Markus Villig started Bolt, the Tallinn based ride-hailing company in 2013 when he was 19. Seven years later, his company is worth €1.7bn.
It has not been a smooth ride. Villig launched the app on a €5,000 budget and kept going when investors were telling him to give up, as Uber was raising billions of dollars. He says that getting the ride-hailing company off the ground “was probably the toughest six months I ever had”.
The company survived the early months because its team “had so much conviction that we were doing something unique and better,” Villig says over a Zoom call from Tallinn. Bolt, which also provides e-scooters and e-bikes, and food and package delivery, has just survived another uncertain period — the pandemic. During the first lockdown last year, business dropped 85 per cent overnight.
Villig co-founded the company with his older brother, who already had experience working in the tech industry. Markus Villig, though, was still in high school and had to work hard to persuade Tallinn’s taxi drivers to sign up to his app.
He saw a gap in the Estonian capital’s transport market (where Uber was slow to get going), as the city’s taxi services “were terrible”. The consumer case to start Taxify, as it was known before a 2019 rebrand, was obvious. Taxi drivers, Villig says, had dirty cars and “took ages to arrive”. In spring 2013, following a period of research carried out after school, he would approach drivers at taxi stands to find out how things worked.
According to Villig, the drivers were stuck in old taxi companies, often had to pay high monthly fees and did not get a lot in return. But Villig had his work cut out in persuading drivers to entrust themselves to a 19-year-old who did not yet have a fully functioning app. “When . . . you’re just sort of pitching them an idea, 90 per cent of them will just tell you to F-off,” he laughs.
Meanwhile, he convinced a freelance developer to build a prototype platform, but it was going to cost €5,000. Villig spent months persuading his parents to lend him the money.
Over time he gathered about 100 drivers prepared to take a chance. But, when he launched in August 2013, they did not all come online when he needed them, and he realised many had given false contact details. “In reality I had only a few-dozen,” he says.
He started going to taxi stands and getting into cars: “So I just sort of went there, took [their] phone, signed [them] up on the spot . . . and was like, look, every time you come to work just open this app.”
By that winter he had a few hundred drivers and was offering a functioning service. About nine months later he fundraised €70,000. Six months after that he raised another €1.4m, mostly from local investors. By 2014 “we had good traction, and we had a product that was working well in Estonia”, he says.
Villig then had to consider how to scale to other markets, but in 2015 and 2016, “Uber became this juggernaut of raising more money than any tech company”, he says. “It was unprecedented. Nobody had raised those kinds of amounts. Not Google, not Facebook, nobody”.
In May 2016, for example, Uber raised $5.6bn, giving it a valuation of $66bn (although, its market capitalisation is now $91bn following its 2019 initial public offering).
The result: “Not a single VC would even touch us,” Villig adds. “The next two years were extremely tough for us because you can imagine us having so limited funding and resources going against the company with billions. It wasn’t really a fair fight,” he says.
He responded by running as lean a start-up as possible and believes “those two or three years really made us”. With such limited resources, Bolt spent cash with extreme caution. This culture endures and Villig says it gives the company an advantage.
When I put to him that the transportation business model appears to be capital intensive, he points out that while Bolt last year raised the most funding it has had so far, “it is still far less than most of our peers, and yet the business model is still viable and the company is operating and growing at a rate we’re more than happy with”.
He cites disapprovingly Silicon Valley’s start-ups’ tendency to “blitzscale” — where they raise large amounts of money and then spend what it takes to “win the market”. As that theory goes, “when you win the market, you’re a monopoly and you’ll always make that money back”.
While he admits he is generalising a US trend, it contrasts with what he feels is a cautious approach in Europe. “It makes sense to take your time, build things on a proper foundation and long-term, that’s the way to win, not just to outspend everybody in the first years,” he says.
The caution has paid off. Investors returned to Bolt once it had proved its strategy was effective and “that there was room for multiple winners in the transportation industry,” he adds.
While investment may have returned, Villig says “we are still very careful”. Bolt might spend less on marketing, for example, and instead lower drivers’ commission rates so they can earn more money.
The lean approach of the company — which has more than 50m customers and 1.5m drivers across 40 countries, mostly in Europe and Africa — also served as preparation for the coronavirus pandemic. While business fell dramatically, Villig felt it was essential to deal with the crisis with a long-term outlook. How do you cut costs without creating problems further down the line?
He decided against cutting any of Bolt’s now 2,000 staff. “We didn’t see the point of letting people go who we would need to rehire in six months,” Villig says. Instead, “we asked who was willing to go for a 30 per cent pay cut and — to me, shockingly — a high amount of people were happy to take [it]. That really helped us get through the tough times.”
By contrast Uber has cut nearly 6,700 staff — about 23 per cent of its workforce.
In a recent report by Oxford university, however, Bolt was rated one of the worst for the working conditions it offers for gig economy workers. But it did not want to comment on the findings.
Bolt’s revenue in 2019 was €148m. In May 2020 it announced a €100m capital raise, in the form of a convertible note, which the company said at the time would allow it to continue to scale up its ride-hailing, micro-mobility and food delivery businesses in Europe and Africa.
The money came from a single investor, Naya Capital Management, which was also a significant investor in the company in a $67m Series C funding round in July 2019. Bolt raised a further €150m in December and received a €20m in March from the International Finance Corporation, part of the World bank.
Last summer, when cities started to move again, Villig says “acceleration was quicker than we expected”. And the growth in micromobility and food delivery services accelerated due to the pandemic. “We quickly surpassed our target of offering scooter sharing in 45 cities, and now have plans to be the biggest micromobility operator in Europe in 2021,” Villig says.
Currently Bolt operates 130,000 electric scooters in more than 100 cities across 15 countries.
He has not always been a fan of e-scooters, admitting that the economics make it “a difficult business vertical to get right”. He believes that Bolt has a unique approach, as it produces its own hardware, allowing for a scooter that, Villig says, is faster and cheaper to repair. And by offering scooters, ride-hailing and food delivery services, the technology and marketing costs are shared and savings passed on to customers.
He has brought his company a long way for someone who wanted to “get into tech”, but had no idea how to start a company. “I literally started by googling ‘how do you start a start up’,” Villig says.