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Bolt Financial's loans come due

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Re: Bolt Financial's loans come due

#121

Post by yardstick »

JumpCrisscross wrote: post #7
bombcar wrote: post #3

> 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…

> 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.

I guess then the solution would be some form of redundancy payment, sufficient after taxes to cover the loan. The ex-employee could at their discretion use the payment to cover the loan. Or not. This way you’d avoid IRS penalties.

Re: Bolt Financial's loans come due

#122

Post by mike10921 »

dhd415 wrote: post #39
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…

>>I'm somewhat blown away by this whole thing. Leverage to finance an already-leveraged derivatives position on illiquid stock. From the issuer of said stock. Who is also the borrower's employee. That's both risky and dodgy! It's risky, but not necessarily dodgy. Many employers do not even permit early exercise and I wish more did as I could have substantially reduced my tax burden in some situations. Taking loans fo…

"Taking loans for early exercise is risky, but ultimately, we're adults who are responsible for our own decisions." Yes, agree. If the situation was reversed and these employees made money from their investment no one would be complaining.

My guess is overall Bolt was actually being nice to their employees and allowing them to get in early on the action (i might be wrong but i've been in similar situations and usually the intent is good)

Re: Bolt Financial's loans come due

#123

Post by ldjkfkdsjnv »

tomatowurst wrote: post #119

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.

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.

Re: Bolt Financial's loans come due

#124

Post by ldjkfkdsjnv »

s_dev wrote: post #104
greatpostman wrote: post #41

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

He's a founder -- NOT the CEO who is Maju Kuruvilla. Ryan might be CFO though so an executive.

He was the CEO for the majority of the time the company has been around

Re: Bolt Financial's loans come due

#125

Post by aluva »

sydthrowaway wrote: post #10

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.

There is some truth to this, not the job for everyone. I personally know the current CEO and I was surprised when he joined the company as CTO. As far as I know CTO at the very least should be familiar with latest and greatest technology.

Re: Bolt Financial's loans come due

#126

Post by aluva »

Apocryphon wrote: post #87
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).

4 day week is simply a PR effort. I have been following the company on LinkedIn and even the current CEO put out "words of wisdom" and he likes them himself.. weird

Re: Bolt Financial's loans come due

#127

Post by yardstick »

gruez wrote: post #28
madamelic wrote: post #11

Earlier quoted context omitted.

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.

> to cover employees' tax burdens due to exercising their options. Not just the tax burdens, the exercise price as well

> Not just the tax burdens, the exercise price as well

Sure, but the exercise price is effectively set by the taxman. If you set it too low, they’ll just charge more tax.

See https://assets.fenwick.com/legacy/FenwickDocuments/409_Valua...

“Employees, officers, directors and consultants who receive stock options with exercise prices that cannot be shown to be at or above the reasonably-determined FMV on the date of grant face immediate tax on vesting at a combined federal and state tax rate as high as 85% or more.”

The game is rigged in the taxman’s favour.

If the tax was calculated at the exercise (or grant!) date but only due upon sale of the shares (or using those shares as collateral to loans etc), the system would be a lot fairer. Especially for illiquid shares in private companies, where it may be years until you could receive cold hard cash for your shares.

Re: Bolt Financial's loans come due

#128

Post by dhd415 »

mike10921 wrote: post #122
dhd415 wrote: post #39

Earlier quoted context omitted.

>>I'm somewhat blown away by this whole thing. Leverage to finance an already-leveraged derivatives position on illiquid stock. From the issuer of said stock. Who is also the borrower's employee. That's both risky and dodgy! It's risky, but not necessarily dodgy. Many employers do not even permit early exercise and I wish more did as I could have substantially reduced my tax burden in some situations. Taking loans fo…

"Taking loans for early exercise is risky, but ultimately, we're adults who are responsible for our own decisions." Yes, agree. If the situation was reversed and these employees made money from their investment no one would be complaining. My guess is overall Bolt was actually being nice to their employees and allowing them to get in early on the action (i might be wrong but i've been in similar situations and usuall…

I agree. I don't see any way that Bolt benefits from having outstanding loans to employees for early option exercise, so all this criticism of them seems misplaced. Say what you want about their business model, valuation, etc., but this looks to me like an honest attempt to help employees with early option exercises. Stock options are risky at any juncture, but I appreciate having the option to exercise early as the tax benefits can be substantial.

Re: Bolt Financial's loans come due

#129

Post by fragmede »

onlyrealcuzzo wrote: post #9
bhouston wrote: post #6

Earlier quoted context omitted.

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.

I am willing to bet no one did this.

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.

Re: Bolt Financial's loans come due

#130

Post by pbreit »

JumpCrisscross wrote: post #7
bombcar wrote: post #3

> 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…

Why would employees exercise prior to departing and/or with no exit in sight?
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