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
Jesus, my startup is making about half that with a good sales pipeline for this year and we are 55 employees total. We might hire additional handful this year but that's it. How do you even onboard when you double your workforce every few months?
I worked at a startup and the CEO was obsessed with hiring at all cost. We, engineers, were all wondering what the hell these new hires were supposed to do. We did not need them.
Then they explained it to me. They needed to show growth through hiring in order to raise money.
I mean, I couldn’t even blame them, if that’s a criteria for VC to hand you a check, well you gotta do what you gotta do.
Needless to say this startup, eventually had to cut cost and end up firing most North America employees and replacing them with new hires in east Europe.
My experience is that current investors want you to hire tons of people to shorten your runway so they can force you into another round where they can buy more shares and dilute the founders more.
I always wonder how much of the faibled 99% start-up failures are up to that attitude. Imagine to settle for 100 million exit, at maybe 2x, more often. Couldn't it be tgat VCs would ve more profitable? Serious question, bevause VCs are professionals in what they do and they definitely have a reason. A reason that totally eludes me.
I always thought Uber could be a nice billion plus business modernizing the taxi business and providing software to run it, but no, they had to grow so much to legally fight whole countries and upset regulations
I always have to adjust for this as an early-career engineer aspiring to start my own startup. It's insanely intimidating looking at companies with multi-million or billion-dollar valuations, but my definition of a "successful" company is probably vastly different than what most hyper-growth VCs are looking for.
I'm always more interested in the low-fixed-cost software businesses like Sublime Text, Pinboard, or Hwaci (SQLite)
the answer is no probably not. VC for tech startup exist because of economy of scale of tech and is ruled by power law. one winner that returns 100x is much more important than a handful that return 2x.
to be clear most VC funds are not actually able to do that.
They would have to adjust their strategy and be more selective in the companies they invest in. And they of course know that they aren't actually very good at picking winners, so that strategy is out.
Interesting and funny documentary from the dot com boom era in a finish company, riot entertainment. Great watch on the insanity of VC funding and growth.
Haha, I have watched that documentary multiple times, it is great and deserves to be turned into a film.
Someone's earlier point about hiring as a growth indicator to VC's reminds me of the point made by the CEO in the documentary about how VCs told him he needed to have 100 employees in order to boost the value of the company, so they ended up hiring people off the street, spouses and family members.
Yeah Bolt's numbers are just nonsense. We do 1/3 of what you do with a slightly less workforce than you, same hiring strategy.
There have to be tons of businesses like ours. No one cares about small business success though. I'd love to read more books and stories about "small" businesses making $5-40MM and how they go about their day and running the company. Would make for far better reading than all the vaporware and malinvestment in the VC space due to free money over the last 5-10 years.
"Hidden Champions", it is not super recent, but it deals with mostly what you are looking for.
The thesis is (If I remember correctly) that the backbone of Germanys economy are "Hidden Champions", small but highly skilled and specialized companies that can produce a niche (technical) good at an quality that cannot be matched by any other mean, making them practical the entire market for that thing.
At its peak during the 1980s and 1990s this is exactly what Inc magazine focused on, businesses making between $10 million and $100 million, the vast middle section of American business, the tens of thousands of medium sized businesses that make up the bulk of the economy. And Inc was very popular, because at that time it was a very popular idea for an entrepreneur to build a business on that scale.
After 2000 that particular ideal faded away, and also the market for what Inc magazine offered faded away. Slowly, but increasingly, the focus shifted to "unicorns." There were a few contributing factors:
1. In the 1950s and 1960s and 1970s it was still possible to start a business and grow it to $20 million, and then remain relatively stable at that level. However, the creation of new businesses has been in decline since the 1970s, a trend partly offset by the explosion of software startups, but still the trend is downwards.
2. Consolidation. In 1999 there were 8,000 businesses listed on all of the USA's stock markets (NYSE, Nasdaq, etc). In 2022, there are only 3,400 businesses listed. These last 20 years have seen the fastest consolidation in the history of the USA.
As such, the middle zone of American business is under pressure. Much more now than before 2000, a business has to get big, or get bought, or go under. So the dream that Inc magazine was selling in the 1980s and 1990s simply isn't realistic any more.
>> As such, the middle zone of American business is under pressure. Much more now than before 2000, a business has to get big, or get bought, or go under. So the dream that Inc magazine was selling in the 1980s and 1990s simply isn't realistic any more.
I guess. Our HQ is in an industrial-commercial zone, and there are no shortage of small businesses making $1-100MM doing stuff I've never heard of, have probably existed for decades, and just do quite well for themselves. I've driven around 5-10 square miles over the last few years around here just to take inventory of said businesses, and so many of them don't have websites or meaningful online presence, yet clearly do decently well.
I think people just don't talk about these businesses, or care very much. Only Mike Rowe really seems to care about small business / blue collar-type work (Dirty Jobs). I guess Guy Fieri does a good job of highlighting restaurants in his work, too.
I'd like to see a Gini coefficient type analysis for businesses.
Knowing nothing about nothing, I wonder about the role of financialization and tax policy in driving this transition. Stuff like the preference for growth stocks over value stocks, replacing pensions with individual retirement accounts, and cutting capital gains taxes.
However we got here, my belief (hope) is our economies would be more resilient with more small to mid-size companies. Ditto more fair.
Tax rates on small businesses - especially in my county/state combination - are absolutely brutal and have significantly gone up over time in comparison to larger businesses as a percentage of revenue. There's a lot of reasons for this, none of which I think are deliberately intended to harm small businesses, to be clear, but it's frustrating all the same.
I've seen companies with less revenue and a bigger workforce growing at that rate. They call it blitz-scaling, and I don't know if it's actually ever worked, where I saw it first hand it was basically just setting a pile of money on fire.
Yep, this is what happens when your "growth" metric is employee headcount, under the naïve assumption that more people is a proxy for more work getting done is a proxy for revenue. This may make more sense for a sales-focused organization, less so for marketing or technology driven organization.
Maybe not a proxy per se, but more like a leading indicator, right? Those big enterprise customers might not ask about revenue, but the sales unit can certainly brag about headcount.
Absolutely agree. I wrote the comment while thinking, why would a company need a proxy for revenue, when revenue is so easy to count? On reflection I now understand the GP’s point; when revenue is zero, you need something to use instead.
But of course revenue (and, having achieved that, then profit IMO) should be among the concrete goals. It’s so weird that this is missed so often.
With an important caveat. The SWEs in the Bay Area are just conduits for obscene sums of money flowing from VCs to real-estate agents, landlords and homeowners. Plus car dealerships, perhaps (every other car is a Tesla or a higher-end BMW/Mercedes model in the Bay Area).
The standards of living are high only because of the natural bounty of the Bay Area. Pretty good weather, stunning natural beauty with easy access to plentiful and varied open spaces, some of the best produce in the nation thanks to the most fertile and productive farmland in the world (central valley), multicultural, and generally tolerant and respectful people.
But many of the objective things that count towards a high standard of living are not much better than the rest of the nation, given the eye-watering tax burdens on CA residents. California roads are amongst the worst, housing quality is generally poor and nothing to write home about, failure to promote dense housing has led to encroachment on wooded areas that are huge fire risks, zero investment in burying power lines has exacerbated forest fires even further, and heavy property crime due to the exploding homeless population in core urban areas is continuously threatening public safety. Not to mention the insanely high gas prices (due to CA taxes), consumption taxes and effectively high property taxes which all hit living standards of average people quite hard.
Reminds me of my dotcom boom/bust experience of the late nineties where the dotcom was posting monthly "hiring targets" and celebrating that they met them. They were so screwed and tanked badly right after March 2000.
My employer was doing those kind of numbers pre-covid, having been profitable from year one.
But we’re not really ‘a tech company’, except in as much as we have a website. We did outlast companies in our sector that expanded like startups, though.
Staying relatively small and focussed with growth driven by making money instead of outside investment might be the antithesis of what a lot of people on here are into, but it can produce better results in many occasions.
We aren't early stage. We have a growing revenue stream but have been at it for about 5 years with some ups and downs along the way. There is a product market fit but the product still needs a lot of work on being more scalable (in terms of process).
you don't onboard efficiently which makes your new hires inefficient so you have to hire even more to compensate to just get the increase you wanted. This is just one factor in the raise of inefficiencies during a fast company growth.
Wow that is very impressive in this climate may I ask what is the category of the business? I am guessing it is not in any of the fashionable current spaces (blockchain, retail logistics, fintech,…)
There are lots of people of people out there running highly profitable (and globally well-known) businesses off of Excel sheets. They have identified that they don't want to do this anymore as these sheets have grown so monstrously complex over the years that the employees who have to use them are miserable. Basically there is lots of opportunity to start a tech company whose sole purpose is to get much bigger businesses off of Excel. However, for reasons, this is much harder than it sounds.
As a counterpoint, a few months ago I helped out a small manufacturing company with their Excel overload. Every day, they start with a new document based on a template someone made years ago. Every shift has their own worksheet in the document, every machine and job has its own set of rows, with lots of columns for capturing relevant information.
Everyone there is used to dealing with it and for every use case except this particular one, it does what they need.
All I did was write a little program to consolidate data from many thousands of spreadsheets, do some aggregations, etc. allowing them to get better insight into scrap and downtime rates per machine and per contract.
I charged $500 for about 1.5 hours of work, and they were thrilled.
Anyway, what I wanted to point out was that totally eliminating Excel is, for many businesses, probably not worth the hassle and productivity problems associated with the switch. But you certainly can move complexity out of Excel and into a place where it is much more manageable. Reading/writing Excel files is ridiculously easy and doesn't need to occur on a machine with Office, or even Windows.
I didn't mean to be so absolutist. Excel is often enough. I've worked with companies who are trying to ditch their Excel sheets but, in my experience, it's often a super hard problem to solve, especially if you are trying to generalize to sell it to multiple parties.
I think you probably need to be embedded in the industry for a while so you have both a good handle on how the industry works and the connections to get a foot in the door with any new solution.
Ha, love that. Gotta love the "boring" businesses that have good profit margins and solve problems. We're in a similar industry, with a lot of R&D costs.
