venture capital and startups.
00:00:43 Speaker_01
The company has scaled over $2 billion in annual recurring revenue, but along the way, every single top tier European venture investor turned them down.
00:00:54 Speaker_01
They got lifeline funding from, check this out, a Baltic real estate company, which kept them alive and now they have over 200 million customers and challenge Uber on a global scale.
00:01:05 Speaker_01
Today, the story of Bolt to an incredible $8 billion valuation with their founder Marcus Willig joining us in the hot seat. Before we begin, let me share an exciting development from Hive.
00:01:16 Speaker_01
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00:01:26 Speaker_01
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00:01:36 Speaker_01
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00:01:49 Speaker_01
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00:02:04 Speaker_01
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00:02:10 Speaker_01
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00:02:58 Speaker_01
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00:03:41 Speaker_01
Marcus, dude, I am so excited for this. Thank you so much for joining me today. Excited to finally be on the show. Dude, this is so good to make happen. Now, I hear that
00:03:49 Speaker_01
The start was a 19-year-old student in Estonia who obviously didn't have a driver's license. I don't either to this day, so I'm thrilled about this. But can you take me to the specific moment that you had the, shit, I need to found Bolt.
00:04:04 Speaker_00
Actually, the story started when I was 10 years old. So I knew already by that moment that I'm going to be a tech entrepreneur for life. I realized that I'm really great at technology. I really cared about software.
00:04:15 Speaker_00
I was always looking at all the latest gadgets. And I realized I really like commerce. I liked working with people, figuring out how to make money. So in kindergarten, I was selling Legos. Then in school times, I was scaling some collectibles.
00:04:27 Speaker_00
Then I learned to code, started building websites for local companies. So already as a teenager, it was clear that this is going to be my passion for the next couple of decades. What did your parents say? They said, go for it.
00:04:38 Speaker_00
And the reason for it was very simple, because they grew up in the Soviet Union. So I mean, we grew up under the Russian occupation in Estonia. And at the time, entrepreneurship was banned. So they couldn't pursue their ambitions.
00:04:50 Speaker_00
They couldn't build a business. So when I was growing up in the 90s, finally in sort of a free democratic country of Estonia. They really told me that, go for it, challenge whatever things you want to do in the world, go for it.
00:05:02 Speaker_00
So I really grew up in that environment.
00:05:04 Speaker_01
OK, so we have this kind of entrepreneurial streak from very early, and then we are 19 as a student and don't have a license.
00:05:12 Speaker_00
Where does the Bolt idea come from? So once I had learned how to code and I was building these websites and making money on the side, I always knew that that's not going to be my long term ambition. I wanted to start a startup.
00:05:22 Speaker_00
So I first experimented around with a bunch of different ideas. I first built a mobile app for our school's online educational system. That didn't go too far because I realized very quickly
00:05:33 Speaker_00
The schools don't have a lot of money, and the sales cycles are horribly wrong, and it's a public sector. So after six months, I gave up on that idea. What it takes 10 years for a VC to learn an ad tech, he just learned very quickly. Exactly.
00:05:45 Speaker_00
And then I took a very systematic approach. I spent a couple of months studying different industries, and I just more and more over time started to realize that transportation is the most exciting space for me in the world.
00:05:57 Speaker_00
And there was a number of factors for it. So first, it was very clear that we're going through this once in a generation shift. So people will not be needing to own assets, but they can start to use assets on demand.
00:06:07 Speaker_00
Similar to what had happened to music, to videos, increasingly to many, many other sectors, it was clear that's going to happen in transport. Second, electric cars were coming along.
00:06:15 Speaker_00
And that was just this big revolution that I thought is going to shake up the industry. And third, it was clear that you will also have micro mobility.
00:06:21 Speaker_00
So you will go from building these large combustion engine cars to having electric motorbikes, electric cycles, electric scooters. And I thought there's another opportunity there.
00:06:32 Speaker_00
And then fourth, there was the shift from you driving your car to potentially self-driving happening. So I was just amazed, like, wow, okay, transportation is really going to go through this massive shift. I need to be in that industry.
00:06:43 Speaker_00
It doesn't even matter what I'm going to do, but that's the place to be. So you have this realization.
00:06:47 Speaker_01
What do you do next? The majority of people fail, I always think, because they don't take the first step. What do you do post, I want to innovate in transportation, in this shared new economy of not owning assets? What's the next step?
00:06:58 Speaker_00
So I started then as a 19-year-old kid by literally googling, how do you start a startup? So I went to this Y Combinator and other websites. There was great content out there.
00:07:08 Speaker_00
And the top one advice was always that you've got to validate your interests of customers and the suppliers before you build the first line of code. So I did that.
00:07:17 Speaker_00
I set up this survey on social media in Google Forms, sent it to my school list, put it up everywhere I could, and hundreds of people replied. And they all said that, yeah, they agree. The taxi industry in Tallinn at the time was horrible.
00:07:31 Speaker_00
And it was so horrible that if you were to design a bad experience, that's what you would essentially design. So I can walk you through how it was. So you had 15 different companies. You had to call all of them.
00:07:43 Speaker_00
Most of the time, they didn't even pick up. Then even if they did pick up, the car almost never actually made it to you. Even if it did make it to, then the car was in a horrible shape. It was dirty. The driver was rude.
00:07:55 Speaker_00
You could forget about paying with a card. You always had to pay in cash. So it was just all around a really bad experience. And I was thinking that there must be a better way to organize this. And so did hundreds of other people.
00:08:06 Speaker_00
So I was thinking after this survey, wow, this is great. This is the easiest startup ever. Everybody's so excited and waiting for me to launch. I haven't even built anything. And then the trouble started. So then I had to go and validate the supply side.
00:08:17 Speaker_00
So then after school, for multiple months, every day I went to these taxi stands that you have all around the world. So you go there as a kid, you open up the door, get in, start pitching the driver.
00:08:26 Speaker_00
We have this new app, you should sign up, you're going to be making extra money. and the sales went really well. 90% of them immediately said, get out of my car. I want to deal with you. Who are you? Some random teenager.
00:08:38 Speaker_00
You know, I want to watch my news and whatever. So that was very frustrating, but they kept on doing that for months and months.
00:08:44 Speaker_00
I think most people would have given up and they did it until I had about 50 drivers who I had finally persuaded to give me their contacts.
00:08:51 Speaker_01
Did the message change to make it successful with those 50 or was it just persistence?
00:08:55 Speaker_00
I think that I was sort of optimizing the wording a bit, as you would in sort of face-to-face sales, because over time I saw what was getting me the better conversion. But at the end of the day, the pitch was simple.
00:09:06 Speaker_00
You're currently stuck under this legacy taxi company that doesn't give you a lot of work. That's why you're sitting here in this taxi stand. You should sign up to this app. It's low risk.
00:09:15 Speaker_00
You're just going to be paying a small commission every time you get a trip. So it should be a no-brainer. And even then, most of the drivers didn't want to sign up. So it was a big uphill climb to make it happen. So then we had 50. What did we do then?
00:09:26 Speaker_00
So once I had validated the consumer interest, and I had got the first drivers on board, I started building the app. So I was back then 19. Everybody else in my high school was studying for exams. But I had gotten lucky.
00:09:38 Speaker_00
I had completed one of these National Computer Science Olympiads. So I had got to a good grade there, and they had given me a free pass to university. So that gave me a free pass, effectively. I was like,
00:09:48 Speaker_00
I don't care about the exams, I'm gonna get into uni anyway, so that gives me six months to work on this product. So they spent all the other time I had, aside from being in the taxi stands, by actually coding.
00:09:59 Speaker_00
So I was building the consumer app, the driver app, trying to build a backend, and I realized very quickly that this is going fine, but I'm not that capable of programming that I can build all of these systems as quickly as I need.
00:10:11 Speaker_00
So then I went to Mulder Brother. who was 15 years older and had a great career in tech and then used to be one of the early employees at Skype back in 2004. So he had a great network of engineers.
00:10:23 Speaker_00
So I went to him and I was like, we need to get some engineer on board to help me with this. I need a co-founder. And I think we talked to, it must've been at least 30 people. Every single one of them turned me down. because why would you join?
00:10:35 Speaker_00
It's a 19 year old kid. They have no experience, no money. Was Uber known at the time? Absolutely not. So back then they were a limousine company in the US.
00:10:44 Speaker_00
So I was thinking that, yeah, these guys have raised good money, but like, I don't think I'm ever going to compete with them. which is going to be a story- And so the model wasn't validated for anyone going, is this even- Absolutely not.
00:10:53 Speaker_00
So back then, nobody had even heard of these apps, at least our part of the world. Everybody was just using the phone dispatcher to get it right.
00:11:01 Speaker_01
So you have 30 conversations, none of them join.
00:11:04 Speaker_00
Exactly. So it was a very tough time recruiting this co-founder, and then we got more and more desperate. So we started publishing this on random forums in Estonia, whether it was programming forums or random job sites.
00:11:16 Speaker_00
And then one day, I get this email from a candidate who writes to me that, let's meet up and I want to hear more. And I mean, I didn't have any other candidates anyway, so I was like, sure, let's meet.
00:11:25 Speaker_00
And I quickly Google before I go there, how do you interview a person? Being a 19 year old kid, I'd never hired anyone. So I show up to this meeting, I pitch him for probably an hour about what we're trying to do and why this is exciting.
00:11:38 Speaker_00
And then the problem is that most software engineers are pretty sort of introverted people, like they don't really show you on the meeting whether they're excited or not. And I can tell you that Estonian software engineers are even worse than that.
00:11:49 Speaker_00
So I had no clue at the end of the meeting whether this guy is excited or not. So I go out and on the wiser, and then a few days later, he writes to me again that let's meet up. And then this magical moment happens. I get into this cafe with him.
00:12:03 Speaker_00
He pulls out the phone, he pulls out another phone, and this guy, just in a couple of days at home, built the writer application, driver application, all the backend, just makes an order on the spot.
00:12:13 Speaker_00
And he's like, hey, I got so excited about the idea that I just went home and built this to prove you that I'm a capable guy. So I just said on spot, wow, you're hired. I'd been working on this for months, and this guy did it all in a couple of days.
00:12:24 Speaker_00
That was Oliver, who turned out to be our technical co-founder, who's still with the company 11 years later. He's the most brilliant software engineer I've ever worked with.
00:12:33 Speaker_00
And I just found him from a random forum, and he just showed up, built the thing as basically a test assignment.
00:12:38 Speaker_01
How much of success in business is luck versus skill? Respectfully, it's quite lucky that that happened.
00:12:44 Speaker_00
It's amazing. I think that in our case, without Oliver, the company would have never been where it is. So I'd say it's even close to 100% of luck.
00:12:51 Speaker_01
What would you say is the biggest advice for founders looking to find another co-founder?
00:12:56 Speaker_00
I'd say from that story is that you can never give up. And even if the first 30 people don't work out, just keep on going. And you can really try to find people from all sorts of channels. You don't need to only go through your networks.
00:13:10 Speaker_00
Sometimes these random forums actually churn out amazing candidates. So just keep on doing it.
00:13:15 Speaker_01
I didn't know that story. I love that. And so we have Oliver then, and we start building out the back end, the front end. The product is now starting to hum. Talk to me about going live. When did we go live and how did that response go?
