(Bloomberg) -- Ryan Breslow has managed to alienate some of the biggest names in Silicon Valley. Y Combinator co-founder Paul Graham tweeted that the 27-year-old entrepreneur was in “mania territory,” investor Garry Tan said he was telling “self-serving lies,” and VC Marc Andreessen mocked him for not working on Fridays.
The blowback came after a series of fiery tweets in which Breslow slammed the popular accelerator Y Combinator, attacked his sometime rival Stripe Inc. and called the Silicon Valley startup industry a “boys club” full of “mob bosses.” It was a remarkable show of bomb throwing for a young co-founder of a startup at a precarious time for tech markets.
In a recent interview over Zoom, Breslow was unapologetic. He gestured to a painting behind him depicting what he said was an aerial view of a hurricane and tapped its center, “That’s where I operate.”
Breslow is the co-founder of Bolt Financial Inc., a startup that facilitates online checkouts and secured an $11 billion valuation from investors in January. Shortly after the tweetstorm, he said he would resign as chief executive officer. Breslow and people close to Bolt insist the move had nothing to do with his online tirade. Indeed, he still maintains tight control over the company, according to two people familiar with the matter. He has a 25% stake that’s worth about $2.75 billion, said the people, who asked not to be identified discussing private information. Bolt declined to comment on his shares.
Now, with unusual speed, the startup is again trying to raise money at an even higher $14 billion valuation, two people said, a deal it is aiming to close in the coming weeks.
In some ways, Breslow is following in Silicon Valley’s long tradition of bucking convention. He also sometimes appears on TikTok shuffle dancing in a tie-dye shirt. But now, he’s publicly battling luminaries in the tech world as well as questions about his leadership and Bolt’s ballooning valuation. The outcome could decide the fate of a 600-person startup in the ferociously competitive market of online payments. It could be the next high-flier like Stripe—or another calamitous tech flameout.
Showmanship has been a key part of plenty of Silicon Valley successes, as well as debacles. During the Zoom interview, Breslow said the hurricane picture hanging behind him was a painting by a Cuban artist. Asked to provide a fuller view of the image, Breslow gamely pulled back his camera to reveal the bigger picture: The painting was a close-up of the face of a dog.
The dark mark that appeared to be a hurricane, the place where Breslow said he operated, was a nostril.
@ryantakesoffPregaming the zoom calls. Song: Pardon my French, Patlok #bboy #toprock #housedance #shuffle #footwork #shuffledance
♬ original sound - Ryan
Bolt is one of several companies trying to simplify the online checkout process. Since 2017, when Amazon’s patent on one-click checkout expired, there’s been a race to bring the feature to the rest of e-commerce. Many merchants see an urgent need for the service: Online carts are abandoned about 70% of the time in transactions that require more than one step for payment.
Breslow, a Miami native, co-founded Bolt in 2014—just two years after he started as a freshman at Stanford University—envisioning a company that would enable payments with digital currency. The focus of the company eventually pivoted to regular shopping. Besides offering speedy checkouts, Bolt’s software lets shoppers purchase items from any page—not just the cart page—and helps businesses collect data. The startup doesn’t charge merchants for using its software but earns money every time a shopper who has already enrolled in Bolt’s system checks out. Bolt’s pitch to businesses is that the startup will only make money when they do.
In Bolt’s early days fundraising was a challenge, as was hiring engineers and trying to get media attention. “It was brutal,” Breslow said. He grimaces while recounting the two times Bolt nearly ran out of money and had to cobble together small checks from a swath of investors. “Sand Hill Road wouldn’t invest in my company,” he said. “I went to all ends of the earth to find capital.”
Eventually, Breslow raised money from prominent New York firms including funds managed by BlackRock Inc., General Atlantic and Dan Och’s Willoughby Capital. He hired Matt Mochary, a CEO coach who has mentored founders including Coinbase Global Inc.’s Brian Armstrong. Breslow self-published two books, Fundraising and Recruiting. And he learned how to draw attention. In September, Bolt debuted a four-day work week, which Breslow said would let each employee work “like a lion, not a cow.” The move attracted a slew of positive stories.
As the company grew, Breslow also began to tweet more, largely about management and startup advice, buying Twitter promotions to boost his profile. In January, Breslow tweeted: “For the last 4 months, I took everything I learned in business and wrote threads. The result: 4k to 104k followers.” Asked about the Twitter ads, Bolt said it pays for distribution on company-related accounts and that “a majority of the growth has been organic.” Now, as Breslow’s profile has risen following his fundraising and incendiary tweets, he has 154,000 followers.
Some close to Breslow say they’ve become uneasy with his increasing focus on self-promotion. One Bolt shareholder called publishing a book titled Fundraising while in the middle of fundraising “brash.” And when Breslow turned his Twitter ire toward Silicon Valley, multiple people in his inner circle privately expressed some surprise at the tone of the tweets, and alarm at the subsequent reaction.
