31 May 2022 |

Bolt’s Big Plan Backfires



Bolt’s Big Plan Backfires

  • One-click checkout startup Bolt just laid off 185 employees, ~30% of the company
  • In February, founder Ryan Breslow announced Bolt would start issuing personal loans to employees to exercise stock options
  • The move was criticized as highly risky, with the potential to bankrupt employees if Bolt’s ultimate exit valuation is less than its January valuation of $11B
  • Now layoffs are in full swing and valuations tumbling, leaving Bolt employees and former employees on the hook

Why It Matters: Ryan gave Bolt employees loans to exercise their stock options, at a wildly high, $11 billion valuation, and declared it as a radical breakthrough for Silicon Valley.

Today, it’s extremely likely that recently laid off employees owe Bolt more than their shares are worth. Which could cause real problems down the line since that debt is secured by their personal assets – their savings and their homes.

How It Happened: To Exercise or Not To Exercise

First, stock options are not free. They’re a benefit for employees giving them the option to buy company stock at a specific price. But you do have to buy it.

If you’re employee #1 at a company, your shares are probably cheap because the company isn’t worth much yet. As the company gets more valuable, shares get more valuable, and employee stock options get more expensive.

Example: If you were employee #1 at Coinbase, you might have stock options reserving 10,000 shares at a price of $0.50 each. When Coinbase IPOed and the stock price hit $300 a share you could exercise – purchase your 10,000 shares for $0.50 each – and make a pretty good return.

Breslow’s plan was to give out loans so employees could exercise early and reap the tax benefits of long term capital gains. It would also make it easier for employees who left the company to exercise their options. But despite that laudable aim, Silicon Valley veterans called the plan naive and arrogant. Because…

The Downround Trap

Bolt has raised over $1 billion in venture capital, which is a feat in itself, and racked up a massive $11 billion valuation.

But the company only generated ~$28 million in revenue in 2021. They were targeting $50M revenue in 2022, but there are rumors that’s slipping. $11B on $28M in revenue is pretty rich.

Now valuations for growth stage, venture backed companies are cratering and Bolt will likely have to raise at a lower valuation the next time around. AKA a down round.

The consequences of that reality are best explained by Ryan himself in his thread announcing the plan:



So if employees bought shares in Bolt at an $11B valuation, and the company ultimately is acquired for say $2B – or in a worst case scenario goes bankrupt like competing one-click checkout startup Fast – employees will still have to pay off those loans.

He also says: “Over half of Bolters eligible to receive this benefit decided to move forward with BOTH early exercise and loans during our tender offer.” Oof.

On the other hand…

If Bolt succeeds and eventually IPOs or sells for upwards of $11B then it’s a win. Employees are in the clear, their loans are repaid, and they’ll make a profit.

Their new CEO said the goal of the layoffs is to “reach profitability with the money we have already raised” and a down round in the near term doesn’t determine the company’s ultimate price. It’s risky and it feels like it will be some time before Bolt can justify an $11B valuation again, if ever, but who knows. For the employees’ sake, I’m hoping it works.

Exercising options is one of the least understood facets of startups. Go deeper with Holloway’s fantastic guide to equity compensation.

Plus: To add insult to injury Ryan Breslow is also a cofounder of Prysm, a startup focused on promoting these loans across the tech industry.


Vitalik Goes Soul Searching

Soul Bound NFTs

  • Ethereum Founder Vitalik Buterin published a new white paper on what he calls “soul bound tokens” (SBTs)
  • SBTs are non-transferrable NFTs tied to a single individual
  • Stick with me here. SBTs would be a new technology primitive, to verify university degrees, identification, proof of an investing track record – anything permanently attached to a person.

Solving the Money Problem:

Right now NFTs are primarily a way to signal wealth. In this white-paper and blog post Vitalik Vitalik calls that out, criticizing today’s crypto space and, in his own words, “how money-oriented everything is.”

People celebrate the ownership, and outright waste, of large amounts of wealth, and this limits the appeal and the long-term sustainability of the culture that emerges around these items.