00:13:27 Speaker_00
So the tricky bit is that marketplaces are probably the toughest businesses to get going. So if you build a B2B SaaS application, for example, you can fully control the consumer experience.
00:13:39 Speaker_00
That's not the case with marketplaces because you need to overcome this chicken and egg problem. You need the drivers and you need the customers at the same time. And both of them are very impatient.
00:13:47 Speaker_00
So if a driver signs up, they expect to get trips at most in a couple of hours. Otherwise, they're not going to bother keeping the app online, especially back then when data was more expensive as well.
00:13:56 Speaker_00
And then on the consumer side, it's even worse because if they open the app, they need to get a ride in a couple of minutes. If you don't have a car nearby in that area, they're just gonna move on.
00:14:04 Speaker_00
So it's a very tricky marketplace, especially in ride hailing to get it off the ground. There's many marketplaces that are far easier. So for example, you can contrast this to Airbnb.
00:14:12 Speaker_00
Like a supplier might sign up, it's completely fine, they don't get any bookings for a few days, they can wait. But that's not the case with the driver. So now, how did we overcome that was very tricky. So first of all, we didn't have any budget.
00:14:23 Speaker_00
You hadn't raised any money. So back then I was a 19-year-old kid with no budget, and the only thing I was able to do was I went to my parents and I was like, hey, we really need some budget to get this thing off the ground.
00:14:34 Speaker_00
We came from very modest means, and Estonia, especially back then, wasn't a rich country. So they said, yeah, we'll put aside 5,000 bucks for your university fund.
00:14:42 Speaker_00
And we're fine to give it to you, we trust you, but if you spend all this money on this project, you've got to cover your own rent for the next few years at uni. So I thought about it for a couple of seconds and I was, okay, let's do it.
00:14:54 Speaker_00
Give me the cash. And that was the initial funding we used to get the company off the ground. So we spent a bit of that on product development. We spent it to get the first sort of stickers and some of the billboards and business cards ordered.
00:15:06 Speaker_00
And it was a very humble beginning of just trying to hack in every different free organic manner we could to get the first initial traffic to the platform. Okay.
00:15:13 Speaker_01
So then we launch and it's difficult. You're managing demand, supply.
00:15:17 Speaker_00
How does that go? So the odd thing about this business for us for day one was that it was very asymmetric. So the consumer side was from day one actually very strong. So we got the ton of free media. It was a great story.
00:15:31 Speaker_00
Everybody hated the taxi industry. There was this young kid who tried to fix it. So we got hundreds of initial signups coming into the app, and that was great.
00:15:38 Speaker_00
But the problem was almost every single one of them got a really bad experience because we barely had any drivers online. So they opened the app, the cars similarly didn't show up, or the experience wasn't great.
00:15:47 Speaker_00
And I got really into a panic mode because I was thinking that we can't just waste this first initial burst of demand that came in.
00:15:55 Speaker_00
Because if all these people get a bad experience, we're going to get a bad rep and we're never going to be getting out of this problem. So I did everything I could. So I went on the streets of Tallinn, signing up taxi drivers one by one again.
00:16:06 Speaker_00
This time, at least I had an app so I could sign them up on the spot.
00:16:09 Speaker_00
And that turned out to be a very effective sales tactic, what I recommend to more founders nowadays, which is that I just got in the car and then I just wouldn't go out of the car before the driver had signed up.
00:16:18 Speaker_00
So I just was like, hey, give me your details. I'll just do the account for you, download the app, set it up. And I was like, OK, give me five minutes. I'll set it up for you.
00:16:25 Speaker_00
And just every time you come online, click this button and the app is going to open up. So I did this really curated service to get every single driver online. And then I realized that that wasn't even enough.
00:16:36 Speaker_00
So I went to my older brother, Martin, who worked at a different tech company at the time, and I was like, hey, can you help me with this as well? And then I went to my mom, and I was like, hey, can you help me with this as well?
00:16:45 Speaker_00
Because we need even more people on board. So, it was a very humble beginning of just using everybody I knew to sort of try to help and sell me these drivers to get them started. Are you making money at this point?
00:16:56 Speaker_00
On the first day, I'm just fascinated. How many people took a ride? So, I think that we started off by doing about five trips on the first day, and then it started very, very gradually growing from there.
00:17:08 Speaker_00
So, it took us a couple of months before we got to 100 trips a day, and then very quickly went from that to 200, 500, 1,000 trips a day.
00:17:16 Speaker_00
And then it was already obvious that this thing is taken off, it's going to become sustainable, and we could start to hire the first employees.
00:17:22 Speaker_01
When was it most obvious to you that you had the whole product market fit?
00:17:25 Speaker_00
Actually, the whole thing was that we saw this massive consumer demand from day one. So it was very clear that consumers really want this service. So that was never the question for us.
00:17:34 Speaker_00
The hard part for us from 11 years ago until today has always been the supply side. Our mantra every single time we have our internal all-hands meetings, for 11 years. It always ends with one slide, which is ad supply.
00:17:47 Speaker_00
So that's always been the biggest blocker for us. How do you get more drivers on board? Nowadays, we can expand that to how do you get more couriers on board, more restaurants on board. That's always been the biggest focus for us.
00:17:56 Speaker_01
When you look back at those very early days, what did you do that you wish you hadn't done?
00:18:02 Speaker_00
I think I should have been more aggressive with initial fundraising.
00:18:06 Speaker_00
I think we could have sped ourselves up a couple of months if I had gotten out and raised a small angel check before I did, because we bootstrapped the company completely for about the first year.
00:18:17 Speaker_00
So we built the product, we got to some thousands of daily trips, and we did all of that with 5,000 bucks from my parents. So I think we actually could have accelerated a bit if we had gone and raised a small angel ticket before.
00:18:29 Speaker_01
Respectfully, why are these businesses so capital inefficient? When you look at your Ubers or you name it, they are so capital inefficient and the cost it is to manage and run them is extraordinary.
00:18:41 Speaker_01
How are you able to do a first year, thousands of trips with $5,000 and everyone else takes $15 million in a seed round?
00:18:50 Speaker_00
So still to this day, we're the only company in this whole industry that's achieved that. So there's been dozens of these companies that by now have raised billions of dollars. And I think it comes down to a few things.
00:19:01 Speaker_00
First of all, I think it was the internal culture of the people who were part of that initial team.
00:19:06 Speaker_00
So me, Oliver, Martin, my brother, the first employees, we just came from this really frugal and resourceful mindset where the only thing we're thinking of is how do we get this business to profitability without raising any money?
00:19:18 Speaker_00
How do we keep our costs as low as possible? And that's a completely different mentality than how all of these other businesses were built. So specifically, you look at some of our US competitors who raised $30 billion.
00:19:29 Speaker_00
I mean, these companies obviously started off with having so much excess cash that they got very bloated. It was never a problem for them that they had to optimize for costs because they could always go out and raise more money.
00:19:39 Speaker_00
And we came from literally the opposite, which was we had no money and we had to make everything work with very little. Where did having no money benefit you and where did having no money hurt you?
00:19:49 Speaker_00
The biggest benefit for us was probably in terms of attracting the right people, because we could never pay even very attractive salaries.
00:19:56 Speaker_00
In terms of cash, I think we're always paying sort of mid-market or low, but what we did to compensate for that was that we gave people generous equity.
00:20:04 Speaker_00
So we tried to attract people who were really missionaries, not mercenaries, and that really worked out nicely. And the other big benefit was that it really defined the company culture.
00:20:13 Speaker_00
So the first couple of dozen people who joined, we went through this brutal period the first couple of years where we couldn't raise any money while our competitors were raising literally billions of dollars.
00:20:23 Speaker_00
And that just forced us to be so effective at how we spent every single euro. We had this huge analytical dashboards of measuring ROI, measuring every single thing we do. And that just cascaded now down into what the company is today.
00:20:35 Speaker_00
But if we didn't have that cash crunch in the beginning, I don't think that ruthless sort of frugal culture would have ever formed otherwise. Why did you raise money when you did?
00:20:44 Speaker_00
So what we realized eventually was that, yes, we can keep on bootstrapping this company forever. We built it to about 10 million annual revenues without raising any external financing effectively. 10 million annual revenues.
00:20:57 Speaker_00
Yeah, so we raised about 1 million of the first seed fund and then we built the company to 10 million ARR with that, which is unprecedented in most places, not to mention in this industry.
00:21:08 Speaker_01
Who was the first investor and how did that meeting go? You weren't like at this point 19, 20? Exactly. You're googling how to hire someone. I don't imagine investing in things that much more natural.
00:21:18 Speaker_00
So I was 20 years old. We had this good traction going on in Estonia, and then we wanted to raise the first 1 million seed round to expand.
00:21:24 Speaker_00
I reached out to everybody in Estonia I could think of, and then we raised the first round mainly from some small local VC funds who were just setting up back in the day and some first early Skype employees. What was the price?
00:21:35 Speaker_00
I think it was probably a nine million valuation, so we raised a million euros at that moment.
00:21:41 Speaker_01
Would that round still happen today? And what I mean by that is, with the globalization of venture startups content, would you just go global from day one and just go to YC, or hopefully through shows like ours, come to people like us?
00:21:55 Speaker_01
Or do you think there are still 19-year-olds in Tallinn who would raise from locals because they've never heard of this world?
00:22:02 Speaker_00
I think that for sure there's a huge population of those people who still think that it's easier to raise locally than it is to raise internationally. So I don't think globalization has gotten to that point yet.
00:22:12 Speaker_00
Whether that is effective is another matter. I do think that it would make more sense for them at least to approach the European VCs and raise a more serious round from the get-go. The valuations have massively spiked as well.
00:22:22 Speaker_00
So I think if today we had the same metrics, we would probably be raising that round at the 50 million valuation, not the nine million valuation. Okay, so you raise one on nine and then you go for ten million in revenue?
00:22:34 Speaker_00
Yeah, so then it was a couple of years of grind after that because we raised this one million, we then tried to launch ten countries at the same time. Ten at the same time? We were absolutely amateurs at what we were trying to do.
00:22:45 Speaker_00
So we went from trying to launch Estonia to trying to suddenly launch in the Netherlands, in the US, in a bunch of other places around the world, and we almost bankrupted the company in six months.
00:22:56 Speaker_00
So we burned for most of that one million very rapidly with nothing to show for it. And the lesson for us from that era was that you really got to take these expansion cities sequentially and not in parallel.
00:23:08 Speaker_00
So we then actually had to make the hard call of letting all those people go, shutting down effectively all of those markets.
00:23:15 Speaker_00
And we thought, okay, let's figure out how do we go from one to N. So how do we then figure out how do we do Latvia or Lithuania or Poland and just take the closest geographic countries to us and figure them out one by one, figure out the launch model.
00:23:28 Speaker_00
And then once we've done that, then let's go and actually race around and replicate it. So we did it the other way around, we were too optimistic. So what did you cut down to?
00:23:36 Speaker_01
So you expand to 10 at the same time, and you go, shit, this isn't working, cut back. What do you cut back to?
00:23:43 Speaker_00
So I think we were left with about 15 employees, most of whom were then related to the Estonian operation. which was the only piece of the business that was actually working well and growing organically. So that was a self-funding business.
00:23:55 Speaker_00
And then we had a couple of people that we could afford to actually work on the international expansion.
