Is it time to spin up http://fuckedcompany.com/ again?
Related: "Our Incredible Journey," which focuses on acquisitions that involve shutting the acquired company's products down and leaving their customers high and dry:
Bolt Financial's loans come due
141–150 of 204 posts
Re: Bolt Financial's loans come due
#142> 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…
> 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 like eating your own dog food then eating the dog.
Re: Bolt Financial's loans come due
#143Earlier quoted context omitted.
> what is it you think Bolt did that the SEC should pursue them for? Bolt offered, with multiple conflicts of interest, what are essentially margin loans to potentially unsophisticated borrowers. The $300 credit for a financial advisor the CEO tweeted about should, alone, be presumptive. To be clear, I don't think anyone did anything intentionally wrong. (Also, I learned about this yesterday, so there’s that.) But wa…
What conflict of interest? The company tried to do something beneficial for its employees, although perhaps it was misguided. They gained nothing here except the marketing benefit of trying to be employee friendly. Margin loans are risky because you can get liquidated and lose your other principal. This was a cashless loan, that was only 50% recourse, so the only risk is that you may have to pay back half of what you…
> What conflict of interest?
Issuer is the lender is the employer. This is a mess of conflicts.
> company tried to do something beneficial for its employees, although perhaps it was misguided
I agree. (Though it ignores the stupidly simple, entirely common alternative: cut the loan crap and just give them the money.)
> was a cashless loan, that was only 50% recourse, so the only risk is that you may have to pay back half of what you bought the stock at if it ends up worthless
For that 50%, it’s identical to a margin loan. We regulate those because lending against magic numbers that go up is a consistent failure mode in capital markets.
Re: Bolt Financial's loans come due
#144Earlier quoted context omitted.
For what? This thread is full of misunderstandings. What is it you think Bolt did that the SEC should pursue them for? If it’s alleged they fraudulently hid risks, etc., it’s one thing, but so far all that seems to have occurred is they offered something that has pros/cons, disclosed risks, half wanted to take the risk for the pros, and in hindsight, perhaps it was a bad deal since valuations are tanking industry wid…
> what is it you think Bolt did that the SEC should pursue them for? Bolt offered, with multiple conflicts of interest, what are essentially margin loans to potentially unsophisticated borrowers. The $300 credit for a financial advisor the CEO tweeted about should, alone, be presumptive. To be clear, I don't think anyone did anything intentionally wrong. (Also, I learned about this yesterday, so there’s that.) But wa…
Employers cannot replace financial advice from an advisor with a fiduciary duty. Providing general education is good, and so is getting them free sessions with a financial advisor. But I don't totally agree they should be liable.
This was an incredibly risky program, and I don't understand how Bolt was valued last year. But engineers were potentially sitting on a life changing amount of money. Not exercising could have cost engineers hundreds of thousands in additional taxes if Bolt had a great IPO. They needed to get financial advice from an independent advisor.
Re: Bolt Financial's loans come due
#145I 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.
There are a lot of product-minded engineers out there (user-facing outcomes focused). There are also a lot of engineers who enjoy the engineering decisions and challenges at particular stages of a company's growth. Both (and many others) are good and healthy mindsets.
You don't have to be a kernel hacker to be a good or motivated engineer.
Re: Bolt Financial's loans come due
#146This 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.
if you leave the company you get a refund for whatever it is you don’t vest.
i feel like people who are acting like early exercise is money down a black hole aren’t aware that if the company is going nowhere you will probably know that long before 4 years, in which case if you leave you get a refund for unvested options. and even if you’ve vested shares you’re unsure about in many cases the company will offer to buyback shares.
worst case it’s a write off against capital gains.
Re: Bolt Financial's loans come due
#147Earlier 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…
Why would employees exercise prior to departing and/or with no exit in sight?
>Why would employees exercise prior to departing and/or with no exit in sight?
Mainly to avoid taxes if stock price goes up.
If the price is $1 today and you exercise the option to buy stock, you pay taxes on $1.
If the price goes up to $20, you pay taxes on $20.
If the company fails before you can sell, you loose moeny in both cases. However, if you wait, you payed a lot more taxes on stock that is worthless.
People can easily pay hundreds of thousands in taxes on stock that they can never sell. Also, sometimes the stock goes up so much that employees cant afford the tax bill to exercise the option, because the stock cannot be sold until IPO.
https://secfi.com/learn/exercise-stock-options-tax-implicati...
Re: Bolt Financial's loans come due
#148Earlier quoted context omitted.
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 ta…
I'm more familiar with traditional retail options, but I'm confused. I understand why the employees would want a loan - they need money to buy the shares required to exercise the loan - and I guess they can't do it through a normal broker? If the employees Exercise-to-sell-to-cover or Exercise-to-sell they should be fine right because they would have closed the loan? This would explain why so many took the loan but s…
It's short term capital gains vs long term.
If you don't exercise and just sell short term capital gains tax applies.
If you exercise ISOs and hold long enough you pay AMT, which can be refundable, and LTCG when you sell the shares.
Re: Bolt Financial's loans come due
#149Earlier quoted context omitted.
I'm more familiar with traditional retail options, but I'm confused. I understand why the employees would want a loan - they need money to buy the shares required to exercise the loan - and I guess they can't do it through a normal broker? If the employees Exercise-to-sell-to-cover or Exercise-to-sell they should be fine right because they would have closed the loan? This would explain why so many took the loan but s…
It's short term capital gains vs long term. If you don't exercise and just sell short term capital gains tax applies. If you exercise ISOs and hold long enough you pay AMT, which can be refundable, and LTCG when you sell the shares.
What happens if they waive the loan? Does it count as LTCG + the income tax on the loan amount?
Re: Bolt Financial's loans come due
#150Earlier quoted context omitted.
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).
Not to derail this thread but what’s two faced and charlatan about JF/DHH? Or are you referring to someone else?
Pretty sure this is referring to the situation last year: https://news.ycombinator.com/item?id=27000945