The mobility market in general is the least competitive in the world. Bolt is the leading shared mobility business. We operate in more than 50 countries with a mission to replace people's private cars. A lot of the taxi companies obviously saw this as a threat and then they started blocking their drivers from joining. When I was in Serbia, I was trying to sign up the local biggest taxi company there, I realized clearly these guys are the mafia. They don't care about the customer experience whatsoever. And that's when we pivoted back hard into just working directly with individual drivers.
You have raised I believe around $2 billion. They raised $24 billion before IPO. Do you want to share a little bit more about what that capital efficiency taught you?
Constraints really force you to be innovative, force you to be efficient. When you're starting a business as a 19-year-old in a small country with barely any VC ecosystem, obviously you got to make by with being 10 or 100 times more clever than your competition.
We're here today with Markus Villig, the founder and CEO of Bolt. Markus, welcome to the a16z show.
For those of us that haven't heard about Bolt, can you introduce what Bolt is and give us a little bit about the scale of the business?
Sure. Bolt is the leading shared mobility business coming from out of Europe. We operate in more than 50 countries with a mission to replace people's private cars. And we cover services as diverse as ride-hailing, car rentals, scooters, electric bikes, restaurant delivery, grocery delivery. So it's quite a wide breadth of products across a massive geographic diversity.
Awesome. And you know, let's get a little bit about the story of how old were you when you started the business, how did the idea came about, where were you at that moment in time, and how did everything get started?
Sure. I was born in a tiny island in Estonia with about 30,000 people. So I was growing up there passionate about science, technology, reading up on all the science fiction literature as a kid. And I really dreamed of becoming a scientist and an entrepreneur. And then Estonia got very lucky. So in 2003, Skype was founded there with the main product headquarters being placed in Tallinn. And my older brother was one of the early employees there. So I was about 10 years old and I was already ambitious about getting into tech. And then seeing that journey, how Skype became one of the biggest tech success stories not just in Europe but around the world, gave me a lot of confidence that I want to get started in this space as quickly as possible. So as a teenager, I learned to code, started building websites for local companies to make some money and get some experience. And then I did my first startup when I was 15 years old in education tech. That was a funny experience because I mean I was in sort of seventh, eighth grade and going to headmasters and trying to sell them like a new system to run their schools. Eventually I realized it's very hard to make money there especially as a kid. So I pivoted a couple years later to looking at the next idea. And then when I was just wrapping up high school, I realized transportation is the best place to be where you can make a massive impact in the next 10 years. And that's how I got into Bolt and then been doing that ever since.
That's awesome story. You know, it's very interesting to hear obviously that you always been into entrepreneurship at such an early age. This became one of the most competitive markets, but we did a lot of research on how you started the business and there was this dynamic at the beginning where you were dealing with the taxi operators and then there was this incident that happened that kind of changed your perspective and you decided to go direct with the drivers. So you want to talk a little bit more about that and how that affected Bolt at the very early innings.
Sure. So we always had the idea that for the network to be effective and for us to provide the best utility for customers, you got to have all the supply in the network you can. So that any driver that's the nearest by in the city can pick you up. And so at first I had no budget to begin with. I was 19 years old. So I went on the street trying to sign up taxi drivers one by one. And that worked for a while, but then after a couple months I realized...
What was the original pitch to the taxi drivers?
Effectively it was that today you're stuck under this taxi company. You pay them a massive fee each month as a fixed fee normally and it doesn't matter how many trips you get, you still got to pay it. So you're sort of locked up into this company. And what we're going to offer you is you can download this app which is a much better experience and you only pay as you go. So there's no risk for you. So you can just take this for incremental income every day. And that actually resonated quite well. But the problem was a lot of the taxi companies obviously saw this as a threat and then they started blocking their drivers from joining. So then we had to pivot strategy and then what we tried to do was actually that we built a tool and we thought we can get the taxi companies to join because of the tool, but then they're going to stick around for the network.
I think there's actually something one of these a16z partners likes to explain as a good...