00:23:59 Speaker_01
How do you respond to people who say, well, when you expand to new markets, there'll always be loss-making markets. And you have to subsidize the loss-making markets with the profitable Estonian markets. And that's the nature of the beast.
00:24:09 Speaker_01
The maturation of the market will come. Is that right? Or are we like, no, we can have unit economically efficient markets from day one?
00:24:17 Speaker_00
For marketplaces such as ours, there is no way you can have positive unit economics from day one. And the reason for it is very simple.
00:24:24 Speaker_00
This is a very strong network effect business, which means that you do need to overcome this initial chicken and egg problem. You need to get the drivers online. You need to get the customers online. And at first, unit economics are deeply negative.
00:24:36 Speaker_00
You actually have to subsidize both sides in the marketplace to get the liquidity up. And then once you cross a certain threshold, then it becomes self-sustaining. You hit critical mass, and then it becomes a massively profitable business.
00:24:46 Speaker_00
What have been your lessons on what that threshold is? For most these type of urban on-demand mobility marketplaces, the ratio is about 25% market share. So that's a very high bar.
00:24:57 Speaker_00
So you really need to subsidize hard, oftentimes for a couple of years before you get to that threshold. And that's when the network effects kick in.
00:25:04 Speaker_01
We talked about that kind of launch playbook. How did the development of that launch playbook go? We're back now to 15. We've got Estonia working well, but we've had 10 that didn't go so well. How did we go about that playbook creation?
00:25:17 Speaker_00
It was a very iterative process and very humble beginning. My brother Martin, we designated him to launch the first Latvian market.
00:25:25 Speaker_00
So he literally went there, rented a small apartment, which then also turned out to be our office after a couple of months. And then he just basically slept there and then hired a few young students to help him. And that's how we set it up.
00:25:37 Speaker_00
So he was going to meet the taxi companies, meet individual taxi drivers, organically start to figure out how do we get demand into the marketplace by giving out business cards and leafleting and all of that. So very humble beginnings.
00:25:50 Speaker_01
What have been your biggest lessons on what works for driver supply and what doesn't?
00:25:55 Speaker_00
At the end of the day, about 80% of our volume is driven organically from word of mouth. So nothing can beat that, even today. And all the paid channels make up about 20% in a mature phase.
00:26:06 Speaker_00
However, once you start in a market, of course, it's different because nobody's heard of your product. So the question really is how do you get the first couple of hundred drivers and the first couple of hundred customers on board?
00:26:14 Speaker_00
And generally, we see the most effective for both sides is a combination of PR. So you always got to get some first launch media and you get some exposure from that. And then the other thing is just paid online ads.
00:26:25 Speaker_00
And for us, generally, the most effective turned out to be Instagram and Facebook ads. So that's how you get the first couple of hundred people excited.
00:26:31 Speaker_00
And then after that, your product needs to be great, because if it's not, then all your cohorts will fall to zero. If you actually have a fantastic value proposition, then the other way around, your K-factor is going to be positive.
00:26:41 Speaker_00
You're going to be exponentially growing.
00:26:43 Speaker_01
Listen, I'm an investor. We get shoved CAC to LTV ratios the whole time by founders.
00:26:47 Speaker_01
And the question that I always kind of oscillate on is, do CACs go down with time as you increase word of mouth and brand, or do they go up as you saturate your core ICP in the core target market? How would you advise me?
00:27:00 Speaker_00
So marketplaces have this very unique dynamic, which is that in your first six months, the unit economics are always horrible because you don't have enough liquidity in the marketplace.
00:27:08 Speaker_00
So you constantly need to subsidize the drivers, otherwise they're going to drop off. You constantly need to subsidize the customers, otherwise they're going to go away.
00:27:16 Speaker_00
So your first six months of unit economics will tell you effectively absolutely nothing. So they always look bad.
00:27:21 Speaker_00
And then you just got to have faith in the model that as long as you keep on investing long enough, then you will hit some threshold and then it's going to flip into profitability.
00:27:29 Speaker_00
And that is almost impossible for any financial person normally to understand. And then that was why it was very difficult for us to raise funding initially as well.
00:27:36 Speaker_01
Totally get you there. Any other lessons on driver supply that were like, I wish we'd done this, I wish we hadn't done this?
00:27:43 Speaker_00
So one trick we did that really helped us get going in some of the first markets was actually to go to the market with a SaaS product and then convert it into a marketplace afterwards.
00:27:52 Speaker_00
So there's a good saying that people might join you for the tools and stay for the network. And that's effectively the logic we did.
00:27:59 Speaker_00
So, in some of these countries we had no money, so we couldn't do our nowadays playbook of going in and then paying the drivers to stay online for a certain number of hours. We just didn't have the budget for it.
00:28:09 Speaker_00
So, instead what we thought is, maybe let's go to these local taxi companies and give them great tools instead. So, we give them fleet management software, we give them dispatching software.
00:28:18 Speaker_00
They really have a huge productivity lift from that, because otherwise they were running on old school radios and writing stuff down in notebooks. So, they really loved it. So, we were able to get the first companies on board with that.
00:28:28 Speaker_00
Then they added all their supply into the ecosystem, so we suddenly had hundreds of drivers online. That was sort of what sold the supply side for us.
00:28:36 Speaker_00
Then we then took the next six months to build up the consumer platform without worrying about this chicken and egg problem because the drivers were there anyway.
00:28:43 Speaker_00
Then, of course, what happened over the next couple of years was that these taxi companies at some point realized that, hey, we don't even need this dispatching software any longer.
00:28:50 Speaker_00
We can just actually drop our call centers and we're just going to get all of our demand from this application.
00:28:55 Speaker_00
So it was a very sort of natural go to market that I think actually a lot of these marketplace founders oftentimes miss, that that's a great opportunity.
00:29:02 Speaker_01
What market was the biggest surprise, good or bad, and why?
00:29:07 Speaker_00
I think the biggest surprise I've had to this day was how successful we were in Africa. So we raised this first million, we tried to launch in a bunch of markets, that failed.
00:29:16 Speaker_00
Then we took a step back and started doing this iterative approach of launching incrementally one country after another. And I think we had about four or five countries working nicely in Europe and we're quite happy with that.
00:29:27 Speaker_00
And when you say working nicely, what revenue are we at there? So probably each of those was doing maybe 10 million euros of gross bookings in terms of how much people were spending on the fares.
00:29:38 Speaker_00
And then our commission of that was typically around 15%. So it was like 1.5 million ARR per country. Okay. This is real volume. Yeah. So it was decent. We could hire a decent team to run the country. They were growing nicely.
00:29:49 Speaker_00
But when you then zoomed out and thought about where is this business going to go over the next couple of years, it was clear that we need more geographies. We can't just operate in these small Central Eastern European countries.
00:29:58 Speaker_00
And that was never the ambition for us. Then what we did was we just made an Excel list of the top 200 cities in the world. We ranked them by about seven criteria. On purpose, we kept these models very simple rather than complex.
00:30:10 Speaker_00
It was things like population, regulation, number of drivers, what's the car ownership rate in the country, metrics like that. We then ranked the table and we tried to take all of our bias away from it and just look at, well, what does the table say?
00:30:24 Speaker_00
And all the African cities were ranking top of the list. And we had no clue about Africa. I'd never even been there. So the top one city on the list was Johannesburg. And none of us had been there. We had no idea what's going on.
00:30:37 Speaker_00
And we didn't want to replicate the earlier mistake of prematurely hiring people into countries before we knew whether they're going to work out. And we didn't really have the budget to do that anyway.
00:30:46 Speaker_00
So we thought back then in 2015, is there a more cost effective way to launch these markets?
00:30:51 Speaker_00
And then a trick I still don't understand why more companies don't do is that we just then set up online ads to customers and to drivers saying that Bolt is now live in Johannesburg without having nothing.
00:31:02 Speaker_00
So we just put a couple of hundred euros budget, start running the ads in a bunch of these cities, in dozens of these cities that we had identified.
00:31:09 Speaker_00
Then the whole idea was that let's run it for a couple of weeks, see how many customers signed up, what is the CAC ratios in all those places, where do we see the best ROIs, and that's going to be an immensely valuable signal to then figure out which are actually going to be the places we're going to launch.
00:31:23 Speaker_00
This was such an effective hack. In just a couple of weeks, we identified that, hey, here's the top seven cities that have the best numbers, so let's now go to those and only hire people in those cities.
00:31:33 Speaker_00
Some of them were very unintuitive, so many of the cities from the original list dropped off. Okay, so what were the top ones too? So exactly, the first one was Johannesburg and top two was Lagos, Nigeria.
00:31:42 Speaker_01
Johannesburg and Lagos. You are still respectfully a kid from Estonia, from Tallinn, and you've never been there. How do you launch in Johannesburg and Lagos?
00:31:53 Speaker_00
That was the thing that also really differentiated us from most companies was that we really always look extremely pragmatically at everything, and we always try to calculate the rise of everything, and we sort of go from first principles.
00:32:04 Speaker_00
So the logic for us then was that, okay, what do you really need to get this service off the ground? So effectively, you need hundreds of drivers in the ecosystem. But okay, what do you need for that?
00:32:14 Speaker_00
We just started running these online ads for drivers, and we saw that hundreds of them were signing up because unemployment rates in some of these countries were huge, like 30%. So you had a lot of people who wanted to make extra income.
00:32:24 Speaker_00
And then we thought, okay, what's next? We just put up an online ad for hiring the first employee. And some young kid from a university signed up as a sort of part-time job.
00:32:36 Speaker_00
And then we had this Skype interview with him back in like 2016, when nobody was hiring remotely. And we told this kid over a video call, hey, we're going to figure out a way how to send you a card so you can pay for utilities.
00:32:46 Speaker_00
So you go and you find an office space, and then you start calling all these drivers and start training them. And that's what we did.
00:32:52 Speaker_00
So this young kid just trusted us through a video call, caught the first office space, we sent him a list of drivers, he called them and got them into the office and trained them up. And that's how we prepared for launch.
00:33:00 Speaker_00
So that happened for a couple of months, we had enough drivers, and then one day we just clicked the switch and turned on the service for customers. Eventually, of course, we realised that the market became huge.
00:33:10 Speaker_00
It started doing hundreds of millions of dollars of gross bookings, tens of millions of revenue.
00:33:16 Speaker_00
So the bizarre thing was that we started it as an experiment and we thought, if these are going to be turning out as good of a market as, let's say, Latvia, then we're going to be happy.
00:33:27 Speaker_00
But instead what happened was in six months, Johannesburg went from being zero to being more than half the business. just from scratch with one local student running the whole operation. How many other cities did you have in play at that time?
00:33:39 Speaker_01
It was probably 15 cities live in Europe at the moment. And it was more than half the business? It was incredible. So why was that? Was that frequency of trips, number of actual customers?
00:33:49 Speaker_00
So how we measure success in the company has always been by one metric from day one of the company, which is cross bookings. So it's how much actual monetary volume of transactions is happening on the platform.
00:34:00 Speaker_00
And it was incredible to us that the number of trips was immense. It went very quickly from zero to millions, but the monetary value of the trips was so high.
00:34:09 Speaker_00
We didn't really expect it, that South African trips are going to be almost the same price as some of these trips in Eastern Europe.