Thanks. We definitely want to take it to the next level, beyond a "good lifestyle business" stage but we'll do it on our terms growing the workforce at a rate that makes sense to us despite some pressure from the board to "hire more aggressively".
1) "Multiple rounds" is basically the worst possible way to do layoffs.
2) Based on their recent fundraise (and assuming that they had 0 dollars at that point), that's basically a burn rate of 25-30M/m. I'm not sure I can event comprehend what that company could be spending that much money on.
In my experience, layoffs almost always happen in waves. The first layoff is usually when nonperformers and people who are already on managers' hit lists (people who are hard to fire only for legal reasons) are jettisoned. Later rounds start eating into actually valuable employees. In the interim, many experienced people read between the lines and make for the exits, further depleting the ranks and leaving behind folks who can not or will not look for opportunities elsewhere.
Even a single round is bad because it will cause some of your most hire-able people to look and then likely leave. When a second round comes too close to the first then everybody starts looking hard and the people that stick around are the ones nobody else wants. It would be cheaper to just close the doors.
Leaving things to trust is not an option IMHO. Unless a company can guarantee that there won't be another round, they can always change their mind. I'm not sure if any company can give any such guarantee.
That’s a bit disingenuous; of course no company can make a 100% guarantee.
There is still a huge difference between “this is the only round of layoffs, we will grow past this” (when this is the true intent) and “that’s all for this week. We’ll be back with the next round of layoffs on Friday”
The way to do layoffs is simple. You get managers to stack rank the lot, then you get every single person with 30 or more reports under them in a room.
Then you do the whole layoff in one 5 hour meeting.
I used to work “doing layoffs” and I don’t think I ever saw stack ranking as the layoff strategy.
Most often I saw “divisions” or “capabilities” cut, either entirely or to skeleton crews that kept the lights on.
Next was just randomly applied. And frankly managers with 30 or more reports were frequently layoff targets as they are expensive and don’t add a ton of obvious value to the bottom line (unless they had a sales function).
Was always curious about that from an outcome perspective. It seemed like a company could go "manager-lean" (ax manager count, retain employees) for awhile, easier than vice versus.
I'd imagine a lot of paperwork got back up, but presumably the company business roughly kept going. True or false?
I think the overriding lesson I learned from my time doing that job was that people dramatically overestimate their value to a firm.
That’s true of ninja rockstar developers and vp directors of business dev. Largely the world keeps turning no matter who leaves a firm no matter the circumstances.
There is a lot of confirmation bias in this observation. Frankly, the dead have no voices and the missing value and / or damage is often simply unobserved by those who are left.
It's rare that the damage is surfaced. I did see an event once though when a fairly senior manager made repeated attempts to hand over some data collection and reporting when they were made redundant but were rebuffed by colleagues and their manager alike. Essentially this person was seen as a bit of a third wheel, and many comments were hurled around during the lay off process along the lines of "not clear what his real contribution is".
Well, it turned out that the data that he was collecting, analysising and reporting on was fundamental to the running of a strategic investment. Some months after he left the said project tanked, and because the data was not available a lot of money that potentially should have been recoverable wasn't.
About wrongful termination: Does severance pay help to reduce risk for companies? I always assume the risk comes from insufficient severance pay. My point: Even if you have grotesque firing practices, enough money can pave over the problem.
You sign an agreement Not to sue in order to get your severance. Unless you have money, bringing a suit is hard. And if you are suing a company that is slashing headcount to increase runway, what are your chances to get anything years down the road?
> Does severance pay help to reduce risk for companies?
In California, severance is almost always in exchange for signing away various rights, one of which is likely any claim of wrongful termination. You can always try to negotiate the payout or the terms, though. Just expect to hear "no."
Last valuation of this company was $10+ billion. Absurd. [0]
I'm personally happy to see the correction coming where profits - or lack thereof, more likely around these parts - actually means something these days.
I heard they had 900 employees. It's just a checkout page that plugs into your payment processor. I don't get why they need so many people. Most complicated thing they are probably doing is tokenizing the credit card themselves so the card info is portable across merchants with different processor.
Wait what the fuck, I thought the whole thing was about the Uber competitor also called bolt. No wonder some of the comments don't really make sense, especially in terms of team size.
That adds up to maybe 100-200 people in my head. It's not like they rebuild every payment integration every day.
I worked for a retailer with >$2B in revenue across stores and 5 websites plus internal tools and we had about 100. And probably half were low cost contractors. Software practices sucked, deploys took forever, they had an ivory tower architecture crew and pie in the sky CTO and yet their digital products all worked fine and made tons of money. Why? Their products and branding were excellent.
The other thing Uber has to do is optimize well. It needs to state competitive with Lyft for both passengers and drivers, minimize driver churn (but not too much), optimize matching, and charge predicted fares accurately.
Uber also processes an insane number of transactions. Not quite Visa, but I'd guess it's in the top 5% of volume as a merchant.
Uber also was wasting a huge amount of time and energy and most of the engineers didn’t have anything productive to do. At least that’s what I gathered from some ex Uber folks.
Uber has scale, they are processing $15+ billion plus in rides a year. Millions of customers and millions of drivers that need tools built to service them.
Similar. It's wild to realize when I was CEO of our startup, we had significantly less name recognition, dramatically less capital raised (by orders of magnitude), a much smaller team.
...and yet apparently significantly more revenue per employee than Bolt. Oh, and we were profitable, infinite runway, good growth, solid unit economics, LTVs we understood.
Everybody starts making zero (or negative) dollars.
I have no positive view of Bolt myself, but in a situation like this VCs are putting money on future prospects/growth potential, not the early revenue.
I shaved a bit off our AWS bill and my CFO at the time asked if it was worth my time. I asked him if he knew how you get a huge AWS bill with no idea how to fix? A little bit at a time.
People get lazy because things seem good and let questionable hires and other expenses slide by because why not, there's plenty of money.
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.
Yes, regardless of Bolt's specific circumstances, this is on point. Nobody is giving startups money to sit on it. Especially for the really big raises, a big part of the motivation is that the company has made a case for how the large amount of money is going to be deployed very quickly (with the goal of generating returns). You don't take $900M of VC funding and stretch it out over 10 years, that's not what they gave it to you for.
Whether it's actually possible to usefully deploy all that money is another matter. Generally it's very hard. I only have an up-close perspective on one such large raise (that ultimately failed) but imo the reason they got the money was that they made themselves a credible way to spend so much so quickly.
Depends on the economic environment. We are headed for a difficult cycle. Downsizing and doing a raise to at least partially "sit on" might be the best strategy at this moment. Money flow can go from huge to nothing faster than one might imagine.
In the grand scheme of it, I haven't worked with that many, but every founder I have had the chance to work with has cared about sustainability. This is way more speculative, but I believe that sustainability goes out the window in favor of quarterly wins when the (co)founder steps back from their role and they transition to a non-(co)founder CEO and such.
I guess we could interpret that as the cofounder cares about sustainability for as long as it takes to hand off the bag.
Large profitable tech companies don’t lay off staff when they see opportunities to grow. I know that three of the Big 5 tech companies (FAANG - Netflix + Microsoft) are throwing money and headcount at cloud just from the aggressive recruitment I’m seeing - I work for one of the big 3 in the consulting department and I’m constantly getting solicitations from the other two. Apple also is still hiring where it sees growth
FAANG - Netflix + Microsoft started development centers in my Eastern European country. Apart from Google which is about the decent level, the rest aren't offering very good salaries or work conditions compared to competition so they aren't attracting the top talent.
Their strategy here is not the same as in US. They came here for cheap workforce, but cheap for them means REALLY cheap.
Have a compelling product that generates revenue. Unless your workforce is 100% saturated and you don't really _need_ that many engineers, lay-offs are one step above cutting free snacks on the usefulness scale when it comes to trying to stop bleeding.
I think you mean profit, not revenue. In terms of surviving difficult economics, revenue is useless if not accompanied by profit. Cutting 33% of their workforce will at least temporarily stop an awful lot of bleeding. Long term effect, probably not good. If losing 33% doesn't hurt them long term, then they have been doing some incredibly bad hiring. They might make it to the other side of this and I know nothing about their specific situation, but judging from the history of other failures, this is sadly often the first step in a death spiral.
Remember that debt fuelled stock buybacks were a huge reason for propping up stock prices for these companies as well.
Now that cheap debt is off the table, that buyback strategy will have diminishing impact as well, forcing companies to find other ways to keep stock up (such as cutting costs)
I mean the established big tech companies are sitting on mountains of cash. I suspect they’ll start ramping up buybacks even more aggressively due to what they see as undervalued equity.
I don't think VC-backed startups typically do stock buybacks? That's more of a Fortune 500 thing, AFAIK. "Startups" (of whatever size) are always concerned about the next funding round; I don't think they're going to burn runway to prop up the share price. It's companies like GE and IBM that do that, AFAIK.
I was referring to the OP’s comment that established publicly traded tech companies too will be under pressure to keep the stock price up and thus, aren’t immune to layoffs
I see. You have a point there. That would cement, in my mind, their transition from "growth" to "utility" companies, though, and I would expect them to start paying dividends.
> 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
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 "committed" enough).
2. Ryan loses nothing if the company fails (his personal loss has probably already been covered since the first VC round), but each employee is left with a mountain of debt.
3. It's just bad advice. I know plenty of people who took out loans for stock; and I would never recommend it; it's incredibly risky especially if it can destroy you if it fails. If leadership plays so fast and loose with other people's money, you have to question how well they are doing their job.
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 loans? There is too much already loaded onto the employer-employee relationship, we don't need to add lender-borrower to the damn mix.
(Side note: the $300 stipend for financial advice is laughable. You couldn't even get a lawyer to review a fraction of such an instrument for that amount, and yes, I'd put recourse loans against private shares in the risky as hell bucket which should absolutely be legally reviewed.)
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.
If you can’t afford to buy your options, but take out a personal loan to buy them, that must have been a riskier approach than just buying them if you had the cash, no? The leverage increases the personal risk at least as I understand how that works.
