It was 2020. The company was already fairly big. Suddenly, you started seeing this news where there's a virus spreading. And then in a couple of weeks, it got so bad that the business declined 85%. That isn't an easy position to be in. We very quickly pivoted to food delivery. We launched suddenly in about 15 countries across Europe and Africa with a food product. We were very lucky in the timings. It actually worked out really well.
You've read Lord of the Rings five times. Why that book and why so many times?
Lord of the Rings somehow stuck with me. Sort of the narrative arc of how we can have people come from all sorts of small places and make something great in the world. Coming from a small village in Estonia really resonated with me as well. We operate in 50 countries. We have more than 200,000 vehicles in more than 200 cities and we custom design them. We have our own team in China for the manufacturing. We're profitable for the last 2 years. We have a tech team of 800 people. We have taken a lot of effort to make sure that we design the best hardware we can. This sort of more experimentation R&D culture I think starting to pay off.
In 2013, a 19-year-old from a tiny Estonian island town borrows €5,000 from his parents, and decides to take on Uber. Just over 12 years later, and Bolt now operates in more than 50 countries, generates nearly €2 billion in revenue, and is one of the only European startups competing at a genuinely global scale. Markus Villig is the CEO and he's still only 32. Today, Markus and I talk about his philosophy of culture, market fit, how to fix Europe's ambition problem, the economics and impact of autonomous cars, and lessons from Markus' favorite series, Lord of the Rings. I'm Mario and this is The Generalist.
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I'd love to start with a little bit about your mind and understanding how you think. One of the things that when I was researching you came up is that you've read Lord of the Rings five times. Why that book and why so many times?
I was growing up in a tiny village in Estonia. So I spent many, many days of my childhood just reading books, everything I could find. And I remember fantasy and Lord of the Rings was always top of the list, but I was heavily into everything from science fiction, reading encyclopedias and so on. But yeah, Lord of the Rings somehow stuck with me. This sort of fight between good and evil and sort of the narrative arc of how you can have people come from all sorts of small places and make something great in the world. Coming from a small village in Estonia really resonated with me as well.
Yeah. You grew up on an island of like 10,000 people, right?
Yeah. So the city is 10,000 people. It was a very great place actually to grow up as a kid. It was very safe. You could just wander around the city as a six-year-old. We didn't even need to lock our doors. So, I mean, growing up, I thought that's a good way to grow up, but I realized later on it's obviously very unusual. That's not the upbringing of most people.
I don't know if you saw, but there was a really great sort of discussion where Palmer Luckey was talking about Lord of the Rings and what it meant to him. I imagine there's some of that relevance to it, too. You talked about the, you know, the good and evil piece, but, you know, even when we're talking about it on a geopolitical scale or on a company-wide scale, like is that a text that you end up sort of coming back to a lot for its lessons?
I think that a lot of it obviously resonated with me as a kid and then still to this day. My view of the world still in some ways is maybe more black and white than I think has become the norm over the last couple of decades. And probably that's heavily shaped by the fact that my parents were growing up and lived most of their life under the Russian occupation in Estonia. So very clearly they understood that there was this iron curtain on one side of it. Everything was horrible and you were living under this oppression. Even to the point where entrepreneurship was banned and if you said anything wrong about the government, you know, you were going to be sent to a prison. And then on the other side of that to the west were all these sort of light values of democracy and so on. And I think we sort of always were growing up, me and my siblings, with that type of attitude that hey, let's make Estonia a great country that belongs to the west and we don't ever want to fall back under this regime again.
Mhm. In the history of Bolt, who have been like the biggest sort of baddies, the Saurons that you've had to fight most? Like is it a concept? Is it like entropy? Is it a competitor like Uber? Like how do you sort of think about that?
I think internally we've always viewed ourselves in that way as the underdogs and then probably the rebels versus the Darth Vader out there. And I think their branding helps with that as well.
So very clearly we've seen ourselves as coming from Europe trying to have more sort of human values of making sure that the drivers and partners are better taken care of as well. Not maybe just always optimizing for the sort of short-term pennies that you can make, but we understand that we're actually a physical service at the end of the day working with real people and we want to have these drivers on the platform for many, many years. So, if you piss them off in the short term, like you're not going to have a great business long-term as well. And that's something that I think to our advantage it doesn't come that naturally to many of these US companies headquartered in SF and they see Europe as sort of a peripheral second-tier market for them.
