Bolt, the $11 Billion Business Built on Deception

Ryan Breslow, entrepreneur and founder of Bolt Financial, has created something of a legend for himself. At 19, he founded the company, and eight years later, he stands as a wild success story with an estimated net worth of over $2 billion. But, while his success is evident, the way he attained it was often colored with misleading information and subtle deception.

Bolt started as a Bitcoin wallet company in 2014 when it was founded by Breslow and fellow student from Stanford, Eric Feldman. But it soon transitioned to e-commerce payments, where it built software to handle online payments for retailers and offered fraud protection. Later, Bolt also began offering a technology that allowed customers to make a purchase with a single click similar to Amazon’s “Buy Now” button but with the ability to be plugged into merchant websites.

Breslow eventually attracted early backers and tapped into a network of investors, and in 2018, he started publicly pitching the fraud protection services to merchants. In the pitches, he spoke highly about the algorithm used to detect fraud while also mentioning the use of human review for risky cases.

In truth, the fraud detection had far more human involvement than Breslow led merchants to believe. Not only did analysts review many transactions, but they approved and rejected them based on a mix of transaction data and their gut. Moreover, employees received encouragement to approve risky transactions to keep merchants on the platform.

The goal was to keep the merchants around to use for fund-raising. Although the companies didn’t all stick around and eventually turned on Bolt, Bolt’s revenue projects included those companies.

Bolt also signed deals with merchants before ensuring their technology would integrate with Bolt. They even used some of the prospective clients as customers, even though they weren’t using the service.

The dubious practices allegedly continued behind closed doors, where employees were given instructions on how to interact with merchants. The instructions included a lot of deception on what was underway and what Bolt intended to build.

Bolt’s use of exaggeration and unfounded optimism wasn’t only directed at customers. It also found its way to investors, such as Tiger Global, who eventually passed.

But the company did make a few changes in 2019 after wildly successful fund-raising and a hefty $357 million valuation. Bolt began to figure out which clients could actually go live and honed its fraud detection algorithm, leaving the human gut behind.

The company didn’t leave its deceptive practices behind, though. Breslow sometimes overstated Bolt’s numbers, and he went on to use misleading marketing materials to raise funds.

The incident occurred between Bolt and Authentic Brands Group. While Authentic Brands owns over 30 retail brands, only Forever 21 and Lucky used Bolt’s technology. Despite that, Bolt cited the group’s entire revenue in marketing materials. It even cited retail brands of Authentic Brands on its site that didn’t use its service.

In 2021, Authentic Brands sued Bolt for using it to raise money and for problems with Bolt’s technology that cost Forever 21 $150 million in sales and more.

None of that slowed down investors, though, with investments and the company’s valuation continuing to rise. In part, this was due to Breslow telling investors that the company was targeting shoppers as well as merchants.

But recently, investors have started to worry about the company being overvalued and not meeting expectations. Breslow has since stepped down as chief executive, though he remains the executive chairman.

Regardless of what happens to Bolt now, Breslow has made a name for himself. He even wrote a book about fund-raising, where he says, “Fund-raising is purely a matter of momentum.” And perhaps that’s true, seeing as he made it so far with deceptive practices and eager investors.