Unless there was an agreement to forgive the loans if the options go underwater, which I haven’t seen reported here.
It depends on what your future income stream looks like. If you're a 22-24 year old software developer, getting to take on low-interest debt in an inflationary environment is a great deal. It's losing money on the stock that is the problem here.
If it requires predicting the future isn’t that by definition riskier?
The potential outcomes if you spend money you have are that you recover your money (break even), lose the money, or make a profit.
The outcomes if you take a loan are that you break even, make a profit, or acquire a debt that you by definition weren’t really able to afford in the first place (or you would have just used the resources you have to fund the exercise).
I feel sorry for anyone who was hoping they were young and had tons of upside potential, who now needs to service a loan that they will never see a corresponding asset for, who is about to face a quite difficult job market for juniors.
>Companies lining up recourse financing for their employees should.
Wait the companies set these loans up? I thought they were just going to a bank and getting something akin to a personal loan or some other 3rd party collateralized loan.
It's a cashless loan. If you have options that cost $10,000 to exercise, the company lets you pay with a promissory note (promising to pay the $10,000, plus minimal interest set at the IRS's AFR). This is effectively the same as the company loaning you $10k, and then you hand it back over to exercise, but the cash does not change hands.
If you were to get a private loan, the interest would be much higher.
The company does not want to be in the business of making loans, but this is a way to allow the employee to exercise upfront (and thus potentially get certain benefits, like in a good exit scenario, of having gains be subject to LTCG and not ordinary income), in the best way possible. But in a downside scenario, like the company folding, the person is on the hook for the loan just like if they had decided to exercise with their own money.
In that Twitter thread where the CEO originally announced the idea many people reported this happened in the dot-com bust. Private equity firms would buy the company and go after past employees for the loaned money.
Good advice I got from colleagues at a 2000 era company who took out loans to buy their options and cover the taxes when the stock was at $50/share and then watched it drop to <$1/share while they were in a lockout window. I worked with people who had 6 figure loans they owed on for worthless stock. Took years for the stock to recover.
This is me currently. Bought my options before IPO markets went bust. Gives me anxiety when i think about it. Just reading this comment made my heart rate go up :(.
I am not a finance person, but maybe you should talk to a tax attorney or tax planner. That kind of person may be able to offer some guidance on what you can do. Good luck and remember at the end of the day, it's just money and you can recover no matter what.
Why would they have taken out a loan to buy their options? If the options are vested you can just sell them and pocket the difference between your strike price and the buy offer. If the options weren't vested you can't buy them anyway and you would still have the same strike price when they did vest.
Sell them to who? Are there any secondary market sites still running. Otherwise, you're cold calling investors. I tried to sell my shares in a startup to cover my six figure tax bill and couldn't find a buyer even with the company's CFO helping me.
The OP I was responding to was clearly talking about a publicly traded company - "the stock was at $50/share" and "Took years for the stock to recover." They could sell them to anyone who wanted to buy them and clearly people did if it was going up.
To answer your question, yes there are still companies that facilitate the secondary market for pre-IPO options, Forge/Sharespost is the one that immediately comes to mind.
All those markets are currently dead. Been searching high and low on all those sites for my options but all the sites went completely quite last 3 months.
In this case, the company had gone public, so they could have sold. Bolt is a wholly different story. I think the employees back in 2000 had one window where they could sell where the stock was at a high value. Many of them passed it up, expecting it to go to 70.
In 2015, I talked to ESO fund for some fintech options I had where I couldn’t cover the tax when I quit (stock wasn’t public). I was very satisfied with my dealings with them. Ultimately, they pulled out on the deal. That was a pretty strong signal because, low and behold, that pre-ipo stock tanked in a month too. Luckily, the lessons I’d learned from the earlier stories helped me to walk away from those options. It was a tough, but ultimately good decision.
It's all luck and timing. The company I couldn't sell the shares to cover my tax bill was acquired for nine figures a year later and I had all my stock because I couldn't sell it.
Short answer: greed. They didn’t want to give up any shares. To pay for the tax they owed between strike price and current market value, they should done a cashless transfer and sold off a portion to cover the taxes and then held the remaining for a year to get capital gains tax treatment. I think ultimately they didn’t think the party would end. I had some coworkers there who had sold stock when they could and were thought of as leaving money on the table because the stock can only go up. Those ended up being the smart ones. But hindsight is 20/20
> Short answer: greed. They didn’t want to give up any shares. To pay for the tax they owed between strike price and current market value
Greed by the taxman.
It would be a non-issue if the tax authorities collected the tax at the point those shares are converted to something else, or used as collateral to a loan. But to tax them without any ability for the employee to extract value from them - especially relevant for privately listed companies with glacially illiquid stock - is abhorrent.
But instead the taxman has to always be the first to eat the pie. Even if that pie never turned into anything real.
In the UK it is horrid- share options of any meaningful value are taxed at ~%63 (including all hidden National Insurance taxes) and it could be years before you can cash your shares, if at all.
I'd guess they wanted to hold the stock for 1 year after exercise to qualify for long term capital gains, but this would likely trigger AMT. Not sure if this has been the case back in the day though.
> 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 swindled because they don't know any better, but if you made decision even after consulting a financial advisor that's on you.
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.
That’s quite a stretch. They set up a plan you’d have to opt into. They don’t stand around waiting for a rationale from everyone who didn’t take them up on it. You still have your options so you’re not telegraphing a lack of faith in the company. It’s absurd to think management is going, “gee, Joe didn’t take this potentially risky option after the consultation. He’s not a team player.”
That is not at all a stretch and is slightly offensive that you used the word “stretch” here given what that word is supposed to mean. This is a perfectly valid concern where many people will be pressured into complying.
Except if you don’t take the loan, you are still betting big on the company by staying around for stock options. There is zero reason to think this shows lack of faith in the company. This is on the level of thinking you’re going to get fired if you don’t buy a red BMW because all the execs have red BMWs and got a local dealer to offer a good deal to all the employees.
$300 won't cover the cost for a qualified advisor. Even if you'd get a tax professional to make the math for you for that money (the one I use charges $350 for a phone call, ymmv), getting a lawyer to go over the terms of the loan would be $1000 at minimum.
i guess they probably doled it out as "file an expense report" stipend rather than cash or some voucher, that could lead to some awkward conversations w/ management...
It was an option, not a requirement. There are pros/cons to doing it, but it was ultimately the employee’s decision. I’m sure the risks were well disclosed. The issue is >50% of employees don’t understand any of it, no matter how well explained and disclosed.
It is not enough to disclose the risks. You can not allow your employees to do this unless at the minimum you can demonstrate that they actually and fully understand those risks and you give them access to ALL the numbers you have
I would bet money Bolt disclosed financial statements and all material information as part of this offer.
The risks here are not rocket science. If the most recent round of preferred stock financing was $100, and your exercise price is $20, the risk is that if the stock ends up being worth less than $20, it's a mistake in hindsight. You can talk all day about the risks, the numbers, etc. What's currently happening is macroeconomic -- inflation, fed tightening, asset prices dropping across the board, etc. This was not some Bolt-specific issue. People assumed it was more likely that the stock would be worth at least their exercise price (which still may be the case). A full half of the people this was offered to declined, because they were prudent and the risks were probably clear. The other half was probably optimistic, and also gambling on crypto and other startups at the same time.
With the preference stack it could take much more than a $20 price to break even.
It may not be rocket science, but this isn’t obvious unless you’re really savvy about startup deal structure, and all of the preference stack is disclosed.
I did the same thing once; early exercising my options in a couple batches as I had the money to do so, and filing an 89b election. Ultimately I had to borrow some money on a personal loan in order to exercise the last of my options as the value was starting to ramp fast leading up to the IPO.
Conveniently the CEO has bailed the sinking ship and publishes daily tirades against the "establishment" that is victimizing Bolt specifically every day.
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 does well.
QSBS cutoff is $50M in gross assets owned by the company, not $50M valuation. There are many cases where a valuation can be far above $50M yet still qualify. That said, I have no idea if Bolt would qualify here. FWIW financial services companies don't qualify for QSBS at all, so Bolt may fall under that
You missed one important insight: the founder pushing employees to buy shares. That's a red flag on its own. If your options expire, that's less dilution, so there isn't really an incentive to get employees to exercise other than raising funds and the appearance of internal confidence.
Responsible leadership will give you numbers, but leave you to make your own choice. Anything else should make you worry.
> if the common stock becomes less than exercise price, their personal assets are on the hook
Can someone explain what that may mean for the >50% of employees at Bolt that bought into this program, now? I'm really struggling to grok what my quoted sentence entails...
By taking part in this program, you are essentially taking a personal loan, partially secured by your stock options which will vest later.
If you don't happen to understand Stock options: At a later date you will have the OPTION to buy company stock at a set price (often referred to as a Strike price)
So some entity is lending you money because they know you have Stock options and presumably will be good for the money when they vest/mature.
Of course, if the value of the Stock at the point of your options maturing is LOWER than your strike price, you essentially have earned yourself the option to buy $4 apples at the price of $50 an apple. Eg: your options are worthless (beyond their ability to purchase shares which might not be buyable on a public market)
So since you took out a _personal loan_ you now have to pay it back.
EDIT: I missed one thing - you actually get to exercise _now_ if you take out this loan... This has slightly more upside because it means that you could have in theory, sold those shares for immediate upside on the secondary market and thereby have de-risked yourself. If you didn't, then you got hosed. You could also have a capital gains advantage by spreading the gains I suppose
I was struggling to understand why someone would take a loan against options rather than just sell them on the secondary market like you mentioned and I think the key difference is that you can't sell an unvested option on the secondary market but with this Bolt program you could take a loan against an unvested option which is unique and kind of bizarre. Who would underwrite such a loan and how is the accounting for it done at the company level? Also wouldn't they be taxed as income?
a lot of popular and semi-popular startups are hard for some VCs to invest in. So some of them like ESO fund (https://www.esofund.com) will give you money to exercise and pay taxes but on condition that they'll take a decent amount of profits when you sell the stock
These employees chose to take out a loan in order to exercise the options. These employees now own the shares that they exercised their option for _and_ a loan to pay back the amount of money spent to exercise. If the price of these shares becomes _less_ than the price spent to exercise the option to receive the share, then the value of the employees' shares is now _less_ than the price paid to exercise. This means that if an employee wants to pay off the loan, they first sell their shares, and then they're still on the hook for the remaining difference between the sale of the share price and the principal for the loan.