Mhm. Yeah. There's been so much of your story that has been sort of like finding these markets that other people have overlooked and winning in them. Before we sort of talk more about that, maybe when someone says they read Lord of the Rings five times, it sparked something in my brain and I went down a bit of a Tolkien rabbit hole where I was like, okay, what does this say about you? What does it maybe say about the world? And one thing that came to me is apparently Tolkien invented a word called eucatastrophe. Eu from the Greek word of like good. And the idea is sort of like right at the edge of catastrophe something great happens. And so I was curious when you think about Bolt, what have been the moments where you've gotten closest to catastrophe and then something fantastic came out of it?
There's been many stories like that. First one that comes to mind is during COVID. So I mean it was 2020. The company was already fairly big. We were probably doing 100 million in revenue. We probably had about a thousand employees and already quite a wide presence in about 30 countries or so. And then suddenly you started seeing this news where there's a virus spreading and some cities were going to be shutting down and not allowing people to move. And then in a couple of weeks it got so bad that the business declined 85%. We're thinking like wow, okay, that isn't an easy position to be in. Like you can't raise money in that type of a condition. Obviously you're losing all your revenue. What are you going to do with a thousand employees you have? What are you doing with the hundreds of thousands of drivers who are counting on you as well to make a living. So I think a lot of the people in the company obviously got for right reasons very panicky about what we're going to do. But then we thought that hey, let's keep our cool, figure out what are we going to do in this situation to make the most of it. And then we very quickly pivoted to food delivery. So we had just launched the first prototype version of food delivery just coincidentally a couple months before but then we were very lucky in the timing. So we're like hey, let's use all these people we have who can't work on ride-hailing at the moment. Let's just push them into food. And we launched suddenly in about 15 countries across Europe and Africa with the food product and it actually worked out really well. So it was able to compensate for quite a bit of the loss we were making on the ride-hailing side. Maybe this sort of yeah resembles one of these Tolkien sort of catastrophe scenarios as well.
What did it take to go from hey we've prototyped this and we have sort of the first version running to like production mode? Like I can imagine there's obviously huge operational things. Were there regulatory things that you had to sort of get over, technical things?
A lot because you can imagine food delivery by now is quite a complex problem to solve both in terms of technology and operations, right? So, first of all, you have to sign up thousands of restaurants or merchants to get on the platform. So, we repurposed all the people we could, you know, where possible they went on the streets and just signed up merchants offline. But wherever possible, we just online were asking them to, hey, send us your menus. We're going to digitize them, put them in the app. So you can imagine doing that at rapid speed in a matter of days is quite a complex undertaking across nearly 20 countries with very different levels of technology sophistication as well, all the way from places like Portugal to Nigeria to Poland. So yeah it was quite a mess and then at the same time how do you scale up the technology so that it actually makes all of this easy to administer as well. So you can actually report your local taxes correctly. The logistics run smoothly. How do you localize the app to just work in so many languages and so on. So it was quite an intense hackathon effectively for the whole company for a couple months.
You mentioned that you know you're the European sort of underdog that has been fighting against the Sauron, the Darth Vader. How much of Bolt's culture do you feel like is an Estonian culture fundamentally? Because in some ways that is also like the Estonian story of like this small country that really outcompetes on a relative basis in tech.
Absolutely. I think that those three, being Estonia's sort of culture and history and my own and the company's, I think they all have a lot of overlap and that's quite natural. I think obviously if you start the company and you run it for 12 years at the end of the day it's going to be reflecting the values and your own behaviors to a large extent. And I think similarly Estonia as I mentioned, I mean we have this very unique history where we've only now had a reindependence for the last 30 years and in that time Estonia has gone from one of the lowest GDP countries in the world even to one of the fastest growing in Europe. Living standards now are better than in most European countries. We have more startups than almost any place in the world.
More, Israel is the only one above it.
And per capita, Sweden is even ahead. And in terms of unicorns similarly. So clearly in terms of any metric you look at, Estonia is doing really well in tech and then in general. And I think we've always tried to take that enthusiasm and then those values into Bolt as well and we don't care that we're from a small country. We've always had the view that if we work harder and we do smarter decisions we can beat whoever company in the world regardless of how big they are.
