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Technology

Bolt Built $11 Billion Payment Business on Inflated Metrics and Eager Investors (nytimes.com) 20

Posted by msmash from the closer-look dept.
The start-up has had a meteoric rise, thanks to its charismatic co-founder, Ryan Breslow. But he sometimes stretched the truth to get there. From a report: In just over three years, Bolt has soared in valuation to $11 billion from $250 million, making it a Valley success story. But Bolt's meteoric rise has been fueled at least in part by a pattern of stretching the truth, according to interviews with over 50 former and current employees, clients, investors and others with whom Bolt discussed partnerships and fund-raising, as well as a lawsuit filed recently by a big customer. Most of them sought anonymity because they weren't authorized to speak publicly. In a rush to show growth, Bolt often overstated its technological capability and misrepresented the number of merchants using its service, some of the people said. In presentations to investors, it included the names of customers before verifying whether those merchants were able to use its technology. For a time, a fraud detection product it was pitching to merchants was more dependent on manual review than Mr. Breslow implied, according to a former employee. Mr. Breslow, 27, abruptly stepped down as chief executive in January, blindsiding some investors who, just weeks earlier, had put money into Bolt at an $11 billion valuation.

Now, Bolt's troubles are mounting. Some investors are looking to sell their stakes, while customers are questioning Bolt's technology. One of Bolt's biggest customers, Authentic Brands Group, which owns and licenses brands like Brooks Brothers, is suing the company for having "utterly failed to deliver on the technological capabilities that it held itself out as possessing." At an all-hands staff meeting last month, Bolt -- which has around 800 employees -- announced a three-month hiring freeze. Although it has cash to keep operating for a while, Bolt has talked to prospective investors about raising more funds, according to people with knowledge of the outreach. The implosion last month of Fast, a direct competitor, has only heightened investor scrutiny.

[...] The race to add merchants often meant that Bolt's sales team signed deals without always verifying that the merchant's payments technology would be able to integrate with Bolt. Ms. Neve said it was standard industry practice to include both prospective clients and those who had signed, even if they weren't using the service. Guess, for instance, was listed on Bolt's website as a "won" customer but never went live and was later removed, she said. An internal document viewed by The Times laid out what to do if a merchant asked whether Bolt's technology could integrate with its e-commerce platform. "If it's a big merchant, you probably want to act like our integration is already underway, not lie about it being done, but act as if it's close," the document said. "If it's a smaller merchant, gauge how much we want them vs how excited they are. If we want them a lot and they're not absolutely ecstatic, then act as if we'll build it." Ms. Neve said the company couldn't locate the document, but that it does not reflect "the practices or policies of Bolt." Bolt's business tactics raised questions from at least one big potential investor. As part of its due diligence, Tiger Global, a fund known for investing in hundreds of young start-ups, had talked to clients that Bolt said it had signed on. Based on those conversations, Tiger executives weren't so sure those merchants would use Bolt beyond a trial, according to two people involved in the conversations. To Tiger, Bolt's revenue projections seemed overly bullish and exaggerated, the people said. Tiger passed.
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