00:34:14 Speaker_01
Why gross bookings? That doesn't necessarily determine user happiness. So like frequency of trips would suggest actually that I love it and I just can't get enough of it. But they may not be very much. It may be just quickly around the corner or a mile.
00:34:28 Speaker_01
Why is gross bookings the focus?
00:34:30 Speaker_00
My view is that it's the only thing that matters. And if you ask me what's our retention, what's our activation rate, what's our CAC, I couldn't tell you really any of those things because I don't think they're completely relevant.
00:34:41 Speaker_00
The only thing that at the end of the day matters is what's your GMB or gross bookings. I think it encapsulates everything that is either going good or going bad in the business.
00:34:51 Speaker_00
The reason for it is that if you have great retention, then consumers will keep on returning to the platform. They will keep on doing GMB.
00:34:58 Speaker_00
If they like it, they're going to be increasing their frequency over time, which means they will do even more GMV. They will also get their friends to their platform, which will bring even more GMV.
00:35:06 Speaker_00
Again, that's the only North Star metric we're focused on. Of course, there are some teams who look at CAC, who look at the acquisition rates, who look at the retention rates, but that's a clear secondary priority for us.
00:35:19 Speaker_00
That's never been the North Star of the business.
00:35:21 Speaker_01
Okay, so we have Johannesburg now and we have Lagos now and we're looking at this going, huh, maybe we underestimated the potential of this business in different parts of the world.
00:35:30 Speaker_01
Do we have a strategic discussion now in management and say, something's changed?
00:35:36 Speaker_00
Absolutely. So we were just monitoring these dashboards every few hours. We couldn't believe what was going on because just the consumers signing up were by the thousands every day.
00:35:45 Speaker_00
We had this thousands of drivers signing up who wanted to all get on the platform. So we very quickly had to update our priors and be like, okay, this is actually going to be fantastic. This might be the entire company six months from now.
00:35:57 Speaker_00
And that's exactly what happened. So we created a SWAT team of people in Tallinn who identified, okay, what are the next 15 countries in the world where we could replicate the same thing?
00:36:06 Speaker_00
So, we just continued with this original exercise of then taking the next cities from the list, running ads in those places, figuring out which ones have the best traction and just launching there.
00:36:15 Speaker_00
And we went very quickly from having no presence outside Europe into suddenly being live in about 15 countries. So, we launched all the major African economies.
00:36:24 Speaker_00
We even launched in places like Mexico without having no presence there, not flying anybody there, just full remote launches. And almost all of these launches turned out to be fantastically successful.
00:36:35 Speaker_00
What did you do that made you successful with these launches first? So now what is worth to mention is that we weren't the first to market in those places. And that's what really makes Bolt a unique company.
00:36:45 Speaker_00
Because as I described already, this is a very heavy network effect business. So the first player has a huge advantage.
00:36:52 Speaker_00
They have bigger density, they have therefore better pickup times in terms of the cars, they can therefore offer you a much better customer value proposition.
00:37:00 Speaker_00
So, if you're coming in as a second player, it's generally almost impossible to ever catch up to that, unless you have something very unique that the other player isn't doing. So, what we did, there was a couple of differentiators.
00:37:12 Speaker_00
First of all, we localized much better. What was clear was that especially these American players in these markets completely neglected the local needs. How did they neglect local needs?
00:37:23 Speaker_00
One trivial example, they were operating in Kenya, only allowing you to book a ride if you had a credit card attached. You know how many people in Kenya have a credit card? Less than 2%.
00:37:34 Speaker_00
So they were just completely missing 98% of the market who even couldn't use the service. So we were, wow, there's effectively a complete opening for us, a sort of empty market that we can go into.
00:37:44 Speaker_00
The other thing was that we really optimized for being the most cost-efficient ride-hailing operator in the world. We took a very small cut, and what that enabled us to do was that we were able to pass on much better rates for the customers.
00:37:57 Speaker_00
Generally, they were paying 10% less, and we were also able to pay the drivers 5% to 10% better as well. Actually, both sides of the marketplace had a very clear financial reason why to flip over to us.
00:38:07 Speaker_00
Then, that was enough to overcome this initial critical mass.
00:38:11 Speaker_01
This is a bit of a direct one. I mentioned it to you before. I spoke to Dara at Uber before the show, and he said, essentially, you are often second or third in a market. How do you feel about that? And is that an okay strategy?
00:38:25 Speaker_00
Well, I'm a facts and numbers based guy. So let's look at that. Today, we operate in about 50 countries around the world. And Bolt is the number one most popular platform in more than 20 of them. So we're feeling pretty happy about where we are.
00:38:39 Speaker_00
And when we look at the trend of most of those other 3rd party where we operate, we are continuously taking share for the reasons I mentioned earlier. We offer a better value proposition to the customer.
00:38:48 Speaker_00
We offer a better value proposition to the driver. And in a lot of those places, we're confident that over time, even though we're a second mover, we've done that before. I think we can catch up and actually become the most popular platform.
00:39:00 Speaker_00
Is it still a good business if you are second? depends on whether you're a frugal company.
00:39:06 Speaker_00
I'd say that if I look at some of our competitors like Lyft in the US, I don't think that being a number two is sustainable, but it is a very profitable business if you're able to run a very lean operation.
00:39:16 Speaker_01
I'm sorry for the spicy request. What happens to Lyft from here? You mentioned them.
00:39:22 Speaker_00
their only way out of this is to optimise their costs. I just generally don't see how they're going to be an independent company five years from now with the current cost structure. Do you think they sell?
00:39:31 Speaker_00
I can't really think who would be a natural acquirer. It's not an easy company to turn around.
00:39:37 Speaker_01
So we have this massive market expansion and we are now in Africa, we're in Kenya, we're in Johannesburg, What was the first and most important things that broke in this global expansion? Because this just sounds like too good to be true.
00:39:51 Speaker_00
So, of course, what was going on behind the scenes was mayhem. It was complete mayhem, right? So we were running all of this with a tiny team of about five people from Estonia. None of us had beaten these car markets before.
00:40:03 Speaker_00
So we had to figure out everything. How do you localize the product? How do you collect payments? It was a complete mess.
00:40:08 Speaker_00
but it was also the most fantastic, the most fun part of the business because we were all young kids just figuring stuff out on the go.
00:40:15 Speaker_00
Now, I'd say that actually nothing major broke, but I think the one area that we neglected for too long was how intensely we focused on, especially on the regulatory bit. So I think we started off as a small company.
00:40:29 Speaker_00
We didn't have to worry about it because, again, oftentimes we were the second mover into these countries. So by the time we came in, the regulation was already sorted.
00:40:36 Speaker_00
But there was a couple of instances where, for example, in Poland or in Czech or in the Baltics, we were the ones who defined the category.
00:40:43 Speaker_00
And the regulators were then coming to us and were asking us for input, like, how should we regulate this thing? There hasn't been a platform such as yours here before.
00:40:51 Speaker_00
And I think we neglected it for too long before we actually realized that I think we should set up a public policy team and actually give these regulators what they need.
00:40:59 Speaker_00
I mean, give them input of what we think are the best practices how to regulate this thing. And of course, that doesn't come naturally to most tech companies, especially ones growing at that hyper speed.
00:41:07 Speaker_00
So I think we probably could have done that more of a year or two earlier of just engaging with the public and sort of trying to influence where this goes.
00:41:13 Speaker_01
Is speed the single most important thing in startup growth and development?
00:41:17 Speaker_00
Speed is absolutely the most important thing, if you can execute it with high quality. I do see a lot of companies that execute fast, but I think they're just cutting corners and launching stuff they shouldn't be launching.
00:41:29 Speaker_00
Then at the end of the day, it's a lot of momentum, but really no progress.
00:41:34 Speaker_01
What thing did you do very fast that you should have done more slowly?
00:41:38 Speaker_00
I think we could have actually been more deliberate about which markets we choose to expand into. So I think that, as I mentioned, we had this first wave where we just expanded with the wrong model.
00:41:49 Speaker_00
And looking back, if we hadn't done that, and we would have done this better model that we stumbled into a couple of years later, I think we could have just accelerated the whole evolution of the company by that period.
00:41:59 Speaker_01
Okay, so we've now got this like exploded market map of Bolt adoption and very successful markets. Where are we at in our fundraising life at this moment?
00:42:09 Speaker_00
Still the same where we were back in 2014. You've only raised a million at this point. So by that point, we had raised this one million seed rounds, and then our metrics were just going through the roof.
00:42:17 Speaker_00
We were probably at that moment among top two percentile in terms of startups, maybe in the world, but for sure in Europe. What are you at revenue-wise at that point? At that point, we're easily crossing 10 million ARR, probably growing 500% a year.
00:42:31 Speaker_00
And doing that with an initial budget of one million. What year was this? I'm trying to understand if I was investing. That was back in 2015, 2016.
00:42:39 Speaker_01
Just at the start of my investing career. Never met you. Okay, so we've just raised this million. When do we go, shit, we need to raise a lot more money?
00:42:48 Speaker_00
So it was clear to us all the time that we need to raise more money because we were operating with always having a month or two of cash in the bank. So it was always a huge stress for me, can I even make next month's salaries?
00:42:59 Speaker_00
Because it was a complete disaster. So we tried to raise every way we could. So I met all the VCs around Europe I could get my hands on.
00:43:07 Speaker_00
I get to these meetings show them the metrics tell them the story it was one of those cases where they were like this seems like a great team always have fantastic metrics but we just don't believe in the category like we think that you guys are gonna get wiped out, no matter how many of these meetings I took and it was dozens maybe even hundred they all told us no.
00:43:25 Speaker_00
Did all the big brands say no? Every single one.
00:43:27 Speaker_01
What was their most common reason?
00:43:29 Speaker_00
But this category is a winner-take-all market. There's not going to be any room for number two. And therefore, it doesn't matter how great your metrics are. We're not going to invest. Which was the best meeting that you didn't get?
00:43:39 Speaker_00
I think that we actually didn't get the meeting with Sequoia back in those days. That's another story of how they later came back to the business four years later. Who was that meeting with? Sequoia actually didn't get the meeting.
00:43:51 Speaker_00
That was the sad part. We tried to approach them many times, and back then I think we weren't an interesting enough company. Wow. Did you get a response?
00:43:59 Speaker_00
Yeah, we just got the response that, hey, thanks, but we're not interested in the category at the moment. Wow. Okay, so what was the series A? So we took a very unconventional approach. So first of all, we realized that we have to raise some money.
00:44:14 Speaker_00
We saw that all the sophisticated VCs didn't want to invest. So we had to swallow our pride and be like, okay, we need to raise money or else the company's going bust and we need the money to continue this fantastic expansion.
00:44:25 Speaker_00
So I contact anybody I knew who had any sort of money. So I remember this one meeting was with a local real estate company in Estonia. So I go there, probably back then like a 22 year old kid, and they'd never even heard of a startup.
00:44:37 Speaker_00
They'd never heard of a tech company. And then I'm pitching them about how our metrics are doing, what the story is going to be. And then I remember at the end of the meeting, they were like, we've never invested in anything like this.
00:44:46 Speaker_00
we've never even done any investment outside of real estate. But you seem like a good guy, so we're going to invest half a million dollars in the company." And looking back, it was completely insane that they did that.