Something that I've heard from other entrepreneurs, some sort of Scandinavian entrepreneurs, which has, you know, a good tech ecosystem, could always be better of course, but folks from that region, folks maybe from Central Europe, is that you know a lot of times there's sort of a sense of tall poppy syndrome where even in their culture it's not, you don't want to dream too big in some sense and there's parts of that that are keeping people back. Like does Estonia have its version of that or is that sort of different given the fact that it has this history of great technology companies?
I think that what's quite unique about the Estonian situation is that like again until the '90s entrepreneurship was banned. So I think we had this huge pent-up demand of people who wanted to build a business back then and then in the 90s once we had our independence again it was such a common thing, everybody wanted to start businesses. So there was so much hope and enthusiasm that we can build something great and then so I think most people had completely unbounded ambition because they were just naive, like they didn't know any better because we were coming up from this sort of closed ecosystem, right? And I think that optimism and naivety to some extent has been serving us really well. And then what further boosted that was that in 2003 Skype was founded and the core team members and the core R&D center was in Estonia and of course that over time became one of the most successful internet businesses of all time with hundreds of millions of customers. It was actually the biggest exit of that time at all in the internet world, not just in Europe but around the world. And I think that just further boosted it where people were like, hey, we can build something from our home and build a world-class product and then conquer the world. And I think that just carried through to the next generation of entrepreneurs as well.
One of the reasons I was excited to talk to you is really that you were a very vocal proponent of Europe and the need for Europe to sort of step up into a bigger role on the tech landscape. I think you had a tweet that said, you know, Europe has zero of the top 25 companies in the world that got a lot of attention. Why do you think those sorts of messages capture so much attention? What does it say about the state of Europe today and maybe what needs to happen?
Well, I'd say that when you follow what's going on on X or Twitter, right, then I think the zeitgeist is very much that oh, Europe is falling behind and we're regulating bottle caps and we haven't done anything meaningful in the technology space in a long time. And partially of course objectively when you look at it, it's also true. Yes, the biggest technology companies we have are still 30 times smaller than the biggest US ones just when you benchmark versus revenue or market cap. So clearly there's still a massive way to go. However, when you look at the last 20 years, the progress is astonishing. So when you look at it, the exponential curve keeps on getting better. Every year there's more founders, more funding coming in, better companies being built. But just the problem is that that curve is like 20 years behind the US. So the question is how do we accelerate that? And to some extent, I think having this sort of hopefully helpful criticism and these jokes about Europe is also raising awareness that hey, there are structural problems and we got to address them. So in that sense, I think this criticism is not always bad.
What are the biggest sort of self-owns that Europe does that if you could just get in there and fix it tomorrow would make the biggest difference?
There's so many things and they're interconnected, right? So first of all I think it's a cultural thing which I observe more actually in Western Europe than Eastern Europe. And as you mentioned it's about ambition. So it's not very common to see that you have these young entrepreneurs coming up from Western Europe who want to build the biggest company in the world and are willing to say it out publicly that they have that level of ambition and take on more ambitious projects. So it's gradually starting to happen but it's still I think one-tenth of what it could be. And oddly enough actually then when you start to zoom in like who is building these bigger success stories, I mean even in Western European countries like the UK, generally not local people. So I mean you look at the biggest tech companies in London, you know, Revolut, Wise, etc., it's generally done by people from Eastern Europe often times. So actually it's quite odd that for some reason just this sort of ambition, the sort of work ethic of just grinding it really hard in the first couple of years getting it done, like how do we just manifest more of that in Europe? I think that's the first cultural block we need to solve.
How do you start to decode or debug rather those aspects of European culture? Because you know I've sort of split my life rather evenly between the US and America, half American, half Italian. The things that I would point to is that it seems very fundamentally uncool in Europe to work too hard whereas in America it's almost performative in the other way where you want to be the most hardcore one. Like I don't know what would you point to as the things that make the biggest difference there?
There's obviously some people who just in general have different values in life and they want to enjoy their lifestyle and not work hard and okay it's hard to change that. But then I think that for a lot of people they are willing to work much harder if they see that there's value attached to that. So if they see that their hard work is making a difference, so they see career progression, they see they're changing the world, it's having a meaningful impact on their financial status, then I think people are willing to put in a lot more hours. And unfortunately, many parts of the European economy do not offer that. So if you work as an engineer in Volkswagen, like I mean it's quite capped what you can achieve there. So I don't think you're sort of feeling the same level of ownership as an engineer would have in Tesla or you know maybe like a more meritocratic faster moving company. So I do think that we have this great talent that are smart that have the willingness to work hard but you just got to put them in the right structure.