For the Bolt employees who took this deal, I feel bad...
This is insane to me. I work at a startup with a similar valuation and we bring in almost double that amount of revenue a week... and I think we're overvalued.
20x Price-to-Sales (P/S) multiple on trailing-twelve-month (TTM) revenues is actually on high-end of of sub-$20B SaaS right now -- it's just the new reality. Examples from public markets:
Cloudflare ($NET) TTM revenue is $0.73B and $16.9B marketcap (23x P/S).
DocuSign ($DOCU) TTM revenue is $2.1B with $15.5B marketcap (7.3x P/S).
UIPath ($PATH) TTM revenue is $0.9B with $9B marketcap (10x P/S).
Okta ($OKTA) TTM revenue is $1.3B with $13B marketcap (10x P/S).
I never cease to be amazed at how people value companies based on revenue and not profit. Revenue without profit numbers tell you nothing about how well the company is doing.
I'm not valuing my company solely by revenue, but it's easier to compare the values of startups by their revenues as a good chunk of startups are focused on growth and not profit - and thus aren't yet profitable. Will that start to change with the current macro environment? Probably. Was only trying to point out how out of wack valuations have gotten.
Investors in startups value a company based on the likelihood that they can pawn off a money losing company either to the public markets or an acquirer.
That doesn’t help now that the public market doesn’t have an appetite for companies that aren’t profitable.
So if retail investors aren’t interested in non profitable companies, there is no profit it in it for investment bankers to flip the stock at IPO to take advantage of a “pop” meaning that VCs are less interested in throwing good money after bad.
How have the former “unicorns” focused on “growth” fared in the last few years?
For instance DoorDash couldn’t make a profit during a worldwide pandemic when everyone was ordering takeout.
To do a proper net-present value calculation, you need more than just revenue & profit. You also want to know growth rate, gross margin, and capital efficiency.
I realize that I should have been more precise. I was talking about profit in the colloquial sense where profit = revenues - cost and not the GAAP meaning.
For instance, even when Amazon was “losing money” for years, they were using cash flow to expand. If they were running short of money, they could have just stopped building infrastructure. They had marginal profit unlike companies that are losing money on each sell.
> how people value companies based on revenue and not profit
Profit is a closer abstraction to cash flows (i.e. to the investor) than revenue, but it's still an abstraction. Investors looking at revenues and unit economics can sometimes--often--predict future profits and discount backwards, in the same way that a value investor can look at a company's profits and sometimes--less often, frankly--predict future cash flows from dividends or M&A and then discount backwards.
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?
The term profit covers a number of metrics. All of them are abstractions. The number of assumptions that go into a GAAP profit figure is uncountable. Profit on a cash basis is less wiggly, but it's still--for valuation purposes--useful only inasmuch as it is an estimate of actual cash returns on the investment.
> 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
Lots of ways for cash-flow positive businesses to be running themselves into the ground. Garden variety is off balance sheet liabilities, though people certainly
> How can you have a successful business that spends more money than you make?
Nobody argued this, not for the long term. But there are loads of situations in which losing money in the short term is the long-term savvy move. (This literally describes all investing. You send cash out when you invest.) Valuation involves estimating the value of those future earnings today.
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.
Amazon basically always had positive marginal revenue - unlike most of the startups.
People like to cite the one case where it worked and seem to be forgetting that most of Amazon’s profit comes from AWS. What are the chances that any of these startups are going to pivot to a competent different vertical to shore up their main business? That’s just like saying all you have to do is rehire the former CEO after a 10 year absence and become a trillion dollar company after almost going bankrupt.
And no Amazon did not use “excess capacity to jump start AWS”.
In theory you outspend all of your competitors such that they go out of business or otherwise lose out on the some network effect. At that point you flick the profit switch on and start swimming in pools of money.
I wouldn't like to guess what the success rate of this game is though.
So when will that tomorrow ever come for companies like DoorDash, Uber, Lyft, or the darling former much hyped unicorns?
It’s not a single point in time, most of those same companies who IPOd before becoming profitable recently are still not profitable and being punished by the market more than the market in general.
I don't think that's always true. If you are in that company, they almost certainly have exposure to the cost of those sales and the rate of sales growth, but also the cost to support more users. That gives you a good sense.
If you service has complexity and needs lots of hand-holding and is expensive to generate the sales, then it's harder to say what to do with sales numbers.
Unless you are in the midst of a best market where VCs don’t see a clear exit strategy where they can have a successful exit while the company still isn’t profitable. If you were a startup founder, would you really want to have to depend on continued rounds of funding in this environment?
This reminds me during the dot com crash, when employees exercised their options when the stock was sky high, so they had gigantic paper gains and big AMT bills. Then the stock crashed (like 99% and then some crash), so employees were not only left with near worthless stock, but they had huge tax bills with no money to pay them - and they were sometimes locked out of selling due to insider trading rules as the stock was crashing.
I had a smaller YC company pitch me something like this as an option for my stock comp - an RSA (restricted stock agreement, or "founder's stock"), where I put up all the cash up front, paid a big income tax bill in the first year, but then upside was all capital gains. I would technically own the stock but I had to sell it back for nothing if I left before it vested.
Turned out I left very early because the company wasn't doing great, in the current climate I think they're probably default-dead. All that cash is just gone.
See, generally speaking I don't think this is a bad deal.
I mean, I don't know the exact numbers / company profile. But I was in a similar situation 8 years ago. I could early exercise and I did. Estimating taxes was a pain (but a fun challenge too, lol). A couple of years ago they finally had a liquidity event and doing all these exercise shenanigans saved me a ton of money, so I'm glad I did that.
The business was doing well and I knew exactly what the risks were and I knew I could afford to lose that money. I joined early so it wasn't that much money to begin with.
I guess my point is that I wouldn't be too dismissive of early exercise / RSAs / etc — for the right kind of person / company it could be a great tool.
For what it's worth, this is how it works for founders too. The amount you pay is stupidly small (usually well under $100), since the strike price is essentially $0. There's no legal designation for founder when it comes to stock, so this person just got the same deal the founders did.
This is actually a great deal when the exercise price is low enough. You pay a nominal-ish amount up front to exercise early and all gains are LTCG. It is not a good deal in any situation where you’re not getting in close to the ground floor though, if the exercise cost itself is substantial.
I always found corporate credit cards to be similarly dodgy. Firms I worked at offered a "corporate" amex. The employee as card holder was personally liable for the debt, the employer had no liability. At the time these cards did not accrue any points either. And the corporate policy was typically "no personal expenses".
1) you must use corporate card for company expenses
2) you must not use corporate card for personal expenses
3) you cannot accrue points for use of corporate card
4) you are personally liable for corporate expenses on this card
I'm pretty sure amex was giving big perks to CFOs.
If you assume a limit of $10k per card and company (like the one I was at) had over 10k employees (though not all had cards) the amount is pretty astonishing and zero liability.
I once had an issue with Amex because I'd been travelling a lot and the boss was away and then slow to approve.
Bolt Financial, the finops company, not Bolt the car sharing service which seems to be doing fine:
> In January 2022, Bolt raised €628 million from investors led by Sequoia Capital and Fidelity Management and Research Co, taking the company's valuation to €7.4 billion
This comment should be upvoted. I suspect many people in the thread, like myself, read the whole thing thinking it's about the ride-sharing company. That would be bolt.eu, not .com.
Small note on the Bolt that's doing fine, I suspect a big part of why they're doing fine is that they're doing a lot more than just car sharing. Last I checked, they offer car sharing (car rentals), taxi service (think Uber), food delivery, scooter rental, and I'm sure there's other things in their basket. In many markets their taxi drivers do food delivery during slow hours, cars are moved into the rental part of the business when the taxi business doesn't need as many of them etc. It's a surprisingly well run business for a startup, honestly.
I called it ages ago -- this company is an utter train wreck. I am honestly ashamed of the entire industry for birthing and fostering this basically fraudulent company. Its mistakes and lies are compounding on themselves, creating awful outcomes for its employees:
- Company almost certainly juiced its usage numbers, potentially by buying users to inflate its customers revenues, so it could use those numbers to convince new customers
- Used a single deal with a large company (Forever 21) to sell VCs on the vision, while under the hood that deal was clearly failing
- ex CEO picked twitter fights constantly, to the point of calling into question whether he was even capable of focusing on execution
- Biggest competitor (Fast) exploded even before the market crash.
- Offered employees a four day work week while claiming rapid exponential growth
- Offered employees PERSONALLY guaranteed loans to help them exercise the options
- Raised at $11B valuation with 100x forward revenue multiples.
- Cash raised is currently 6-8x revenue multiple, meaning valuation over next 12m makes employee options worthless
- I've never seen the technology used on any website, and I am a frequent online shopper.
Anecdotally, I keep a very tight list of domains that run with default third party blocked JS, and am very picky on uBlock. I have never seen a single site using Fast or Bolt.
I have an ecommerce web site for a smallish regional coffee company I own. I heard about Bolt and was interested enough to go to their web site to learn more. Could not find a pricing page. Saw a form where you can request a demo. Realized it was one of those products. Left immediately. I don't have time for that song and dance. No wonder they can't grow market share.
Eh. Plenty of enterprise deals require services for implementation. None of this is shady. It’s incredibly common for sites to not have pricing. I wouldn’t chalk any of these up to Bolt being a mess. Their numbers and their founder does that for them already.
I was in the middle of an interview loop with Bolt mid-Apr, they canceled my onsite so they could (supposedly) prioritize onboarding people they'd already hired. Dodged a bullet there. Also did calls with Coinbase, Uber, and Twitter, who all now have hiring freezes.
