Markus Villig, Founder @Bolt: The Most Insane Story in Startups & The Future of Self-Driving| E1225

Markus Villig 0:00 We tried to raise every way we could. I met all the VCs around Europe I could get my hands on. No matter how many of these meetings I took, and it was dozens, maybe even 100, they all told us no. We probably got to the point of doing about 25 million ARR, growing multiple 100% a year, and still no VCs wanted to invest. 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. And then we went from that to 100 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.

Harry Stebbings 0:38 Ready to go? Markus, dude, I am so excited for this. Thank you so much for joining me today.

Markus Villig 0:54 Excited to

Markus Villig 0:55 finally be on the show.

Harry Stebbings 0:56 Dude, this is so good to make happen. Now I hear that the start was a 19-year-old student in Estonia, uh, 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"?

Markus Villig 1:13 Actually, the story started when I was 10 years old. So I knew already by that moment that I'm gonna be a tech entrepreneur for life. I realized that I'm really great at technology. I really cared about software. I was always looking at all the latest gadgets. Uh, and I realized I really like commerce. I liked working with people, figuring out how to make money. So I, in, in kindergarten, I was, you know, selling LEGOs. Then in school times, I was selling some, uh, collectibles. Then I learned to code, started building websites for local companies. So already as a teenager, it was clear that this is gonna be my passion for the next couple of decades.

Harry Stebbings 1:44 What did your parents say?

Markus Villig 1:46 Uh, they said, "Go for it." Uh, and the reason for it was very simple, because they grew up in the, in the Soviet Union. So I mean, we, we grew up under the Russian occupation in Estonia, uh, and at the time, entrepreneurship was banned, so they couldn't, uh, pursue their ambitions. They couldn't, uh, build a business. So when I was growing up in the 90s, finally in, in sort of a free democr- uh, democratic country of Estonia, like, they really told me that, "Go for it, like, uh, challenge whatever things you wanna do in the world. Go for it." So I, I really grew up in that environment.

Harry Stebbings 2:13 Okay, so we have this kind of entrepreneurial streak from very early.

Markus Villig 2:16 Mm-hmm.

Harry Stebbings 2:17 And then we are 19 as a student and don't have a license. Where does the Bolt idea come from?

Markus Villig 2:23 Once I had learned how to code and I was building these websites and making money on the side, I always know that that's not gonna be my longterm, um, ambition. I, I wanted to start a startup. So I first experimented around with a bunch of different ideas. I first built a mobile app for our school's, um, online educational system. That didn't go too far, because I realized very quickly, the schools don't have a lot of money, uh, and the sales cycles are horribly wrong, and it's public sector. So after six months, I gave up on that idea.

Harry Stebbings 2:48 What it takes 10 years for a VC to learn in ed tech, you just learnt very quickly. (laughs)

Markus Villig 2:52 (laughs) Exactly. Uh, and then, uh, I took a very systematic approach. So, um, I spent a couple of months, uh, 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. And there was a number of factors for it. So first, it was very clear that, uh, 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. Similar to what had happened to music, to videos, um, increasingly to many, many other sectors, it was clear that's gonna happen in transport. Second, uh, electric cars were coming along, and that was just this big revolution that I thought is gonna shake up the industry. And third, it was clear that you will also have micro-mobility. So you will go from building these large, um, combustion engine cars to having electric motorbikes, uh, electric, uh, cycles, electric scooters. Uh, and I thought, "There's another opportunity there." And then fourth, there was the shift to, from you driving your car to potentially self-driving happening. So I was just amazed, like, "Wow. Okay, transportation is really gonna go through this massive shift. I need to be in that industry. It doesn't even matter what I'm gonna do, but that's the place to be."

Harry Stebbings 3:57 Okay, so you have this realization. What do you do next? The majority of people fail, I always think, 'cause they don't take the first step. What do you do post, "I wanna innovate in transportation, in this shared new economy of not owning assets"?

Markus Villig 4:09 Mm-hmm.

Harry Stebbings 4:09 What's the next step?

Markus Villig 4:10 So I started then, as a 19-year-old kid, uh, by literally googling, "How do you start a startup?" So I went to this Y Combinator and the other websites. There was great content out there. Uh, and the, the top one advice was always that, uh, you gotta validate your interests, uh, of customers and the suppliers before you build the first line of code. So I did that. I, uh, set up this survey, uh, on social media, uh, in Google Forms, uh, 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, in Tallinn at the time was horrible. And it was so horrible that, uh, if you were to design a bad experience, that's what you would essentially design. So I can walk you through what that, wha- how it was. So you, uh, had 15 different companies. You had to call all of them. Uh, 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 made it to you, then, uh, the car was in horrible shape. It was, uh, dirty. The, the driver was rude. You could forget about paying in, uh, 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, um, uh, to organize this, and so did hundreds of other people. So I was thinking after the 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. 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. "We have this, uh, new app. You should sign up. You're gonna be making extra money." And the sales went really well.... 90% of them immediately said, "Get out of my car, I don't want to deal with you. Who are you? Some random teenager." You know, "I want to watch my news," and whatever. Uh, so it was very frustrating, but I kept on doing that for months and months. I think most people would have given up. And I did it until I had about 50 drivers who I had finally persuaded to give me their contacts.

Harry Stebbings 6:04 Did the message change to make it successful with those 50? Or d- was it just persistence?

Markus Villig 6:09 I think that, uh, I was sort of optimizing the wording a bit, uh, as you would in sort of face-to-face sales, because over time I saw what, what was getting me the better conversion. But at the end of the day, the pitch was simple. Uh, "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 sta- stand. Uh, you should sign up to this app. It's low risk. You're just gonna 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.

Harry Stebbings 6:38 So then we had 50. What did we do then?

Markus Villig 6:41 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. Uh, everybody else, uh, in my high school was studying for exams, but, uh, I had gotten lucky. I had completed one of these, um, national, um, computer science Olympiads. So I had got you a good grade there, and they had given me a free pass to university. So that gave me a free pass, effective. I was like, "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." Uh, so then I spent the, all the other time I had, aside from being in the taxi stands, by actually coding. So I was building the consumer app, the driver app, trying to build a back end. And I realized very quickly that this is going fine, but I'm not that capable a programmer that I can build all of the systems as quickly as I need. So then I went to my older brother, who was, um, 15 years older and, uh, 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. 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, uh, I think we talked to, must have been at least 30 people, and every single one of them turned me down. Because why would you join? It's a 19-year-olds kid, they have no experience, no money.

Harry Stebbings 7:55 Was Uber known at the time? It was-

Markus Villig 7:57 Ab- absolutely not. So back then, they were a limousine company in the US. So I was thinking that, "Yeah, these guys have raised good money, but, like, I don't think I'm ever gonna compete with them," which is gonna be a, a story-

Harry Stebbings 8:07 So the model wasn't validated for anyone going, "Is this even-"

Markus Villig 8:09 Uh, absolutely not. So, so back then, it was nobody had even heard of these apps, at least our part of the world. Everybody was just using the phone dispatcher to get a ride.

