14 ms·

Bolt Financial's loans come due

219 points by lxm 4y ago

SoftTalker 4y ago
Is it time to spin up http://fuckedcompany.com/ http://fuckedcompany.com/ again?
- Gunnerhead 4y ago
  No familiar with this. What was it about?
  - mgbmtl 4y ago
    https://en.m.wikipedia.org/wiki/Fucked_Company https://en.m.wikipedia.org/wiki/Fucked_Company "a "dot-com dead pool" that chronicled troubled and failing companies in a unique and abrasive manner" It was a nice counter-weigh to corporate PR-speak.
    - xeromal 4y ago
      These guys don't actually post new content, but this reminds me of https://ourincrediblejourney.tumblr.com/ https://ourincrediblejourney.tumblr.com/
  - randomhodler84 4y ago
    Startup Dead Pool. Fantasy football except betting when the company will fail.
- curuinor 4y ago
  daily wtf, which is stiiiill going, was also materially part of that sorta thing, but they were successfully paranoid enough not to get lawsuit threats until it wasn't worth it anymore like fuckedcompany was. so sidling into the thing worked the last turbomega tech crash
- a4isms 4y ago
  Related: "Our Incredible Journey," which focuses on acquisitions that involve shutting the acquired company's products down and leaving their customers high and dry: https://ourincrediblejourney.tumblr.com https://ourincrediblejourney.tumblr.com
- buggeryorkshire 4y ago
  Ah I miss that, Pud was hilarious
dang 4y ago
Recent and related: Bolt announces layoffs - https://news.ycombinator.com/item?id=31507599 https://news.ycombinator.com/item?id=31507599 - May 2022 (512 comments)
smol_pkg 4y ago
I remember interviewing with them about 2-3 years ago. Everyone seemed very enthused, but no one was able to clearly articulate for me what it was that made their product/offerings different. Glad I dodged that bullet
- deleted 4y ago
  [deleted]
- nr2x 4y ago
  ceo gives off Jim Jones vibes.
  - bogomipz 4y ago
    Indeed. Someone linked this Forbes profile of him in a post yesterday: https://www.forbes.com/sites/stevenbertoni/2022/04/04/meet-the-gen-z-billionaire-whos-speaking-his-truth-to-silicon-valley/?sh=1831c67a6c06 https://www.forbes.com/sites/stevenbertoni/2022/04/04/meet-t...
    - rychco 4y ago
      This looks like a parody straight out of the show Silicon Valley.
    - Doctor_Fegg 4y ago
      Wow. This is priceless. A longform recap of the infamous Dave Morin interview. > After sunset, he avoids electric lights and screens because they disrupt his sleep. Instead, he lights candles and plays a buffalo-skin drum (he made it himself with the help of a local indigenous tribe) to wind down before bed.
      - FireBeyond 4y ago
        Hah, yes. Every so often I still read this for a laugh: https://jesuschristsiliconvalley-blog.tumblr.com/post/46539276780/a-cunt-and-his-iphone https://jesuschristsiliconvalley-blog.tumblr.com/post/465392... But yeah, oh boy, this guy took Dave Morin and said "Him. He's my role model."
bombcar 4y ago
> A Bolt spokesperson says that only a "single digit" number of laid-off employees took out the loans, despite more than 200 people losing their jobs, and that the aggregate amount was below $200,000. Moreover, she says the company plans to "work with" those individuals. If the amount was less than $200k, which is about the salary for a single employee these days, Bolt should just have annulled them entirely. The PR alone would be worth more than the $200k.
- bhouston 4y ago
  I am not sure that is fair -- what if someone decided to buy out their vested shares with their own money? They would be screwed while those who borrowed from Bolt wouldn't be. It is just generally problematic.
  - onlyrealcuzzo 4y ago
    I am willing to bet no one did this.
    - gumby 4y ago
      Procedurally: It's been fairly common at early stages of startups I've run but the amounts have always been so small (few thousand $) that it's not really commensurate. I also always put early exercise in the SOP (you can exercise immediately to start the LTCG period, and vesting just works in reverse: company can buy the shares back, and a fraction of that right lapses every month). This is part of the potential upside of working for an early stage startup. I agree when it's 10s of thousands or more the optionality isn't worth it for almost anyone. And it's hard to imagine borrowing to exercise could ever be worth it. I've never encouraged or discouraged any employee from making an exercise decision (I don't want to get the liability of giving tax or investment advice). I don't even encourage them to file 83(b) except that when I explain why it's a pain for the company if they don't do so, everyone has figured it out immediately :-).
    - fragmede 4y ago
      Why not? Greed is universal and it's a chance to buy in for pennies on the dollar. We don't know their strike price or 409a or any of the other relevant details.
hestefisk 4y ago
So the firm borrowed money to employees?
- madamelic 4y ago
  My understanding is that Bolt lined up loans for employees to cover employees' tax burdens due to exercising their options. In simpler words: Bolt helped employees take out personally guaranteed loans to give Bolt money. In the loan terms, if the employee leaves for any reason, the employee owes Bolt the entire loan amount within 90 days of end of employment.
  - hoofhearted 4y ago
    Doesn’t all this smell ENRON’ish?
    - gruez 4y ago
      In what sense? Searching Enron's Wikipedia article I couldn't find any references to employees getting loans to buy stock. The only way they're similar is "dubious company crashes and burns, employee's equity turn worthless", but even then the similarity is limited because Enron was a case of fraud and bolt isn't (at least to my knowledge).
      - fnordpiglet 4y ago