Breslow, for his part, says he was emboldened after raising $355 million and notching an $11 billion valuation to finally air frustrations with traditional tech VCs that had been simmering for years. The money hit Bolt’s account the same week he sent his tweetstorm. “This is the point where we finally felt we didn't need them,” he said. After taking in nearly $1 billion in total funding, he said it was clear “they couldn’t stop us.”
The biggest question mark for Bolt now is its towering valuation relative to the revenue it generates, a closely watched metric that helps investors determine whether a company is overpriced. The startup does not disclose its financial results, but according to two people, last year it took in about $40 million. (Two people familiar with the industry said they believe that even that number seems high, based on their understanding of Bolt’s market share.) With $40 million in sales, that would mean Bolt’s revenue multiple is in the hundreds—a big number even in a frenzied market for startup funding, where valuations often get ahead of real-world traction. For comparison, public market competitor Shopify Inc.’s projected 2021 revenue is $4.57 billion, according to Bloomberg estimates, giving the company a revenue multiple of 24.
Several private venture firms passed on investing in Bolt because of that uncomfortably high valuation and its unproven business, people familiar with the deal talks said, and others were put off by Breslow’s unorthodox style.
At the moment Bolt should have been coming into its own as a Silicon Valley force, the company’s fundraising announcement hit unusual snags. Bolt’s press release in January said that BlackRock Inc. funds had led the round, but in an odd twist, BlackRock hadn’t led the round, forcing Bolt to correct its statement. Over Zoom, Breslow explained that it was an innocent mistake, and an easy one to make since BlackRock had committed the most money. But two people familiar with the deal who asked not to be identified said that BlackRock was not actually the biggest investor in the round. A spokeswoman for Bolt said: “BlackRock is the largest new outside investor. No further comment.”
The idea to resign as CEO came to Breslow while meditating, he said. In an interview with CNBC this week, he said he had had the idea after closing the funding round, though two people familiar with the situation said he had told them he'd been considering it months ago. Regardless, some people involved in the funding round felt “blindsided” by the news, according to another person familiar with the situation.
As Breslow departs the CEO job to take the position of executive chairman, Bolt is adding seasoned leaders in day-to-day roles. The new CEO is Maju Kuruvilla, 44, who served as Bolt’s chief technology officer and chief operating officer after leaving Amazon.com Inc. in 2020. It also added two other executives. Twitter Inc.'s head of human resources, Jennifer Christie, recently joined the company, as did Joanne Bradford, formerly the chief marketing officer and chief operating officer of SoFi Technologies Inc.
Ultimately, Bolt's success will hinge on how many large customers it can sign up. Bolt and its competitors, like PeachPay Inc. and Shopify’s Shop Pay, are trying to create the largest possible group of merchants and shoppers that use their software. “We are all building networks of buyers and sellers,” said David Mainayar, a founder of PeachPay. “Networks are more valuable depending on how many people opt into the market.” It’s a similar strategy to that of the credit card giants: Retailers accept Visa because so many consumers want to use it.
Bolt says it has 300 merchants live on its platform and aims to increase enrolled shoppers from its current 12 million to 112 million by the middle of next year. Right now, though, its roster of customers is dominated by small and regional retailers. One of the few notable exceptions is Forever 21, which is trying to bounce back from bankruptcy.
According to people familiar with the matter, Bolt has talked to large social media companies about using its service. Those people told Bloomberg that the list includes Pinterest Inc., which has already been working with Bolt, and is discussing the details of a continuing relationship. Bolt has also met with representatives for TikTok. Bolt, Pinterest and TikTok declined to comment. In the interview with CNBC this week, Breslow said he has signed “enormous deals” over the last six months.
Convincing more large companies to use Bolt could be difficult because other providers offer more capabilities at this point, said Richard Crone, a payments industry consultant. That leaves Bolt with a narrow path to reaching its potential, he says. According to people familiar with the company, if its conversations with social networks pan out, Bolt could be on track for $160 million in annual recurring revenue a year from now. But the process of fending off the competition could be difficult: “Bolt is completely dependent on beating all other wallet types,” Crone said. “Do they have the components to pull it off?”
No longer CEO, Breslow is settling into his new position of executive chairman, where he says he’ll focus on his “superpowers”: deal-making, and steering the company’s culture and vision. He created Conscious Culture, an organization dedicated to building a humane corporate culture, with Mochary as a founding partner. (Mochary says he’s getting too much credit for the initiative: “That is the kind of guy that Ryan is. He is giving me credit for the work that he has done.”) From Breslow’s home office in Miami, where he moved at the beginning of the pandemic, he says he still makes time to meditate and practice yoga every morning. He also says he dances every day, sometimes in between meetings: “That’s how I feed my soul.”
Breslow says he took a loan out against his Bolt shares to create the dance non-profit The Movement, offering no-fee dance lessons. He credits the San Francisco dance scene for providing an authenticity which he says is nonexistent in Bay Area tech. “I’ve learned more about leadership from the elders in dance than in a lot of tech circles,” Breslow said.
He’s also tried to impart some of his confidence to other founders, telling them they don’t need to curry favor from the Silicon Valley powers that be. “Always remember you are worthy,” he wrote in one of his books. “Money is plentiful these days.”
©2022 Bloomberg L.P.
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