– Vitalik Buterin, Creator of Ethereum

Crypto is undergoing a reckoning right now. To advance, crypto startups need to refocus on the basics: generating revenue and building products that people want.

SBTs go beyond the hyper-financial and get at the technology underpinning crypto, pointing at new use cases for NFTs – like medical records, credit history, property rights – and to new ways to punch out of the crypto bubble to reach more mainstream customers.

Takeaway: Like most of crypto, SBTs are a fascinating a technology that could spawn new products or entire industries. But right now it’s crypto for crypto’s sake.

And some people would prefer a more professional name:


Every week I interview up and coming founders to break down their business, how it fits into the market, and get a glimpse of what’s coming next in tech. Here’s a quick take from the Just Raised pod.


A deep dive into manufacturing, the new space race, and defense with Hadrian founder Chris Power and one of his investors, Delian Asparouhov at Founder’s Fund

Product: Automated factories to build aerospace parts

Traction: Over $1M in ARR in month one

Raised: $90M Series A from A16Z and repeat backer Lux Capital + $9.5M Seed last year from Founders Fund and Lux Capital.

I heard from some of you after the deep dive on Formic on Friday that you want to hear more about companies rebuilding American infrastructure. Hadrian is one of the best.

Our podcast interview with Chris covers everything from why supply chains today suck to weapon systems in space. Plus, why Chris and Delian are both convinced we’ll have a base on the moon within the next decade.

Listen Here


A16Z Crypto Fund IV

Raise: $4.5B for a new crypto fund

One Liner: A16Z Fund IV is the largest crypto VC fund ever

I’ve written about so many A16Z announcements lately this one got knocked down to the funding section. Like A16Z Crypto Research, Fund IV is proof of Andreeseen’s conviction in blockchain as the next computing paradigm. It’s also going to make them a huge amount of money.

Venture Math: Assuming a 2% management fee A16Z crypto will pull in $90M/year on this fund, every year for the next 5 years. That’s $450M all together. And they just raised a $2.2B Fund III a year ago, which should be throwing off $44M in management fees a year. That’s $667M in management fees from 2021 to 2027. Not bad given the team at A16Z Crypto is about 60 people.


Raise: $25M Series A from Index

Founders: Dana Gibber, Caroline Klatt, Adam Neumann, former founder of WeWork, and his wife Rebekah Neumann

One Liner: Carbon credits on the blockchain

So this deal made waves on the internet and was celebrated as Adam Neumann’s return. But this is actually not a bad idea. Hear me out.

Carbon credits – which can be purchased to offset taxes on carbon emissions – are in a wild west phase. Companies are selling carbon credits based on the yearly carbon capture of forests in the Arctic and issuing credits from dozens of other schemes that don’t actually combat climate change. Putting carbon credits on public blockchains, so they can be tracked and monitored, makes sense. And Adam and Rebekah Neumann aren’t on the executive team actually building the company.

But both blockchain and carbon credits are rife with scams and were talking about the dynamic duo that just got a Hollywood feature for their ridiculous excess. So yes, the internet had a field day.

Synthesis Capital

Raised: $300M Fund I

General PartnersCosta Yiannoulis and Rosie Wardle who both spun out of CPT Capital

One Liner: Largest food tech fund to date

Check Size: Average check size of $15 million

I’ve been skeptical of the food tech space. I don’t know if I believe the consumer demand is there, especially not to support the kind of $10B valuation Beyond Meat sported for a few months after it’s IPO.

But Synthesis aims to invest closer to the farm level and Rosie Wardle was the first check into Beyond Meat before it was even called Beyond Meat. The team’s also invested in Impossible Foods, Perfect Day, and a few other big name alternative food startups.

As they dive deeper into the science of agriculture and lab-based foods this will be a fund to watch.

ONE FUN THING: Rocket League Solved

AI engineers in Germany proved a new, less computationally intense way to train AI models. In the process they ‘solved’ the hit game Rocket League, building an unbeatable AI.

To do it they trained their AI on a simple simulation of the game instead of the game itself. The approach could make it cheaper and faster to train new AI models. Here’s the research.