        Enron, Lehman, and similar had serious pressure to buy company stocks including making it the default for a 401k contribution. But afaik there was no equity financing by the company. That said the culture was so heavy all in corporate stock many, many employees lost everything. Never hold company stock. If you work there you’re already incredibly long. Diversify.
      - solatic 4y ago
        A rather large number of Enron deals (where Enron purchased an asset) were denominated in Enron stock rather than in cash. Enron executives were compensated in stock, with additional bonuses based on the stock value. Everyone was happy until the stock started to dive, then many of the underlying deals that were denominated in stock reverted to cash because the stock price dropped too low, etc. It's Enron-ish because it's a deal that creates additional demand for the stock, then when the price of the stock rises, it's used as proof that doing deals with company stock is profitable to all parties, which makes it more enticing in the future. When the stock falls (always unthinkable), the rank and file are holding the bag.
sydthrowaway 4y ago
I don't get the value of this company. How can fellow SWEs who learnt about kernels, networks and hardware (among other incredibly complicated works) get excited about ONE CLICK CHECKOUT? Maybe this is the JS boot camp effect.
- automatic6131 4y ago
  I was just about to make this point. How does "one click checkout" become worth $11B? (massive) Capital misallocation, i'd imagine
  - jakelazaroff 4y ago
    According to a comment on another thread [1], their annual revenue is $40M. That's a valuation of 275x revenue. And they were seeking to raise another $400M at a $14B valuation [2] — 350x annual revenue! Truly mind boggling. [1] https://news.ycombinator.com/item?id=31510453 https://news.ycombinator.com/item?id=31510453 [2] https://www.theinformation.com/articles/bolt-seeks-valuation-lift-to-14-billion-weeks-after-raising-last-round https://www.theinformation.com/articles/bolt-seeks-valuation...
    - seibelj 4y ago
      I also wonder if that revenue is just the payments they process. If so then true revenue is probably ~2.5% of that.
      - jakelazaroff 4y ago
        As shady as this company is, I would honestly be shocked if they counted the full value of the payment processed as revenue.
        deleted 4y ago
        [deleted]
  - dghlsakjg 4y ago
bastawhiz 4y ago
Maybe someone can clarify this for me, because I'm not sure I understand how this is possible: when the loans were announced, it was said that ~half of employees took the loan. But here, when 200 people were laid off, only a "single digit" number of employees that were let go had these loans. Even if that number is 9, that's like 4.5% of the laid off employees. How is that possible, except by Bolt explicitly not laying off employees with loans? I don't know if such a thing is illegal, but "you are indebted to us so we'll give you preferential treatment" doesn't feel _not_ illegal.
- czbond 4y ago
  You need more facts - the loans may not be an even distribution across 50%; I expect loan support was skewed towards the upper part of the pyramid Example - some staff may not have had loans/shares (eg; customer support, etc) and the loans may be for senior and up roles who have enough shares to worry about the high taxes on shares.
  - kaesar14 4y ago
    I don’t understand though, the layoffs affected a third of the company and eng was involved, how could 33% of the workforce be laid off with over half taking loans lead to single digit people in this situation? Numbers don’t add up imo.
    - in_cahoots 4y ago
      If the company was growing rapidly, then maybe 33% of the workforce hadn’t vested yet?
      - berberous 4y ago
        Yeah, if they laid off new folks who started less than a year ago, none of those people would have vested. And in a rapidly growing company, the new hires can be a big portion of the company.
xwdv 4y ago
Imagine if getting fired and immediately owing a vast sum of money to your employer became a common practice at most companies. Might lead the way to higher levels of employee retention and may be seen as some kind of solution to people not doing their jobs or doing the bare minimum just for a paycheck, especially in undesirable but necessary jobs.
- FollowingTheDao 4y ago
  What you are describing is indentured servitude. And might I add that it is scary you even think this is close to a good idea.
  - xwdv 4y ago
    I’m merely analyzing ideas. You’d probably turn blanch if you attended some of the product development meetings that happen behind closed doors at my employer.
- fundad 4y ago
  Imagine getting paid back by someone you just terminated. It's fantasy, fuck these guys. Seriously pay nothing back until you speak to a lawyer. Bolt will be out of business by the time the loans go into collection, then offer to settle for $1.
- fnordpiglet 4y ago
  Sounds like precisely the opposite world I want to live in.
- floren 4y ago
  It's disgusting as hell so yes, I wouldn't be surprised to see it in the next few years. Maybe when you start your new job, you have to pay them a $10k deposit, which will "vest" back to you over the next four years; quit early and it's gone!
  - umeshunni 4y ago
    This is/was actually a common practice in IT companies in India, where you have to a pay back a 'bond' if you leave within a year or something.
greatpostman 4y ago
What people don’t know is the CEO Ryan Breslinlow founded the company that constructed the loans. He played both sides.
- fundad 4y ago
  Do they think they can get people to pay money back after terminating their employment?
  - jrochkind1 4y ago
