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Comment by nrmitchi | Hacker News Reader

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.

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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 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.

> 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"

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.

Yeah, if they have $300MM and are laying off, something is seriously wrong.

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.

https://www.forbes.com/sites/kenrickcai/2022/05/25/checkout-...

$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

You can't fire someone for cause just because your money losing business ran out of money.

Firing for cause is when the employee screwed up, not when the CEO did.

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.

IMO, it’s dumb HR/Legal lingo.

It isn't just about the employee abuse.

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.

Ah. The trim the deadwood argument.

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.”

It also lets the people being let go save face.

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.

> Sometimes companies over-hire or hire the wrong people.

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.

Regardless of whether or not that’s true, the right thing for the company (and all its stakeholders) is to take the medicine (do the layoff).

Don't forget they're getting sued by a large customer of theirs too, claiming their solution doesn't deliver what was promised: https://www.pymnts.com/legal/2022/authentic-brands-sues-bolt...

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).

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.

So, a silicon valley startup?

Has your team run into any issues with WP checkout?

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.

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.

> or one person figured out a way to increase the density of co-lo rack by 10 times. Curious, whom are you referring? Sorry for my ignorance.

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.

Reminded me of this:

> 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...

that’s a crazy amount for a crypto wallet

are these new hires lobbyists?

Their main business is acting as an exchange.

>Bolt apparently raised $355 million 4 months ago. If they are having cash problems, or are concerned about not having enough runway

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."

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.

"Pre-profit companies" LOL. So that's what they're calling them nowadays?

Talk about euphemisms...

Pre-business plan

Twitter still has that status!

Why is it a euphemism? Delaying profits as a primary objective has been a common startup strategy for decades.

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.

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.

I wonder what happens to these companies that never reached profitability in a recession. We might see dozens of unicorns die

This says it’s about 240 employees:

https://www.forbes.com/sites/kenrickcai/2022/05/25/checkout-...

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.

yeah. lots of companies already froze hiring (firing through attrition). Bolt doesn't make a trend but it gets my attention.

edit: I saw on blind indicating its 15% of workforce

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.

What’s considered high?

That's always been true, and not just for unicorns. Big companies let people go in bad times, too; and small companies just fold.

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.

It's just about the opposite. Know and play your cards.

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.

Underappreciated as to second order effects.

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?"

Yes, this. Thank you for pointing out the scapegoating.

Do we know the terms of this raise? I wouldn't be surprised if it's released in tranches based on KPIs.

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.

They're actually pretty close and confusing:

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.

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