Harry Stebbings 8:17 So you have 30 conversations. None of them join.

Markus Villig 8:20 Exactly. So it was, it was a very tough time recruiting this co-founder, and then we got more and more desperate. So we, we started publishing this on random forums in Estonia, uh, whether it was programming forums or random job sites. And then one day, I get this email, uh, from a, 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, let's meet." And I quickly Google before I go there, how do you interview a person? Uh, 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. And then the problem is that most software engineers are, are pretty sort of introverted people. Like, they don't really show you in the meeting whether they're excited or, or not. And I can tell you that Estonian software engineers are even worse than that. So I had no clue at the end of the meeting whether this guy is excited or not. So I go out, none the wiser, and then a few days later, he, he writes to me again that, "Let's meet up." And then this magical moment happens. I, I go- get into this, uh, cafe with him. He pulls out the phone, he pulls out another phone. And this guy, just in a couple of days, at home, built the rider application, driver application, all the back end, just makes an order on the spot. And he's like, "Hey, I got so excited about the idea that I just went home and, and built this, uh, to prove you that, 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. So, um, that was Oliver, who turned out to be our technical co-founder, who's still with the company 11 years later, is the most brilliant software engineer I've ever worked with. And really, I just found him from a random forum, and he just showed up, built the thing as basically a test assignment.

Harry Stebbings 9:57 How much of success in business is luck versus skill? Respectfully, it's quite lucky-

Markus Villig 10:02 (laughs)

Harry Stebbings 10:02 ... that that happened.

Markus Villig 10:03 It's, it's amazing. I, I think that, uh, in our case, uh, without Oliver, the company would have never be where it is. So I'd say it's even close to 100% of luck.

Harry Stebbings 10:11 What would you say is the biggest advice for founders looking to find another co-founder?

Markus Villig 10:15 I'd say from, from that, um, 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, uh, really try to find people from all sorts of channels. You don't need to only go through your networks. Sometimes these random forums actually turn out amazing candidates. So just keep on doing it.

Harry Stebbings 10:34 I, I didn't know that story. I, I love that. And so we have Oliver then, and we start building out the back end, the front end. W- product is now starting to hum. R- talk to me about going live. When did we go live, and how did that response go?

Markus Villig 10:47 Tricky bit is that marketplaces are probably the toughest businesses to get going.

Harry Stebbings 10:51 Yeah.

Markus Villig 10:52 So if you build a B2B SaaS application, for example, you can fully control the consumer experience. Uh, 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. So if a driver signs up, they expect to get trips i- at most in a couple of hours. Otherwise, they're not gonna bother keeping the app online, especially back then when data was more expensive as well. 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. 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 com- contrast this to Airbnb. 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 a driver. So, um, now, how, how did we overcome that was very tricky. So first of all, we didn't have any budget, because, um-

Harry Stebbings 11:44 You hadn't raised any money?

Markus Villig 11:46 Yeah, so, so back then, I was a 19-year-old kid with no budget, and, uh, the only thing I was able to do was I went to my parents. Um, and I was like, "Hey, we really need some budget to get this thing off the ground."And, uh, we, we came from, a, very modest means in Estonia, (laughs) especially back then, wasn't a rich country. So they said, "Yeah, we'll put aside 5,000 bucks for your university fund. And, um, we're fine to give it to you, we trust you, but if you spend all this money on this project, you gotta 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. (laughs) G- give me the cash." And, uh, that was the initial funding we used to get the company off the ground. So we spent a bit of that on product development. Uh, we spent it to, uh, get the first sort of stickers, and some of the billboards, and business cards ordered, and, uh, 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.

Harry Stebbings 12:36 Okay. So then we launch, and it's difficult. You're managing demand, supply. How does that go?

Markus Villig 12:42 So the odd thing about this business from, uh, for us, for day one, was that it was very asymmetric. So the consumer side was, from day one, actually very strong. So we, uh, got a ton of free media. Um, it was a great story. 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. 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 car similarly didn't show up, or the experience wasn't great. And, um, 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. Because, if all these people get a bad experience, we're gonna get a bad rep., and we're never gonna be getting out of this, this problem. So I, I did everything I could. So I went on the streets of Tallinn, signing up taxi drivers one by one again. This time at least I had an app, so I could sign them up on the spot. And that turned out to be a very effective sales tactic, what I recommend to more founders nowadays. Which is that, uh, you just, I just got in the car, and then I just wouldn't go out of the car before the driver had signed up. So I just was like, "Hey, like, give me your details. I'll just do the account for you." Download the app, set it up. And I was like, "Okay, give me five minutes, I'll set it up for you, and just, every time you come online, click this button and the app is gonna open up." So I did this really curated, uh, sort of service to get every single driver online, and then I realized that that wasn't even enough. 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? Because, like, we need even more people on board." Uh, so it was a very humble beginning of just using everybody I knew, to, to sort of try to help and sell me these drivers, uh, to get them started.

Harry Stebbings 14:19 Are you making money at this point? Like, on the first day? I'm just fascinated. How many people took a ride?

Markus Villig 14:25 So I think that we started off by doing about five trips on the first day. Uh, and then it, it started very, very, uh, gradually growing from there. So it took us a couple of months before we got to 100 trips a day, and then very quickly s- went from that to 200, 500, 1,000 trips a day. And then it was already obvious this, this thing is taking off, uh, it's gonna become sustainable, and we could start to hire the first employees.

Harry Stebbings 14:48 When was it most obvious to you that you had, like, the Hail product market fit?

Markus Villig 14:52 Actually, the odd 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. The hard part from us, from 11 years ago until today, has always been the supply side. So, our mantra every single time we have our internal all-hands meetings, uh, for 11 years, it always ends with one slide, which is, "Add supply." 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 we get more couriers on board, more restaurants on board? That's always been the biggest focus for us.

Harry Stebbings 15:23 When you look back at those very early days, what did you do that you wish you hadn't done?

Markus Villig 15:29 I think I, uh, I should have been more aggressive with initial fundraising. I think we could have sped ourselves up a couple of months if I had, uh, gotten out and raised, uh, small angel check, uh, before I did. Because we, we bootstrapped the company completely for about the first year. So we built a product, we got to some thousands of daily trips, uh, and we did all of that with 5,000 bucks from my parents. So I think we could, actually could have accelerated a bit if we had gone and raised the small angel ticket

Markus Villig 15:56 before.

Harry Stebbings 15:56 Respectfully, why are these businesses so capital inefficient? When you look at your, your Ubers or your you name its, they are so capital inefficient, and the cost it is to manage and run them is extraordinary. 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?

Markus Villig 16:17 So, uh, 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. Um, and I think it comes down to a few things. First of all, I think it was the internal culture of the people who were part of that initial team. So me, Oliver, Martin, my brother, the first employees. Uh, 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? 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, look at some of our US competitors who raised $30 billion. 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. And we came from literally the opposite, which was we had no money, and we had to make everything work with very little.