    "get" them to? I mean, by taking them to court and getting a court order for a bank levy or wage garnishment if needed, why not? If it's a legal debt, it's not really optional.
    - fundad 4y ago
      Bolt’s investor’s legal team has entered the chat.
- icelancer 4y ago
  People know this, it's being posted all over the Internet. However, while I think Bolt is a ridiculous company - and borderline scammy, check my comment history for my personal dealings with them - I really doubt that Ryan was in a position to seriously profit from these cashless loans. I would guess Ryan set it up this way in compliance with IRS regulations and on advice of his internal attorneys and financial experts.
- s_dev 4y ago
  He's a founder -- NOT the CEO who is Maju Kuruvilla. Ryan might be CFO though so an executive.
  - ldjkfkdsjnv 4y ago
    He was the CEO for the majority of the time the company has been around
tempsy 4y ago
This is why you should early exercise and file an 83B election whenever possible. Personally would avoid working at any startup that is in the awkward middle stage and would require you to shell out six figures just to exercise some questionable options especially now. Either join a very small company in the early stages where the valuation is still low or join a late stage or public company where you vest RSUs and don’t have to deal with options at all.
- gkoberger 4y ago
  Sure, but this isn't realistic. Like you said, most people can't afford to exercise early. Even at a small company, most people don't have an extra $10k to gamble on a startup that may go nowhere. This is what Bolt was trying to solve. They did it the wrong way and hurt a lot of people, but they were trying to give people the opportunity to exercise early. The correct answer is a 10-year extended window. It's not perfect, and there are downsides. But it's (currently) the fairest way to issue stock options to employees. By the time it comes time to exercise, the employee will be significantly de-risked because they'll know how the company is doing.
  - tempsy 4y ago
    Define “most people”. $10k maybe a lot for a new grad but isn’t if you’ve worked even just a few years, especially in a high paying role in tech elsewhere.
    - gkoberger 4y ago
      If you're working at a small tech startup, you're likely not making a huge salary. Good, sure, but not huge. It's possible you left your high-paying FAANG job to be developer #3 at a tiny little startup, but in my experience this almost never happens. Also, $10k is a lot of money. Even if you have it in savings (and I'd agree a lot of tech people technically do), it's a huge gamble on an unknown startup. You're already gambling your time; now you're supposed to also gamble your money?
      - 4y ago
csours 4y ago
My understanding is that stock grants to employees are no longer tax advantaged and that's one reason they went away. I don't have a deep understanding here, so if someone has a link to when this changed, I'd appreciate it. Was this mechanism intended to get around this tax problem and at the same time help out the company?
subsubzero 4y ago
Boy do I hate how ISO options are treated by the IRS for startup employees. It puts an insane amount of risk on the employee in both coming up with the cash to exercise(bolt offered loans for this part) and then the worst part, being taxed on unrealized gains. The latter to me seems completely against how the rest of the tax code when it comes to stock based assets. And it leaves employees who are not well informed on these tax details in a possible state of financial ruin should you have a stock valuation jump, then exercise; then stock price goes down, hello bankruptcy!. Its the prime reason I would never work for any startup again that offers ISOs.
- bpodgursky 4y ago
  - If you join as an early employee, your strike price is minimal and this isn't a concern at all - If you want to minimize risk in return for higher taxes (call ~40%), just hold your ISOs and exercise-and-sell as a same-day sale when you're liquid (ie forgo the tax advantages of ISOs). There's absolutely no way for you to get screwed over if you're willing to take the gain as standard income.
  - strikelaserclaw 4y ago
    except in cases where you are let go or decide to leave.
    - JumpCrisscross 4y ago
      > except in cases where you are let go or decide to leave The IRS is only involved at the time of exercise [1][2]. Companies are the ones making ISOs expire, versus convert to NSOs, three months following termination of employment. [1] https://thestartuplawblog.com/incentive-stock-options-post-termination-service-exercise-periods/ https://thestartuplawblog.com/incentive-stock-options-post-t... [2] https://www.cooleygo.com/isos-v-nsos-whats-the-difference/ https://www.cooleygo.com/isos-v-nsos-whats-the-difference/
  - paisawalla 4y ago
    But if you actually want to have and hold equity in a company you helped build, and want the most favorable tax treatment, you have to 1. accept compensation in ISOs, likely taking a salary hit 2. exercise, and pay AMT in the exercise year on the spread 3. hold until you can sell, but at least for 12+ months so you qualify for LTCG treatment So you get hit with a lower cash comp in (1) which is an opportunity cost. Then you have to pay taxes in (2) maybe well before the stock is ever liquid in any way. Then you still have to wait for liquidity (3). Plus normally the company does not tell you, an ordinary employee, when its beginning fundraising. If it did, you could at least time your exercise so as to minimize spread. Conversely if I want to take a bet on a public company which I have no relationship to, I just buy and hold. Why is it easier to get favorable treatment for a company I have nothing to do with, versus one that I helped build?
