Hey everyone,

I’ve recently been travelling upcountry for work. In the bustling African city of Johannesburg, you can find many a thing.

Potholes, Broken traffic lights, and street merchants selling their goods.

One thing that litters the streets is these tiny quadricycle vehicles offered by Bolt, Uber’s European counterpart.

Most people will see a cheap form of transport, or even a death trap. Every time I see one of them, it reminds me of one of the coolest startup stories ever.

That's the story I'll be telling you today: how an obscure Estonian ride-hailing startup had its breakout story in Africa’s City of Gold.

Estonian Ride-Hailing

Bolt Highlights

1. €2B ARR across 50+ countries, 600+ cities with only $2B raised

2. Raised €1M seed and attempted expansion into 10 countries, nearly bankrupting the company in 6 months

3. Mercedes/Daimler offered the founder €100M for the company at age 22. He turned it down. 1 year later: they invested €100M+ at €1B valuation

4. During COVID, despite an 85% revenue drop in 4 weeks, Bolt avoided layoffs and emerged with 3x market share.

5. Secured Sequoia's largest ticket ever in Europe at a €4.5B valuation

Bolt’s Origin

Markus Villig became an entrepreneur at age 10, selling LEGO and building websites for his local school.

Interestingly, his parents encouraged entrepreneurship, having grown up under Soviet occupation, where striking out on your own was essentially banned.

At age 19, Markus was incredibly frustrated by Tallinn's broken taxi system. Essentially, there were 15 taxi companies, all reachable only by phone; rides were cash-only; drivers were rude; and cars never showed up.

Like every entrepreneur who stumbles on a groundbreaking idea, he began by asking the simple question, “Isn't there a better way?”

He validated market demand through a Google Form survey, confirming wider demand for better taxi solutions.

So he set out to build one of the first ride-hailing applications, using a €5,000 loan from his parents, which was meant for college.

Funny enough, the first stumbling block he encountered was building the application. Although he was a programmer, he quickly realised that the complexity of building a two-sided marketplace mobile application with a functional front-end and back-end might be too great even for his skill set.

The obvious solution was to bring on a co-founder to help him build this. Over 30 people rejected him. When all hope was seemingly lost, he came across Oliver Leisalu on a random Estonian coding forum.

After their first meeting, Markus had no idea if Oliver was the right person, let alone whether he was even interested in the project.

Two days later, Oliver came back to Markus, showing him the working application, building it in a couple of days because he was so excited.

Markus, at that point, had been working on the app for months, and he had found a guy who had built it in a matter of days. He hired Oliver on the spot.

Oliver has been with the company for over 12 years and is still the CTO of the company today.

Once Oliver joined, they were off to the races. Markus would manually acquire drivers for their network, literally climbing into taxis and refusing to leave until the driver signed up. Their flywheel had started to spin.

Initially, they had 5 trips per day, which gradually grew to 100, then 200, 500, and eventually 1,000 within the first year of going live.

Global Expansion

A year in, Bolt had been extremely resourceful, bootstrapping the company with the €5,000 loan as the only source of funding.

They were hitting their limit so they raised a €1 million seed round. That’s when their first almost fatal error came.

They tried to launch in 10 countries simultaneously and basically blew their entire funding round on it, nearly bankrupting the company in 6 months.

As a result they were forced to cut back to 15 employees, shut down all international markets, and go back to the drawing board. The key lesson for them was that expansion needs to be sequential, not running in parallel.

Believe it or not, Bolt’s breakout moment came from expanding into the City of Johannesburg (South Africa’s economic hub.)

You might be wondering how on Earth they concluded that Johannesburg was the number one country on their expansion list? First principles thinking.

What the founders did was simple but ingenious. They created an Excel list of the top 200 cities in the world and ranked them by 7 criteria focused on the key metrics for their business.

Crucially, they threw away all of their biases, and instead of going to neighboring countries, they looked at the map of the world and sought out the best countries for their business to expand into, regardless of what they felt was the best solution.

They let data drive the outcome. The unexpected result was that African cities ranked at the top across all metrics.

Johannesburg and Lagos emerged as one and two on the list. So, of course they packed their bags, flew out there and set up shop right? Quite the opposite.

With another deployment of self-awareness, the founders realised a bunch of Estonian blokes who had never left Europe stood no chance on the ground in Africa. So their solution was to run the expansion as an MVP test.

They started with a remote launch strategy, testing demand with online ads before hiring locally.

They hired their first local employee in Johannesburg via a Skype interview in 2016. This person ended up being a university student who was looking for a part-time opportunity. Bolt founders sent them a credit card to set up an office to start recruiting drivers.

Before they knew it, Johannesburg went from zero to more than 50% of their total business in less than six months, with a uni student managing the entire operation.

The reason the strategy worked so well in Africa?

• Large populations with massive transportation needs

• 30%+ unemployment rates (endless driver supply)

• Rapidly growing economies with vast volume potential

The product market fit in Africa was so strong that they needed to invest significantly less.

Founder Lessons

I absolutely love this story, and there's a lot we can learn from Marcus and the Bolt founding team about building scalable startups on a shoestring budget.

Lesson 1: Constraint Breeds Creativity 

Bolt raised 93% less capital than Uber ($2B vs $25B lifetime) and built the company to €10M ARR with just €1M raised.

Lesson 2: Data Over Assumptions 

That Excel spreadsheet changed the entire trajectory of the company. It only came about because the Estonians discarded their geographic bias and looked at the whole world as an opportunity set.

That led them to the opportunity where others saw pure risk.

First principles thinking > gut feel.

Lesson 3: Bet Big When Others Retreat 

When COVID-19 hit, Bolt lost 85% of its business in 4 weeks. Their competitors laid off 30-50% of workforce as any rational company exposed so badly to COVID might.

Bolt zigged while the others zagged. They made ZERO layoffs, instead enlisting all employees into a 20% salary cuts (with an opt in to increase.) The founders took their pay to zero.

Betting on COVID as an extremely painful but short-lived event enabled them to achieve 3x market share in a matter of months.

As I said, every time I see Bolt’s tiny yellow vehicles, I get reminded of this story.

I think that vehicle itself (being super efficient, reliable, nimble) actually represents Bolt's DNA as a company:

Finding the efficient solution, underserved markets, and identifying the seemingly obvious solutions that have been staring you in the face for ages.

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Thanks for reading,

— Luca

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That’s it from me. See you next week, Luca 👋

P.P.S Let’s connect on LinkedIn and X.