Harry Stebbings 17:12 Where did having no money benefit you, and where did having no money hurt you?

Markus Villig 17:17 The biggest benefit for us was probably in terms of attracting the right people, because we could never pay even very attractive salaries. In terms of cash, I think we were always paying sort of mid-market or low. But what we did to compensate for that was that we, uh, gave people generous equity. So we tried to attract people who are really missionaries, not mercenaries. And that really worked out nicely. And the other big benefit was that it really, uh, defined the company culture. 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. And that just forced us to be so effective at how we spent every single euro. We had this m- huge analytical dashboards of measuring ROI, measuring every single thing we do. Uh, and that just cascaded now down into what the company is today. But if we didn't have that cash crunch in the beginning, I don't think that w-... ruth- ruthless sort of frugal culture would have ever formed otherwise.

Harry Stebbings 18:11 Why did you raise money when you did?

Markus Villig 18:13 So, what we realized eventually was that, yes, we can keep on bootstrapping this company forever. We- we built it to about 10 million, uh, annual, uh, revenues, um, without raising any external financing effectively. We raised-

Harry Stebbings 18:26 Ten- 10 million annual revenues?

Markus Villig 18:28 Yeah. So- so we- we raised about one million of an annual- of the first, uh, seed fund, and then we built the company to 10 million ARR with that, uh, which is unprecedented in most places, not to mention in- in this

Markus Villig 18:38 industry. And-

Harry Stebbings 18:38 Who was the first investor, and how did that meeting go? You weren't like, at this point, 19, 20?

Markus Villig 18:43 Exactly. So-

Harry Stebbings 18:43 You're Googling how to hire someone. I don't imagine investing-

Markus Villig 18:46 (laughs)

Harry Stebbings 18:47 ... is that much more natural.

Markus Villig 18:47 So- so I was 20 years old. We had this good traction going on in Estonia, and then we wanted to raise the first one million seed round to- to expand, and, um, I reached out to everybody in- in Estonia I- 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.

Harry Stebbings 19:06 What was the price?

Markus Villig 19:07 I think it was probably a nine million valuation, so we raised, uh, a million, uh, euros at- at that

Markus Villig 19:13 moment.

Harry Stebbings 19:13 Got you. 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? 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?

Markus Villig 19:36 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- I don't think globalization has gotten to that point yet. Uh, 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. And, uh, the valuations have massively spiked as well. So I think if today we- we had the same metrics, we would probably be raising the round at the 50 million valuation, not the nine million valuation.

Harry Stebbings 20:03 Okay, so you raise one on nine, and then you go for 10 million in revenue?

Markus Villig 20:09 Yeah, so- so then it was a couple of years of grind after that because we raised this one million. Um, we then tried to launch 10 countries at the same time.

Harry Stebbings 20:17 10 at the same time?

Markus Villig 20:18 We were absolutely amateurs at what we were trying to do. So- so we, uh, we went from, um, trying to launch Estonia, uh, to trying to suddenly launch in the Netherlands, in the US, and a bunch of other places around the world, and we almost bankrupted the company in six months. So- so we burned through most of that one million very rapidly with- with nothing to show for it. And the lesson for us f- from that era was that you really gotta take these expansion, um, series sequentially and not in parallel. So we then, uh, actually had to make the hard call of letting all those people go, shutting down effectively all of those markets, and we thought, "Okay, let's- let's figure out how do we go from one to in." So how do we then figure out how do we do Latvia or Lithuania or Poland and just take the closest, uh, geographic countries to us and figure them out one by one, figure out the launch model. And then once we've done that, then let's go and actually raise a round and replicate it. So we did it the other way around. We were too optimistic.

Harry Stebbings 21:12 So what did you cut down to? 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?

Markus Villig 21:21 So I think we were left with about 15 employees, uh, 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. And then we had a couple people that we could afford to actually work on the international expansion.

Harry Stebbings 21:37 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. The maturation of the market will come."

Markus Villig 21:49 Mm-hmm.

Harry Stebbings 21:50 Is that right? Or are you like, "No, we can have unit economically efficient markets from day one"?

Markus Villig 21:55 So it depends on the industry. 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. This is very strong network effect business, which means that you do need to co- 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. 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.

Harry Stebbings 22:25 What have been your lessons on what that threshold is?

Markus Villig 22:27 So generally, um, for most these type of organ- urban on-demand mobility marketplaces, uh, the ratio is about 25% market share. So that's a very high bar. 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.

Harry Stebbings 22:44 So 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?

Markus Villig 22:57 It was a very iterative process. So, um, and very humble beginnings. So my brother, Martin, we designated him to, uh, launch the first Latvian market. So he literally went there, rented a small apartment, uh, 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. Uh, and that's how we set it up. So he was going to meet the taxi companies, uh, meet the individual taxi drivers, organically start to figure out how do we get demand into the marketplace by giving out business cards and leafleting and- and all of that. So

Markus Villig 23:29 very humble beginnings.

Harry Stebbings 23:30 What have been your biggest lessons on what works for driver supply and what doesn't?

Markus Villig 23:34 At the end of the day, about 80% of volume is, uh, driven organically from word of mouth. So nothing can beat that, even today. Uh, and all the paid channels make up about 20% in a mature phase. 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? And generally, we see the most effective for both sides is a combination of PR. So you always gotta get some first launch media and you get some exposure from that. And then the other thing is just paid online ads. 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. 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, you're going to be exponentially growing.

Harry Stebbings 24:24 Listen, I'm an investor. We get shoved CAC to LTV ratios the whole time by founders, 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 and the core target market?How would you advise me?

Markus Villig 24:41 So marketplaces have this very unique dynamic, which is that in your first six months, unit economics are always horrible because you don't have enough liquidity in the marketplace. 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. So your first six months of unit economics will tell you effectively absolutely nothing. So they always look bad. 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. 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.

Harry Stebbings 25:17 Any other lessons on driver supply that were like, "I wish we'd done this, I wish we hadn't done this"?

Markus Villig 25:22 So one trick we did, um, 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. 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. So in some of these countries, we had no money, so we, 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. So instead what we thought is, "Maybe let's go to these local, uh, taxi companies and give them great tools instead." So we gave them fleet management software, we gave them dispatching software. 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. And then they added all their supply into the ecosystem, so we suddenly had hundreds of drivers online. And then that what, was, was, uh, sort of what sold the supply side for us. And 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. And 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. Like, we can just actually drop our call centers, and we're just going to get all of our demand from this application." So it was a very sort of natural go to market that I think actually a lot of these marketplace founders, um, oftentimes miss that that's a great opportunity.

Harry Stebbings 26:43 I'm so enjoying this. So your brother is running Riga. He's got this beautiful HQ, very big, very professional. It's also his apartment-

Markus Villig 26:50 (laughs)

Harry Stebbings 26:51 ... uh, with his bed in the corner. Um, what market was the biggest surprise, good or bad, and why?

