I guess this is the beginning of the tech washout. clings to large tech company job
EDIT: 33% layoff today
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?
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.
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.
What company is that?
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.
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.
Swing the axe and get it done in 2 days.
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.
[0]: https://techcrunch.com/2022/01/14/online-checkout-bolt-decac...
...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.
Imagine!
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.
(Doesn't work if the company goes bust though)
https://www.crunchbase.com/organization/bolt-5/company_finan...
how can a company burn money that quickly so they end up with only 12-18 months of runway?
People get lazy because things seem good and let questionable hires and other expenses slide by because why not, there's plenty of money.
Facebook? Who knows? I don’t follow adTech
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)
It will be 12-18 months at least before we can tell if a long legged tech washout is upon us.
https://twitter.com/theryanking/status/1493390184897032201
HOLY CRAP. How is this even legal???
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.
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.
You missed the tweet directly under it:
> Therefore, we made sure to give every employee ample time to read about the pros and cons of this decision, including learning about all the risks in the business, and we gave every employee a $300 stipend to consult a financial advisor during the implementation process.
I understand making things illegal to protect people from being swindled because they don't know any better, but if you made decision even after consulting a financial advisor that's on you.
Conveniently the CEO has bailed the sinking ship and publishes daily tirades against the "establishment" that is victimizing Bolt specifically every day.
Responsible leadership will give you numbers, but leave you to make your own choice. Anything else should make you worry.
Source: https://twitter.com/theryanking/status/1493609864534315014
> 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...
edit: thanks much for the quick explanations
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.
> At Bolt, we did it as a Series D company
> If your company has a strong growth trajectory, the benefits to your team from this program can be extraordinary.
https://mobile.twitter.com/theryanking/status/14933901919518...
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.
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.
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.
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.
Do we have evidence to this encouragement?
There is basically no way to read that thread where it doesn't sound like an encouragement.
I presume the Twitter braggery counts as encouragement.
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.
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 ycombinator downturn letter (https://techcrunch.com/2022/05/19/yc-advises-founders-to-pla...) just says something like this:
> 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.
That sounds exactly like what Bolt is doing.
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."?
$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?
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.
I think in this case it's a significant volume number of people.
And so it's not normal even with a downturn. It's indicative of poor management.
> 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.
https://www.coindesk.com/business/2022/05/19/coinbase-outlin...
well, may be there is a connection :
"Earlier this month, Bolt announced it was purchasing crypto startup Wyre Payments in a deal worth reportedly worth roughly $1.5 billion."
Talk about euphemisms...
https://www.forbes.com/sites/kenrickcai/2022/05/25/checkout-...
edit: I saw on blind indicating its 15% of workforce
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?"
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.
Affect is the influence or impact on something.
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.
- 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.
Real talk, is this fin-tech's latest Theranos?
I went down this rabbit hole last month. While not directly related to the current topic, it might help explain why you've "never seen it": https://twitter.com/nrmitchi/status/1519174682863226880
A product not intended for an SMB, but instead one targeted at large enterprises?
Bolt definitely has some explaining todo with employee stock options but calling it Theranos seems little extreme.
Fast didn't inflate their revenue.
Bolt encouraged employees to take the loan to exercise stock. And Bolt's founder founded that loan company.
Fast definitely didn't do that
Calling it theranos seems fair...
Bolt : WeWork :: Fast : Theranos
Here are some good reads: https://www.nytimes.com/2022/05/10/business/bolt-start-up-ry...
and ICYMI the infamous "Stripe and YCombinator, the Mob Bosses of Silicon Valley" thread from the soon-to-be-former CEO:
https://twitter.com/theryanking/status/1485784823641755648
if it looks like a duck, walks like a duck, quacks like a duck...
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.
"troll account. didn't actually get laid off from bold. curious to see how long it takes HN to realize this."
Please don't create accounts to do this.
> 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?
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.
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.
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.
Maybe it’s just me. But I don’t consider publicly traded companies to be anywhere near a startup.
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.
I guess net burn = net loss?
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.
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.
When he outed YC, Sequoia Capital and New York Times, I felt uneasy because I knew there would be blowbacks.
Edit: added "some of"
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.
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.
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 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.
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.
Makes no sense to me either.
That they were able to raise 1B$ is a true dotcom era déjà vu.
Everyone should get obscene salaries
Mostly because of the loss of face. Layoffs means the CEO/board has screwed things up big time.
Firing people is easy. They fire screw-ups all the time, no platitudes no regret.
But this time the CEO screwed up, there are no two ways about it. Taking responsibility is painful.
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.
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.
> 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
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.
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?
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.
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.
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.
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.
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.
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.
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.
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.
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.
edited (I understand I might not have described what I mean clearly).
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.
Reminds me of this George Carlin's performance: https://www.youtube.com/watch?v=vuEQixrBKCc
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.
> great depression 2
You must be a Ray Dalio fan.
Surprising that I’ve never heard of either Fast or Bolt
Can employees go on strike to prevent the layoffs?
With news of layoffs at Bolt, I wonder how many partners lost sales like mine.
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.
https://www.nytimes.com/2022/05/25/business/bolt-layoffs.htm...
Perhaps the feds inducing a hiring freeze is _working as designed_ :
https://finance.yahoo.com/news/why-the-fed-wants-corporate-a...
> 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.
There’s some special irony in this statement as they attempt to achieve the holy grail network effect of being “the sole” 1-click checkout option!
I wish I could short all startups that use the term 'democratize' for any reason.
No more Web 3.0, NFT, DeFi posts for a few years. Top Kek, lel.
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.