Boggles my mind how companies flip on a dime between "hire as fast as possible" and "the sky is falling, we're laying people off." In the case of Bolt and Twitter, there were material changes (lawsuit from major customer, Elon Musk) but the others are just scared about the economy.
Conversely: "Slow to hire, fast to fire" is something I've heard a few times in my career, and usually within organizations that turned out to be truly toxic and absolutely burnout inducing places to work.
Operating on either extreme probably makes for captivating blog posts and "leadership reading material" but in praxis seems like it should be self-evidently a bad idea.
With YC, Craft, and Sequoia all urging their portfolio companies to operate at a < 2x burn multiple, it would make sense to see these growth stage companies start to panic.
When you’re small, and have revenue, it might only take a handful of layoffs to get to “default alive” as a startup. But once you go beyond a series A and start dumping gasoline on every part of your business to scale faster, the risk starts to grow exponentially. These companies with hundreds of employees are insanely inefficient, but that’s the game. You run hot until you get above everyone else and then you start to figure out how to actually make money.
During a recession that type of growth probably doesn’t work. We might still see a few companies blitz scale, but if the capital is risk off there’s unlikely to an abundance of these types of companies.
In a way it’ll be an end of an era. Probably for the better, but the run was great while it lasted (depending on how you view great). I think any startup caught in the middle right now needs to effectively assume they’re dead unless they get to operational break even with their current runway.
Couldn't agree more! Being at now-puplic start-up that needs somewhere north of, IMHO, 500 million to become somewhat profitable (industry specific, some hardware products simply cost a shit ton of money to develop) that is something I think a lot about lately.
Especially the, up until now, habbit of inefficiently thtowing money and people at a problem hoping something sticks. In hardware, so nothing that can be growth-hacked.
> habbit of inefficiently thtowing money and people at a problem
I've repeatedly commented on this phenomenon. In my experience this has never worked and unlikely to work. I've seen at least 2-3 startups doing well go completely offtrack by sudden infusion of big VC money. They are then expected to ship features like no tomorrow which leads to rampant hiring. As a result salaries go through the roof messing up internal compensation parity. Also, money attracts a certain persona of people who are good at building empires and not creating value.
I guess what I'm trying to say is; a big infusion of VC money is rarely a good thing for an org. They stop being efficient and innovative orgs. When money is abundant the first response to any challenge is to throw money at it. Is website not able to handle traffic? Throw bigger DB, more machines. Not able to ship a feature on time? Hire a dozen more. Is user sign up down? Run a cash back campaign. This may help them crush a competitor in the short run but by the the music stops and money dries up once efficiency driven org would have lost that DNA.
It also create a false sense of product market fit. When you are literally spending millions to acquire customers, you will have revenue no matter what you sell, but how much of that revenue is actually because you built something people want. I suspect this this is the case with Bolt. One-click checkout isn't that innovative to begin with.
Normaly me neither. In that particular case so it makes sense. Hardware development costs tons of money, especially when done by throwing highly paid engineers at the problem as the only idea. And when it is easier to get funding through a listing, but not enough yet, the company doesn't have a product yet but is public. Not an ideal place to be, for sure.
I don’t think it will, but even a 1-2 year recession is enough to destroy these companies. The leverage in / structure of the current financial system makes it extremely hard to not decrease interest rates again.
> This is one of the hardest messages I’ve ever had to send.
Layoffs are something of a fact of life but, seriously, executives need to stop saying things like this when they announce them. Nobody gives a damn how company leaders feel in these situations, least of all the people receiving the message - nor should they.
I remember reading a blog post about how to do lay offs once. I can’t find it anymore but it was essentially don’t make it about yourself. It leaves a bitter taste in their mouth. Wish I could find it.
When I've had to separate with employees, I never brought feelings into it. I kept it fact-based as possible for a multitude of reasons. Most of all, respect for the employee.
In March 2020 when the pandemic lockdowns hit, my CEO literally cried as he told us on Zoom we had to furlough our friends and take a pay cut. He did not hide it in an email or call attention to how it made him feel. What he did do was bust his ass to bring back every one of those employees a few months later. The actions of truly caring people are so much greater than the empty posturing of failing amateurs running toy businesses.
I mean in the modern capitalist society is having a CEO cry when they fire someone required? I’ve survived many layoffs but wouldn’t have been upset if my manager or leadership simply stated the facts.
I'd say that depends on the audience. If you were still working at Bolt, for instance, and the CEO did not indeed feel anything, you'd probably be a little spooked that they seem like a sociopath.
At the same time, it is such a copy-paste statement that it's unlikely to elicit much confidence in its veracity, but still, the absence of it would not be taken well I'd imagine.
It depends imho on the severance terms. If the company has decent ones then the message is "this hurts me and I did everything to cushion the blow for you" If the company has bad ones then the message is "let's make a hundred people losing their livelihoods about how a multimillionaire feels but isn't willing to give up any of those millions."
Thanks to him, lot of people in the industry are now a bit wiser and more careful while others simp for the establishment because they seek to benefit, are benefiting (maybe in the minds of some, they think they are reading this board and looking at profiles of users who simp or attack them?)
When he outed YC, Sequoia Capital and New York Times, I felt uneasy because I knew there would be blowbacks.
He claimed Stripe copied his blog post, but when you click the links you'll see that Stripe's post was submitted earlier than his! This was his big "WHO WANTS PROOF?" reveal. He does not walk away from this looking good.
I was on that thread, I have no idea what Bolt did at the time and I don't use Stripe.
Ryan didn't even look at the timestamps for the posts he was referencing: https://news.ycombinator.com/item?id=30069359 Everything else he said was pure speculation and story-telling.
Anecdotally, most people on HN hate the NYT; it should give you pause if even these people did not buy Ryan's story-telling.
There is a more tactful way to do what he did. It's ok to criticize business competitors, but calling them "mob bosses" and going on paranoid rants about them is not effective. It probably doesn't matter that much for him because he has fuck you money, but I hope he learned to have more self control after this.
One of the things that I would consider before joining any startups is just how good sane (or humane or whatever appropriate word) the founders are. Don't go behind all the PRs. Just try to find whether the people who founded are actually good people. What are their ethics. All these are subjective qualities so it's difficult to weigh but that's where the money is.
edited (I understand I might not have described what I mean clearly).
I tried to order a Solo Stove last fall. I placed the order, they accepted it, everything seemed like a normal e-commerce experience. Two days later, I received an email saying my order had been canceled for suspected fraud. I've never had that happen before, and it hasn't happened since. My experience is obviously anecdotal but their fraud detection routine clearly had major flaws.
With news of layoffs at Bolt, I wonder how many partners lost sales like mine.
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.
Generous severance is the ethical test of a CEO during a layoff. It softens the blow of a layoff immeasurably to provide 4-6 months of severance.
If a CEO won't do it, the remaining employees should question the CEOs ethics, and ask themselves how they will be treated in the future. And if the business literally can't afford to do it (which is rare), then everyone should question the CEO's competence.
As customers, we should all do our best to avoid and boycott companies that do layoffs without providing generous severance. Because who wants to do business with an unethical or incompetent company.
If anyone knows what severance Bolt is paying, let us know.
This company is probably going to go under. Huge severance is going to eat into their already short runway. Sometimes its just not there. And most of their engineers are highly capable, they will be fine. Its part of working for a high tech startup.
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 are taking advantage of any excuse that isn't "ya we hired way to many people so that we could say we are bigger than Fast".
Bolt apparently raised $355 million 4 months ago. If they are having cash problems, or are concerned about not having enough runway, I don't believe for a second that any magnitude of layoffs will help them.
Both "we overhired" and "it's because of the market" can be true at the same time.
You get a $335 million in Feb with a common understanding with current investors that you are going to raise $ XXX in roughly 24 month, depending on results compared to an agreed upon business plan. You thus plan for a roughly 24 month runway. 4 month later (now) you get a call from your investors that your planned next series is going to be significantly lower/harder. You now need to stretch your 24 month runway to at least 36 month. SO you have to adjust plans.
They didn't overhire compared to the initial plan, but overhired compared to the current situation, where basically all rounds are 50% lower and many are just not happening at all.
> The safe move is to plan for the worst. If the current situation is as bad as the last two economic downturns, the best way to prepare is to cut costs and extend your runway within the next 30 days. Your goal should be to get to Default Alive.
More broadly I've gotta believe that raising $335 million (after many more hundreds of millions previously), and still expecting to need to raise more down the road is just a seriously flawed approach to running a business.
I also believe that it is flawed, but it is the model that most of valley is built on. It's frustrating. I wish more companies would just focus on building value and becoming profitable. VC funding for growth makes sense, but it shouldn't be in lieu of a profitable business model. If we keep funding unprofitable companies with unproven business models capitalism breaks, efficiency is lost, and someone ends up holding a bag - usually the mom and pop investor in the public markets.
> They didn't overhire compared to the initial plan...
Frankly I don't care what their plan was if they "planned" to spend ~350M in 2 years while making 10-40M in annual revenue while getting sued by their largest customer. That is an absolutely insane level of spending. Just because you had a plan to do some unsustainable and irresponsible crap doesn't absolve you of responsibility when it turns out to be unsustainable and irresponsible.
> The ycombinator downturn letter ...
You really think that Bolt, and Bolt's ex-CEO, saw a letter from YC, and thought "Oh ya, let's definitely doing what YC said. YC definitely knows what they're talking about. I personally trust all of their decisions and statements."?
> You really think that Bolt, and Bolt's ex-CEO, saw a letter from YC
No, but I strongly suspect that both YC and Bolt CEO reached the same conclusion: "what was true few month ago isn't anymore, so we need to buckle, focus a bit less on growth-at-all-cost and a bit more on extend-the-runway"
$355M is a lot of money... Nobody can tell today what the market will look like in 24 months and nobody could tell in February what the market will look like in 24 months. You need to include some uncertainty in your plans anyways.
If there's a downturn it's not all negative, the people you were going to hire in 6 months might now be better and cheaper.
Sounds to me more like the CEO feels there was over-hiring anyways and this is just an excuse. Also maybe this is a little about "after acquiring crypto startup Wyre in April" and the current outlook on crypto?