Some of the things that you like to talk about with regards to Europe are also sort of related to the defense side of the equation and we are currently in a period of history where things are shifting very intensely and it seems like Europe is going to have to take sort of more responsibility in that respect. What would you like to see happen and how did that interest originate in you? Was it sort of natural given your history and of course the invasion of Ukraine but yeah would love to hear sort of how that came together.
Well, I actually did not want to get involved in defense in the first place because I was thinking I'm going to stick to my lane and build and I'll, you know, contribute to Estonia and then Europe that way economically. But then actually a few people from the Estonian defense forces reached out about a year into the war and they were quite concerned because they said that hey we were expecting there's going to be an influx of new talent who will want to build these new generation defense companies that we desperately need but that hasn't really happened. So maybe you can come and advise and give us some input effectively like what should we do. And then we devised the plan of a couple of steps and then we just executed on that in about 6 months in Estonia. And they think that's a good blueprint for most other countries to follow. So effectively what we did was that first of all we realized there's a big funding bottleneck. So there's on paper plenty of easy money in Europe but then you look at what fraction of that can actually go into building any type of lethal products in terms of rockets or you know modern armaments that are needed, it's almost zero. There's basically no capital available, at least that was the case 3 years ago. So, we went to the Estonian government and we asked that, hey, let's set up a 100 million defense tech fund that exclusively does these type of investments that most other funds can't do. And we think that's going to be obviously great for building up this new defense ecosystem, but we actually think there's a great investment opportunity here as well because it's sort of an under-appreciated sector. So, we actually got the Prime Minister to say yes to that after two meetings. We set it up. That fund is active. We're deploying money for the last couple of years and that fund is actually now rapidly growing in size. So that was the first thing we did. The other thing was that we realized that defense is such a peculiar sector that most people in tech have no idea what to do there. So they have no idea how to get going. What are the problems? How does the procurement work and so on. So what we did was we created this defense technology meetup. At first we thought let's see how popular it's going to be. We just threw it out there. Wanted to invite investors, entrepreneurs, engineers, people from the defense space. And it was so popular the first time it was immediately oversubscribed. So we could fit a couple hundred people into the room but we couldn't take more. And now that's become a recurring monthly event and it has grown into quite a big effectively conference by now where every month we're getting people on the eastern flank together. We're hosting them in Estonia and other countries as well and then that's great. So, we're just building the sort of new ecosystem of connecting people across these different disciplines and then when you bundle that with the funding it works really well. And then maybe the third last small thing we did was that we realized that at the end of the day all the innovation is happening in Ukraine because they have the biggest pain of course, it's closest to the front line. So they can have this rapid development cycles of building something that day, sending it to the front line the next day. And obviously if you're a western company building somewhere in a lab you don't have any connection to reality you're going to be far behind. So what we did was try to get as many of these Ukrainian companies to set up in Estonia as possible. And now we've been able to get dozens of them to register there, set up in Estonia and then they can start to sell those products into other NATO allies as well. So that was our three-pronged approach and I'd recommend more European countries to look into that as well.
Yeah, that last piece is something that at least from an observer's perspective, talking to some of the founders of these different companies, you do see, I think, a really tangible difference when I've talked to folks that have been deploying stuff on the front lines versus those who are in more of a lab environment where often it's the ones that are building in a lab that can attract the most money and get the most buzz and people can be really great with the narratives, but then often those are also the ones that seem to have almost no impact on the battlefield from folks I've spoken to and so sort of bridging that is sort of pivotal.
Right. Absolutely. And I've personally been to Ukraine to meet some of these teams and I mean the resourcefulness these people have is off the charts. What they're able to do with just a couple of million of funding is build extremely advanced technology whether it's drones or counter-drone technology and so on and it's extremely impressive. And then at the same time you look at some of these western companies who are raising tens of millions, hundreds of millions and the hype is great but then you look at actual real world effectiveness, it's not proportional. So I do think that we got to go where the actual best companies are and today they are in Ukraine and we got to learn from them.
You are clearly so interested in this and obviously see the importance of it. Is there a version of Bolt in the future that has a very different aspect to it that is more about western security, more about defense in some capacity because you've often said we're only 1% done. I could imagine the 99% could have many different form factors.