w0de0 4y ago
This isn’t a competent news article. I’m not commenting on Bolt Financial’s unethical choices, but simply on the poor, slightly insulting Axios style and format. Particularly egregious is the line which begins “Yes, it's welcome news…” You are ostensibly the news, Axios - why are you telling me how to feel about yourself? Axios repeats this pattern frequently - their signature bulleted snippets of supposed fact often being little more than tweets. Also they carry obsequiously friendly reporting on Amazon frequently.
Allower 4y ago
tomatowurst 4y ago
This type of gross negligence and incompetence from Ryan really makes me doubt his twitter claims about YC, Sequoia and NYT. It's starting to make sense that he did to shift the blame and deflect. Having said that I don't think this is going to play out well for him. It was a huge mistake to get half of your staff to take on personal debt for stock options that mount to nothing.
- ldjkfkdsjnv 4y ago
  Yeah the picture is getting clearer. When he made those posts, bolt was failing and he knew it. Those were frustrations coming out. He got pushed out and then not long after the layoffs begin.
lumost 4y ago
The tax benefits of options over RSUs are vastly overstated relative to the risks. At the end of the day, you're going to save ~15% on the total exercise through options compared to RSUs. That's 15% of what for many people may be a 5-10 year investment horizon. The risk you take on as an employee with those options is much greater than 15%. If you have used loans to purchase the options, you have a substantial risk of being underwater. It's time we callout options for what they are, a way for companies to protect their equity pool while being able to sell a story that the options are going to shoot through the moon.
- renewiltord 4y ago
  So you grant stock and that’s taxed at grant or you grant RSUs that convert at vest and are taxed at vest. But the stock is not liquid. How are you going to pay the tax. At least, with options you can just choose to sit on them. One of my friends walked away from an options grant and I exercised only when I wanted to. No tax implication till exercise. That’s a big advantage. Early exercise is a big play. You do it if you’re super early and super confident. You don’t have to. Pretty traditional if you’re early enough since it’s cheap.
  - lumost 4y ago
    RSUs are only taxed when the company is liquid, not when they are vested (which is one and the same post IPO). So the tax free options are really just locking in long term cap gains. Of course the con is that it’s not actual compensation as the stroke will be equal to the present valuation.
    - mech4bg 4y ago
      That’s not true. It depends on the RSU structure. We’ve had both types at my company. Also FWIW the company can withhold some shares as they vest but max 22% for federal.
    - sb8244 4y ago
      The info I've seen for RSU indicates tax on vest, even if the stock is not liquid (private company). Is it really true that tax is only if the asset is liquid? Does the IRS make a distinction between liquid and illiquid here?
deleted 4y ago
[deleted]
ilamont 4y ago
Bolt Financial yesterday laid off one-third of its workforce, just months after raising $355 million in VC funding at nearly an $11 billion valuation. Serious question: Does this company have a future? Does it have any value, either as a profit-generating venture or sold to an acquiring company?
rwhitman 4y ago
I feel like this saga is going to conclude with a Hulu/Netflix/HBO documentary where they end the series with an interview of Ryan Breslow in his jail cell.
anonymouse_001 4y ago
Regular user posting anonymously. But I thought I'd give an example of how what Bolt did made sense in some rare cases, and is also extremely dangerous in almost all cases I worked for 4 years as a Staff Engineer for a company that went public beyond my wildest dreams. I have worked for startups over 20 years and this was the first time it paid off for me. I had a mix of RSUs and ISOs. The value of those when the company went public (shortly before I became fully vested) was over 2.5 million. All in all, I made about 3 million dollars (I stayed an additional 6 month and left once I hit 4 years). Taxes ate a huge portion (left with 1.8 Million after taxes). Had I early exercised the ISOs, I would have conceivably paid about 700K less in taxes (if I had early exercised and pain 200K or so in taxes) So something similar to the option that Bolt provided would have given me 500-700K additional. Sounds good, right? However, keep in mind most startups fail, and very few do as well as the one I was in did (I've worked for ~6 companies over the course of my career). The first one struck big, but I didn't sell (I could have made 100K after taxes when I was very young) and then the first dot com crash happened and that was that. And then this one. Let's look at what would have happened had I had an option like Bolt gave employees and the company had not gone public or worse, got laid off. I would have owed over 200K on a loan taken against stock that was now worthless. So the pragmatist in me things that making an extra 750K on the 1/10 chances that the company IPO'ed and did well, vs a 9/10 chance that I would owe 200K. Now, keep in mind I worked with people who were on their 2nd, 3rd successful startup and could afford to pay 200K in taxes on stock that might never pan out. The risk for them was "that sucks!". The risk for me would have been bankruptcy. If you cannot afford to early exercise and take the tax hit if it does not pan out, you definitely, definitely cannot afford to take out a loan to early exercise your stock.

