The inside story of how Silicon Valley's hottest AI coding startup almost died

StackBlitz cofounders Albert Pai (left) and Eric Simons (right) moving out of a hacker house they ran in Palo AltoEric SimonsIn 2017, Eric Simons founded StackBlitz with his childhood friend Albert Pai. Six years later, it was the startup equivalent of the walking dead.StackBlitz raised funding to build software development tools, including WebContainers technology that let engineers create and manage projects in a browser, rather than on their laptops.The business didn't really take off, and by late 2023, things came to a head. StackBlitz wasn't generating much revenue. Growth was lackluster. At a board meeting that December, an ultimatum was issued: Show real progress, or you're toast.Simons and Pai pitched a plan to grow by ramping up sales efforts for existing products, while building new offerings that could be bigger. "We also acknowledged that it might be time to explore acquisition scenarios ahead of potential failure," Simons recalled.Then, one board member, Thomas Krane, got real: By the end of 2024, everyone needed finality on StackBlitz's fate.Thomas Krane, managing director at Insight PartnersInsight Partners"I think I was saying what a lot of others were thinking in the room," Krane told Business Insider."No one was happy with the trajectory," venture capitalist and StackBlitz board director Sarah Guo remembers. "We needed a new plan."When the meeting ended, Simons walked out of his "shed-turned-home office" into his backyard on a cloudy, windy Bay Area day to try to process the news."It was a tough pill to swallow, but we agreed," he said.As 2024 began, it looked like StackBlitz was about to become one of the thousands of startups that fizzle into the abyss of venture capital history every year.Not so fast. In Silicon Valley, fortunes can turn on dime as new inventions spread like wildfire, incinerating legacy technology and feeding unlikely growth from the embers. And this is what happened to StackBlitz.Noodling with OpenAI modelsCofounders Albert Pai (left) and Eric Simons (right) working on working on early prototypes of StackBlitzEric SimonsIn early 2024, Simons, Pai, and their co-workers probably should have been meeting more with the investment bankers Krane had introduced them to — an attempt to ring what value remained from the struggling startup.Instead, like Silicon Valley founders often do, they were noodling with new technology, seeing how OpenAI models performed on coding tasks."The code output from their models would break, and the web apps created were buggy and unreliable," Simons said. "We thought it would be years before this improved. So we dropped that side project after about two weeks."A Bolt from the blueStackBlitz founders Eric Simons (left) and Albert Pai (right) at Eric's wedding. (Albert was groomsman).Courtney Yee/Photoflood StudioThen, in June 2024, OpenAI rival Anthropic launched its Sonnet 3.5 AI model. This was a lot better at coding, and it became the technical foundation for an explosion in AI coding startups, such as Cursor and Lovable, and an important driver of what's now known as vibe coding.That summer, StackBlitz started working on a new product that relied on Anthropic's breakthrough to bring coding to non-technical users.On Oct. 3, StackBlitz launched this new service. It was called Bolt.new, a play on the startup's lightning-bolt logo. It took roughly 10 employees three months to create.Bolt used StackBlitz's technological base — that WebContainers underpinning that allows engineers to work in a browser — and added a simple box on top with a flashing cursor and a question, "What do you want to build?"A cocktail menu at StackBlitz's "hackathon" event in San FranciscoAlistair Barr/Business InsiderThe service offered a tantalizingly simple proposition: Type what you want to create in plain English and Bolt's software would tap into Anthropic's Sonnet model in the background and write the code needed to create a website or a mobile app. And not just simple sites to share your wedding photos. Full applications that let users take valuable actions including logging in, subscribing, and buying things.Before this, digital products like these required professional software engineers and developers to build them using complex coding languages and tricky tools that were way beyond the capabilities of non-technical people.Simons emailed StackBlitz investors to tell them about Bolt, and asked for their help."If you can RT/share on X, and/or share with 3 developers you know, myself and the team would be extremely appreciative!" he wrote, according to a copy of that email obtained by BI. Crying in a "shed office"StackBlitz CEO Eric Simons talks