Come for the tool, stay for the exchange. Yeah, exactly. So I think 100% that was the playbook we did back in 2014 before I think he even popularized it. But effectively what we did was we built a fleet management and taxi dispatch software for local taxi companies all across Eastern Europe. So we got them onto the network. They saw it was great. Then after a while obviously they realized, 'Hey, we don't need these human dispatchers anymore. Let's pivot to focus on the car rental business.' And that was a great way to get going. But after a while I realized that it's very hard if you're limited by these external partners who are often times slow moving, very legacy. They don't really care about the customer experience. And I think that last drop in the bucket for me was when I was in Serbia. I was trying to sign up the local biggest taxi company there. I realized clearly these guys are the mafia. They don't care about the customer experience whatsoever. And that's when we pivoted back hard into just working directly with individual drivers in most markets because that was just the only way you could actually offer a great compelling customer value proposition.
So you started the business in Estonia which is one of the largest countries in the world, but obviously it's 1.2 million people in Estonia, not a large market. You have to think immediately about expanding and I believe that you started in Western Europe, but that was almost a very very costly decision. So you want to talk a little bit more about that?
Sure. I think actually what I've observed is that most startups are having the biggest issue going from zero to one and then once they've cracked it and you have product market fit, then after that the scaling is relatively easier. I think for us it was the other way around. So the zero to one in Estonia was quite simple. I mean it was a lot of work, but it was pretty straightforward and we got the network going in about six months and about 12 months in we were the biggest provider of taxi trips in the whole city. But then what we really struggled with was how to scale the model. So we raised our first seed round of about a million bucks. We thought that that's going to be all the money we'll ever need in the world. We were very ambitious. I mean I was 20 years old.
How did you find the first investor?
It was actually mostly local angel investors with actually Skype background. So that's where many of them had made their first money and then they were investing in local startups. So we thought, 'Hey, let's try to conquer the world. Let's try to launch in about a dozen countries at once.' And that was a very silly idea for two reasons. First of all, we couldn't really at first identify which were going to be the successful markets because we didn't yet know what are the characteristics that actually correlate with success. So we just wasted a lot of money going into markets where we actually shouldn't have gone to at all. And second, even in the markets that turned out to be good markets, we just had no idea how to scale. So we were just wasting money on sort of silly tactics of how do you get drivers and then taxi companies on board and didn't work. And it almost bankrupted the company in six months. So then we luckily stopped that quickly. We realized that going in parallel doesn't work. We got to go sequentially. So let's pick one market at a time, really optimize the playbook, figure out how it works. And then it took us about 18 months of doing that one by one.
What was the market that you guys decided in?
I mean it was a big market. It was Latvia, right next door. So literally, me and my brother, we basically worked there. I mean we literally slept in the office for a couple of months. Basically I figured out the model how do you scale the city. And then after a while we got a playbook going and then we could really start to scale. And today we've gone from that to operating in more than 52 countries now.
That's amazing. And we're going to touch a little bit more about how you literally have expanded to pretty much every region in the world having started in Estonia, but I want to double click on what was a pivotal moment in this industry which was COVID. You know, during that time I believe like 80-85% plus of the business obviously suffered because of this pandemic. How was that for you and what are some of the lessons that you want to share with some other entrepreneurs that when you face that situation?
So first of all of course it was a disaster first and foremost for our drivers because suddenly when cities went into lockdown, we lost 85% of revenue, but obviously that was happening with our drivers as well. They couldn't really make any income. And the company was already fairly large by then. We were in about 25 countries or so. We're probably doing more than 100 million of commissions in terms of actual lower take rate revenue. So, it was pretty meaningful as a drop. And we pivoted and we did two things. So, first of all, we realized that food delivery was growing through the roof as was general e-commerce obviously during these lockdowns. And we launched that and we scaled it to 16 countries in about 4 months on the back of our existing ride-hailing network. And that turned out to be quite a massive success story. We went from zero to well more than a billion of gross bookings on the food platform very rapidly. And we were able to do that because we had a couple of key components. One was we had these great operational teams all over the world and we could just effectively use them to pivot those people to work on the food business instead. And second, the hard thing about this business on the food side is getting merchants on board. But then they were so desperate to join any network to get any orders. So, it was very easy for us to go and sign up tens of thousands of restaurants extremely rapidly. So, that was our wedge how we got going on the food delivery side.
And how many countries were you operating at that point in time? And did you apply some of the same lessons where you rolled it out in a few countries and then went aggressively or how was that?