Who in the world didn't foresee the market cooling dramatically as the pandemic "ended"?
I remember interviewing at real estate start ups during the pandemic hiring like crazy, as if this wasn't obviously a temporary boom period.
The problem is that the vast majority of startups suffer from a Markov memory problem where they can't fathom a world different from their current state no matter how absurd that view is to anyone with common sense.
Why do you need an excuse to perform layoffs? Sometimes companies over-hire or hire the wrong people. Other times they scale back certain efforts and are left with people that don't fit into the organization anymore. I feel sorry for the people, but layoffs are part of a normal process and with economic downturn we're facing, that will almost certainly impact their lines of credit and fundraising. So the prudent action would be to lay people off.
You don't need an excuse, but if you have one then management can save face. The theory would be it's a lot harder to hire people in the future if everyone thinks you're bad at management, and much easier if everyone just thinks you got unlucky with market timing.
Came here to say this, it's one of the first things I investigate about a company. If the company does habitual layoffs or has done rather large ones in the past five years, I'll move on 90% of the time.
I disagree. I think it's healthy and more humane than firing people for cause. Hiring is hard and you mess up, or people grow out of their role. Everyone knows people at work that are incompetent. It's tough to get rid of them because they may not be grossly incompetent or malicious, but just not up to standard. The layoffs I've seen usually let people go that are not effective and frankly not very happy. They get a severance, can collect unemployment and usually land on their feet. It's healthier than an organization that essentially hires for life
This makes lots of sense. But I never see it play out this way.
Because in a given company, if you ask people to identify “the deadwood” there will be a couple standouts, but otherwise quite a bit of variability. If nothing else because everyone has ego centric biases that over compensate their own contributions (or that of their function/department). And then it’s really just a mosh pit of politics that decides who stays and goes.
Or put more succinctly “one man’s deadwood is another’s diamond in the rough.”
This is true. “For cause” is “employee fucked up real bad [theft, harassment, etc]”, but many people think it means the plain English reading of “was individually underperforming” which would be a performance-related termination but not a “for cause” termination.
A nonseasonal (or similar) company that has a large swing in employee-counts has a problem. If swings happen repeatedly, the problem isn't getting fixed.
Excuses aren't needed, exit packages are appreciated and build good will with the community of people you are hiring from. And many companies will also use their networks to help you find a new job by referring you to multiple companies. At least, that was my experience when I was laid off at a relatively well funded startup in the Bay Area at that time.
Bolt pitched us a ton (we do eight figures of revenue online using a WP-style checkout), we heard them out, did a small demo-type, and I spoke to a bunch of their customers... and we came to similar conclusions. It's overhyped "technology" that has very questionable marketing claims.
Of course. Everything sucks. But people keep buying stuff and we incrementally improve the experience, so it is what it is.
Our marketing team wanted to move everything to Shopify, and then I asked them to do a cost-benefit analysis compared to the 0% we pay with our current setup (plus Stripe fees).
When the estimate came back in the hundreds of thousands of dollars more per year, I took the opportunity to lecture them on rent-seeking and middleman evaporation of profits that these software startups/businesses capture silently from organizations who just don't do the math.
Oh I didn't, but I (shockingly) didn't think it was relevant here in comparison to the $355M dollars that they recently raised. Even an expensive lawsuit would be unlikely to put a big enough dent in that to materially affect their runway, and it's not like "losing more sales" can make their existing revenue much lower (again, in comparison to a $355M war chest).
For a small company, "over hiring" is always a sign of incompetency of the management. Think about the good companies in the early days. They can do so much with so few people, like one person evolving zookeeper into a beast to handle FB's scale, or two people having implemented LevelDB in a matter of months, or one person figuring out a way to increase the density of co-lo rack by 10 times.
> Coinbase ended Q1 with 4,948 full-time employees, up 33% versus the fourth quarter of 2021. Over the past twelve months, Coinbase also said in its first-quarter report that the company added over 3,200 net new employees.
It's documented in the book Google Plex. Google hired a neurosurgeon as their first infrastructure engineer. His fast task was to increase the rack density to save company money. The dude figure out how to pack 10x more processing power into the same size, resulting in overheating of the colo space (or overloading the power line? I can't remember exactly). The colo company had to tear down an entire wall and used a 18-wheeler modified mobile air conditioner. I probably got some details wrong as it's been years since I read the book, but you get the spirit.
Idk about this one, and 10x sounds past physical limits unless their original footprint was ridiculous, but I heard a story at Google that sounded kind of like this.
I think there was some colo in the day that charged only by sqft and gave away the electricity assuming customers would have reasonable densities. Somehow Google crammed a completely unreasonable density of machines into the colo. I would guess this was corkboard days. When the contract was renewed, the colo was sure to change the terms.
I was under the impression that that acquisition (along with their previous ones) was all stock, but apparently it was a mix. In hindsight, that seems like a poor decision.
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.
It's lol indeed, and this appears to be one among many symptoms of this complete nonsense we're living.
It seems to be normal nowadays for a startup to pursue all the sorts of shallow growth indicators instead of worrying about making real money. They are concerned about "runway" not as a measure of how long they will last, but as an indicator to plan the time for another "round".
And I don't blame the companies alone. Investors are usually thought to be smarter people, but they are humans with emotions and dumbness like everybody. The amount of investors who don't understand very well what they are doing seems to be increasing. They are setting (accidentally, as they don't quite know what they are getting into) this sick system of incentives. Companies are basically playing accordingly.
Delaying profits is a perfectly valid strategy, but that implies intent. I guess however most of these modern startups are having no profits because they aren't managing to make them, and not as part of a bigger strategy.
Exactly. Delaying profits means having a knob in your cash allocation (usually sales) that you can turn down and become profitable. If you turn it down and still can't fund the company... you weren't delaying profits.
Pre-profit doesn't just refer to your cash-allocation-adjustment scenario. There's also the broader notion of what you focus on. A company may be pre-profit because they're not prioritizing profitability as a strategic objective early on. They may have no (current) way of turning a dial and becoming profitable, yet still be making the correct strategic decision to ignore profitability for the sake of e.g. growth or product development. Countless now-gigantic, now-profitable companies started as startups who were intentionally (and correctly) focusing on strategic objectives other than profitability.
The more businesses do this, the more the hiring market becomes lemons for unicorn-type businesses. Prospective employees will wonder if they're an overhire and if question their expectations of job security.
Always ask about valuation and revenue. If the multiple is very high run the other way. A high multiple makes it less likely that your stock will be worth something, it also makes it more likely that the company will have to do layoffs in the future.
The more businesses do this, the more people will be out there who will just be happy for a paycheck and health insurance. Prospective employees will start to be less picky and have fewer options, sadly. It's not going to be a good time for a lot of people.
they probably aren’t burning cash quite as quickly as Fast but product simply doesn’t seem that interesting or differentiated to me at all.
and similarly to Fast can’t recall a single merchant I’ve shopped from that actually uses it.
and with such a public brawl with their largest merchant/customer I don’t see how that really inspires much confidence in any other medium or large merchant that were even remotely considering using them. the risk of it not working very well seems far too high to switch to it if whatever a merchant is currently using is far from broken.
If I'm the buyer of a B2B product, am I going to start looking at startup competitors and asking "Will they be around in X months? Or should I just buy from MAMAA, who I know will survive?"
I hope this doesn’t sound pedantic but it’s “affected”, not “effected”. It’s an error I see a lot and it’s easy to fix if you just remember that “affect” means “to impact”.
So if what you’re trying to say someone or something was impacted by something else, you say “affected”.
Also as a general rule of thumb “effected” while grammatically correct is rarely ever used in colloquial talk in the context of what it means which is executed or produced. So people almost always mean “affected” when they make this mistake.
Effect is the result of the influence or impact on something.
The simplest way to think about it is that 'affect' is a verb and 'effect' is a noun, but they refer to essentially the same thing (you could define 'affect' as 'to have an effect on' something). But even that is confused by things like the verb phrase 'effect change'.
Which word you use might actually just come down to which way you're talking about something, but broadly affect is the action and effect is the result.
Bolt laid off around a third of their workforce accord to The New York Times, from just over 900 employees to around 660 as counted by active Slack users internally.
I'm a bit naive on this space so forgive if this is an ignorant question;
Can anyone explain how any of these companies (Bolt, Fast, 1o) are doing anything different than "checkout with paypal"? What exactly is wrong with paypal that would make a merchant want to use Bolt instead?
The idea is that a central 1-click checkout provider will store your payment information, shipping address, and other details after the first time you use a site with their checkout.
The next time you checkout on any website that uses the same 1-click checkout provider, they already have your information for “1-click” checkout.
The investment thesis is that if 1-click checkout were to take off, it would become a winner-take-all market where every shop wants to use the 1-click provider with the largest customer base. This is the magical “network effect” that investors want to see. If it works and becomes ubiquitous, the network effects would be massive.
So far, none of the providers have managed to get much traffic at all. The common theme is that integrating 1-click checkout into everyone’s different web store has been a much bigger engineering challenge than they expected. They’re burning cash at shocking rates to do all of these custom integrations but not getting enough return on investment.
It’s also entirely unclear why Shopify or Stripe or another provider wouldn’t just step in and use their scale to make this happen themselves. I kind of suspect few people actually want 1-click checkout to begin with.
PayPal has had this for a very, very long time. I use it all the time, and it works great. So what am I missing? I also have Apple Pay enabled. It works great as well. The use of hardware verification vs a browser redirect gives it some nice advantages. So what exactly is the differentiated experience I’m getting with Bolt?
My personal experience for the last couple of years is that the "checkout with Paypal" option on most sites is buggy now. After the Paypal portion of the payment flow, the redirect back to the original site fails. The redirected page will either show me an error message or I'll be somehow redirected to the website's root page.
I've stopped using the Paypal option even though I really want to use it, because it makes me uncomfortable providing my credit card information to so many sites. Not sure what's changed, it used to work quite well. My guess is either there's a bug on PayPal's side with my account, or the PayPal integration has gotten more complicated and many websites have not kept up with certain changes.