during the startup's "hackathon" event in San FranciscoAlistair Barr/Business InsiderThe first week that Bolt.new came out, it generated about $1 million of annual recurring revenue, or ARR, a common way cloud software services from startups are measured financially. The next week, it added another $1 million in ARR, and then another, according to Simons.StackBlitz wasn't, in fact, going to shut down. Instead, it had a hit on its hands."I had slept three hours a night for a week straight to get the release out with our team," Simons told BI. "After seeing it live, and people loving it — beyond anything I had ever created before — I cried, alone at my desk in my backyard shed office."A very different investor updateAlbert Pai (left) and Eric Simons (right) a week before they launched StackBlitz.Eric SimonsOn the first day of November, Simons wrote a very different email to his investors. The subject line read, StackBlitz October Update: $0 to $4m ARR in 30 days.The number of active Bolt customers surged from about 600 to more than 14,000 in the first few weeks, according to a copy of the email obtained by BI. A chart showing early usage trends for Bolt.newEric Simons/StackBlitzARR soared from roughly $80,000 to more than $4 million in the same period. A chart showing early revenue traction for Bolt.newEric Simons/StackBlitz"You can imagine after years of grinding on our amazing core technology, endlessly searching for a valuable business use case of it, just striking out over and over again, how I and the team feel looking at this graph," Simons wrote. "If you had to put it into a word or two, it'd be something like 'HELL. YES.'"When talented technologists are pushed to search harder for new ways to monetize their inventions, on a tight deadline, sometimes magic happens, according to Krane from Insight Partners. "That life-or-death pressure led to a series of rapid pivots that ultimately led to this incredible outcome," he told BI. "This company broke every model in terms of growth rate."A new pricing modelThere was so much customer demand for Bolt that StackBlitz raised prices after about a week. The main subscription plan went from $9 a month to $20 a month.The startup also added new pricing tiers that cost $50, $100, and $200 a month. A few weeks after this change, almost half of Bolt's paying users were on more expensive plans.An early breakdown of Bolt.new revenue and pricing tiersEric Simons/StackBlitzSimons said StackBlitz may have stumbled upon a new pricing model for AI code-generation services. (Turns out, he did).Every time a Bolt user typed in a request, this was transformed into "tokens," which AI models use to break letters, numbers, and other characters into digestible chunks. Each token costs a certain amount to process.Bolt users were sending in so many requests they were blowing through their token limits. So StackBlitz introduced tiered pricing so customers could pay extra to get more tokens."Customers are willing to pay a lot of money for heavier usage of AI inference," Simons told his investors.One customer was quoted $5,000 and a 2-3 month timeframe by a Ukrainian contractor to develop an app. Instead, she bought Bolt's $50 a month plan, and built the app herself in less than two weeks."1/100th of the cost, and 5-10x faster timeline," Simons wrote.A carrot or a stick?Albert Pai (left) and Eric Simons (right) launching a feature for their startup StackBlitz at midnightEric SimonsSimons also couldn't resist an invitation to stay on the rocket ship, dropping a classic Silicon Valley funding-raise carrot. Or was it stick?"We've also received substantial inbound interest from VCs and from strategic acquirers," the CEO wrote in the Nov. 1 email to investors. "So we're starting to explore how best to play our hand(s) in the coming weeks/months here." (Earlier this year, reports emerged of a new funding round valuing StackBlitz at roughly $700 million).With StackBlitz's demise averted, Simons realigned resources to focus on Bolt. The startup hired more staff and added Supabase, a database service that stores transaction data, user registrations, and other crucial information.It also added Stripe technology so Bolt users can easily accept card and digital payments. StackBlitz also spent heavily to educate customers on how to use Bolt better, running weekly live YouTube video sessions.Waiting for AnthropicAnthropic executives, from left to right: Daniela Amodei, Dario Amodei, Jack Clark, and Jared Kaplan.AnthropicBolt was off the races. But there was still one big hurdle involving Anthropic.Back in the spring of 2024, an Anthropic cofounder filled out a "Contact Us" form on StackBlitz's webcontainers.io site. The form asked anyone who wanted to license