00:44:56 Speaker_00
But I mean, they invested at a valuation of about 15 million. So by now they made easily more than 100x return on that investment. And the only reason they did was because they'd never even heard of any of our competitors.
00:45:07 Speaker_00
So they just looked at it on the merits of the business. And that turned out to be much smarter than all the sophisticated VCs who turned us down.
00:45:14 Speaker_01
Oh my god, that's insane. So you turned 500k into 50 million? Yes, even more. That is insane. And so what did you raise in that kind of interim round? You cobbled together?
00:45:24 Speaker_00
Yeah, so we cobbled together half a million from this real estate company, similarly a couple hundred thousand from a local railway operator, a couple hundred thousand from a local telecoms guy.
00:45:33 Speaker_00
So it was just this tiny all together maybe one million bucks. And that was enough? Well, we had to survive with that. We had no other choice because nobody else wanted to back the company back then. So when did big cash come in?
00:45:45 Speaker_00
So then after that, the metrics were doing fantastic, probably got to the point of doing about 25 million ARR, growing multiple hundred percent a year, and still no VCs wanted to invest. This is just like, oh, for fuck's sake.
00:45:59 Speaker_00
I just got so frustrated with the VC industry, I was telling like, I'm never going to talk to any VCs ever again. And then what happened was... Was the experience bad?
00:46:08 Speaker_00
I think the experience was actually nice in a sense that they took the meetings, they listened, they were like, yeah, you seem like a good guy. They tried to give me some advice, but at the end of the day, I didn't need advice.
00:46:16 Speaker_00
What I needed was money. None of them were willing to invest in the company at the time. Then it all changed very bizarrely when one day Mercedes or Daimler, the group approached us out of the blue.
00:46:28 Speaker_00
The interesting bit was that all these OEMs at the time were trying to figure out what is their strategy going to be. So they all realized that mobility is changing.
00:46:35 Speaker_00
Maybe one day, everybody's going to be ordering cars from these apps and that's going to completely kill their existing business. So Mercedes was the one who had a big fund to set aside. So they wanted to buy as many of these companies as they could.
00:46:47 Speaker_00
So they approached us and they tried to buy the business back then for maybe a hundred million euros, which obviously as a young kid would have been a fantastic outcome.
00:46:57 Speaker_00
So, we discussed it with the founders, but my view was immediate that we don't want to sell the business. We're on to something special. This is going to be an amazing business, so we're going to turn it down.
00:47:05 Speaker_00
How much of the business did you have at that stage?
00:47:08 Speaker_01
Probably 45%. So, you made $45 million, say, at 22.
00:47:13 Speaker_00
Yeah. And we had a big debate about it with the other founders, like, what do you want to do? And I was completely clear that I want to build a business. And they got lucky that Oliver and Martin were both very supportive.
00:47:24 Speaker_00
So they were like, okay, it's your call. You started the business. If you want to go for it, go for it. So we turned it down in a day. We didn't even think about it.
00:47:31 Speaker_01
Wow. That is incredible. Was there anyone who did want to sell it?
00:47:35 Speaker_00
Well, there was obviously some of these angel investors who were like, wow, we're going to get a great return of whatever, 10x in a year, and this is going to be fantastic for us.
00:47:44 Speaker_00
But actually, they all were of the same opinion that you started the business, this is your call, if you want to go for it, take the risk. Okay, so we say no, and they then invest in the business? Yeah, and that was then the bizarre thing.
00:47:55 Speaker_00
So then a year went by and our numbers just kept on growing. So we probably quadrupled the business in the next year. And then we went back to them and then they realized that we're going to be the winner in this category in most of these markets.
00:48:07 Speaker_00
So then we managed to convince them that they invested more than a hundred million at the billion dollar valuation. So it went in a year from being an acquisition to being an investment. And that's turned out to be fantastic for them.
00:48:18 Speaker_01
You've gone from raising a million from a real estate company, local telecoms people, not the standard, to a hundred million from Daimler. That kind of fucks with your mind a little bit, no?
00:48:32 Speaker_00
Well, it was a huge transition. We also, in the interim, had this interesting debate with the team internally. What are we going to do with the money? Because We were doing already really well, and we didn't really need to fundraise.
00:48:45 Speaker_00
But what we saw was that if we do this fundraise, and we're able to deploy it even nearly as efficiently as the past money, then we're going to be able to just quadruple the business very quickly.
00:48:54 Speaker_00
So it was clear to us that in order for us long term to have success in this category, we need to raise the money.
00:48:59 Speaker_01
That is insane that it was like one, one and a half, and then a hundred. Absolutely. I had no idea about that. Yeah, it was a huge transition. When you get the hundred, what did you spend on that you look back now and you're like, why did I spend that?
00:49:14 Speaker_00
Honestly, I don't think we really did anything wrong with the money. I think we generally spent it all really well.
00:49:20 Speaker_01
So Estonian.
00:49:21 Speaker_00
So we had this super clear moment, I remember, when we raised this round. And I mean, it ended up then, there was some add-ons, so it ended up being $170 million round. So 100 of that from Daimler, and then a few other investors joined in.
00:49:35 Speaker_00
And I went to Tim and I was like, hey, we're not going to be changing the culture. So you can imagine effectively we haven't raised any money. So we're going to keep on operating just as we have.
00:49:43 Speaker_00
Yes, we're going to be hiring a bit more people, but it's not like we're going to be bumping everybody's salaries massively or everybody will get huge teams now. We're going to retain that similar cost efficiency ethos we've had from day one.
00:49:53 Speaker_00
And given that all these people had been in this tough period for many years, it wasn't a tough sell. They were all like, yeah, this is what makes us special. This is why we're winning. We're not going to mess it up just because we raised a round.
00:50:04 Speaker_01
But you now have 170 million. Just in terms of your execution from there, what changed?
00:50:11 Speaker_00
So what that mainly enabled us to do was just launch, first of all, significantly more markets at the same time.
00:50:17 Speaker_00
Exactly, it was necessary to overcome this initial chicken and egg problem because, again, the setup costs in some of these cities can be absolutely massive.
00:50:24 Speaker_00
To get going in a city like London, you need to invest ballpark at least 100 million euros to reach that critical mass. Otherwise, it's just not going to work.
00:50:32 Speaker_01
Ooh. What was the cheapest city to launch and what was the most expensive?
00:50:37 Speaker_00
The cheapest cities to launch were the ones we first did in the Baltics because they were tiny. It was half a million people, very little competition back in the day, so you could probably get them... I mean, Estonia, we got going with 5,000 bucks.
00:50:49 Speaker_00
And then contrast that with some of the biggest cities in the world where you need to invest tens of millions, if not hundreds of millions.
00:50:54 Speaker_01
Did the growth... Okay, so we're doing multiple cities, same time, we've got 170 million. Did the growth then just continue?
00:51:02 Speaker_00
Absolutely. So we then went from doing that 25 million ARR to very quickly getting to 100 million, 200 million, 400 million ARR in just a matter of a couple of years.
00:51:12 Speaker_01
When you look at the growth profile of the business, I was brought up on this treble, treble, double, double. What was yours? Was it like 1 to 5 to 25 to 100? How did that growth profile look? Just so I get an idea.
00:51:27 Speaker_00
So looking back, it was probably, we went from zero to 2 million ARR in about 18 months. And then from there, we went to about 10 million ARR in the next 18 months. So we were 5x.
00:51:40 Speaker_00
And then we went from that to a hundred million ARR in less than two years. And then we went from that to now we have 2 billion ARR in sort of the next few years. So it was extremely rapid exponential growth throughout this whole business.
00:51:54 Speaker_01
You're at 2 billion an hour. Yes. Wow. Fuck me, that's a lot. That's more than I thought. When you get to that stage, people really start to take notice of you. When do people really start to take notice of you, do you feel?
00:52:08 Speaker_00
So there was a couple of changes that happened with the company at the same time. So first we were just growing really well. So the numbers were so good and we got so large that these investors just couldn't ignore us anymore.
00:52:19 Speaker_00
So we then started to also appeal to the financial crowd. So actually the first financial investors who came to the business were huge top tier New York investors. So we raised money from the likes of D1 and Tarzana and some great New York funds.
00:52:34 Speaker_01
And it was- Just take me to that. You've only raised from Daimler and some telecoms. When Dan Sondheim and D1 come in with a, hey, Marcus, we'd love to chat, was that a very natural, normal process? How did that go?
00:52:47 Speaker_00
Actually, what I really liked about these New York investors was that they were very numbers oriented. They really did very deep, very sophisticated analysis about the numbers, the market shares, the trends.
00:53:01 Speaker_00
They really liked the story on top of that, but they were mainly invested based on numbers. I think with the VCs, it was that way around. So the numbers were great, but they didn't really focus on numbers.
00:53:09 Speaker_00
They sort of focused on what they thought was sort of the narrative in the industry. And that turned out to be completely wrong. So all these New York guys who bet based on the numbers were the ones who now made a killing on this.
00:53:18 Speaker_00
So you raised from them. How much did you raise from them? So in aggregate, we've now raised 1.5 billion. So it's been a mix of maybe 10% of that from strategic investors, and then the most of that from the European and US-based investors.
00:53:31 Speaker_01
So the emails that didn't get meetings from Sequoia, when did Sequoia come back into the fray?
00:53:37 Speaker_00
So then mid-2021, the company was doing extremely well. And we really had this explosive growth during COVID. So what happened was that the whole mobility industry shut down.
00:53:51 Speaker_00
So COVID hit, and in four weeks, we went from just massive, about 200 million of revenues to losing 85% of that.
00:54:00 Speaker_01
What do you do at this time, dude? That is unprecedented. The last time was Spanish fucking influenza in 1917. What do you do?
00:54:08 Speaker_00
So COVID was this fascinating episode for us. So we were doing probably 200 million of ARR. It dropped 85%. Every other company in this industry started laying off people.
00:54:18 Speaker_00
They laid off 30%, 50%, whatever they thought was needed for the company to survive. So I remember we had this meeting over a call with the top management and we decided we're not going to do any layoffs.
00:54:30 Speaker_00
We're going to be the only company in the industry that's going to retain all of our people. And it's going to be a huge gamble because we lost 85% of our revenue. And instead what we're going to do, we will do a salary reduction to everybody for 20%.
00:54:42 Speaker_00
And then we're just going to bet the company that in six months this is going to go by. And because we're the only company that's keeping our team intact, we're going to accelerate out of this faster than anybody. and we gambled the company on that.
00:54:53 Speaker_00
That turned out to be fantastic.
00:54:55 Speaker_00
So actually the team morale we got from doing zero layoffs while everybody else did was just such a massive morale boost that people were even opting in that some people did 30, 40% salary reductions to get us through those next six months.
00:55:07 Speaker_00
What did you do in those six months? I mean, we all remember nothing happened. So we did a couple of things. So first of all, we optimized every single thing we could in the business.
00:55:17 Speaker_00
We're already frugal going into COVID, but that really made us question every single line of the P&L and we squeezed everything we could to make the business more efficient.
00:55:26 Speaker_00
The other thing we did was we really started preparing how do we come out of this much stronger than going into it. So, we actually launched a number of markets.
00:55:34 Speaker_00
So, we were setting them up, and it was great timing because all these drivers were low-utilized. They obviously didn't get trips. There was no traffic going on. So, it was very easy for us to get into these countries and sign up the drivers.