> The investment thesis is that if 1-click checkout were to take off, it would become a winner-take-all market where every shop wants to use the 1-click provider with the largest customer base.
Not saying you're wrong about that being the thesis, but the thesis makes no sense to me. It assumes that consumers are selecting shopping sites based on which payment service the sites use rather than on, say, price or selection.
The target market this investment thesis depends on is people who say, "I found a site with just the thing I wanted, but to buy it, I would have to enter my payment information! Guess it's back to Google to see if someone else has it at a similar price, and if not, I just won't buy it at all." Because the moment you give in and enter your payment and shipping details into a second checkout provider, that provider becomes just as convenient for future purchases as your first one.
The "makes sense" idea is for low effort purchases.
Simple example is itch.io. Games on there are a couple of bucks. I have my payment information saved. People link a game to me, and I'll maybe impulse buy cuz I don't have to deal with making an account or setting up payment info.
It's silly, but I think it works in a certain sweet spot! But honestly I think the bigger thing than payment details is actual account creation. I'll go over to Amazon to buy a thing just to not deal with some product's bespoke checkout page, unless I really want to support the product's creator.
I've definitely bailed on purchases before due to the purchase flow being too annoying, and either found another site or gave up.
Usually this is due to having to type in all my data just to figure out what shipping options are, but I'm quite sure every step you make people do to check out results in x% fewer sales.
I wonder how much of this is driven by misunderstanding the analytics?
“We have a huge drop-off rate in our checkout flow! Customers have intent to buy and they’re somehow getting blocked in checkout; we need a smoother/faster checkout…”
No dumbass, you need to need to not charge $15 shipping on a product where you’re only $5 cheaper than your free shipping competitor.
Yea, your thesis makes no sense. Refining that thesis into what Bolt/Fast/etc actually believe:
- Conversion rates on the checkout page will be higher when user info is prefilled bc of less friction
- This means conversion rates will be highest for the one click checkout product with the largest market share
- This will lead to merchants choosing the one click checkout product with the largest market share, bc they want the best conversion rates
- This leads to VCs lighting money on fire trying to capture the market, since largest user network will be the main objective
This is assuming, of course, that checkout page UX and optimization is something all these companies will be able to do so it'll be a level playing field there. Given how much research and experimentation has gone into optimizing checkout pages, if these players all have buckets of VC money, that seems safe to me.
I think the network effects are on the vendor side. As a vendor you integrate with the one-click checkout company that has the largest user base, because that'll have the most coverage for your customers.
> It assumes that consumers are selecting shopping sites based on which payment service the sites use rather than on, say, price or selection.
If I'm shopping for something and multiple sites offer it for the same price, which happens pretty often for many categories of products, I prefer the vendor with the easiest checkout experience and/or the fastest shipping.
> I kind of suspect few people actually want 1-click checkout to begin with.
This.
I trust Amazon almost implicitly. I know that they have all my information, and that I use the same shipping and payment method every single time. There should be no reason for 1-click checkout to not work perfectly every time.
And even there, I don't use it. I dunno. Is it really that much more effort to look at one more screen and get the feeling of security that the item is going to the right place and will get there on a day that makes sense?
If Amazon can't get me to use 1-click, No other merchant/retailer has any hope whatsoever.
It works for digital items (iTunes, Kindle) because the delivery is "to me, in the UX i'm using right now", not a physical item that has to come to an address.
I've ordered things from not-Amazon and had them arrive weeks late, or they ship the wrong or damaged items, or returns are a hassle, etc. One-click checkout is not the solution to any of that.
It would be very interesting to see the conversion rates of Bolt and Stripe. Considering we have Apple/Google Pay, Paypal, Klarna, and card details being stored in a browser the advantages offered by Bolt seem minimal at best. It's also hard to imagine moving from a situation where a payment passes through one service (Stripe) to two services (Bolt and Stripe) being particularly cost effective for the merchant.
I also imagine more than a few shoppers would be freaked out by seeing their card details stored on a site they've never used.
That's interesting. I feel like the way to really get this business off the ground would be for someone like 1password or Chrome to replace the credit card number they store with one they own, and then when you use it to fill in a form with your credit card information, the merchant charges them and they charge you a 1% service fee or something. Overnight, you are taking 1% of all Internet shopping revenue.
The ethics are, of course, terrible. I made myself a little sad just writing this!
Essentially, Bolt (and Fast etc) are offering the convenience of a "1-click checkout" identical to Amazon's 1-click checkout button.
If you transact with Bolt at least once through any of their merchants, then Bolt will have saved your billing and shipping information so that future purchases are instant and do not require checkout forms to be completed. Theoretically with the reduced checkout friction there is a reduction in abandoned carts.
And since Amazon now also came out with such a payment button, how are they going to compete against a company which already has an enormous user base with their credit card data on file?
That they were able to raise 1B$ is a true dotcom era déjà vu.
Amazon's multiple attempts to foray into payments as a service have been failures. For multiple reasons. I know this because I worked on one of their largest payment services; it was meant to be part of AWS offering but disbanded since. Since then they have attempted checkout button; payment button; square like device and what not.
Curious, why? I could understand it as merchant, but as customer, PP has great customer protection (including partial chargebacks, free return shipping, etc.)
I wouldn’t call it notorious. I have almost never heard of non-merchants being fucked over by them. And for customers, they are the opposite, super easy to deal with because, like Amazon, they decide in favor of the customer when in doubt.
> I know this will be difficult for us all, so I want to provide clarity on what will happen next. For those directly impacted in the US and Canada, our goal is to inform you within the next 30 minutes when you will receive a calendar invite for an individual or small sub-team “Bolt Restructuring” meeting. For those of you who are staying on the Bolt team, later this morning you will receive an invite to a Town Hall at 1pm PST. If you work outside of the US and Canada, we will provide further clarity based on the local laws and regulations over the next few weeks.
I hate the use of things like "directly impacted" - feels like such corporate speak to try to lessen the blow. Just be straight about things. "Those who are being laid off" - don't hide behind words.
So is this the competitor to Fast, which also had a big round of layoffs recently?
(edit: ah yes I remember now it was a complete shutdown)
My current understanding is that both of these businesses were premised on the end of Amazon’s one-click checkout patent. Is this proving that to be a faulty premise?
It depends. You don't know what their layoff strategy was. It's possible to do a 30% layoff and still be hiring.
You should still continue looking since you don't know what you'll be getting into.
If they do rescind the offer, since they'd be screwing you pretty hard, I'd ask for pay and health insurance until you find your next job, but also ask them to connect you with other companies their VCs have invested in. Feel free to ask even if they don't offer.
If they offer severance, feel free to ask for more.
IANAL, but I doubt you'd have much legal recourse. California is a right-to-work state. Public shaming is always an option, but that can be personally and professionally expensive.
It's definitely not random, but it's not perfectly ordered according to merit/performance either.
Some times entire departments are laid off if their projects are part of the cuts. You can be the best performer and still get laid off if you're in the wrong department. Some times companies will identify key employees and ask them to "re-apply" for other positions at the company in other departments.
More often, cuts are made throughout the organization. If the company is laying off 5-10% of employees then it's usually not that difficult to identify underperforming employees if management goes in with a scalpel. However, once the layoffs grow to 20-30% or if the layoffs are imposed at a team level (many teams are 100% good performers) then you have no choice but to lay off good performers as part of the plan.
Actual strategies vary depending on circumstances, but generally you retain people who have the most experience on critical items whereas newer hires and people working on random, nice-to-have type projects are at high risk. Anyone with an unusually high compensation relative to their performance is also a likely target for cuts. If everyone on the team is performing similarly but some people are making 50% more than others (seniority, better negotiating, etc.) then you'd rather lay off two of those employees than three people at more traditional pay. It's about budgets, not headcount.
The other fun trap is that high performers might even be happy with the bottom 5% gone, but it's also easiest for them to find new jobs, so if you cut the bottom 20%, half of the top 10% will also leave.
It really depends on the layoff strategy and there are lots of those.
But for the most part you should treat it as random. For instance I was in the room when a company decided to shut down a whole location, even though it was very high performing. The reason? It had the lease ending soonest so they could cut even more costs there.
It's complicated. You're basically targeting an optimal team structure on the other side. That means you're likely saving high performers, but that's not always the case.
We had to let a really great UI engineer go because we didn't have the team size to support his position any more. He found a job quickly and we gave recommendations - including clearly communicating it was just an unfortunate draw for him.
The wording of these always makes my skin crawl. Just say what's happening and what led to this decision. Numbers, not handwaivey rhetoric like "we need to focus".
The funny thing about recessions, and macroeconomics as a whole; much of the time, we eat the food we cook. If there is an upcoming recession, the most likely root cause is that a bunch of people believed there will be an upcoming recession.
De facto - bear in mind the system that we´re talking about moves rather slowly - recessions always have real financial or economic system causes, and quite often are seen coming in advance by some people.
People who are at the right points in the financial system, who for example can see bad debt starting to build up (takes months, but there's always a clear pattern of people starting to skip payments etc), companies starting to run out of runway with no revenue coming in, again their banks will typically be able to spot this fairly quickly. Changes in fuel costs are very significant, especially in the US, too many people drive too far to work, petrol goes up, this multiplies quickly - this one hasn't even really hit the system yet, wait for winter.
Sure; but 8 times out of 10, these things happen and there's no recession. People were SCREAMING recession recession recession in 2020 Q1-Q2. It never materialized.
You've got the "well we kicked the can down the road" group, who are just as bad as the "predict 10 recessions and you'll get one right" group because there's always going to be a recession; saying "it'll happen in the future" is at least more accurate than saying "it'll happen last month, no this month, no next month, ok JULY" because at least you're not wrong, but the future is indefinite. Its not useful.
If the markets & macroeconomies were rational, then you could draw a line and say: root systemic issue causes recession. Clean, simple. The problem is, economies aren't rational (by any definition of rationality understandable to the human brain, which is the only useful definition). They're extremely complex, billions of signals, and predicting what's going to happen is extremely difficult.