Markus Villig 26:58 I think the biggest surprise I've, I've had to this day was how successful we were in Africa. And, uh, the logic for us was that, um ... So we raised this first million, we tried to launch in a bunch of markets, that failed. Then we took a step back and started doing this, um, iterative approach of, of launching, uh, incrementally one country after another. And I think we had about four or five countries working nicely in, in Europe, and we were quite happy with that.

Harry Stebbings 27:21 And when you say working nicely, what revenue are we at there?

Markus Villig 27:24 So probably each of those was doing maybe 10, uh, million euros of, of gross bookings in terms of how much people were spending on the fares. And then our commission of that was typically around 15%. So it was like 1.5 million ARR per, per country.

Harry Stebbings 27:37 Okay. This is real volume.

Markus Villig 27:38 Yeah, so it was decent. We could hire, uh, a decent team to run the country. They were growing nicely. 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, we needed more geographies. We can't just operate in these small Central, Eastern European countries, and that was never the ambition for us. So, um, then what we did was we, uh, 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. It was things like population, regulation, number of drivers, um, what's the car ownership rate in the country, metrics like that. And then, um, we then ranked the table, and we tried to take all of our bias away from it and just look at wha- what does the table say. 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, um, and we didn't want to replicate the e- earlier mistake of, 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, to do that anyway. So we thought, uh, back then in 2015, "Is there a more cost-effective way to launch these markets?" 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. So we just put like a couple of hundred euros budget, start running the ads in, in a bunch of these cities, in dozens of these cities that we had identified. And then the whole idea was that, uh, let's run it for a couple of weeks, see how many customers signed up, what, what is the CAC, uh, ratios in all those places? Where do we see the best ROIs? And that's going to be immensely valuable signal to then figure out which are actually going to be the places we're going to launch. Uh, and this was just such an effective hack. So we, 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." And some of them were very unintuitive, so many of the cities from the original list dropped off.

Harry Stebbings 29:36 Okay, so what were the top ones to you?

Markus Villig 29:38 So exactly the first one was Johannesburg, and top two was Lagos-

Harry Stebbings 29:41 Okay.

Markus Villig 29:41 ... in Nigeria.

Harry Stebbings 29:41 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?

Markus Villig 29:53 So, um, that was the thing that also really differentiated us, uh, from most companies, was that we really always look, uh, extremely pragmatically at everything, and we always try to calculate the ROIs of everything, and we, uh, sort of go from first principles. 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? So 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. And then we thought, "Okay, what's next?" We, uh, just put up an online ad, um, uh, for, um, h- hiring the first employee. And some young kid from, uh, university signed up as a sort of part-time job. Uh, and then we had this Skype interview with him back in like 2016 when nobody was hiring remotely, and we told this kid over video call, "Hey, we're going to figure out a way how to send you a card so you can pay for utilities. 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. So this young kid just trusted us over video call, got 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. So that happened for a couple of months. We had enough drivers, and then (snaps fingers) one day we just kicked the switch and turned on the service for customers.

Harry Stebbings 31:09 And this kid in ni- wh- where was this, Lagos or South Africa?

Markus Villig 31:12 This was, this was in Johannesburg.

Harry Stebbings 31:13 Okay. Is he still with the company? Or w-

Markus Villig 31:15 I think he was with us for, for a couple of years, but eventually, of course, we realized that th- the market became huge. It started doing hundreds of millions of dollars of gross bookings, uh, tens of millions of revenue.

Harry Stebbings 31:25 Was Africa an immediate success when you took it on?

Markus Villig 31:28 So, so the bizarre thing was that we, we started it as an experiment, and we thought, "If these are going to be turning out, uh, as good of a market as, let's say, Latvia, then we're going to be happy." 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.

Harry Stebbings 31:47 How many other cities did you have in play at that time?

Markus Villig 31:49 It was probably 15 cities live in, in E- in Europe at the moment.

Harry Stebbings 31:53 And it was more than half the business.

Markus Villig 31:54 It was incredible.

Harry Stebbings 31:55 So why was that? Was that frequency of trips, number of actual kind of customers?

Markus Villig 32:00 So how we measure success in the company has always been by one metric from day one of the company, which is gross bookings. So it's, it's how much actual monetary volume of transactions is happening on the platform. Uh, 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, was so high, 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.

Harry Stebbings 32:24 Why gross bookings? That doesn't necessarily determine user happiness. So like frequency of r- trips would suggest actually that I, 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. Why is gross bookings the focus?

Markus Villig 32:41 So 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 rel- like, they're completely irrelevant. So the only thing that, at the end of the day, matters is what's your GMV or gross bookings, and, uh, I think it encapsulates everything that is either going good or going bad in the business. And the reason for it is that, if you have great retention, then con- consumers will keep on returning to the platform. They will keep on doing GMV. If, uh, they like it, they're going to be increasing their frequency over time, which means they will do even more GMV, and they will also get their friends to the platform, which will bring even more GMV. So again, that's the only North Star metric we're focused on. And of course, there are some teams who look at CAC, who look at the, uh, acquisition rates, you know, who look at the retention rates. But that's a clear secondary priority for us. Uh, that's never been the, the North Star of the business.

Harry Stebbings 33:33 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." Do we have a strategic discussion now in management and say, "Something's changed"?

Markus Villig 33:47 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. We had these thousands of drivers signing up who wanted to all get on the platform. So very quickly, um, had to update our sort of priors and be like, "Okay, like this is actually going to be fantastic. Like this, this might be the entire company six months from now." And that's exactly what, what happened. So we, uh, we created this 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?" 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. 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. We even launched in places like Mexico without having ... no presence there, not flying anybody there, just full remote launches. And, and almost all of these launches turned out to be fantastically successful.

Harry Stebbings 34:47 What did you do that made you successful with these launches first?

Markus Villig 34:51 So now what is worth mentioning is that we weren't the first to market in those places, and that's what really makes Bolt a unique company. Because, as I described already, this is a very heavy network effect business. So the first player has a huge advantage. They have bigger density. They have, therefore, better pickup times, in terms of the cars. Uh, they can therefore offer you a much better customer value proposition. So if you're coming in as a second player, it's generally almost impossible to ever catch up to that, uh, unless you have something very unique that the other player isn't doing. So what we, we did, there was a couple of differentiators. First of all, we localized much better. So what was clear was that especially these American players in these markets completely neglected the local needs.

Harry Stebbings 35:32 How did they neglect lo- local needs?

Markus Villig 35:35 One, one trivial example, like they, 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%. 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, so a sort of empty market that we can go into." And the other thing was that we really optimized for being the most cost-efficient ride-hailing operator in the world. So 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. So generally, they were paying 10% less, and we were also able to pay the drivers 5 to 10% better as well. So actually, both sides of the marketplace had a very clear financial reason why to flip over to us. And then that was enough to overcome this initial

Markus Villig 36:22 critical mass.