I think we launched food in about 60% of the existing rides footprint we had at the time and it worked out really well. But that basically sort of softened the blow a bit for the first year. But then the other thing where really that moved the needle for the company was that when these lockdowns started to end, we were much closer to the markets to understand from the politicians which cities are going to open up and we were very aggressive. So, effectively we tripled our market share that we had pre-COVID to post-COVID because we were just much faster at investing in the right markets exactly when they opened up on the day. So, when people were coming back after months to use ride-hailing, we were the top of mind app that they wanted to come back to. And I think there's a great saying about it that it's very hard to overtake somebody in a race when everything is smooth, but you can overtake a lot of cars in a race when it's raining.
Yeah, that's... I used to say that.
I was saying driver, yeah.
So, let's touch a little bit about this because, you know, there's a lot of debate right now when it comes to building Europe versus Silicon Valley and the differences. Obviously, here at a16z, we have backed amazing founders that have been in Europe even though we're predominantly based in Silicon Valley and what we want is to serve as a bridge. One thing that we've noticed and kind of like the main differences is when you're building a business in the US, obviously, you care about a lot of different dynamics like your product, go-to-market, but you don't have to worry about multi-currency, you don't have to worry about multi-jurisdiction, and operating in multiple countries. That is not the case in Europe where a lot of the businesses from the get-go have to deal with these complexities early on. What are the things that this multi-country barrier helps you focus on in the short term and in the long term?
I'd say it has its pros and cons, right? So, on one hand, if you start in a country like Estonia with barely more than a million people, you have to think global from day one. So, the entire tech architecture, how we design the firm, everything is already on the premise that you want to be in dozens of countries. And that's a massive advantage because you're already thinking that you have to have this great product flywheel where you understand what's going on on the ground and you incorporate these localizations very quickly. And that's very different than if you're starting in a massive home market like India or the US where effectively you're the customer, you think you know the market well, you don't really need to worry about these localizations that much. So, I think that can be a great strength of these European companies that operate in these diverse geographies. At the same time though, when you actually then look at the arc of history in tech, in most of these consumer internet industries, the US companies have completely dominated. And I think the reason often times is that you have strong network effects and economies of scale in this type of businesses. And then the problem is you might have two equally good companies, one that starts off in Europe, one that starts off in the US. Because the US market is just so homogeneous, you can grow much faster. And therefore, what typically happens is that by the time, you know, 3-5 years in, the US player is going to be double the size of the European player because they've had to deal with all this complexity and then all these 27 markets at once and therefore they're often times growing much slower. And then typically what happens is by that time they're double the size, they can effectively go and then just outcompete them just based on having more capital often times. And we've seen this pattern just happen time and time again. And I think that you need to have a very unique set of characteristics in your business for that not to be the case. So, this larger scale player just doesn't wipe out.
Very very interesting. Let's talk a little bit about Estonia because within Europe, Estonia is a very particular country. I think one of the highest per capita unicorns per capita in the world. Estonia has been so good for us as a firm, you know, we're investors in Skype and we're also investors in TransferWise. And one thing when I was mapping out the countries that we were going to go spend time last year, it was very clear that Estonia had to be a top priority for us despite the population being so small compared to other countries. I'm curious from your perspective, why do you think this is the case in Estonia? What drove this innovation and what are some of the key ingredients that make this small but very mighty ecosystem work?
I don't know. Well, I guess it boils down to three things. One is ambition. I think that you have this strong flywheel going in Estonia for the last 20 years of us building great tech companies. So, young founders coming up, they've seen the success of companies like Skype and then Wise and us who built into the tens of billions of scale. And I think they just have this feeling it's absolutely possible to do and their ambition of course is to even surpass everybody who came before. And they're willing to work very hard to make it happen. So, that's a key ingredient. Second, I think Estonia has some of the best software engineers in the world. And in general that applies to Eastern Europe. When you look at where most of the successful programmers have been coming from the last 20 years, I mean, there's so many great ones from the region. And then third, I'd say specifically in Estonia, we have this massive benefit of being a digital-first nation. Arguably, Estonia is the most technology-wise advanced government in the world. We've been having online voting for more than 20 years. Online taxes, etc. Like every single government service you can do online at the tap of a button. So, I think we've already just grown up in this environment where consumers have extremely high expectations for digital services and we're so digitally native. So, for us to build these tech companies is very natural career path.
And you know, you mentioned this point about recruiting because one of the key questions that sometimes people are not familiar with Europe and let's say they start a business in Estonia is about recruiting. So, it sounded like you started with a great pool of talent in Estonia. How did you then expand it to continue to recruit maybe outside and how did you prioritize those markets?
