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A Bolt engineer borrowed $100k to exercise his options, then he got laid off
- ent101 4y agoComing up: The CEO blaming YC, Stripe, Shopify, the VC Mafia, the NYT,... basically anyone and everyone except himself.
- gaze 4y agon people blaming n-1 people
- andsoitis 4y ago> The fintech startup Bolt encouraged employees to take out loans to exercise their stock options. bad idea for a company to give financial advice to their employees. ironic that it is employees at a fintech company who act with such financial recklessness.
- Overtonwindow 4y agoThat’s a shame, when I exercised my options with my employer, they just did a swap and I didn’t have to borrow any cash upfront. Is this situation unique ?
- throwawaymaths 4y ago$100k in options seems like a lot, I guess.
- apatheticonion 4y agoI hate this whole options/RSU strategy companies chain us with. You sit there waiting for a liquidation event or IPO with no guarantees on either. The longer you stay, the harder it is to leave.
- crhulls 4y agoAs a founder who has gone from seed to IPO we have never intentionally employed this strategy for non executive hires. We also allowed liquidity at each funding round. A lot of the reason the system is setup how it is is due to IRS tax rules that make it very hard to give equity at the later stages of a company. If you just give shares then the employees will have a tax bill day one on an illiquid security. Workarounds are complicated, and things like this are the result. I think Bolt’s issues are more due to arrogance than malice.
- kahnclusions 4y agoThis is why, when you’re looking at job offers, cash in the bank now is ALWAYS better than anything else they can offer. And with RSUs, at least they are real stocks in a trading account that you can immediately sell and cash out when they vest. Options on the other hand are the worst. Consider them to be worthless.
- aneil 4y agoI'm a founder. I agree, it's a scam. The constraint I bump up against is that VCs expect standard terms which means that stock options will be granted with tight post-exit expiry schedules. The best we've managed to do is to give people the right to 83b election. The whole structure creates such an adverse situation for employees - forcing people who are usually not in a position to take risk (like this guy) into a risk position and a taxable event. If anyone has good workarounds for seed-Series B level companies, I'd love to hear.
- tempsy 4y agowell the article says his strike price was $1.50 and someone was able to complete a transaction for $28 in March Even if it’s dropped by 50%-$80% since then he almost certainly could sell his vested shares even if it’s a lot lower for above breakeven on a secondary market if he’s desperate for cash.
- crhulls 4y agoAt some point the secondary market value becomes $0 for common shares due to the preference stack, which in Bolt’s case is probably over a billion. So if the market views Bolt at less than a billion common is worth nothing.
- aosmith 4y agoThis is pretty basic, don't borrow money you can't afford to loose.
- mytailorisrich 4y agoOnly borrow what you can repay. This case is really only another example of "read and understand the terms before signing." If you have 90 days to pay the loan off when you leave the company for any reasons then you must have this scenario covered.
- nunez 4y agoThis is sad, but ultimately, this was a risky decision from the onset.