Harry Stebbings 36:22 I spoke to Dar at Uber before the show, and he said, I'd li- I want, just want to make sure I get this quote right, 'cause he might, you know, be a little bit upset if I don't get it right. Um, it's something along the lines of, essentially, you are often second or third in a market. How do you feel about that, and is that an okay strategy?

Markus Villig 36:42 Well, I'm a facts and numbers based guy, so let's look at that. Um, 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.And when we look at the trend of most of those other 30 where we operate, we are continuously taking share for the reasons I mentioned earlier. Uh, we, uh, offer a better value proposition to the customer. 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, uh, we've re-... we've done that before. I think we can catch up and actually become the most popular platform.

Harry Stebbings 37:18 Is it still a good business if you are second?

Markus Villig 37:21 It depends on whether you're a frugal company. 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. Uh, but it is a very profitable business if you're able to run a very lean operation.

Harry Stebbings 37:35 I'm sorry for this spicy request. What happens to Lyft from here? You mentioned them.

Markus Villig 37:40 I think that, um, their only way out of this is to optimize their costs. I, I just generally don't see how they're going to be an independent company five years from now with the current cost structure.

Harry Stebbings 37:49 Do you think they sell?

Markus Villig 37:50 I, uh, can't really think who would be a natural acquirer. It's, it's not, uh, easy a company to turn around.

Harry Stebbings 37:56 Okay. So we have this, like, 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? 'Cause this just sounds, like, too good to be true.

Markus Villig 38:12 So, uh, of course what was going on behind the scenes was-

Harry Stebbings 38:15 Mayhem. (laughs)

Markus Villig 38:15 ... 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 been to these car markets before, so we had to figure out everything. How do you localize the product? How do you collect payments? How do you issue invoices? Uh, how do we hire people to keep on training the drivers? How do you run marketing in these places? So it was a complete mess, but it was also the, the most fantastic, the most fun part of the business, because we were all young kids just figuring stuff out on the go. Now, I'd say that actually nothing major broke. But I think the one area that we neglected for too long was, was how, um, intensely we focused on, um, especially on, on the regulatory bit. So I, I think we started off as a small company that didn't have to worry about it, because again, oftentimes we were the second mover into these countries. So by, by the time we came in, the regulation was already sorted. 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. And the regulators were then coming to us and were asking us for input, like, "How, how should we regulate this thing? Uh, there hasn't been a platform such as yours here before." And I think we neglected it for, for too long before we actually realized that I think we should set up a public policy team, uh, and actually give these regulators what they need. 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 the ones growing at that hyper speed. So I think we, we probably could have done that move a year or two earlier, of just engaging with the public and, and sort of trying to influence

Markus Villig 39:41 where this goes.

Harry Stebbings 39:41 Is speed the single most important thing in startup growth and development?

Markus Villig 39:45 Speed is absolutely the most important thing, if you can execute it with high quality. Because I do see a lot of companies that execute fast, but I think they're just cutting corners and, and launching stuff they sh- they shouldn't be launching. And then at the end of the day, it's, it's a lot of momentum, but really no progress. So-

Harry Stebbings 40:02 What, what thing did you do very fast that you should have done more slowly?

Markus Villig 40:05 I think we could have, um, actually been more deliberate about which markets, um, we choose to expand into. So I, I think that, uh, as I mentioned, we had this first wave where we, we just expanded with the wrong model. And looking back, if we hadn't done that and we would have done this better model that we stumbled into a couple years later, uh, I think we could have just accelerated the whole evolution of the company by

Markus Villig 40:28 that period.

Harry Stebbings 40:29 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?

Markus Villig 40:38 Still the same where we were back in 2014.

Harry Stebbings 40:41 You've only raised a million at this point?

Markus Villig 40:42 So by that point, we had raised this 1 million seed rounds, um, and then our metrics were just going through the roof. We were probably at that moment among like top two percentile in terms of startups, maybe in the world, but for sure in Europe, in terms of growth.

Harry Stebbings 40:55 What are you at revenue-wise at that point?

Markus Villig 40:56 At that point, we're easily crossing 10 million ARR, probably growing 500% a year.

Harry Stebbings 41:01 Fuck. (laughs)

Markus Villig 41:02 And doing that with a initial budget of one million.

Harry Stebbings 41:05 When... What year was this? I'm just trying to understand if I was there.

Markus Villig 41:08 So, so that, that was back in 2015, 2016.

Harry Stebbings 41:10 So we've go- just raised this million. When do we go, "Shit, we need to raise a lot more money"?

Markus Villig 41:15 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, uh, of cash in the bank. So it was always a huge stress for me, "Can I even make next month's salaries?" Because-

Harry Stebbings 41:26 Seriously?

Markus Villig 41:27 It, it was, it was a complete disaster. So w- we tried to raise every way we could. So I met all the VCs around Europe I could get my hands on. I get to these meetings, uh, show them the metrics, tell them the story. And it was one of those cases where they were like, "This seems like a great team. Obviously have fantastic metrics, but we just don't believe in the category. Like, we, we think that you guys are gonna get wiped out." And no matter how many of these meetings I took, and it was dozens, maybe even hundred, they all told us no.

Harry Stebbings 41:54 Did all the big brands say no?

Markus Villig 41:56 E- every single one.

Harry Stebbings 41:57 What was their most common reason?

Markus Villig 41:59 They just said that, uh, "This category is a winner take all market. There's not gonna be any room for number two, and therefore it doesn't matter how great your metrics are, we're not going to invest."

Harry Stebbings 42:07 Which was the best meeting that you didn't get?

Markus Villig 42:09 I think that we actually didn't get the meeting with Sequoia back in those days.

Harry Stebbings 42:13 Oh.

Markus Villig 42:13 And that's another story of how then they, they later came back to the business four years later.

Harry Stebbings 42:18 Who, who was that meeting with?

Markus Villig 42:19 At Sequoia, we actually didn't get the meeting. That was the sad part. So we, we tried to, uh, approach them many times and then, uh, back then I think we weren't an interesting enough company.

Harry Stebbings 42:27 Wow. Did you get a response?

Markus Villig 42:29 Yeah, we, we just, uh, got the response that say like, "Uh, thanks, but, uh, you know, we, we are not interested in the category at the moment."

Harry Stebbings 42:35 Wow. Okay. So what was the series A?

Markus Villig 42:38 So th- we took a very unconventional approach. So first of all, uh, we realized we had to raise some money. We saw that all the sophisticated VCs didn't want to invest.

Harry Stebbings 42:48 (laughs)

Markus Villig 42:48 Uh, so, uh, we had to swallow our pride and be like, "Okay, we need to raise money otherwise the company's going bust, and we need the money to continue this fantastic expansion." 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, I go there, probably back then like a 22-year-old kid, and they'd never even heard of a startup. 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. 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, (laughs) looking back, it was completely insane that they did that. But I mean, they invested at a valuation of about 15 million, so by now they made like, 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. So they just look 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.

Harry Stebbings 43:46 Oh my God. That's insane. So you turned 500K into 50 million?