00:55:45 Speaker_00
They had no other alternative. And then what we did was that these markets- So, how were you actually doing that?
00:55:51 Speaker_01
Because you're not going into these markets in a travel ban zone signing up drivers. How did you get drivers who are low-utilized?
00:55:58 Speaker_00
So during COVID, actually, online ads worked really effectively. So we were just running a lot of ads, signing up drivers. Then once they signed up, we started calling them and then they heard about the idea.
00:56:08 Speaker_00
They saw that this is a great platform, much better than the ones they've been using before. And the word just spread organically. So we suddenly signed up hundreds of thousands of drivers all across Europe, all across Africa.
00:56:18 Speaker_00
And so we have these expansion moments. It lasted longer than six months. but not everywhere. So what was the key distinction was that some of these markets started opening up very quickly.
00:56:28 Speaker_00
So for example, some of these Eastern European countries already three, four months later, by the summer of 2020, they were already up and we saw volume started to rebound. And then in other places like London, of course, it took significantly longer.
00:56:40 Speaker_00
But then what we did was we had this war room where effectively almost every day we came together and we looked at, okay, which are the cities which are opening up, which are the cities not.
00:56:49 Speaker_00
And then immediately when we saw a city open up, we had a blast of just investing marketing dollars and discount dollars into that. So we really accelerated out of all these lockdowns. And I think that's what every competitor missed.
00:57:00 Speaker_00
So we effectively came out of it with market shares that were twice or three times higher than the ones going in. How long did it take to get that 85% loss in revenue back? It actually happened very quickly.
00:57:13 Speaker_00
It was probably five or six months before we were fully back. And then we already started hitting new records after that. Wow. So going back to the Sequoia, and so then what, Andrew Readlight drops you a DM? So we actually had the Sequoia team reach out.
00:57:28 Speaker_00
I think it was their European team. And what was completely different from every other VC meeting I've had before that was that they had done all their homework before. So we were just in the middle of raising a new round. They approached us.
00:57:41 Speaker_00
They said, hey, we've done all the homework on the company. We're not going to be a burden. Share us some of the metrics. We'll come back to you in 48 hours. I remember it was literally me having two calls with them. And a few days later, they come back.
00:57:52 Speaker_00
Hey, we're interested. We're joining the round. So they really lived up to their reputation. It was just fantastic execution from their side. How much did they write? Still to this day, Bolt is the largest ticket Sequoia has ever done into Europe.
00:58:03 Speaker_00
That's an amazing, amazing thing. And they did it in 48 hours? Yeah, so the decision-making process was incredibly quick. So from the moment I had the call with them to them getting back to me was 48 hours where we're joining the round.
00:58:14 Speaker_00
And what price round was that? So that was me 2021. So it was probably four and a half billion valuation. Wow.
00:58:23 Speaker_01
Okay. So we have that round. That's a very significant moment in terms of brand and validation for the company. Does having Sakura as an investor change the structure of a company?
00:58:33 Speaker_00
I'd say that we were already doing so well that we didn't need any particular investor to help us accelerate the growth. We had a great model. We just had to replicate that in more places around the world.
00:58:43 Speaker_00
I think the unique bit that Sequoia brought to the table was especially the brand in terms of employees. So specifically in Europe, I think there was a lot of people who suddenly saw the validation that, yeah, we've heard Bolt is doing well.
00:58:55 Speaker_00
But after Sequoia and some of these other great funds invested, it really put us on a map where some of these talented people finally made the decision to join.
00:59:02 Speaker_01
How do you respond to people who say, if people join because of a fund, they're the wrong people to join?
00:59:08 Speaker_00
You can have wrong people join for any reason. I mean, wrong people might join because you're paying them too much, or they might join because an investor sort of came on board.
00:59:17 Speaker_00
I think you just need to have a great process for weeding out who are the people with the right values. Do you think you were good at hiring? I was horrible at hiring the first few years.
00:59:26 Speaker_00
So the story goes that out of the first 10 people I hired, I had to fire seven of them. So it almost killed the company. What did you do wrong? I was way too optimistic about people. Growing up, I just always tried to see the best in people.
00:59:41 Speaker_00
I was thinking everybody who's going to join is going to be equally excited about the business. They will spend all their waking hours thinking about how to optimise it. It turns out that wasn't the case at all.
00:59:51 Speaker_01
What were they? Respectfully, were they not as hardworking? Were they not as intelligent? Were they not as ambitious?
00:59:56 Speaker_00
I think it came down to all of those things to some extent. We hired people without the proper vetting process in the first year. I was 19 years old, so I had no clue what I was doing.
01:00:05 Speaker_00
So many of these people joined with completely different expectations of what I had as a CEO.
01:00:09 Speaker_00
Looking back, I think it was actually a great exercise because I learned from that of which are the patterns you really want to find in people, which are the patterns you don't.
01:00:17 Speaker_00
And after that, I think we codified the hiring process to be much more specific. And then we had a lot of success with hiring in the years following that.
01:00:24 Speaker_01
If you could only have one quality in a candidate, what would that quality be?
01:00:29 Speaker_00
I'm still in the camp of intelligence, so I would rather get somebody who's very smart. It's fine if they work a bit less hours, but they make the right decisions.
01:00:36 Speaker_00
At least for our business, you cannot compensate with hard work if you don't make the right decisions.
01:00:42 Speaker_01
Everyone says in Europe, the trouble is that we don't have people who seem gross like the US before. Is that true? And where have you seen that, if so?
01:00:52 Speaker_00
I'd say that it's very hard to find strong leaders in Europe who actually understand tech companies and who have actually built organizations of thousands of people. That I agree with. There's just almost no tech companies of that size in Europe.
01:01:04 Speaker_00
However, when you think about all these other things, whether it's how do you do sophisticated marketing or how do you build large-scale engineering systems, those things, you can find plenty of talent in Europe.
01:01:13 Speaker_00
I think that either you can get people who worked in the US and come back here, or you can just learn about how the best companies do it. A lot of their best practices are public.
01:01:21 Speaker_00
So I don't really agree that you cannot figure out how to do world-class marketing or engineering from here.
01:01:37 Speaker_00
In our experience, what has worked significantly better is taking people, especially from Central Eastern Europe, who are really talented, extremely intelligent, hardworking, good trustworthy people, but they've just never had the chance to compete at the world scale before.
01:01:50 Speaker_00
They've always wanted to, but there was never a company in the region that they could join. And those are the people who really built the company. And they're very loyal. They've grown with the company. They know everything. They've been here for years.
01:02:01 Speaker_00
And they think it's just completely different mentality than hiring people into Silicon Valley, for example, who oftentimes might move on to the next thing two years later. So we don't have that kind of culture.
01:02:11 Speaker_01
Do you think that the European funding environment is poor quality?
01:02:14 Speaker_00
I think that it used to be very bad 10 years ago, and it's significantly better now, but there's a lot of catching up to do to the US. In what ways could it catch up? First of all, we're just limited by funding.
01:02:25 Speaker_00
So one of the problems is that if you look at where's the money coming from into the US VC industry, there's so many more LPs, the big pension funds are putting money in, the university endowments are putting money in, and that's not really the case in Europe.
01:02:38 Speaker_00
So there's just, I think, far less capital available. Do you actually...
01:02:42 Speaker_01
It shows successful now, because I do argue back a little bit. I would argue completely the opposite. There is way too much money in Europe, and there are way too few opportunities.
01:02:50 Speaker_01
And the result of that is you see this concentration of capital into the few obviously good ones, and the prices are just fucking nuts. And I mean, the amount of mediocre to poor large funds is insane in Europe.
01:03:04 Speaker_00
I'd say that for sure there's a self-fulfilling prophecy in that as well, that again, if you have enough capital available, then these companies can raise the money they need to actually compete with their US counterparts.
01:03:14 Speaker_00
And if the money is not available, then they're just going to get out-competed, not because in any way they would otherwise be a worse company, but just because they don't have access to the funding.
01:03:23 Speaker_00
And at least in our industry, we've seen that play out many, many times, where it's been very clear in the food delivery industry, grocery delivery, transport in general, where a lot of these companies from the US just have more funding, and that's the only reason they win.
01:03:35 Speaker_01
What would you most change about European funding then, other than more?
01:03:40 Speaker_00
I'd say that they also need to be more ambitious and be able to tolerate that some of these businesses take a long time to get to profitability.
01:03:47 Speaker_00
From what I've seen, many of these investors are just demanding profitability way too early before these companies actually get to a massive scale.
01:03:54 Speaker_01
Marcus, I'm a 19-year-old European entrepreneur. I know I look a little bit older. You're advising me. I've started this business, and I'm really excited about it. We're a million in ARR.
01:04:04 Speaker_01
Should I raise from European VCs, or should I just go straight to the US? What do you advise me?
01:04:10 Speaker_00
Now, in 2024, there are good European VCs available. So I would think that it's easier to raise from Europe and these people can also help you recruit talent in Europe.
01:04:20 Speaker_00
However, if you want to go and do your target market is in the US, then I would probably raise from US investors because they will help you with connections and talent there. Do you really think VCs add value?
01:04:29 Speaker_00
I think there are some VCs who add value, but probably 80% of them just provide capital and that's it.
01:04:36 Speaker_01
When you look back now, what would you have done differently about fundraising?
01:04:41 Speaker_00
I would have likely gone to these New York funds much earlier.
01:04:46 Speaker_00
I think that actually I at first just didn't even think that they would be willing to invest in private companies such as ours, but actually the moment we got to first meetings with them and they saw the numbers, they were really excited and they think they could have invested in the business a year or two earlier.
01:04:59 Speaker_01
You've expanded well beyond the core category now. Talk to me about the decision to expand to other categories and how you thought about that.
01:05:07 Speaker_00
We always had the ambition to build a replacement to your private car. And we knew that ride-hailing alone is not going to do that.
01:05:13 Speaker_00
Ride-hailing is going to be a huge business, but there needs to be automotive transport we're going to offer on the platform as well. But the first five years, we were just having no resources whatsoever.
01:05:23 Speaker_00
So ride-hailing consumed all of our attention, all of our money. And then probably in 2018, we, for the first time, realized that we actually have enough budget that we can take on one new bet.
01:05:33 Speaker_00
And then we debated internally long, what is that going to be? And then we took a gamble on micromobility. So we decided we're going to be the first ride hailing company in the world to launch electric scooters on the platform as well.
01:05:44 Speaker_00
And that was actually quite a controversial decision, both from the employee point of view, but also from some of the investors, because they were thinking that, first of all, it's a hardware business, so it's very difficult.
01:05:55 Speaker_00
And second, you're going to be cannibalizing your own very profitable ride-hailing trips, because there's a big overlap. About 40% of the ride-hailing trips in a lot of these countries are less than four kilometers long.
01:06:05 Speaker_00
So you're going to be cannibalizing that and pushing people, instead of taking a ride-hailing car, to taking a scooter instead. And you will have much worse margins there. But our view has always been significantly more long term.
01:06:15 Speaker_00
We've always been thinking that it's great for us to cannibalize ourself rather than let somebody else do it. It was very clear to me that this is going to be the future. These electric scooters and bikes are going to be everywhere.
01:06:25 Speaker_00
So either we can build that category and define it based on our rules, or somebody else is going to come and they will steal our customers.