the WebContainers technology to fill out some basic details."After we saw that form, we called to chat. He said Anthropic was working on a project and this could help," Simons recalled, without identifying the cofounder. For the first year, StackBlitz proposed a license for Anthropic with uncapped usage for about $300,000."With hindsight, we made them a smokin' deal," Simons said. "We were desperate at that point." Other big customers might follow Anthropic's lead and sign license deals, too, the thinking went. By October, though, when Bolt had taken off using the same web-based StackBlitz technology, a $300,000 uncapped license suddenly looked like a very bad deal for Simons's startup.StackBlitz founders and staff hanging with The ChainsmokersStackBlitzBut there was a catch: Anthropic had to sign the contract by the end of October, otherwise the deal would expire. Simons and his StackBlitz co-workers watched the clock like hawks."We were like, god, please don't sign it," Simons told BI. The deadline finally passed. Anthropic never signed.Simons doesn't know exactly why the AI lab didn't put pen to paper. However, he noted that Anthropic has "a lot of things going on.""They were like, 'we might come back to this in the future maybe,'" Simons said. "We have a great relationship with Anthropic. They are doing an incredible amount of revenue now, and so are we." Whatever the reason, StackBlitz was now free to pursue its Bolt growth strategy.A podcast appearanceVenture capitalist Sarah GuoFortune/ReutersBy December 6, Simons appeared on No Priors, a popular AI podcast hosted by Guo and another top AI startup investor, Elad Gil. (Guo is an early backer of StackBlitz).The CEO shared that Bolt was generating $20 million in ARR, just a few months after it launched. By the middle of March 2025, Bolt's ARR had jumped to $40 million. In a recent interview with BI, Simons wouldn't share more revenue details. However, he said StackBlitz planned to announce a new ARR number when Bolt passes triple-digit ARR, meaning more than $100 million. The service has 5 million registered users now, and Simons said StackBlitz is profitable, growing, and healthy. There's even a new name for the millions of non-technical users who craft digital offerings through Bolt.Simons calls them "software composers."A hackathon meetingThe Chainsmokers perform on stage at StackBlitz's "Hackathon" event in San Francisco.Alistair Barr/Business InsiderHe explained this to me at a "hackathon" event StackBlitz held on May 7 in San Francisco. Hundreds of "composers," along with other customers, partners, and investors, partied late into the evening, with The Chainsmokers DJ-ing. (The duo are StackBlitz investors).Simons held court, schmoozed and chatted, with a wide grin and seemingly endless energy.Through the din, I asked him if he was concerned about rival AI coding services nipping at his heels. After all, it had been about seven months since Bolt launched — a lifetime in Silicon Valley AI circles.Simons seemed unperturbed. He said the years of hard work that StackBlitz spent developing its WebContainers technology gives Bolt an edge that most rivals don't have.This allows Bolt-based applications to be built and run applications using the chips on customers' devices, such as laptops. Other AI coding providers must tap a cloud service each time a user spins up a project, which can get very expensive and technical, according to Simons."People assume we're a startup that just launched yesterday," he said. "But we're an overnight success, seven years in the making."A party duel with FigmaEvan Wallace and Dylan Field are the cofounders of Figma.FigmaThe competition doesn't wait long to respond in Silicon Valley, though.A few San Francisco blocks away, on the same day as Bolt's hackathon party, graphic design giant Figma announced a competing product at its annual Config conference. Figma Make is a new tool that helps developers create web apps using conversational prompts, rather than specialized software code.Sound familiar?"We believe there are multiple huge companies to be built here, and that the market for engineering is bigger because of AI," Guo said.Simons noted that this new Figma service doesn't use the same WebContainers technology that supports Bolt. "We wrote an operating system from scratch that runs in your browser. It's completely different from what Figma has," he argued.Still, I could tell Figma had made an impact."What are the odds that we were throwing a giant party on the same day as their launch across the road? I'll leave that to your writer's imagination," Simons told me, with a giggle.Read the original article on Business Insider

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