Markus Villig 43:50 Yes, even more.

Harry Stebbings 43:51 That is insane. And so what did you raise in that kind of interim round? You cobbled together-

Markus Villig 43:56 Yeah, so, so we cobbled together half a million from this real estate company. Similarly, a couple of hundred thousand from a local railway operator, um, couple of hundred thousand from a local telecoms guy. So it was, it was just this tiny, altogether maybe one million bucks.

Harry Stebbings 44:09 And that was enough?

Markus Villig 44:11 Well, we had to survive with that. We had no other choice because nobody else wanted to back the company back

Markus Villig 44:16 then.

Harry Stebbings 44:16 So when did big cash come in?

Markus Villig 44:18 So then after that, the metrics were doing fantastic. Um, we probably got to the point of doing about 25 million ARR, growing multiple 100% a year, um, and still no VCs wanted to invest.

Harry Stebbings 44:30 (laughs)

Markus Villig 44:31 So-

Harry Stebbings 44:31 It's just like, "Oh, for fuck's sake."

Markus Villig 44:33 I, I was just ... I, I just got so frustrated with the VC industry. I w- I was telling Mike, "I'm never gonna talk to any VCs ever again." Uh, and then what, what happened was-

Harry Stebbings 44:40 Was the experience bad?

Markus Villig 44:42 I think the experience was actually, uh, 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. What I needed was money, and, and none of them were willing to invest in the company at the time. So, and then it all changed, um, very bizarrely when one day, uh, Mercedes or, or Daimler, the, the group, uh, approached us out of the blue. Uh, and the interesting bit was it's all these OEMs at the time were trying to figure out what is their strategy gonna be. So they all realized that mobility is changing. Maybe one day, uh, everybody's gonna be ordering cars from these apps, and that's gonna 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. So they approached us and they tried to buy the business back then for maybe 100 million euros, which, uh, obviously as a young kid, uh, would have been a fantastic outcome. So we discussed it with the founders, but my view was, uh, immediate that we don't want to sell the business. We're onto something special. This is gonna be an amazing business, so we're gonna turn it down.

Harry Stebbings 45:42 How much of the business did you have at that stage?

Markus Villig 45:44 Probably 45%.

Harry Stebbings 45:46 So you'd have made 45 million dollars, say, at 22?

Markus Villig 45:50 Yeah. And we had a big debate about it with the other founders, like, "What, what do you, what do you want to do?" And, um, I was completely clear that I want to build a business, and I got lucky that Oliver and Martin were both very supportive. So they were like, "Okay, it's your call. You started the business. If you want to go for it, go for it." Uh, so we turned it down in a day. We didn't even think about it.

Harry Stebbings 46:08 Wow, that is incredible. Did ... Was there anyone who did want to sell it?

Markus Villig 46:12 Well, there was obviously some of these angel investors who are like, "Wow, we're gonna get a great return of whatever, 10X in a, in a year, and this is gonna be fantastic for us." Uh, but actually, uh, 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."

Harry Stebbings 46:28 Okay, so we say no, and they then invest in the business?

Markus Villig 46:32 Yeah, that was then the bizarre thing. So then a year went by, and our numbers just kept on growing. So we, we probably quadrupled the business in the next year. And then we went back to them, and then, uh, they realized that we're going to be the winner in this category in most of these markets. So then we managed to convince them that they invested more than 100 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

Markus Villig 46:56 for them.

Harry Stebbings 46:56 Okay, you've gone from raising a million from, you know, uh, real estate company, local telecoms people, uh, not the standard, to 100 million from Daimler. That kind of fucks with your mind a little bit, no?

Markus Villig 47:11 Well, it was, it was a huge transition. So w- we also in the, in the interim, had this interesting debate with, um, uh, with the team internally that, "What are we going to do with the money?" Because we, we're doing already really well and we didn't really need to fundraise. 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 gonna be able to just quadruple the business very quickly. 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.

Harry Stebbings 47:38 That is insane that it was like one, one and a half, and then 100.

Markus Villig 47:43 Absolutely.

Harry Stebbings 47:44 I had no idea about that.

Markus Villig 47:45 Yeah, it was a huge transition.

Harry Stebbings 47:47 Okay, when you get the 100, what did you spend on that you look back now and you're like, "Why did I spend that?"

Markus Villig 47:55 Honestly, uh, I don't think we really did anything wrong with the money. I think we genuinely spent it all really well. So-

Harry Stebbings 48:01 You're so Estonian. (laughs)

Markus Villig 48:03 So, so, so, so w- we had this super, super clear moment, I remember, when we raised this round, and I mean, it ended up then there were some add-ons, so it ended up even being 170 million dollar round. Uh, so 100 of that from, from Daimler, and then a few other investors joined in. Um, and, uh, I went to the team, I was like, "Hey, we're not gonna be changing the culture." So you can imagine effective, like, we haven't raised any money. So we're gonna keep on operating just as we have. Uh, yes, we're gonna be hiring a bit more people, but it's not like we're gonna be bumping everybody's salaries massively or everybody will get huge teams now. We're gonna retain that similar cost efficiency ethos we've had from day one. And given that all these people had been in those, in the sort of 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- we're not gonna mess it up just because we raised a round."

Harry Stebbings 48:48 But you now have 170 million. Just in terms of like your execution from there, what changed?

Markus Villig 48:55 So what that mainly enabled us to do was just launch, first of all, significantly more markets at the same time. And, uh, 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. To, 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 gonna work.

Harry Stebbings 49:17 Ooh.What was the cheapest city to launch and what was the most expensive?

Markus Villig 49:21 Probably the s- 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 ... s- I mean, Estonia we got going with 5,000 bucks. So, uh, 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.

Harry Stebbings 49:40 Did the grow ... Okay, so we then are inv- we're doing multiple cities, same time, we've got 170 million. Did the growth then just continue?

Markus Villig 49:47 Absolutely. So we then went from doing that s- uh, 25 million ARR to very quickly getting to 100 million, 200 million, 400 million ARR in just a matter of a couple

Markus Villig 49:57 of years.

Harry Stebbings 49:57 When you look at the growth profile of the business, I was brought up on this travel, travel, double, double, I think is the kind of statement, or maybe travel, travel, travel, tr- But what was yours? Was it like one to five to 25 to a hundred? How did that growth profile look? Just so I get an idea.

Markus Villig 50:15 So looking back, it was probably ... We went from zero to two million ARR in about 18 months.

Harry Stebbings 50:22 Uh-huh.

Markus Villig 50:22 And then from there, we went to about 10 million ARR in the next 18 months. So, uh, we-

Harry Stebbings 50:27 5X.

Markus Villig 50:27 We, we 5X. And then we went from that to 100 million ARR in less than two years. And then we went from that to now we have two billion ARR, uh, in sort of the next few years. So it was extremely rapid exponential growth throughout this whole business.

Harry Stebbings 50:42 You're at two billion in ARR?

Markus Villig 50:44 Yes.

