Markus Villig started Bolt, the Tallinn-based taxi company, in 2013 when he was 19. Seven years later, his company is worth 1.7 billion euros.
It has not been a smooth ride. Villig launched the app with a budget of $5,000 and kept going when investors told it to give it up as Uber raised billions of dollars. He says getting the taxi company off the ground “was probably the toughest six months I’ve ever had”.
The company survived the first months because the team had “so much conviction that we were doing something unique and better,” Villig said during a Zoom call from Tallinn. Bolt, which also supplies e-scooters and e-bikes, and food and parcel delivery, has just survived another period of uncertainty: the pandemic. During the first lockdown last year, sales fell by 85 percent overnight.
Villig founded the company together with his older brother, who already had experience working in the technical industry. However, Markus Villig was still in high school and had to work hard to get Tallinn’s taxi drivers to sign up for his app.
He saw a gap in the Estonian capital’s transport market (where Uber was slow to take off) because the city’s taxi services were “terrible”. The consumer case to start Taxify, as it was known before a rebrand in 2019, was an obvious one. Taxi drivers, Villig says, had dirty cars and “it took ages for them to arrive.” In the spring of 2013, after a period of research after school, he visited drivers at taxi ranks to ask how it worked.
According to Villig, the drivers were stuck in old taxi companies, they often had to pay high monthly charges and they didn’t get much in return. But Villig had his job to convince drivers to entrust themselves to a 19-year-old who didn’t yet have a fully functioning app. “When… you just give them an idea, 90 percent of them will just tell you to F-off,” he laughs.
Meanwhile, he convinced a freelance developer to build a prototype platform, but that would cost $5,000. Villig spent months convincing his parents to lend him the money.
Over time, he gathered about 100 drivers who were willing to take a risk. But when he launched in August 2013, not all of them came online when he needed them, and he realized that many had given false contact information. “In reality, I only had a few dozen,” he says.
He started going to taxi ranks and getting into cars: “So I just went there, took… [their] telephone, signed [them] on the spot. . . and was like, look, every time you come to work, you just open this app.
By that winter, he had several hundred drivers and offered a well-functioning service. About nine months later, he raised €70,000. Six months later, he raised another €1.4 million, mostly from local investors. In 2014 “we had good traction and had a product that worked well in Estonia,” he says.
Villig then had to consider how to scale to other markets, but in 2015 and 2016, “Uber became the juggernaut of raising more money than any tech company,” he says. “It was unprecedented. No one had raised that kind of money. Don’t Google, don’t Facebook, nobody.”
For example, in May 2016, Uber raised $5.6 billion, giving it a valuation of $66 billion (although its market cap is now $91 billion after the 2019 IPO).
The result: “No VC would even touch us,” adds Villig. “The next two years were extremely tough for us, as you can imagine we have so little money and resources to antagonize the company by billions. It wasn’t really a fair fight,” he says.
He responded by running the leanest startup possible and believes that “those two or three years really made us.” With such limited resources, Bolt spent money extremely cautiously. This culture lasts, and Villig says it gives the company an advantage.
When I tell him that the transportation business model appears to be capital-intensive, he points out that while Bolt raised the most funding it has had to date last year, “it’s still much less than most of our peers, and yet the business model is still viable and the business is operating and growing at a pace that we are more than happy with.”
He disparagingly cites the tendency of Silicon Valley startups to “blitzscale” — where they raise large amounts of money and then spend whatever it takes to “win the market.” As that theory goes, “when you win the market, you are a monopoly and you will always make that money back”.
While he admits to generalizing a trend in the US, this contrasts with what he believes is a cautious approach in Europe. “It makes sense to take your time, build things on a good foundation and long term. That’s the way to win, not just outdo everyone in the early years,” he says.
The caution has paid off. Investors returned to Bolt after proving that his strategy was effective and “that there was room for multiple winners in the transportation sector,” he adds.
While investment may have returned, Villig says “we are still very cautious”. For example, Bolt can spend less on marketing and instead lower commission rates for drivers so they can make more money.
The company’s streamlined approach – which has more than 50 million customers and 1.5 million drivers in 40 countries, mainly in Europe and Africa – also served as preparation for the coronavirus pandemic. Although sales fell dramatically, Villig found it essential to face the crisis with long-term prospects. How do you cut costs without causing problems later?
He decided not to cut any of Bolt’s now 2,000 employees. “We didn’t see the point in letting go of people we would have to re-hire within six months,” Villig says. Instead, “we asked who was willing to go for a 30 percent pay cut and – shocking to me – a large number of people were happy to [it]. That really helped us through the tough times.”
In contrast, Uber has laid off nearly 6,700 employees — about 23 percent of its workforce.
However, a recent Oxford University report rated Bolt as one of the worst for the working conditions it provides for workers in the gig economy. But it declined to comment on the findings.
Three questions for Markus Villig
Who is your leadership hero?
I don’t think there is one person. But what I’ve tried to do over the years is to study all the great CEOs that have gone before me — so Jeff Bezos, Bill Gates and Elon Musk and so on. But what I’m trying to do is take the best things from them and practice them in my daily life. There is no single idol.
What was the first leadership lesson you learned?
It is that clarity is everything. What I often see is people get into this mode of reflection where they come up with very complex ways [with] how to encourage people and goals and what to do. In the end, humans are pretty simple creatures – the more you can simplify things, the better they work. So when we have goals, we basically boil it down to just a few sentences. As a junior leader that is sometimes easier to do than [it would be for] a senior leader.
What would you do if you weren’t a founder?
My other career path I considered as a kid was into science, so I would probably have done something in physics or math. I’ve always been very passionate about that. In high school I went to Olympiads [competitions] and so on. But unfortunately I didn’t have time to deal with it [those] passions of the past decade.
Bolt’s 2019 revenue was €148 million. In May 2020, it announced a €100 million capital increase in the form of a convertible bond, saying at the time it could continue to scale its ride-hailing, micromobility and food delivery businesses in Europe and Africa. .
The money came from a single investor, Naya Capital Management, who was also a major investor in the company in a $67 million Series C funding round in July 2019. Bolt raised another €150 million in December and received €150 million in March. 20 million from the International Finance Corporation, part of the World Bank.
Last summer, when cities started moving again, Villig says that “acceleration was faster than we expected”. And growth in micromobility and food delivery services accelerated as a result of the pandemic. “We have quickly surpassed our target of offering scooter sharing in 45 cities and now have plans to be the largest micromobility operator in Europe by 2021,” says Villig.
Bolt currently operates 130,000 electric scooters in more than 100 cities in 15 countries.
He hasn’t always been a fan of e-scooters, admitting that the economy makes it “a tough business vertical to do well”. He believes Bolt has a unique approach, as it manufactures its own hardware, enabling a scooter that, says Villig, is faster and cheaper to repair. And by offering scooters, ride-hailing and food delivery services, technology and marketing costs are shared and savings passed on to customers.
He took his business far for someone who wanted to “get into tech” but had no idea how to start a business. “I literally started googling ‘how do you start a start-up,’” says Villig.