I'd say that even though it's a passionate area for me and I think it's extremely important for Europe, just frankly I don't think we should do everything through the vehicle of Bolt. I think that we have so much to do there and I don't want that to be sort of a distraction there. So for the time being I'm on the sidelines advising, investing in these companies. And you know, one day, who knows? I mean, maybe there's going to be a great opportunity to build a new company in the defense space, but for the time being, I see that my time is probably best spent in this role.
Yes, that makes sense. You've also talked a decent amount before about sort of the need for capital market reform in Europe. You know, that's not a space that I'm as familiar with certainly. What are the structures that need to change there? How would you like to see that start to play out?
Well, we can start off just from the outputs at first, right? So purely if you look at retail trading activity, regular people, the difference between how much US retail people are buying stocks versus Europe, the delta is more than 10x.
It's absolutely massive in terms of net new inflows, how much capital is coming in, how much people are trading, it is uncomparable. And obviously that has trickle effects down the line, right? So if you have more money coming in, the cost of capital is much lower. There's much more liquidity in these markets. And that's great for the local ecosystem. So you have more companies benefiting from this and then more entrepreneurship. And also it's actually better for the investor because the alternative if you don't do that then your money is just sitting in savings accounts which is the case in Europe, you actually end up making way lower yields. So you typically make like a 2% or 3% yield on that money versus something much greater in the stock market. So I think in Europe today we're in a lose-lose situation. It's bad for our people and it's bad for the companies. And unlike some of these other things I think this is actually one of the easiest things to get fixed. It's not that controversial that we should be adjusting these rules and we've been studying which European countries are doing it the best and actually I think Sweden is top of the list. Sweden has actually done these reforms over the last decade and with those reforms they've boosted their activity to a similar level as the US. So clearly it is doable if you do the right reforms and effectively what they did was they just made it extremely easy for anybody to buy stock. So they cut all the red tape and they reduce the tax burden massively. So it's very affordable for people to do these stock trades and clearly it works. There's now many, many years of evidence of this and we should just replicate that all around Europe and get 10 trillion of money to be invested into public markets and technology and entrepreneurship and I think that would completely revolutionize the landscape we see in Europe today.
That's fascinating. Let's talk a little bit about Bolt and the history of this company because it is a fascinating business and it's one that I think is very unique. I can't imagine there are many stories quite like this that start in Estonia and really go globally. There are obviously precursors, but you're doing it in a very different way. In studying your story, you began with a 5,000 loan from your parents. Is that right? What was the pitch like to your parents for Bolt?
I went to them. I said, 'Hey, I have this idea. I think that there's a fantastic opportunity to build an app that aggregates all the taxis in the city. You can hail them at the tap of a button. It's going to be great in terms of prices, quality, pickup times.' They had like no idea what I'm talking about because back then they didn't even have a smartphone. So the pitch wasn't the easiest. But after some debate, they said, 'Hey, we're fine to give you 5,000 out of your university fund if you're going to go for it. That's at your own risk. You got to then cover your own rent because we didn't come from that wealthy of a family.' And then looking back, I mean, I realized like why were they even willing to take this risk in the first place? Was because by that time I had probably five years of some type of entrepreneurial experience already.
So I think they'd seen from the sidelines how I was building websites, learning to code, trying to do some e-commerce and so on. So they sort of already saw that I wasn't just a regular teenager who had no idea what I was talking about.
So, what were the first entrepreneurial things that you were doing? And what was the first, I don't know if you'll forgive me, was it a euro at that time? What was the first euro you made over the internet?
Actually the very first one was the most plain. We were just building websites for local companies. So somehow I got some first inbounds of people telling me hey my cousin is doing a restaurant. He needs a website. I heard you can do that. So that's how it got going. And then at some point it was extremely lucrative because these small companies in Estonia had no idea how to do that. They were paying me maybe 500 or a thousand euros per page.
So, you know, for me as a teenager, that was a lot of money.
And then at some point they recruited
A couple of my classmates to do the websites and then I was even sort of just trying to bring in the customers. So, I became this sort of small agency.
You were the manager at that point.
Yeah. So, I was sort of learning how to manage customers, get my first employees, manage the payments, figure out how to produce a great experience. So, yeah. And I always knew this was just the stepping stone and the way for me to learn. Because I always at heart knew I wanted to be a tech entrepreneur and then build a product.