219 points by lxm 4y ago

SoftTalker 4y ago

Is it time to spin up http://fuckedcompany.com/ http://fuckedcompany.com/ again?

Gunnerhead 4y ago
No familiar with this. What was it about?
- mgbmtl 4y ago
  https://en.m.wikipedia.org/wiki/Fucked_Company https://en.m.wikipedia.org/wiki/Fucked_Company "a "dot-com dead pool" that chronicled troubled and failing companies in a unique and abrasive manner" It was a nice counter-weigh to corporate PR-speak.
  - xeromal 4y ago
    These guys don't actually post new content, but this reminds me of https://ourincrediblejourney.tumblr.com/ https://ourincrediblejourney.tumblr.com/
- randomhodler84 4y ago
  Startup Dead Pool. Fantasy football except betting when the company will fail.
curuinor 4y ago
daily wtf, which is stiiiill going, was also materially part of that sorta thing, but they were successfully paranoid enough not to get lawsuit threats until it wasn't worth it anymore like fuckedcompany was. so sidling into the thing worked the last turbomega tech crash
a4isms 4y ago
Related: "Our Incredible Journey," which focuses on acquisitions that involve shutting the acquired company's products down and leaving their customers high and dry: https://ourincrediblejourney.tumblr.com https://ourincrediblejourney.tumblr.com
buggeryorkshire 4y ago
Ah I miss that, Pud was hilarious

dang 4y ago

Recent and related: Bolt announces layoffs - https://news.ycombinator.com/item?id=31507599 https://news.ycombinator.com/item?id=31507599 - May 2022 (512 comments)

smol_pkg 4y ago

I remember interviewing with them about 2-3 years ago. Everyone seemed very enthused, but no one was able to clearly articulate for me what it was that made their product/offerings different. Glad I dodged that bullet

deleted 4y ago
[deleted]
nr2x 4y ago
ceo gives off Jim Jones vibes.
- bogomipz 4y ago
  Indeed. Someone linked this Forbes profile of him in a post yesterday: https://www.forbes.com/sites/stevenbertoni/2022/04/04/meet-the-gen-z-billionaire-whos-speaking-his-truth-to-silicon-valley/?sh=1831c67a6c06 https://www.forbes.com/sites/stevenbertoni/2022/04/04/meet-t...
  - rychco 4y ago
    This looks like a parody straight out of the show Silicon Valley.
  - Doctor_Fegg 4y ago
    Wow. This is priceless. A longform recap of the infamous Dave Morin interview. > After sunset, he avoids electric lights and screens because they disrupt his sleep. Instead, he lights candles and plays a buffalo-skin drum (he made it himself with the help of a local indigenous tribe) to wind down before bed.
    - FireBeyond 4y ago
      Hah, yes. Every so often I still read this for a laugh: https://jesuschristsiliconvalley-blog.tumblr.com/post/46539276780/a-cunt-and-his-iphone https://jesuschristsiliconvalley-blog.tumblr.com/post/465392... But yeah, oh boy, this guy took Dave Morin and said "Him. He's my role model."

bombcar 4y ago

> A Bolt spokesperson says that only a "single digit" number of laid-off employees took out the loans, despite more than 200 people losing their jobs, and that the aggregate amount was below $200,000. Moreover, she says the company plans to "work with" those individuals. If the amount was less than $200k, which is about the salary for a single employee these days, Bolt should just have annulled them entirely. The PR alone would be worth more than the $200k.

bhouston 4y ago
I am not sure that is fair -- what if someone decided to buy out their vested shares with their own money? They would be screwed while those who borrowed from Bolt wouldn't be. It is just generally problematic.
- onlyrealcuzzo 4y ago
  I am willing to bet no one did this.
  - gumby 4y ago
    Procedurally: It's been fairly common at early stages of startups I've run but the amounts have always been so small (few thousand $) that it's not really commensurate. I also always put early exercise in the SOP (you can exercise immediately to start the LTCG period, and vesting just works in reverse: company can buy the shares back, and a fraction of that right lapses every month). This is part of the potential upside of working for an early stage startup. I agree when it's 10s of thousands or more the optionality isn't worth it for almost anyone. And it's hard to imagine borrowing to exercise could ever be worth it. I've never encouraged or discouraged any employee from making an exercise decision (I don't want to get the liability of giving tax or investment advice). I don't even encourage them to file 83(b) except that when I explain why it's a pain for the company if they don't do so, everyone has figured it out immediately :-).
  - fragmede 4y ago
    Why not? Greed is universal and it's a chance to buy in for pennies on the dollar. We don't know their strike price or 409a or any of the other relevant details.

hestefisk 4y ago

So the firm borrowed money to employees?