Its honestly surprising to me that, generally, people on HN fully understand: you can't predict when the stock market is going to go up. It is literally no different than predicting when its going to go down. You can't do either; not with any foolproof reasoning. If you spend every month saying "its going to be a down month", eventually you'll be right, but it doesn't mean your process is good and it doesn't mean you'll be right next month.
"companies starting to run out of runway with no revenue coming in" Like Bolt? The company that raised $300M this year, and to compensate for their "declining runway" decides to fire... 250 people.
This is not an example of a company reacting to systemic market conditions. Its a company reacting to systemic market sentiment. Sentiment precedes conditions. Startups operate for years with 12 months of runway and no revenue. What's changed? Availability of capital? Eh, not really. What's changed is the expectation of availability of capital in 12 months. That expectation is based on real or semi-real things: rising interest rates, inflation, supply chain woes, but it is not in-and-of-itself Real; its a prediction of the future.
Of course, maybe availability of capital is drying up, today. Why? VCs being more stingy. Why? Well, maybe you say rising interest rates, maybe inflation, war in ukraine, but go talk with a VC and they'll say: expectation of market downturn in the coming year.
Through that expectation they (hopefully temporarily) destroyed the economic activity of 250 people. A hold has been placed on all those peoples' ability to: buy iPhones, buy clothes, eat at a nice restaurant, buy a house... and that is what causes recessions.
Sentiment precedes conditions. Sentiment is already priced in.
This is bordering on delusional. You think there are no meaningful fundamental factors to the world economy and the only thing likely to cause it to go down is sentiment? Not debt? Not liquidity? Not inflation. Not money supply? It just goes down because people woke up on the wrong side of the bed?
The people believe it's going to go down because they are doing things like looking at balance sheets and tracking the relevant data. It's like saying someone got killed because a bullet happened to be moving around towards them but that it definitely wasn't because they were shot.
Recession happens when all the people who thought they were working on the next big thing realises that they wont be the next big thing, that all the work they put in was just a waste. You can't avoid that by just thinking positive thoughts, reality isn't an optimist and will hit you sooner or later no matter how hard you try to ignore it.
Trying to delay a recession just means all that waste work gets even deeper entangled into your economy, making the recession hit harder and wider.
This kind of message feels more authentic to me if you put the big news in the first sentence, then cover logistics, then add any context you want. Seems better than making people wade through a lot of stuff about securing financial position, market conditions, etc etc to learn if they are losing their job.
Edit: I'm going to leave the below message but wanted to acknowledge that OP meant that the message could be more authentic. I misread.
How is this authentic? I was reading through and thinking how it's mincing words and making it sound like everyone is going to feel the same pain.
"This is one of the hardest messages I’ve ever had to send." Bad start. Why do CEOs make this about them?
"Unfortunately, this includes reducing the size of our workforce and parting ways "
"I know this will be difficult for us all" At least acknowledge that it's going to be more difficult for people who will lose their jobs.
"But today, my focus is on our people. " You're literally laying people off. First paragraph literally puts employees as the last priority. "my top priority has been to do what’s best for Bolt’s business, customers, and employees"
Stuff like this is business reality- just be really authentic. Say it sucks but we've had to do this. Don't talk about how hard it is for you or others who aren't directly impacted. It may be hard but it's way harder for the ones losing their jobs and cut the BS about focus being on people. It's clearly not.
You missed the takeaway of OP's message - OP is saying that the message, as it was broadcast, was not authentic because it was a long, meandering explanation, burying the part where people are losing their jobs in the last sentence of the third paragraph.
Don't waste people's time by burying the most important information. You can receive a longform explanation, but not at the expense of comprehension or speed of delivery.
Why do CEOs feel compelled to say “this is the hardest decision I’ve ever had to make.” Hoping a CEO can chime in here… is the decision really that hard? It seems like they are just trying to not seem like a dick, when we all know they’re just looking out for their own best interests (not saying this is wrong, but not saying this is right either). Just genuinely curious how much “fluff” that statement contains.
Chiming in. I tend to work day and night to ensure a good outcome for our team, investors, customers etc. At the end of the day the buck stops with the CEO. Definitely the last thing you want for your team members.
It's not just their own interests. If they run over budget they have to shut down and everyone loses their job. So impacting only x% is a better alternative. Doing it all in one go and getting it right the first time is very important because you want to end up in a sustainable position where you can assure everyone remaining that they have made it and don't need to worry.
I'm really tired of this "this is one of the hardest messages" cold open.
You have thrown innocent people under the bus because you don't know how to balance a budget and mitigate risk. One thing none of these messages have ever done as far as I'm aware is take responsibility for their actions.
Another case of deliberate overhiring to deprive competition of talent and generate buzz, then shedding the excess when world/market events give you some cover. Combined with a healthy dash of actual failure, of course
Why? Business will continue, they are just trimming fat (excessively) based on what the market is doing. Next 2 years might be rough, especially for ecommerce.
In general, I agree. But for Bolt in particular- they have a 2500x ARR multiple, and their top customer is suing them for "utterly failing to deliver on its promises" due to incompetence in software and lying about the details of their relationship, and the general sentiment of the company and founder is that of fraud, and the direct competitor just went out of business for very similar reasons, and the TAM of the market is less than they've raised in VC- I'd say the employees and investors can do greater things with the remaining capital.
Revenue looked on track for $20M ARR with no growth. About 500x at an $11B val.
But I think they raised about $1.3B, so if they recap at about that amount plus an employee pool, they can bring that multiple to 50x. This would wipe out the founders and early employees, leaving current employees some incentive to move forward.
Then, if the team can grow the business 2x, you are in normal-ish SAAS multiples. So it's not crazy. It could still work. A lot of pain.
Employees can move on at their choosing no? And the investors made a gamble, it's their own fault if they invested poorly. Now they have to wait (or at least play to the contract).
> To laser focus on our core business and products, we will be prioritizing our roadmap and making several structural changes. Unfortunately, this includes reducing the size of our workforce and parting ways with some incredibly talented people on our team as of today.
This tech pullback is tricky. One one hand, there are real businesses with revenue behind a lot of the tech companies (unlike 2000), and these companies have actually changed consumer habits. There are also a lot of crypto businesses that are mostly still private and have invented a electronic trading cards that are losing value. Tech is also a lot bigger than it was in 2000 and 2008, a lot more people got into the industry, and it's not clear how overgrown it is.
Bolt seems like it managed cash flow poorly, and it's in a tough space, effectively competing with your browser, your phone's wallet, Paypal, Amazon, and (eventually?) Shopify. The question is how bad are second-order effects, and how much does a pullback hurt well-run players.
The problem is that even if they run break even, all the shareholders and employees other than the last round of funding is still below water. They need to 10x to be somewhat fundable again, not at all easy to do.
No you might be getting mistaken with Fasts layoffs. Layoffs are still layoffs when they let go of 100% of their staff and fold the company over right?
You assume that this many people actually did something useful instead of looking nice on paper for VC. They have 40m in revenue, a lot of it had to be useless.
I am one of those let go today. It's especially bad, because they seem to have messed up the invite templates. I received one to the Town Hall meeting, even before Majus letter was published, only to get the invitation cancelled and receive and invitation to "Bolt Restructuring". What an emotional rollercoaster. Extremely anxious about the future, as this is my first time being laid off, especially in the current market.
EDIT: I am doubly screwed because I signed up for the employee stock option loan program... and I'm not sure what the bank will want from me now that the stock price has tanked.
We've banned throwaabolt and also what looks to be that user's main account.
To answer the question, it took HN only a few minutes for some users to realize this, but 2 hours for me to find out about it. Most of that time, an email was sitting in the inbox waiting. Thank you for pointing this out, and also to the user who emailed, since otherwise I wouldn't have seen this. We rely on the community to route info to us. Fortunately HN has a lot of users who care about the quality of the site.
All: if you notice anything weird, dodgy, or otherwise degrading of quality, we always appreciate a heads-up at hn@ycombinator.com. HN admins are mostly a clearinghouse for things that the community notices, so this really is a shared effort.
> 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
So I suppose the bank will be after your personal assets?
I work at Bold Commerce and we have some open positions for software devs; take a day or two to process and then take a look. I never realy figured out how so any companies were all going to "own federated checkout" and we are definitely in a different space, though a comparable size to Bolt.
I'm sorry you're going through this. I don't know what your position is but I may be able to help you with the "finding a new job" part of your anxiety. Please feel free to reach out to me on twitter @devetorecruiter. Good luck with everything!
We live seprated already and have our own lifes (and boyfriends, at least for her) but the divorce has not been finalized yet and so she technically is still my wife.
Can you share more about the stock option loan program? If it is what it sounds like, that program is unconscionable insanity and whoever is encouraging employees to engage with it is setting employees up for a world of hurt.
Wow. After reading this I clicked on CEO Ryan Breslow's Twitter profile pic which is of him barefoot, wearing a psychedelic hoodie and sitting in a yoga position with his palms upturned. Between this loan idea, the self-reference to the 4 day work week and the yogi pose, it's like something straight out of HBO's "Silicon Valley."
Wow, everything about this thread -- from the kitschy, nearly condescending rara tone, to the exclamations about something never having been done before being a reason to it -- as well as his profile pic just screams to me that this is a company with a totally broken ethos buried in some weird SV startup pathology. It's all just so weird.
> 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
Yes, it is not the same company. Ride-sharing is bolt.eu, this is bolt.com - some checkout company. bolt.eu is doing OK and got some investment recently.
A the same time in the same market we have several Transportation players investing in creating Hydrogen generation infrastructure for hydrogen based fuel cell EV cars and trucks.
Even Indiana gets a hydrogen gen plant for Trucking.
it should not be a surprise that hypergrowth companies face difficulties in current conditions.
the layoffs will continue and hopefully contribute to a normalization of dev salaries.
i find the crazy salaries that devs received in the last years obscene.
edit: kids, stop down voting without comments. i have met too many arrogant software engineers, data scientists in the last few companies I've worked at. many entitled juniors, too many arrogant seniors. it changed my view of this field
I guess this is the beginning of the tech washout. clings to large tech company job
EDIT: 33% layoff today