Not that many children know I want to be a tech entrepreneur. You know, I went from my first one was zookeeper then a trader in the stock market. So there were some jumps in there but where did that come from for you? Like why was that even a tangible goal?
For me it's always been crystal clear. Started thinking that I wanted to be a scientist when I was probably 5 years old. I was so passionate about technology reading all these sci-fi books and encyclopedias and then so on. And then when I was about 10 I flipped. I was like okay I can be a good scientist but I think my superpower is rather not to do that but to bring people together and then build something commercial around that as well to not just invent the technology but make sure you commercialize it and productize it. And that vision has never shifted. I mean now been on that path for about 20 years.
You're clearly a very competitive person. Where did that sort of first manifest for you as a kid? You know, I think your father was like a very serious athlete. Were you, you know, a serious athlete yourself? Like where did that show up first?
Actually, for me, it's quite a contrast because I only apply this competitiveness in business. So I actually try to in the rest of the time actually be relatively chill and sort of decompress and then take the stress off. Usually in sports or personal life, I'm not that competitive at all, but anytime it gets to anything related to Bolt, then I'm all in.
Wow. It's amazing that you can sort of switch it off. I imagine there must be always a temptation, but clearly you figured it out for yourself.
Yeah. And I think overall, you got to find what's the right balance for you, so you sort of keep yourself sane and then high energy. And at least for me, I realize that if I'm sort of obsessing too much over being my best at sports, then it doesn't really give the sort of anti-stress and health benefits that I would be expecting to get from it.
Yes, that makes sense. Yeah, you're optimizing for performance in a specific lane rather than, you know...
Well, that's at the end of the day what gives me the most joy. And then I sort of see sports more as a means to an end. So that keeps me healthy. It's obviously sometimes fun, but I don't see that as something that sort of defines me and I want to be at my best there all the time.
Your brother Martin had also, you know, had an experience at Skype and so you had seen maybe some of that. What were the pieces that maybe you took from him or learned from him? What were the pieces that maybe you were like, 'Yeah, you keep telling me about this is how Skype did it, but I don't care. I'm going to do it my way.'
We actually have an interesting dynamic with my brother and co-founder Martin. So he's 15 years older. So we didn't have this typical sibling relationship of growing up together because by the time I was three he already moved out. So in that sense we actually sort of got together again after he had already been at Skype and a number of other tech companies and then we started Bolt together. But it was very clear that he said hey I've already been through this many many times. I'm going to be an adviser and do the roles we need but again this is your show. You need to make the decisions you need to drive the ship. And then it was sort of a very good actually like not combative relationship at all because like he was giving me advice but it was always always clear that at the end of the day I had to be the one to make the decision.
That's amazing. I imagine there would be another brother who would try and you know try and enforce his will more or something like that. One of the obviously key people in the Bolt story is Oliver and you often talk about how he sort of built the first prototype in something like I don't know 48 hours. What is it that makes him so special and so unusual?
There's a couple of elements that make him just an absolutely exceptional co-founder to have. First of all, he just found us completely randomly based on a post we made in a small developer forum in Estonia. And based on that, he was willing to do the meeting and then listen to this 19-year-old kid who was pitching this idea with little to show. And he got so excited about it that literally he went home and built this prototype in a couple of days and then came back and showed hey I have a customer app and the driver app and here's how it works. And obviously keep in mind this was pre-vibe coding. So like he actually did it all. So it was really really impressive. And then I told him hey I mean I'd love to have you as a co-founder to join the company but I don't have any money. Like we haven't raised anything other than 5,000 from my parents. So you got to take a risk that we might not be willing or able to raise money for a year. And we're just going to bootstrap this. And he was fine, let's do it. As a 19-year-old kid, I didn't think too much about it, but like now thinking back, you know, he had a wife and a small kid and so he was willing to take a lot of risk on a 19-year-old kid. While being an absolutely exceptional coder, like one of the best I've ever seen, and could have easily worked in any other big tech company and taken much less risk. Why do you think he did that? He's told me this many times. I mean he actually always wanted to build a product where he sees that he can make a massive impact on the world and he could actually just have autonomy to build what he wants to build and not be told by somebody you know that needs to fall under some corporate process and we were just able to give him that environment that he had been waiting for for a long time.
