While the world’s leading ride-sharing business was blowing billions of dollars trying to buy global domination, Markus Villig was busy doing the opposite with Bolt. Working on a meager budget, he built a $8.4 billion operation – and an $700 million fortune — by focusing on overlooked markets in Africa and Europe.
Agun convinced Markus Villig that he was in the wrong business. It was 2015, and the then-21-year-old founder of Bolt was in Belgrade, Serbia, pitching a local taxicab capo on using his app as a digital dispatcher for drivers. The revolver casually left on the boss’s desk sent a clear message: These were rough customers in a brutal business. Villig, who had cofounded Bolt with his older brother Martin two years earlier, was suddenly sure he wanted nothing to do with them. “These were not very nice people to try to do business with,” he recalls.
Rather than working with traditional taxi companies, Villig decided to go directly to drivers and riders. That path put Estonia-based Bolt, which had just $2 million in funding, into direct competition with Uber, which a year earlier had raised $1.2 billion at a $17 billion valuation. That was scary. But it was less scary than the wrong end of a gun.
Photo by Levon Biss for Forbes
Given that Villig had just 0.01% of Uber’s funding, it was clear he needed a very different playbook. A miser’s eye for expenses, for starters. And rather than going toe-to-toe with Uber in developed markets, Bolt began targeting countries like Poland, where initially there was little, or no, competition.
It was a slog. Between 2015 and 2019, Villig white-knuckled Bolt from $730,000 in revenue to $142 million. He couldn’t afford big losses, so he operated the company close to break-even. Uber, by contrast, burned through $19.8 billion, almost $6.3 million a day, before going public in 2019.
Villig’s thrifty approach has paid off. The business now has more than 3 million drivers, operates in 45 countries and generated $570 million in 2021 revenue. As of its last fundraising round, in January 2022, the company was valued at $8.4 billion; startup values have since tumbled, and the 29-year-old Villig’s 17% stake is currently worth $700 million, Forbes estimates.
On occasion, Martin, who is 15 years older than Markus and a veteran of the Estonian startup scene, had to dip into his savings to make payroll. But mostly Bolt relied on hacks such as recruiting drivers via Facebook rather than flashy advertising campaigns, hiring Estonian coders at a fraction of Bay Area rates and working out of a cheap apartment in Estonia’s capital, Tallinn. Bolt’s take was 15% of the ride fare—and the company learned to survive on that. “Investors were stuck in the pattern recognition that this is a winner-takes-all market,” Markus Villig says.
When his local backers urged him to follow every other European startup in trying to crack the U.S. market, Villig launched in South Africa instead, hiring all local staff over Skype (Estonia’s pioneering tech unicorn). Many of his South African drivers and their customers didn’t have credit cards or bank accounts, so he fast-tracked cash payments. Revenue from African countries including South Africa, Nigeria and Ghana now accounts for a third of Bolt’s business.
After years of operating on a shoestring, Villig eventually found backing from China’s ride-hailing giant Didi, and from Mercedes-Benz, before Sequoia Capital and Fidelity invested $1.4 billion in two rounds between August 2021 and January 2022.
Villig now has the money—and the mandate—to supercharge Bolt’s growth, but he needs to be careful to avoid falling into the same traps that snared Uber. While raising Uber-like venture funding in 2021, Bolt also posted Uber-like losses of $622 million. Half of that was attributable to repaying a pandemic-era loan, but there were also expensive volume-boosting discounts for riders and drivers. Additionally, Villig has spent time and money on ongoing efforts to build a Bolt “super app” offering scooters and rental cars, plus food and grocery delivery.
The numbers are still being compiled, but Bolt says it materially narrowed its losses in 2022, and Villig claims he’ll be back to break-even by the end of this year. “We are coming out of an intense five-year investment period building up cities, and now we don’t need to invest in those any longer,” he says.
At least one pitfall he has avoided is the spendthrift tendency of American founders. While some VCs are trying to clamp down on their startups using private jets, Bolt investors brag of Villig’s frugality. Bolt doesn’t issue credit cards, phones or other corporate goodies to its employees, and until 2019 Villig shared a room when traveling to save on hotel costs.
One early investor recently spotted him crammed into the middle seat on Ryanair, Europe’s budget airline. Apparently, the 6-foot-4 Villig had passed on the $14 upgrade for an exit row. “We were extremely frugal from day one because we didn’t have any money,” he says. “Now, Bolt is 4,000 people. They think about what they spend every day, and that’s our single biggest advantage.”
While many tech giants have shed jobs in recent months, Villig claims he has no plans for layoffs. A combination of voluntary salary cuts and government grants spared Bolt workers the worst during the pandemic despite revenue cratering 80%. “When the rebound started, we had all the team in place,” he says.
Uber’s brute-force tactics and brazen disregard for local governments softened the ground for Villig’s lighter touch. But now that it’s bigger, Bolt is hitting the same hurdles that confronted Uber: pay protests, campaigns to reclassify drivers as employees and safety fears. In Estonia, Villig gets a warm reception as one of the pocket-sized Baltic nation’s largest employers, but Bolt faces challenges in some larger, more intensely regulated environments.
Villig doesn’t see the need to change Bolt’s course, or his own. “We have had quite a lot of interest, but if I sell the business, I will take two weeks of vacation, then fly back on Ryanair and start my next venture,” he says. “I’ve got a couple of decades of building ahead of me.”
PATRICK WELSH FOR FORBES
HOW TO PLAY IT
By Jon D. Markman
Ride-hailing businesses are moving beyond hype—they’re building scale to flourish. The best way to play this trend is still Uber. The San Francisco–based company operates the world’s largest mobility-as-a-service operation, with footprints in ride hailing, food and package delivery, and freight transport. Uber operates in 70 countries worldwide. Scale is important. The company reported in February that 2022 sales rose to $31.9 billion, up 83% year-over-year. More importantly, during fourth-quarter gross bookings, adjusted Ebitda and adjusted Ebitda margins reached record levels. Based on these strong growth trajectories, shares could trade to $49 within 18 months, up 31% from the current price.
Jon D. Markman is president of Markman Capital Insight and editor of Fast Forward Investing.
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