madamelic 4y ago
My understanding is that Bolt lined up loans for employees to cover employees' tax burdens due to exercising their options. In simpler words: Bolt helped employees take out personally guaranteed loans to give Bolt money. In the loan terms, if the employee leaves for any reason, the employee owes Bolt the entire loan amount within 90 days of end of employment.
- hoofhearted 4y ago
  Doesn’t all this smell ENRON’ish?
  - gruez 4y ago
    In what sense? Searching Enron's Wikipedia article I couldn't find any references to employees getting loans to buy stock. The only way they're similar is "dubious company crashes and burns, employee's equity turn worthless", but even then the similarity is limited because Enron was a case of fraud and bolt isn't (at least to my knowledge).
    - fnordpiglet 4y ago
      Enron, Lehman, and similar had serious pressure to buy company stocks including making it the default for a 401k contribution. But afaik there was no equity financing by the company. That said the culture was so heavy all in corporate stock many, many employees lost everything. Never hold company stock. If you work there you’re already incredibly long. Diversify.
    - solatic 4y ago
      A rather large number of Enron deals (where Enron purchased an asset) were denominated in Enron stock rather than in cash. Enron executives were compensated in stock, with additional bonuses based on the stock value. Everyone was happy until the stock started to dive, then many of the underlying deals that were denominated in stock reverted to cash because the stock price dropped too low, etc. It's Enron-ish because it's a deal that creates additional demand for the stock, then when the price of the stock rises, it's used as proof that doing deals with company stock is profitable to all parties, which makes it more enticing in the future. When the stock falls (always unthinkable), the rank and file are holding the bag.

sydthrowaway 4y ago

I don't get the value of this company. How can fellow SWEs who learnt about kernels, networks and hardware (among other incredibly complicated works) get excited about ONE CLICK CHECKOUT? Maybe this is the JS boot camp effect.

automatic6131 4y ago
I was just about to make this point. How does "one click checkout" become worth $11B? (massive) Capital misallocation, i'd imagine
- jakelazaroff 4y ago
  According to a comment on another thread [1], their annual revenue is $40M. That's a valuation of 275x revenue. And they were seeking to raise another $400M at a $14B valuation [2] — 350x annual revenue! Truly mind boggling. [1] https://news.ycombinator.com/item?id=31510453 https://news.ycombinator.com/item?id=31510453 [2] https://www.theinformation.com/articles/bolt-seeks-valuation-lift-to-14-billion-weeks-after-raising-last-round https://www.theinformation.com/articles/bolt-seeks-valuation...
  - seibelj 4y ago
    I also wonder if that revenue is just the payments they process. If so then true revenue is probably ~2.5% of that.
    - jakelazaroff 4y ago
      As shady as this company is, I would honestly be shocked if they counted the full value of the payment processed as revenue.
      - deleted 4y ago
        [deleted]
- dghlsakjg 4y ago

bastawhiz 4y ago

Maybe someone can clarify this for me, because I'm not sure I understand how this is possible: when the loans were announced, it was said that ~half of employees took the loan. But here, when 200 people were laid off, only a "single digit" number of employees that were let go had these loans. Even if that number is 9, that's like 4.5% of the laid off employees. How is that possible, except by Bolt explicitly not laying off employees with loans? I don't know if such a thing is illegal, but "you are indebted to us so we'll give you preferential treatment" doesn't feel _not_ illegal.

czbond 4y ago
You need more facts - the loans may not be an even distribution across 50%; I expect loan support was skewed towards the upper part of the pyramid Example - some staff may not have had loans/shares (eg; customer support, etc) and the loans may be for senior and up roles who have enough shares to worry about the high taxes on shares.
- kaesar14 4y ago
  I don’t understand though, the layoffs affected a third of the company and eng was involved, how could 33% of the workforce be laid off with over half taking loans lead to single digit people in this situation? Numbers don’t add up imo.
  - in_cahoots 4y ago
    If the company was growing rapidly, then maybe 33% of the workforce hadn’t vested yet?
    - berberous 4y ago
      Yeah, if they laid off new folks who started less than a year ago, none of those people would have vested. And in a rapidly growing company, the new hires can be a big portion of the company.

xwdv 4y ago

Imagine if getting fired and immediately owing a vast sum of money to your employer became a common practice at most companies. Might lead the way to higher levels of employee retention and may be seen as some kind of solution to people not doing their jobs or doing the bare minimum just for a paycheck, especially in undesirable but necessary jobs.

FollowingTheDao 4y ago
What you are describing is indentured servitude. And might I add that it is scary you even think this is close to a good idea.
- xwdv 4y ago
  I’m merely analyzing ideas. You’d probably turn blanch if you attended some of the product development meetings that happen behind closed doors at my employer.
fundad 4y ago
Imagine getting paid back by someone you just terminated. It's fantasy, fuck these guys. Seriously pay nothing back until you speak to a lawyer. Bolt will be out of business by the time the loans go into collection, then offer to settle for $1.
fnordpiglet 4y ago
Sounds like precisely the opposite world I want to live in.
floren 4y ago
It's disgusting as hell so yes, I wouldn't be surprised to see it in the next few years. Maybe when you start your new job, you have to pay them a $10k deposit, which will "vest" back to you over the next four years; quit early and it's gone!
- umeshunni 4y ago
  This is/was actually a common practice in IT companies in India, where you have to a pay back a 'bond' if you leave within a year or something.