You have many competitors in some sense, right? You have Uber. Obviously Lyft is not really in Europe except through sort of Free Now a little bit now, right? But there has been folks who have been bigger, more public. Like how do you balance learning the lessons from someone like Uber and also sort of running your own race to a certain extent and how has that changed over the years? Like in the early years were you queuing more to what you thought their playbook was or maybe less?
So, funny enough, when we started business in 2013, there was more than 50 ride-hailing companies in Europe.
Yeah. It was absolutely insane. I think even in Estonia, we just had two more competitors than us starting in the same year.
So, I think it obviously wasn't sort of the unique idea that like only us or a few companies were pursuing. I think it became very obvious in 2012 and 2013 that you can build a smartphone connected logistics system and apply that to so many aspects of life. And then looking back, I mean, why would we be the only one left in Europe after a decade? And I think the characteristics that made us quite special was a few things. So, one was that we were one of the first ones to really look at these network effects in a more deep, more scientific manner. I think everybody else just plainly had a very simplistic view in their mind that network effects is a binary thing. Either you have it or you don't. And I think the investor mindset was that hey, if it's a network effect business, then that means it's automatically a winner take all and there's no room for anybody else. But I was coming from a math background and I was thinking about this problem and I was like hey I mean but you can very easily plot out like how many drivers you need in a city, how is that going to impact the pickup times? Model this out and you know when you plug in all the numbers you realize quite quickly that like I mean the steady state of this is most likely not going to be a monopoly because just the barriers to entry are high but they're not that high and like once you hit the sufficient critical mass you can actually start to compete on the merits of having enough network density. So that was sort of one thing we had in mind so we were always very sort of analytically monitoring this in every city what exactly is our market share, pickup times, how do they compare and I think that gave us a very robust framework of how to think about market expansion and where to invest their money and we realized that actually most companies didn't think about that the right way at all and they were just constantly wasting their money on actually cities where they shouldn't have been investing at that time.
So that was one factor. And then the other thing that when you start to again plot out this sort of make a mathematical model basically of this you realize that the other thing that matters of course is price sensitivity. And I think we actually mainly focused on Amazon and then like what was their playbook and how they scaled and then what was the model there and we applied that to us and we realized very quickly that sure we're not going to have as good pickup times at first because by definition we're starting in many of the cities later. But what we can do is we can compensate that by having better economic value. So we can offer more value per trip to drivers. We can offer cheaper prices to customers. And then we effectively modeled out that okay but how much discount do you need to give in order to compensate for these worst pickup times. So we had like over time a very good model of how to think about the price sensitivity versus time sensitivity. I think most others just completely missed that and they've been just misallocating capital for 10 years and that's how we out executed them.
One of the reasons Bolt has won you know apart from just the execution is that sort of price difference and the commission difference. You take you know less than Uber does for instance. And I always sort of wondered okay you know why isn't the terminal state like not 15% but 1% or point whatever you know you could just but what you're saying I think is that like at a certain point you don't need to go past a 15% because it actually doesn't move the needle. Is that right?
Mhm. So effectively you can model out what's the price sensitivity in that market, what is the time sensitivity people have and then you can plot out like what is the diminishing return of therefore what's the optimal price to have for the driver for the customer and then eventually it's usually going to settle on an equilibrium with two networks arriving and typically the third one over time just gets wiped out. I mean it's extremely hard to have an economic equilibrium with three sustainable ride-hailing players in one city.
A big part of your culture has also been frugality and I imagine a large part of that comes just like from the way this company was born. How do you maintain that level of discipline when you're going from you know a few people to 100 to a thousand and so on?
So that's the thing where this operational excellence really comes into play and my view of the world has always been that we need to build this company in a way that's great at software but also great at physical real world operations and I think that's quite different to how most Silicon Valley companies are built where they generally obsess over software. It's the only thing that matters and I mean for sure they're great at that best in the world but most of them are not really this like European type companies who are able to also manage physical assets with high level of rigor and sort of operational excellence. So we started off the company with that premise already in mind and designed it very frugally. So how do you run your annual meetings, quarterly meetings, monthly reviews, weekly reviews. So you know you build up this sort of system and you really optimize it over time to be as effective as possible in terms of how do you onboard drivers, how do you look at pickup times, how do you allocate capital across these markets, how do you run your marketing. So it's all sort of this one integrated system over time that you just got to iterate on and improve every cycle. It's very hard. I mean running that for 12 years on a week-by-week high discipline basis is not easy. And I think that's the reason most of these companies just over time couldn't compete because these advantages also compound. If you already start to lose market share in a city, you start to get into this negative spiral, right? So you have less cars, worse pickup times, customers leave, you know, then the more cars leave and if you don't manage this vicious spiral and you don't have the like right operational rigor to get on this very quickly, it's just going to be a disaster. Your business will be wiped out.