01:06:31 Speaker_00
And I think long term, if you build for the customer, you innovate on their behalf, you give them better options, I think they will reward you with their loyalty. That's always been our philosophy.
01:06:38 Speaker_01
Did you choose specific cities to launch micro mobility in first?
01:06:43 Speaker_00
Oh wow, that was a horrible experience. So we first launched it in Paris, and the logic there was that it's a big city, people have high incomes, so it should be a great place to try it out. It was a disaster.
01:06:58 Speaker_00
Honestly, Microbility in Paris is probably one of the worst places in the world to do it.
01:07:02 Speaker_01
Why?
01:07:03 Speaker_00
Because the rate of vandalism was like nothing we've ever seen. At some point, we were losing 3% of the vehicles every week because people were just stealing them, throwing them in the river, trashing them. It was absolutely horrible.
01:07:14 Speaker_00
So there was no way the unit economics were ever going to work there.
01:07:17 Speaker_01
So you just pull from Paris?
01:07:19 Speaker_00
Yeah, so actually it's funny.
01:07:20 Speaker_01
Also the competition. I remember this kind of, I don't know, five, six years ago. It was insane when there was, I mean, there was DOT, there was Uber, there was you. I was like, oh my God.
01:07:31 Speaker_00
Exactly. So we saw the similar thing happening in micro mobility as we had seen in ride hailing a few years before, which was that.
01:07:37 Speaker_00
suddenly the sector went from non-existent to suddenly becoming 10 companies, everybody raised tens of millions of dollars, huge competition. So it was a big land grab. But what we saw was that, all right, France wasn't working.
01:07:49 Speaker_00
We're thinking, we have these quarters we've already bought. Let's give it a shot, try it out somewhere else. And then for a while we're thinking, maybe let's try another relatively higher income city.
01:07:57 Speaker_00
But then at the end of the day, we're like, okay, let's try it out in Estonia. It's our home market. Let's see what's going to happen. And then it just took off really well. It took off way better than it ever did in Paris.
01:08:07 Speaker_00
Consumer utilization was better. Why do you think that was? I think what actually what we underestimated was that micro-mobility is just a category that will work in almost every city in Europe.
01:08:17 Speaker_00
And I think back then we were skeptical and we were thinking that maybe people don't have money, they're not going to be willing to pay for the convenience. But absolutely they were.
01:08:24 Speaker_00
Even in a place like Estonia, people were happily spending a couple of bucks to get where they needed a bit faster.
01:08:30 Speaker_01
Okay, so we have it working in Estonia, then we slowly expand out with micro-mobility?
01:08:34 Speaker_00
Yeah, so that actually was then the first city where we saw that unit economics really made sense.
01:08:39 Speaker_01
Why are unit economics worse for micro-mobility than they were for core riding?
01:08:44 Speaker_00
Because just fundamentally, the pricing per kilometer was significantly lower. And on top of that, the margin we at least saw in the early days was much lower as well. What is the margin on it?
01:08:53 Speaker_00
So in good markets, you are maybe able to get to 20% contribution margins, but in bad markets, it can be negative. So it's not an easy business to make it work.
01:09:02 Speaker_01
And you've got a lot of logistics around charging and supplies, no?
01:09:05 Speaker_00
So we today are one of the few players that's fully vertically integrated. So we have our own hardware team. So we design our own squatters. We have our own team in China where we manufacture them. We then ship them to Europe.
01:09:16 Speaker_00
We have hundreds of warehouses. We then need to charge them, maintain them, put them on the streets, find the ones that are missing, the ones that have been stolen. So it's a huge operation. There's more than a thousand people working on it.
01:09:27 Speaker_01
But you say this so casually. I presume you hadn't been to China before, given you hadn't been to Africa. And so how do you get a team in China making scooters for you? What is that story?
01:09:39 Speaker_00
So we actually got extremely lucky with that. So once we had this first traction in Estonia, and it was clear that this is going to be a category we want to do seriously.
01:09:47 Speaker_01
So that first one, you just bought a load of scooters from somewhere?
01:09:50 Speaker_00
Exactly. So we bought these nine-bot scooters off the shelf, and that turned out to be a disaster.
01:09:54 Speaker_00
They weren't designed for sharing, so most of them broke down very quickly, and that's where all this narrative comes from that these scooters are not sustainable, because those weren't.
01:10:01 Speaker_00
So what we did was we saw this first market work, and we had two approaches.
01:10:05 Speaker_00
Either we could buy more of this hardware that was just going to break down, or we could take a long-term view and be like, hey, let's actually design a scooter from scratch that is really built for this, that's going to last long, that's going to be very cost-effective.
01:10:16 Speaker_00
But we had no idea how to do hardware. I mean, we were a ride-hailing company, right? So we just tried to hire a team, and we got super lucky.
01:10:25 Speaker_00
So there turned out to be a team of about 10 engineers in Estonia who had been building electric vehicles their whole life. So that was their passion. but they didn't really get product market fit.
01:10:34 Speaker_00
So they were toying around building the first products, but none of them took off. So we went to them and were like, hey, would you want to join the most successful startup in Estonia?
01:10:41 Speaker_00
We're going to give you a budget, we're going to give you a consumer base, just build this hardware for us, join the team. And it turned out to be fantastic.
01:10:48 Speaker_00
So the team joined, they're still all of them with the company now, five, six years later, and they're probably now on the seventh iteration of hardware that they're building for us. So it just turned out to be a massive win-win for both sides.
01:11:12 Speaker_00
How did you do that? So we got lucky that this specific team actually had their connections in China that they'd been working with for a decade. So we got this team on board. They told us, hey, we have the connections.
01:11:22 Speaker_00
We're going to sort all of this out. So just give us the budget. We're going to sort out the designs. We're going to procure the hardware. And this was just a fantastic partnership. How much money did you allocate to that? Because that's a bit of a gamble.
01:11:33 Speaker_00
In the grand scheme of how much money we've raised in general, it's maybe been about 10% of our total funding. But what it did was that it had this massive transformative effect on the rest of the business as well.
01:11:44 Speaker_00
Because we bought these hundreds of thousands of quarters to the market to hundreds of cities, we became overnight from having almost no presence in that sector to becoming the largest micro-military operator in Europe, still to this day.
01:11:56 Speaker_00
Nobody operates with such a big fleet in so many cities. How much market share do you have in Europe today? So the market's actually pretty roughly split between the top four or five players. Each of them has between 15% to 25% share.
01:12:08 Speaker_01
With an eye to the future, when we think about self-driving, you mentioned it earlier, how does self-driving factor into how you think? We're seeing Waymo all over Twitter. I've seen so many friends. Wow, this is like the iPhone moment.
01:12:20 Speaker_01
How do you think about self-driving?
01:12:22 Speaker_00
So I remain optimistic that self-driving is completely going to change the world. It's going to be one of the biggest opportunities for companies like us to change how millions of people live, how cities are designed, how we spend our time.
01:12:36 Speaker_00
It's completely going to be transformative. However, I don't think it's going to happen anytime soon. So
01:12:41 Speaker_00
When you look at these two tech trees that they're currently developing, they're both years out before making a service that's actually commercially viable, that's actually cheaper than a human driver, and one that actually meets regulatory requirements.
01:12:53 Speaker_01
Why?
01:12:53 Speaker_00
First of all, the tech is just really hard. You have these approaches that use end-to-end neural nets like what Tesla and Wave here in the UK are doing, and I think they're making great progress.
01:13:03 Speaker_00
But let's be honest, they're still years away from having a reliable service that can truly replace a human driver in terms of safety and the coverage of areas it can drive in.
01:13:11 Speaker_00
And then you have the other tech tree, which is what Waymo and Cruise have been doing, which is very different. It's much more expensive. You have significantly more sensors, like more lighters on the vehicle.
01:13:20 Speaker_00
And that sort of is getting to the point now where it starts to work as good as a human would, or even better. But there, the costs are just so prohibitive. The costs are significantly higher than a human would.
01:13:30 Speaker_00
So it's going to take them multiple years for the cost to come down.
01:13:33 Speaker_01
Help me understand that, because I have a lot of friends in San Francisco now who say they go to work every day on a Waymo, and it is the same price or cheaper.
01:13:40 Speaker_00
Yeah, but there's a difference between price and cost. Google is one of the wealthiest companies on the planet. They can keep on subsidizing millions of rides for a long time. That doesn't mean the cost structure is there.
01:13:49 Speaker_00
How long will it be, do you think? I hope that we're going to get to the place where the technology and the costs are sorted out over the next five years.
01:13:57 Speaker_00
And then it's probably going to be a couple more years after that for the regulation to get sorted. Especially in Europe, I think it's going to take a long time.
01:14:04 Speaker_00
If Italy hasn't even figured out the ride hailing regulation in 10 years, I wonder how long it's going to be for them to update their self-driving
01:14:10 Speaker_01
What do you do then? You vertically integrate and buy them? You partner?
01:14:15 Speaker_00
Most of these companies, like Waymo, over the long term don't want to operate a car network. It's just too much hassle.
01:14:22 Speaker_00
These companies can build what they're fantastic at, which is building the software, and then there's going to be companies like us that actually do the real world operations.
01:14:29 Speaker_00
Because I think most people underestimate how difficult it is to operate a million or five million or 10 million vehicles in hundreds of cities, comply with all the local regulations, collect the payments, deal with customer support, clean the cars, charge the cars, et cetera.
01:14:45 Speaker_00
I think it's sort of just a scale of complexity most people can't even fathom and they just hand wave and think it's going to be easy. No, it's not. Not to mention the insurance, the financing, the procurement of the cars, et cetera, et
01:14:56 Speaker_00
I think that ride-hailing companies like us are absolutely going to be pivotal for these self-driving car companies to actually go to market.
01:15:02 Speaker_01
What is Uber better than you at today? And what are they worse than you at today?
01:15:09 Speaker_00
Everybody else in this industry who survives by now, there's about seven companies left. What they've been doing better than us is raising money. They've just all raised multitudes of how much we have raised.
01:15:19 Speaker_00
Many of them have raised five billion, some of them have raised 15, even 30 billion, while we have raised 1.5. Are you profitable today? So our story, as we started with, was that we were bootstrapping the company in the first four years.
01:15:30 Speaker_00
Then we raised more than a billion dollars. We invested a big chunk of that over the last five years. And now we're returning back to profitability. But now it's our choice. We have a big set of markets that have been profitable for years.
01:15:42 Speaker_01
Why do you decide to do it now? You can continue to invest, continue to go for growth. What's the rationale for saying, let's go for profitability?
01:15:49 Speaker_00
So our priority, for sure, is still growth, 100%. So there's no intention for us anytime soon to become a profitable company that would be paying dividends or anything like that. Absolutely the focus is growth.
01:16:00 Speaker_00
However, we have a set of markets where we've built out a fantastic category leader position.
01:16:06 Speaker_00
We have millions of customers, the business is organically growing well, it's very profitable, and we're taking that cashflow and investing that into other parts of the group.
01:16:13 Speaker_00
So either we're launching in more geographies, or we're launching new product lines, and we think we're going to keep on doing that for the next decade. What product line do you not have that you would like to have?
01:16:22 Speaker_00
So we already operate five, which is a lot for almost any company. Most companies can't even get one business line to the scale that we do.