greatpostman 4y ago

What people don’t know is the CEO Ryan Breslinlow founded the company that constructed the loans. He played both sides.

fundad 4y ago
Do they think they can get people to pay money back after terminating their employment?
- jrochkind1 4y ago
  "get" them to? I mean, by taking them to court and getting a court order for a bank levy or wage garnishment if needed, why not? If it's a legal debt, it's not really optional.
  - fundad 4y ago
    Bolt’s investor’s legal team has entered the chat.
icelancer 4y ago
People know this, it's being posted all over the Internet. However, while I think Bolt is a ridiculous company - and borderline scammy, check my comment history for my personal dealings with them - I really doubt that Ryan was in a position to seriously profit from these cashless loans. I would guess Ryan set it up this way in compliance with IRS regulations and on advice of his internal attorneys and financial experts.
s_dev 4y ago
He's a founder -- NOT the CEO who is Maju Kuruvilla. Ryan might be CFO though so an executive.
- ldjkfkdsjnv 4y ago
  He was the CEO for the majority of the time the company has been around

tempsy 4y ago

This is why you should early exercise and file an 83B election whenever possible. Personally would avoid working at any startup that is in the awkward middle stage and would require you to shell out six figures just to exercise some questionable options especially now. Either join a very small company in the early stages where the valuation is still low or join a late stage or public company where you vest RSUs and don’t have to deal with options at all.

gkoberger 4y ago
Sure, but this isn't realistic. Like you said, most people can't afford to exercise early. Even at a small company, most people don't have an extra $10k to gamble on a startup that may go nowhere. This is what Bolt was trying to solve. They did it the wrong way and hurt a lot of people, but they were trying to give people the opportunity to exercise early. The correct answer is a 10-year extended window. It's not perfect, and there are downsides. But it's (currently) the fairest way to issue stock options to employees. By the time it comes time to exercise, the employee will be significantly de-risked because they'll know how the company is doing.
- tempsy 4y ago
  Define “most people”. $10k maybe a lot for a new grad but isn’t if you’ve worked even just a few years, especially in a high paying role in tech elsewhere.
  - gkoberger 4y ago
    If you're working at a small tech startup, you're likely not making a huge salary. Good, sure, but not huge. It's possible you left your high-paying FAANG job to be developer #3 at a tiny little startup, but in my experience this almost never happens. Also, $10k is a lot of money. Even if you have it in savings (and I'd agree a lot of tech people technically do), it's a huge gamble on an unknown startup. You're already gambling your time; now you're supposed to also gamble your money?
    - 4y ago

csours 4y ago

My understanding is that stock grants to employees are no longer tax advantaged and that's one reason they went away. I don't have a deep understanding here, so if someone has a link to when this changed, I'd appreciate it. Was this mechanism intended to get around this tax problem and at the same time help out the company?

subsubzero 4y ago

Boy do I hate how ISO options are treated by the IRS for startup employees. It puts an insane amount of risk on the employee in both coming up with the cash to exercise(bolt offered loans for this part) and then the worst part, being taxed on unrealized gains. The latter to me seems completely against how the rest of the tax code when it comes to stock based assets. And it leaves employees who are not well informed on these tax details in a possible state of financial ruin should you have a stock valuation jump, then exercise; then stock price goes down, hello bankruptcy!. Its the prime reason I would never work for any startup again that offers ISOs.

bpodgursky 4y ago
- If you join as an early employee, your strike price is minimal and this isn't a concern at all - If you want to minimize risk in return for higher taxes (call ~40%), just hold your ISOs and exercise-and-sell as a same-day sale when you're liquid (ie forgo the tax advantages of ISOs). There's absolutely no way for you to get screwed over if you're willing to take the gain as standard income.
- strikelaserclaw 4y ago
  except in cases where you are let go or decide to leave.
  - JumpCrisscross 4y ago
    > except in cases where you are let go or decide to leave The IRS is only involved at the time of exercise [1][2]. Companies are the ones making ISOs expire, versus convert to NSOs, three months following termination of employment. [1] https://thestartuplawblog.com/incentive-stock-options-post-termination-service-exercise-periods/ https://thestartuplawblog.com/incentive-stock-options-post-t... [2] https://www.cooleygo.com/isos-v-nsos-whats-the-difference/ https://www.cooleygo.com/isos-v-nsos-whats-the-difference/
- paisawalla 4y ago
  But if you actually want to have and hold equity in a company you helped build, and want the most favorable tax treatment, you have to 1. accept compensation in ISOs, likely taking a salary hit 2. exercise, and pay AMT in the exercise year on the spread 3. hold until you can sell, but at least for 12+ months so you qualify for LTCG treatment So you get hit with a lower cash comp in (1) which is an opportunity cost. Then you have to pay taxes in (2) maybe well before the stock is ever liquid in any way. Then you still have to wait for liquidity (3). Plus normally the company does not tell you, an ordinary employee, when its beginning fundraising. If it did, you could at least time your exercise so as to minimize spread. Conversely if I want to take a bet on a public company which I have no relationship to, I just buy and hold. Why is it easier to get favorable treatment for a company I have nothing to do with, versus one that I helped build?

w0de0 4y ago

This isn’t a competent news article. I’m not commenting on Bolt Financial’s unethical choices, but simply on the poor, slightly insulting Axios style and format. Particularly egregious is the line which begins “Yes, it's welcome news…” You are ostensibly the news, Axios - why are you telling me how to feel about yourself? Axios repeats this pattern frequently - their signature bulleted snippets of supposed fact often being little more than tweets. Also they carry obsequiously friendly reporting on Amazon frequently.