You have this sort of amazing way of describing the system and all the different pieces. When you look at the system and the way it runs today like where are the pieces where you're like ah there's still too much friction here or you know I need to figure out something to do on this part?
Everywhere, everywhere, everywhere. I think that especially now we have three and a half thousand people we have six business lines, you know they're all at very different stages of maturity and even in ride hailing which we've been doing the longest like still there's so much to improve how we run our pricing algorithms how we do dispatching of figuring out which driver is the best match for that ride still so much work to do. And one core aspect of this is regulation because it's not also trivial just to manage that. So we operate in 50 countries regulators constantly change laws. What are the requirements for you to bring a new driver on board and so on. So just managing that alone of how do you automatically verify thousands of different types of driver documents across the world. So if a driver in Nigeria is signing up and they give you their you know car insurance like how do you know if it's real insurance? So like all these automated processes across these thousands of documents is quite hard to validate and in some of these markets the downside is massive. You let one of these issues through you can theoretically lose your entire license to operate in that market if something bad happens. So the stakes are high and then the actually automation of this is not a trivial problem even with current AI.
Yes. Yeah. Have you found that the application of current AI really has made a difference to that or is it still sort of in the early innings of figuring out how to best deploy it?
Well, the first results in some of these areas have been incredibly good. I think that in some of these systems, we were able to replace some particular document automation verification systems. You know, after 3 years of manually writing rules, we were able to just completely throw it out and replace with sort of a new modern LLM based solution. At the same time though, we're now seeing the sort of second effect of that which is there's more fraud happening as well. So the drivers are figuring out that hey, I can generate these fraudulent documents which are so good. So it's a constant arms race of keeping the system in balance.
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Absolutely. First of all, on personnel, right? I mean, that of course makes a big difference. So, if you're starting off in this extremely cash constrained environment with literally 100x less funding than your competitors, you got to be extremely strict on every line item of the business of where you spend money. And of course, that meant we couldn't go out and hire as experienced people as would have liked to. But at the same time, I mean, the benefit of that was we really got missionaries on board who didn't join us for the money, but they joined us because they really deeply cared about what we do. And of course, they hoped the equity one day is going to be worth a lot. So, they were willing to take that risk. So that's one area. The other is that I think it also meant that in the first few years we just couldn't really take much risks in terms of innovation because the product team was so small. We had so much to do. So I think we just looked at what's going on in all these other companies around the world from e-commerce, food delivery, ride hailing and we basically waited to see which of their ideas worked out the best and then were the best in the world at copying them quick. And that playbook actually I think works completely fine. Like if you're a small company, you can keep on doing that for quite a long time and actually be very cost effective. But then over the last 3-4 years, obviously by now the company is in a completely different financial position. We're profitable for the last 2 years. We have a tech team of 800 people. So like now we've completely changed the culture and that allows us to do much more experimentation, innovation, like launch new things I just don't have. But that was an interesting transition to go through.
What have been the sort of biggest dividends of taking a more experimental culture or more of a sort of R&D approach to things? Are you starting to see those things blossom yet or will they be more down the line?
I think by definition some of these things are high risk and we don't expect most of them to work out. So obviously you'll have some waste in the system. But at the same time of course you take more risk some of them might work out beautifully and then be great. So thinking of the last few years I mean one topic we haven't even talked about is hardware design. So we're also one of the largest micromobility operators in the world. We have more than 200,000 vehicles in more than 200 cities and we custom design them. So we have our own internal hardware team. We have our own team in China for the manufacturing and yeah that is one area where we have taken a lot of effort to make sure that we design the best hardware we can. And actually just our new generation bike came out a month ago. I think it's the best sharing bike in the world. So yeah those are some of these bets of this sort of more experimentation R&D culture I think starting to pay off.
How do you see micromobility as part of you know the Bolt suite the Bolt you know future super app so to say is it sort of more of a customer acquisition of like bringing people in the funnel and keeping you know them going rather than you know a as big a revenue driver and profitability driver?
