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Bolt Financial's loans come due

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Re: Bolt Financial's loans come due

#81

Post by rangersanger »

onlyrealcuzzo wrote: post #13
JumpCrisscross wrote: post #7

Earlier quoted context omitted.

> Bolt should just have annulled them entirely These loans were made cashlessly as part of an early option exercise. That is steeped deeply in the internal revenue code. The forgiven principal would be at the very least income. Then the tax benefits from the early exercise would retroactively apply with penalties and interest. All of this assuming the IRS doesn't view the move as a heads I win (if the company does we…

This is sort of similar to what Evergrande was doing with executives, right? IIUC, Evergrande strongly "encouraged" execs to take loans (secured against their income - which was considerable) to buy Evergrande "investment products". Obviously, this was just a way to pay employees with their loan. If things blew up - the employee is completely screwed. If things don't blow up (which seems unlikely when an employer has…

>this was just a way to pay employees with their loan

This feels like a more complex, insidious version of company scrip. At the end of the day, you’re getting paid in fake company money that’s worthless if they go belly up.

Re: Bolt Financial's loans come due

#82

Post by dehrmann »

tempsy wrote: post #46

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 d…

The gotcha with exercising early is you have less information about an illiquid asset. The longer you can wait, the more time you have to see if the company will succeed.

Re: Bolt Financial's loans come due

#83

Post by bombcar »

Razengan wrote: post #73
JumpCrisscross wrote: post #7

Earlier quoted context omitted.

> Bolt should just have annulled them entirely These loans were made cashlessly as part of an early option exercise. That is steeped deeply in the internal revenue code. The forgiven principal would be at the very least income. Then the tax benefits from the early exercise would retroactively apply with penalties and interest. All of this assuming the IRS doesn't view the move as a heads I win (if the company does we…

Can someone please ELI5 the parent comment?

Stock options (sometimes?) have an exercise date. If you don't exercise by that date, you give up on the options.

But some of them would incur a tax liability at option exercising (the IRS values the "gain" at "stock price - option exercise price" and I believe now causes mark to market at the exercise time?) which would need to be paid also.

Bolt offered to loan people money to exercise their options (and pay the tax?). But if Bolt forgives the loan, the IRS will consider it as income to the loan recipient.

But even then, I'd much rather have a (income tax marginal rate * loan amount) debt to pay than a (loan amount) one.

Re: Bolt Financial's loans come due

#84

Post by mgbmtl »

Gunnerhead wrote: post #78
SoftTalker wrote: post #21

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

No familiar with this. What was it about?

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.

Re: Bolt Financial's loans come due

#85

Post by dopamean »

tempsy wrote: post #63
gkoberger wrote: post #49

Earlier quoted context omitted.

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 per…

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.

I'm one of those "most people" right now.

I make a a great wage and have savings in the bank. However I have a 6 month old baby at home and a wife who is taking time off from her career to look after our baby. I also left a job I was at for almost 5 years and exercised my options on the way out. This cost me almost $30k in cash. At my new job early exercising would cost me nearly $40k. Spending $40k to early exercise this startup's equity grant feels like it might be a little irresponsible. It wouldn't surprise me at all if other people didn't have that much lying around.

Re: Bolt Financial's loans come due

#86

Post by tempsy »

gkoberger wrote: post #80
tempsy wrote: post #63

Earlier quoted context omitted.

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.

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 alrea…

if that’s truly how you feel why would you accept an offer where that’s how a significant percentage of your compensation works?

these types of work environments self select for people who are comfortable taking on risk. no one is forcing you or anyone else to join.

Re: Bolt Financial's loans come due

#87

Post by Apocryphon »

smol_pkg wrote: post #2

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

Kind of a shame that yet another one of the few startups pushing for a four day work week turns out to be run by incompetents (Treehouse), and another founder who challenges the VC establishment turns out to be a two-faced charlatan (Basecamp).

Re: Bolt Financial's loans come due

#88

Post by subsubzero »

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.

Re: Bolt Financial's loans come due

#89

Post by tempsy »

dopamean wrote: post #85
tempsy wrote: post #63

Earlier quoted context omitted.

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.

I'm one of those "most people" right now. I make a a great wage and have savings in the bank. However I have a 6 month old baby at home and a wife who is taking time off from her career to look after our baby. I also left a job I was at for almost 5 years and exercised my options on the way out. This cost me almost $30k in cash. At my new job early exercising would cost me nearly $40k. Spending $40k to early exercise…

These types of companies self select for people who are comfortable taking on more risk. If this is your thought process why would you even put yourself in a situation where you pick an offer from a company that offers options as part of your comp over RSUs or a public company?

I don’t doubt that many people have the same thought process, but if I decline to early exercise from a company that offers that option the alternative is a massive tax bill down the road that I didn’t need to pay if the company does remotely well.

Re: Bolt Financial's loans come due

#90

Post by onlyrealcuzzo »

rangersanger wrote: post #81
onlyrealcuzzo wrote: post #13

Earlier quoted context omitted.

This is sort of similar to what Evergrande was doing with executives, right? IIUC, Evergrande strongly "encouraged" execs to take loans (secured against their income - which was considerable) to buy Evergrande "investment products". Obviously, this was just a way to pay employees with their loan. If things blew up - the employee is completely screwed. If things don't blow up (which seems unlikely when an employer has…

>this was just a way to pay employees with their loan This feels like a more complex, insidious version of company scrip. At the end of the day, you’re getting paid in fake company money that’s worthless if they go belly up.

It is not worthless! That's typical startup equity (common stock for employees at least).

The whole point is you're in debt (against worthless equity). It's negative worth!

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