Allower 4y ago

tomatowurst 4y ago

This type of gross negligence and incompetence from Ryan really makes me doubt his twitter claims about YC, Sequoia and NYT. It's starting to make sense that he did to shift the blame and deflect. Having said that I don't think this is going to play out well for him. It was a huge mistake to get half of your staff to take on personal debt for stock options that mount to nothing.

ldjkfkdsjnv 4y ago
Yeah the picture is getting clearer. When he made those posts, bolt was failing and he knew it. Those were frustrations coming out. He got pushed out and then not long after the layoffs begin.

lumost 4y ago

The tax benefits of options over RSUs are vastly overstated relative to the risks. At the end of the day, you're going to save ~15% on the total exercise through options compared to RSUs. That's 15% of what for many people may be a 5-10 year investment horizon. The risk you take on as an employee with those options is much greater than 15%. If you have used loans to purchase the options, you have a substantial risk of being underwater. It's time we callout options for what they are, a way for companies to protect their equity pool while being able to sell a story that the options are going to shoot through the moon.

renewiltord 4y ago
So you grant stock and that’s taxed at grant or you grant RSUs that convert at vest and are taxed at vest. But the stock is not liquid. How are you going to pay the tax. At least, with options you can just choose to sit on them. One of my friends walked away from an options grant and I exercised only when I wanted to. No tax implication till exercise. That’s a big advantage. Early exercise is a big play. You do it if you’re super early and super confident. You don’t have to. Pretty traditional if you’re early enough since it’s cheap.
- lumost 4y ago
  RSUs are only taxed when the company is liquid, not when they are vested (which is one and the same post IPO). So the tax free options are really just locking in long term cap gains. Of course the con is that it’s not actual compensation as the stroke will be equal to the present valuation.
  - mech4bg 4y ago
    That’s not true. It depends on the RSU structure. We’ve had both types at my company. Also FWIW the company can withhold some shares as they vest but max 22% for federal.
  - sb8244 4y ago
    The info I've seen for RSU indicates tax on vest, even if the stock is not liquid (private company). Is it really true that tax is only if the asset is liquid? Does the IRS make a distinction between liquid and illiquid here?

deleted 4y ago

[deleted]

ilamont 4y ago

Bolt Financial yesterday laid off one-third of its workforce, just months after raising $355 million in VC funding at nearly an $11 billion valuation. Serious question: Does this company have a future? Does it have any value, either as a profit-generating venture or sold to an acquiring company?

rwhitman 4y ago

I feel like this saga is going to conclude with a Hulu/Netflix/HBO documentary where they end the series with an interview of Ryan Breslow in his jail cell.

anonymouse_001 4y ago

Regular user posting anonymously. But I thought I'd give an example of how what Bolt did made sense in some rare cases, and is also extremely dangerous in almost all cases I worked for 4 years as a Staff Engineer for a company that went public beyond my wildest dreams. I have worked for startups over 20 years and this was the first time it paid off for me. I had a mix of RSUs and ISOs. The value of those when the company went public (shortly before I became fully vested) was over 2.5 million. All in all, I made about 3 million dollars (I stayed an additional 6 month and left once I hit 4 years). Taxes ate a huge portion (left with 1.8 Million after taxes). Had I early exercised the ISOs, I would have conceivably paid about 700K less in taxes (if I had early exercised and pain 200K or so in taxes) So something similar to the option that Bolt provided would have given me 500-700K additional. Sounds good, right? However, keep in mind most startups fail, and very few do as well as the one I was in did (I've worked for ~6 companies over the course of my career). The first one struck big, but I didn't sell (I could have made 100K after taxes when I was very young) and then the first dot com crash happened and that was that. And then this one. Let's look at what would have happened had I had an option like Bolt gave employees and the company had not gone public or worse, got laid off. I would have owed over 200K on a loan taken against stock that was now worthless. So the pragmatist in me things that making an extra 750K on the 1/10 chances that the company IPO'ed and did well, vs a 9/10 chance that I would owe 200K. Now, keep in mind I worked with people who were on their 2nd, 3rd successful startup and could afford to pay 200K in taxes on stock that might never pan out. The risk for them was "that sucks!". The risk for me would have been bankruptcy. If you cannot afford to early exercise and take the tax hit if it does not pan out, you definitely, definitely cannot afford to take out a loan to early exercise your stock.