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Bolt announces layoffs

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Re: Bolt announces layoffs

#121

Post by nrmitchi »

gruez wrote: post #79
upupandup wrote: post #18

Earlier quoted context omitted.

> There IS risk to the employee; they now have a real loan outstanding and 100% personal recourse, so if the common stock becomes less than exercise price, their personal assets are on the hook https://twitter.com/theryanking/status/1493390184897032201 HOLY CRAP. How is this even legal???

>HOLY CRAP. How is this even legal??? You missed the tweet directly under it: > Therefore, we made sure to give every employee ample time to read about the pros and cons of this decision, including learning about all the risks in the business, and we gave every employee a $300 stipend to consult a financial advisor during the implementation process. I understand making things illegal to protect people from being swin…

It’s kind of different when that decision is saying to your boss “Naww, I don’t think I’m going to take the offer that the CEO was bragging about on Twitter. I guess I just don’t believe in the company enough.”

It may not be perfectly valid, but it’s very easy to see how someone could feel like they didn’t really have a choice if they didn’t want to sabotage their position and future at the company.

Re: Bolt announces layoffs

#122

Post by lr4444lr »

nrmitchi wrote: post #33

First of all, there is no mention of what percentage of their workforce is being directly effected by this. I suspect it is not small. That aside, I fail to see this as anything other than this "company" taking advantage of the current environment to execute layoffs in a way that lets them blame "the market" rather than their own short-comings. We saw this in March 2020 as well. They overhired for the hype, and now a…

Even if this is true, we're looking at a tight money policy and a bear market in tech broadly with no end in sight. Pre-profit companies need to protect their hides, and I expect to see such reflected in layoffs and attrition.

Re: Bolt announces layoffs

#124

Post by nrmitchi »

hm8 wrote: post #111
librish wrote: post #19

Earlier quoted context omitted.

The founder pushing employees to take such a reckless financial decision while presumably their only insight into many key business metrics is the leaderships rosy portrayal of them is unethically irresponsible.

At this scale/valuation of the company, it's probably a bad idea but hard to know at the time. My understanding of US tax laws and options is that this sort of behavior is what you want for early stage startups. You allow early exercise, restricted vesting with the upside of paying no income tax now, only LTCG on vesting (+liquidity event), and potentially QSBS tax exemption if you joined early enough and the startup…

Well sure, but the QSBS exemption cutoff is literally 220x less than the valuation Bolt was trying to see this on.

Re: Bolt announces layoffs

#126

Post by berberous »

JumpCrisscross wrote: post #70
nemothekid wrote: post #24

Earlier quoted context omitted.

I can't see why it should be illegal. People take on debt to buy assets all the time. But this is just so irresponsible and immoral; I really doubt the leadership is actually running a sustainable business; and I'm also starting to seriously doubt there was any credibility to the whole YC/Stripe boys club thing. 1. Ryan (was) the CEO, and can pressure employees to buy stock (or let them go because they aren't "commit…

> can't see why it should be illegal Borrowing against one's shares shouldn't be illegal. Companies lining up recourse financing for their employees should. How were the terms of the loans chosen? Who knew who was and wasn't participating? How was it ensured this wouldn't factor into personnel decisions? How were/are the people setting the strike prices of options segregated from the people setting the terms of the l…

The strike prices of options are set based on a 409A valuation.

These are "cashless" loans, which are recourse for tax purposes (so that the IRS respects this as a true purchase of shares, in order to start people's LTCG and QSBS clocks). The terms were likely very favorable, i.e. set with an interest rate equivalent to the AFR. This is not a situation in which the company is trying to make money as a lender.

This is no riskier than deciding whether or not to exercise your options, which typically employees have to decide within 3 months of leaving a startup.

The risk is not in the terms of the loan, but in whether the employee wants to exercise and lay out the cash (or the promise to pay the cash); in each case, it's an investment decision to decide whether it's worth it given that the stock is risky and could eventually be worth zero.

Note that all these issues are driven by tax rules, and generally not the startups. Startups are damned if they do, damned if they don't.

Every type of equity has pros/cons. If it's an immaterial amount of money, the employee should be a big boy and just decide whether or not to risk the cash. If it's a material amount of money, the employee should really be speaking to their own advisors, which if they have a material amount of equity, they should be able to afford to do.

Re: Bolt announces layoffs

#127

Post by throwaway7104 »

After reading last week's leaked YC letter to founders, I was suspecting that this would be a shockwave staggering the startup scene.

I'm not working at Bolt, but this week our (not large) company has announced a 20% layoff and essentially made it clear that we shouldn't count on any investment funds in the foreseeable future.

Hard times with all these investment sources drying up, but so far this crisis is localized to the tech world, unlike the dotcom bubble was. I sincerely hope that it will stay this way.

Re: Bolt announces layoffs

#129

Post by missedthecue »

cecilpl2 wrote: post #120
scarface74 wrote: post #57

Earlier quoted context omitted.

Profit isn’t an “abstraction”. If you bring in more money than you spend, it means that you don’t have to worry about a “runway”, nor do you have to worry about outside funding. How can you have a successful business that spends more money than you make?

Amazon famously turned no profit for nearly 15 years. When you run a large business you can do things like reinvest what would have been profit into new projects. This is the whole point of a growth company. Recognize that, simplistically, Profit = Revenue - Expenses, and that expenses is a dial which can be turned somewhat arbitrarily.

I don't think the important thing is necessarily profit, but margins. According to Bezos, Amazon had positive contribution margins from day 1.

Re: Bolt announces layoffs

#130

Post by phphphphp »

ushakov wrote: post #89
fdgsdfogijq wrote: post #49

Rumors going around on blind (posted by bolt employees) that over the course of a few rounds of layoffs it will be 30-50% of the total workforce. A lot of the initial layoff are software engineers. Apparently they only have 12-18 months of runway, and need to effectively double that. Current revenue is 40M. I guess this is the beginning of the tech washout. clings to large tech company job EDIT: 33% layoff today

they raised $355M this year and like $600M last year https://www.crunchbase.com/organization/bolt-5/company_finan... how can a company burn money that quickly so they end up with only 12-18 months of runway?

very broad strokes: money is raised to be spent. each round gets you to the next, or you reach some measure of sustainability before the money runs out — layoffs like this should be expected, regardless of the amount raised, if there’s a shift in conditions that indicate raising again in 18 months isn’t going to be easy. You can burn any amount of money if you want to.
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