Harry Stebbings 50:45 Wow. Fuck me, that's a lot. That's more than

Harry Stebbings 50:49 I thought. When you get to that stage, people really start to take notice of you. When did people really start to take notice of you, do you feel?

Markus Villig 50:58 There was a couple of changes that had 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. So we, we then started to also appeal to the financial crowd. So actually, the first financial investors who, who came to the business were, um, huge, uh, top-tier New York investors. So we raised money from the likes of D1 and Tarzana and some great New York funds. And it was a good-

Harry Stebbings 51:24 J- Just tell me that ... You've only raised from Daimler and some telecoms and where is it? When like, you know, Dan Sonnheim and D1 come in with a-

Markus Villig 51:30 Mm-hmm.

Harry Stebbings 51:30 ... "Hey, you know, Markus, we'd love to chat," was that a very natural, normal process? How did that go?

Markus Villig 51:37 So actually, what I really liked about these, um, New York investors was that they were very numbers oriented. So they really did very deep, very sophisticated analysis about the, the numbers, the market shares, the trends, and they really liked the story on top of that, but they were mainly invested based on numbers. I think with VCs it was the other way around. So the numbers were great, but they didn't really focus on numbers, 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, were the ones who now made a killing on this.

Harry Stebbings 52:08 I love that. Okay, so you raised from them. How much do you raise from them?

Markus Villig 52:12 So in aggregate, we've now raised 1.5 billion.

Harry Stebbings 52:14 Mm-hmm.

Markus Villig 52:14 So it's just been a mix of, uh, uh, maybe 10% of that from strategic investors and then the most of that from then European and, and US based investors.

Harry Stebbings 52:23 So the emails that didn't get meetings from Sequoia, when did Sequoia come back into the fray?

Markus Villig 52:29 So then mid-2021, um, 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. And so h- COVID hit, and in four weeks, we went from just massive, like, uh, about 200 million of revenues to losing 85%

Markus Villig 52:53 of that.

Harry Stebbings 52:53 What do you do at this time, dude? That is like, it's unprecedented. The last time was Spanish fucking Influenza in 1917.

Markus Villig 52:59 (laughs)

Harry Stebbings 52:59 What do you do?

Markus Villig 53:01 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. They laid off 30%, 50%, wha- whatever they thought was, uh, needed to, for the company to survive. So I remember we had this meeting over a call with the, with the top management, and we decided we're not gonna do any layoffs. We're gonna be the only company in the industry that's gonna retain all of our people, and it's gonna be a huge gamble because we lost 85% of our revenue. And instead what we're gonna do is that, um, we will, uh, do a salary reduction to everybody for 20%, and then we're just gonna bet the company that in six months this is gonna go by. And because we are the only company that's keeping our team intact, we're gonna accelerate out of this faster than anybody. And we gambled the company on that. And that turned out to be fantastic. So actually the team morale we got from doing zero layoffs while everybody else did, was just such massive morale boost that, that people like were even opting in that some people did fo- 30, 40% salary reductions to get us through those next six months.

Harry Stebbings 54:03 What did you do in those six months? I mean, we all remember, nothing happened.

Markus Villig 54:07 So w- we did a couple of things. So first of all, we optimized every single thing we could in the business. We're already frugal going into COVID, but that really made us like question every single line of the P&L and we, we squeezed everything we could to, to make the business more efficient. 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. So we were setting them up and, uh, it was great timing because all these drivers were, uh, low utilized. Th- 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. They, they, they had no other alternative. And then what we did was that these markets, those-

Harry Stebbings 54:44 So how are you actually doing that? 'Cause you're not going into these markets in a travel ban zone signing up drivers. How did you get drivers who are low utilized?

Markus Villig 54:54 So, so during, uh, 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, 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, so we suddenly signed up hundreds of thousands of drivers all across Europe, all across Africa.

Harry Stebbings 55:13 Okay. And so we have these expansion moments. It lasted longer than six months.

Markus Villig 55:19 ... but not everywhere. So what was the key distinction was that some of these markets started opening up very quickly. 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 volumes started to rebound. And then in other places, like London, of course, it took significantly longer. But then what we did was we had this, um, war room, where effectively almost every day we came together, and we looked at, okay, wha- wha- which are the cities which are opening up, which are the cities not? And then immediately when we saw a city open up, we had a blast-off of just investing marketing dollars and discount dollars into that. So we really accelerated out of all these, um, lockdowns, and I think that's what every competitor missed. So, so we effectively came out of it with, uh, with market shares that were twice or three times higher than the ones going in.

Harry Stebbings 56:03 How long did it take to get that 85% loss in revenue back?

Markus Villig 56:08 It actually happened very quickly. It was probably five or six months, uh, before we were fully back, and then we already started hitting new records after that.

Harry Stebbings 56:16 Wow. Fuck. Okay, so going back to the Sequoia, and so then, what, Andrew Reid, like, drops you a DM?

Markus Villig 56:23 So, uh, we actually had the Sequoia team, uh, reach out. I think it was the Eur- European team. And, um, 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. They said, "Hey, we've done all the homework on the company. We're not going to be a burden." Um, "Just share us some of the metrics and we'll come back to you in 48 hours." And I remember it was literally me having two calls with them, and a few days later, they come back, "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.

Harry Stebbings 56:58 How much did they write?

Markus Villig 56:59 Uh, still to this day, Bolt is the largest ticket Sequoia has ever done into Europe.

Harry Stebbings 57:03 Wow! That's an amazing, amazing thing. And they did it in 48 hours?

Markus Villig 57:08 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, "We're joining the round."

Harry Stebbings 57:15 And they'd-- that-- what price round was that?

Markus Villig 57:18 So that was, uh, mid-2021, so it was probably four-and-a-half billion valuation.

Harry Stebbings 57:24 Wow! Okay, so we have that round. That's a very significant moment in terms of brand and validation for the company. Does having Sequoia as an investor change the structure of the company?

Markus Villig 57:34 I'd say that, uh, 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. 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," 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.

Harry Stebbings 58:04 How do you respond to people who say, "If people join because of a fund, they're the wrong people to join"?

Markus Villig 58:10 I'd say that, um, 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 in, uh, sort of came on board. Uh, I think you just need to have a great process for weeding out who are the people

Markus Villig 58:23 with right values.

Harry Stebbings 58:24 Do you think you were good at hiring?

Markus Villig 58:25 I was horrible at hiring the first few years. (laughs)

Harry Stebbings 58:28 (laughs)

Markus Villig 58:28 So, so the, the story goes that out of the first ten people I hired, I had to fire seven of them. So it did almost kill the company.

Harry Stebbings 58:35 What did you do wrong?

Markus Villig 58:37 I was way too optimistic about people. I think growing up, I, um, just always tried to see the best in people, and I was thinking everybody is, who is going to join is going to be equally excited about the business. They will spend all their waking hours thinking about how to optimize it. Turns out that wasn't the case at all. Uh, and then we-

Harry Stebbings 58:54 What were they?

