Bolt Financial Inc. has been rankling more than just Silicon Valley. The ire extends to its most important client.
Authentic Brands Group is suing Bolt Financial Inc., an $11 billion payment technology start-up, over alleged “failures” to adequately deliver a new online checkout and customer loyalty solution. ABG attorneys argued that the bungled effort resulted in one brand missing out on more than $150 million in online sales.
Documents filed in the Southern District of New York go back to January of this year, but the complaint, which was unsealed in February and amended in March, came to light on Tuesday, when Bloomberg spotted the unreported legal tussle. According to WWD’s review of court documents, the case centers on agreements struck in October 2020 to deploy AllPass across brands under licensee SPARC, a joint effort between ABG and mall operator Simon Property Group — specifically Aéropostale, Brooks Brothers, Eddie Bauer, Forever 21, Lucky Brand and Nautica.
ABG contended that, despite boasting of its advanced capabilities, “Bolt has utterly failed to deliver” on the tech, which was supposed to include “the ability to seamlessly integrate Bolt’s products into brand partners’ websites and the ability to deliver a viable AllPass product on a commercially reasonable time line” of at least Jan. 15, 2021.
That didn’t happen, and what did deploy apparently looked like a mess, the company argued.
The checkout solution alone, which was supposed to be the first step in this new online system, rolled out across just three brands, and it was plagued with problems, the filing continued. Brooks Brothers saw issues with user authentication, single sign on, and buy now, pay later integrations, so it abandoned the solution, leaving Lucky Brand and Forever 21. For the latter alone, the “botched” execution stymied the brand’s e-commerce business, costing Forever 21 more than $150 million in missed e-commerce sales “during the period of Bolt integration,” according to ABG. After witnessing that, SPARC backed off from deploying AllPass across the other brands.
Glitches or poorly thought-out tech features can be devastating for all forms of retail, but shoring up e-commerce systems in particular may be crucial for Gen Z favorites like Forever 21, especially as they look to evolve in the virtual world. The business partnered with Tokens.com to create a metaverse storefront for Decentraland’s fashion week last month, where numerous brands gave away or sold digital fashion, as well as tokenized goods aimed at promoting real-world products and online stores.
In the beginning, the arrangement was supposed to be a win for all sides, as a partnership with ABG and its brands would give the start-up more stature, and as its profile grows, the deal would allow the fashion company to pick up a 5 percent stake in a business recently valued at $11 billion.
Of course, Bolt has rejected this characterization, describing ABG’s claims as a meritless and “transparent attempt” to renegotiate the terms of their agreement. It has a motion to dismiss pending, but despite objections, the case proceeds to discovery and will go to court by October.
Ultimately, ABG believes that Bolt showed false bravado about capabilities that it allegedly couldn’t back up. Some watchers may find the accusation all too easy to believe.
In Silicon Valley, Bolt Financial may be best known for its outspoken 27-year-old cofounder Ryan Breslow. In January, Breslow called out the industry for being a “boys club” — to be fair, he’s not the only one — but in rather extreme and public terms. In a tweet storm, he equated companies like Stripe and Y Combinator to “mob bosses” that use “every power move imaginable” to stifle competition.
He resigned shortly after as chief executive officer, becoming chairman of the company instead. He said the move was unrelated.