01:16:30 Speaker_00
So we do ride hailing, we do scooters and electric bikes, we do car rentals, we do restaurant delivery, and we do grocery delivery. So it's already a full set of products in dozens of countries. Can I push you?
01:16:40 Speaker_01
What's the smallest revenue makeup?
01:16:42 Speaker_00
So the smallest today is still our car rental product. Why do you do it? Because we have a lot of conviction that long-term, that's going to be a multi-billion dollar category for us.
01:16:53 Speaker_01
Why? Because of shit incumbents? Really shit incumbents?
01:16:56 Speaker_00
So as most people have interacted with these old school car rental companies, I don't think anybody's very happy with the experience. And I think that's even the small view.
01:17:05 Speaker_00
One current segment of the market is that people get out of the airport, they need to rent a car for a couple of days. Sure, that's an exciting category and we're looking at ways, how do we make that experience better?
01:17:14 Speaker_00
And similar to ride hailing, we don't expect we need to operate all of this ourselves. We think we can partner with those companies, give them the tools, give them our operational know-how and improve the experience. So that's one.
01:17:24 Speaker_00
But the other thing is that I think we need to be way more ambitious than that.
01:17:27 Speaker_00
And it's like, how do you actually create a new version of effectively Zipcar, which is that you can just rent these cars in a city on demand, just walk up to them, open them up with a tap and you can actually get a ride.
01:17:38 Speaker_00
So that is the category we're way more bullish about. and it's already working fantastically in about 10 cities now in Europe, and we're just scaling it up. So what are you not in?
01:17:47 Speaker_01
So if you were to add a sixth, what would you like to add as a sixth?
01:17:50 Speaker_00
We have this wish list of probably 50 ideas that we're looking at every year and thinking about what are we going to launch next year. So the one I'm currently bullish about is dining payments.
01:18:00 Speaker_00
In many parts of Europe and the world, it's actually not a common thing that you can scan the QR code, you see the menu, you can order and pay from that. And you can integrate it with everything else we already do in the BoldFood ecosystem.
01:18:11 Speaker_00
So you can have a loyalty program there that's all attached to that. So whether you do food delivery, or you do the dining experience, or any of these sort of food related services, they can all tie into a really nice holistic ecosystem.
01:18:23 Speaker_00
So that's what we want to build next.
01:18:24 Speaker_01
Oh, it's fucking hard. I've done the scanned pay investing before. It's a
01:18:29 Speaker_00
This is why you hate European VCs. It's a bad business. And I think that's one of these things that Bolt is good at.
01:18:35 Speaker_00
How do we turn these bad businesses into actually good businesses through just a level of cost efficiency that none of these other companies can match?
01:18:42 Speaker_01
Someone said to me the other day, the heaviest things in life are not iron or gold, but unmade decisions. What's the biggest unmade decision for you that weighs on your mind?
01:18:54 Speaker_00
Actually, there's probably no single decision that I regret that we haven't done. I think it's rather that there's been multiple decisions that I would do differently if I could. What's the biggest?
01:19:03 Speaker_00
Probably, we should have been even more aggressive in our expansion. So if I look back at this period we had from 2015 to 2019, where we launched all of these markets remotely, it was a fantastic time.
01:19:16 Speaker_00
I think what we did back in 2019 was that we started raising these bigger rounds and we were getting this external advice that, guys, you need to get more professional.
01:19:23 Speaker_00
You can't keep on launching markets like this, running Facebook ads and hiring people over Skype calls. You need to have more rigor, more process around it. It was one of those rare times where I actually listened to that advice.
01:19:33 Speaker_00
Then I think we slowed down a bit on expansion and we doubled down on existing markets, which had its merits.
01:19:40 Speaker_00
But I think what it meant was that in some parts of the world, we left the vacuum for other competitors to fill in and actually take meaningful share.
01:19:47 Speaker_00
So looking back, I think we missed out on a great opportunity there if we had continued in that startup mindset for a bit longer.
01:19:53 Speaker_01
This has been such an amazing story. I want to do a quick fire round with you. So I say a short statement, you give me your immediate thoughts. What do you believe that most around you disbelieve?
01:20:03 Speaker_00
I think the most contrarian view that I have not seen any investors really buy into so far is that these ride-hailing companies are really going to be the best way for these self-driving cars to come to market.
01:20:14 Speaker_00
From what I've heard from most people, they think that these companies are going to build their own operations and companies like us are going to get somehow squeezed out of the market.
01:20:22 Speaker_00
I think these people just have no idea about the complexities involved and how difficult it is to scale a ride-hailing network such as this.
01:20:28 Speaker_01
I think when you don't do the work, it's difficult to know how hard it is.
01:20:33 Speaker_00
We've been building this for 11 years with human drivers and that's already hard. If you add sort of the complexity of managing this autonomous operation and cleaning the cars and charging them and so on, I think it's only gonna get more difficult.
01:20:44 Speaker_01
What's been the most lavish purchase then you've spent on?
01:20:47 Speaker_00
I'm a very frugal guy. I don't even have a driver's license. So the most expensive thing I've bought is probably in my apartment in Thailand. Probably still cheaper than anything I could get in London. Does money make you happy? Absolutely not.
01:21:00 Speaker_01
What's the reflection on relationship to money?
01:21:03 Speaker_00
You need to have some base level of money to take care of your daily needs. Absolutely. And to that point, I think it makes a big difference to your emotional health.
01:21:10 Speaker_00
But after a certain point, what I get most of my excitement from is actually seeing the company do well and actually see the people around me do well.
01:21:17 Speaker_00
So the reason I come to the office every day is because I genuinely think we have a world-class team.
01:21:21 Speaker_00
And seeing those people who started in the company as basically interns, and now they're running hundreds of people's organizations, it's just fantastic. So that's what gives me the most joy.
01:21:31 Speaker_01
What have you changed your mind on in the last 12 months?
01:21:35 Speaker_00
I was actually at first very skeptical of AI.
01:21:38 Speaker_01
Why were you skeptical and why did you change your mind?
01:21:41 Speaker_00
I started using ChatGPT when it came out more than a year ago, and there was a lot of buzz about it, and all these CEOs were coming out saying how it's going to transform their companies.
01:21:52 Speaker_00
On one hand, a big techno-optimist, but on the other hand, I tried it out. I asked a bunch of people in the company to try it out, see how it can optimize their work, and it came back very negatively.
01:22:01 Speaker_00
Nobody really thought it's going to move the needle, with the exception of one part of customer support. That was generally the one part that I was thinking optimistically it's going to move.
01:22:09 Speaker_00
But now I think in a year, my thinking has switched significantly, both on a personal level and on a company level. So on a personal level, I now use these LLMs basically every day. What do you use? Actually, a mix, so both on Tropic and Dope.
01:22:23 Speaker_00
Publicity? Very little so far, actually. I generally prefer the other two.
01:22:27 Speaker_01
And then for the team, it's changed as well?
01:22:29 Speaker_00
Yeah, so for the team as well, so it was clear that customer support, it's going to be great. You can automate the meaningful percent of work and make the customer experience better.
01:22:36 Speaker_00
But I think it's also become more obvious to me that you can actually expand that to significantly more use cases, whether that's something like a CRM. So how do you make your sales reps and marketing people more effective?
01:22:48 Speaker_00
Or it might be internal tooling, like how do people in the company discover information more easily? How do you, for example, summarize documents and make better decisions?
01:22:56 Speaker_00
So I'm getting more and more optimistic you can actually apply it in those domains as well.
01:22:59 Speaker_01
What concerns you most in the world today?
01:23:01 Speaker_00
Clearly war.
01:23:02 Speaker_00
I think that there's a lot of things going on well in the world of technology, but I think it's absolutely insane that we have war going on in Europe, Russia attacking Ukraine, killing people, and everybody's just basically forgotten about it.
01:23:15 Speaker_00
It's absolutely crazy.
01:23:16 Speaker_01
Yeah, I do agree with you. It's amazing how it normalizes so fast, as awful as that sounds.
01:23:20 Speaker_00
Exactly. I mean, the war's been going on for two and a half years, and you know, you ask most people in London, they don't even think about it.
01:23:26 Speaker_01
You're a fit dude. I've known you for a while. You're a fit dude. What's the health or diet advice hack that not many people know about and that you think is great?
01:23:35 Speaker_00
Honestly, I think people should just do the basics. That's the most contrarian take here, probably. Everybody's trying to innovate and biohack and whatever. Most people should just take the basics really seriously.
01:23:46 Speaker_00
Sleep eight hours a day, eat healthy food, exercise a couple of times a week, take a few hours off, enjoy time, read books, chill with friends, whatever works for you.
01:23:55 Speaker_01
Just most people don't do it. When have you been most out of kilter in the Bolt journey? Well, you're sleeping an hour a night and it's just, your health is shit.
01:24:03 Speaker_00
Literally never. Over these last 10 years, I've never sacrificed sleep for the sake of the business. I've always thought that that's going to be a bad idea. I'm just going to be ill-tempered the next day. I'll have worse memory, worse decision-making.
01:24:17 Speaker_00
So I've always taken it very seriously. I always sleep well, and I look at this as a marathon.
01:24:21 Speaker_01
God, fucking Estonians. You're always so calm and methodical in what you do. Final one. What question have I not asked that I should have asked?
01:24:31 Speaker_00
Most people still misunderstand how all of these on-demand marketplaces are going to work out. I think that that's been the bizarre thing to me.
01:24:39 Speaker_00
So I was always being this contrarian in this industry for 11 years, telling everybody that I think all of this M&A in this ride-hailing industry is complete insanity. You should not be doing that.
01:24:50 Speaker_00
And again, still to this day, I think most people wouldn't agree with that. Why is it insanity? This is fundamentally a duopoly industry.
01:24:58 Speaker_00
This is an industry that at the end of the day, stable state is going to be two players splitting the market one way or another.
01:25:03 Speaker_00
And whenever the top player pies the other one, they buy themselves a couple of years before somebody else comes in and takes that second player spot as well. So you're back to square one.
01:25:12 Speaker_00
and we've seen time and time again how companies make this mistake. They do this merger, they think it's going to be fantastic, they model out these monopoly returns for a long time, and it never pans out.
01:25:23 Speaker_00
I don't understand why companies keep on making that mistake.
01:25:26 Speaker_01
I totally agree and love that. So what is the future of these marketplaces?
01:25:29 Speaker_00
I think that most of the world has already stabilised. So if you look at this industry, barriers to entry now are so high.
01:25:35 Speaker_00
The technology, getting places like London going requires such a massive need of capital that nobody's willing to fund in this new environment.
01:25:42 Speaker_00
So I don't really think that there's going to be new competitors entering the market in a traditional sense. I think where this innovation is going to come from is new modes of transport.
01:25:51 Speaker_00
Either it's going to be something new like electric scooters, or it's going to be self-driving cars, but I think it's going to be a completely different thing that's going to shake up the market, not the existing companies.
01:26:00 Speaker_01
Marcus, I do the show for shows like this, Which is, I said to you before I think art and science, the story combined with the lessons. Thank you for being so brilliant because it re-energizes me and my love for what I do by doing shows like this.
01:26:14 Speaker_01
Awesome. The Bolt Journey is one of the greats. If you want to see the full episode on YouTube, you can check it out by searching for 20VC to see Marcus in the studio live.
01:26:24 Speaker_01
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