Markus Villig 58:55 I think-

Harry Stebbings 58:55 Were they, w- respectfully, were they not as hardworking? Were they not as intelligent? Were they not as ambitious?

Markus Villig 59:01 I think it, it came down to all of those things to some extent. Just w- we, 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. So many of these people joined with completely different expectations of what I had as a CEO. And looking back, I think it was actually a great exercise, because, uh, I learned from that of which are the patterns you really want to find in people, which are the patterns you don't. 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.

Harry Stebbings 59:30 If you could only have one quality in a candidate, what would that quality be?

Markus Villig 59:36 I'm still in the camp of intelligence, so I, 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. At least for our business, uh, you, you cannot compensate, uh, with hard work if you don't make the right decisions.

Harry Stebbings 59:49 Have you seen that play out in reality? And if so, how?

Markus Villig 59:51 So, um, we, we have a couple of these extremely, extremely intelligent people at Bolt who really defined the company. I, I'd say Oliver, our lead software engineer, has been like that. Uh, like he was able to do alone what took probably 10 average engineers to do the same work, and it was fantastic. The company would have otherwise never, uh, never made it this far. Um, and the other one is our head of growth, uh, Pavel, who's been with the company for about eight years now, who runs all of our global, um, incentive, uh, logic of how exactly do we figure out which is the s- small subset of customers who is worth targeting, which are the ones that you don't target. Uh, and I think we have one of the most sophisticated frameworks for how do we do marketing of any company I've ever seen.

Harry Stebbings 1:00:31 So everyone says in Europe, "The trouble is that we don't have people who've seen growth like the US before." Is that true? And where have you seen that, if so?

Markus Villig 1:00:41 I'd say that it's very hard to find, uh, strong people, um, leaders, in Europe, uh, who actually understand tech companies and who actually built organizations of thousands of people. That I agree with. There's just almost no tech companies of that size in Europe. However, um...... 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, I think those things, you can find plenty of talent in Europe. 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. So, uh, I don't really agree that, like, y- you cannot figure out how to do world-class marketing or engineering from here.

Harry Stebbings 1:01:19 Today, would you rather hire great people in Europe who haven't seen it before, or bring people in from the US and then face that challenge of assimilation, culture, moving people?

Markus Villig 1:01:29 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, at a world scale before. And, uh, they've always wanted to, but there was never a company in the region that they could join. A- and those are the people who have really built the company. And they're very loyal, they've grown with the company, they know everything, they've been here for years, and I think it's just a completely different mentality than, than hiring people into Silicon Valley, for example, who oftentimes might, uh, move on to the next thing two years later.

Harry Stebbings 1:02:03 Right.

Markus Villig 1:02:03 So we don't have that kind

Markus Villig 1:02:04 of culture.

Harry Stebbings 1:02:04 Do you think the UK fund, uh, the European funding environment is poor quality?

Markus Villig 1:02:08 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.

Harry Stebbings 1:02:15 In what ways could it catch up?

Markus Villig 1:02:17 First of all, uh, we're just limited by funding. So one, one of the problems is that if you look at where's the money coming from into the US, um, VC industry, there's so many more LPs, the big pension funds are putting money in, the university endowments are putting money in. And it's not really the case in Europe, so there's just, I think, far less capital available.

Harry Stebbings 1:02:34 Do you, do you actually ... Uh, uh, the show's successful now because I do argue back a little bit. I would argue completely the opposite. There is way too much money in Europe-

Markus Villig 1:02:42 Mm-hmm.

Harry Stebbings 1:02:43 ... and there are way too few opportunities. And the result of that is you see this concentration of capital into the few obviously good ones-

Markus Villig 1:02:50 Mm-hmm.

Harry Stebbings 1:02:50 ... and the prices are just fucking nuts. And, I mean, the amount of mediocre to poor large funds-

Markus Villig 1:02:57 Mm-hmm.

Harry Stebbings 1:02:57 ... is insane in Europe.

Markus Villig 1:02:58 I'd say that, uh, for sure there's a self-fulfilling prophecy in that as well. That, uh, again, if you have enough capital available, then these companies can raise the money they need to actually compete with their US counterparts. And if the money is not available, then they're just gonna 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. And at least in our industry, we've seen that play out many, many times, where it's, it's been very clear in the food delivery industry, grocery delivery, uh, transport in general, where a lot of these companies from the US just have more funding, and that's the only reason they win.

Harry Stebbings 1:03:30 Get you. What would you most change about European funding, then, other than more?

Markus Villig 1:03:35 I'd say that, uh, they also need to be more ambitious and be able to, to tolerate that some of these businesses take a long time to get to profitability. From what I've seen, many of these, uh, investors are just demanding profitability way too early, before these companies actually get to a massive scale.

Harry Stebbings 1:03:50 Marcus, I'm a 19-year-old European entrepreneur. I know, I look a little bit older. Uh, you're advising me. I've started this business and I'm really excited about it. We're at a million in, in ARR.

Markus Villig 1:04:00 (clears throat)

Harry Stebbings 1:04:01 Should I raise from, from European VCs or should I just go straight to the US? What, what do you advise me?

Markus Villig 1:04:07 Uh, I'd say that now, in 2024, there are good European VCs available, so I, I would think that it's easier to raise from Europe, and these people can ho- also help you recruit talent in Europe. However, if you wanna go and your target market is in the US, then I would probably raise from US investors because they will help you with

Markus Villig 1:04:24 connections and talent there.

Harry Stebbings 1:04:25 Do you really think VCs add value?

Markus Villig 1:04:27 I think there are some VCs who add value, but probably 80% of them, uh, just provide capital and, and that's, that's it.

Harry Stebbings 1:04:33 When you look back now, what would you have done differently about fundraising?

Markus Villig 1:04:38 I've, uh, would have likely gone to these, um, New York funds much earlier. I, 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 the 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

Markus Villig 1:04:57 earlier.

Harry Stebbings 1:04:57 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.

Markus Villig 1:05:06 We always had the ambition to build a replacement to your private car, and we knew that ride-hailing alone is not gonna do that. Ride-hailing is gonna be a huge business, but, uh, there needs to be other modes of transport we can offer on the platform as well. Uh, but the first five years, we were just having no resources whatsoever, 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. And then we debated internally along, what is that gonna be? And then we, um, took a gamble on micromobility. So we decided we're gonna be the first ride-hailing company in the world to launch electric scooters on the platform as well. And that was actually quite a controversial decision, both from the employee point of view, but also from some of the investors, because-

Harry Stebbings 1:05:52 Why?

Markus Villig 1:05:52 ... they were s- thinking that, first of all, it's a hardware business, so it's very difficult. Um, and second, you're gonna be cannibalizing your own very profitable ride-hailing trips, because there's big overlap. Um, about 40% of ride-hailing trips in lot of these countries are, um, less than four kilometers long. So you're gonna be cannibalizing that and pushing people, instead of taking 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. We've always been thinking that it's great for us to cannibalize ourself rather than let somebody