Before Henry Ward co-founded Carta, nobody in the Valley thought cap table management could be a viable basis for a startup. Now Carta has 900 employees and is valued at $1.7 billion, and Henry has more ambitious goals: to change how private equity is distributed and shrink the widening gap in personal wealth.
I recently sat down with Henry at our Enterprise Scale Summit and we talked about how an ‘accidental entrepreneur’ could end up changing the world, among other things. Below is an edited excerpt of our conversation. For the full interview, check out the latest episode of Lightspeed’s podcast, “Tomorrow, built today.”
Let’s start by telling us how Carta came to be.
We started with the idea that, if you could buy stock in GE for $7 a share just by clicking a button on a website, why should it cost $20,000 in legal fees to invest in two founders in a garage? How can we fix that and make the private world look more like the public? Once you’ve done that, you could connect global capital markets together. You could create more owners by issuing equity seamlessly and cheaply, just like you put people on payroll today. We think 50 years from now people will look back and say, ‘Could you imagine signing on for a job and all you got was cash? That you could work for 30 years and have nothing left over when you retired?’
When you look back through history, we started with feudalism and serfdom, where people were indentured to the land. Now we’re in the era of payroll, where employees live on the debt stack and investors and founders live on the equity stack. We’re trying to usher in a new world of ownership where we take wage earners off the debt stack and put them on the equity stack, and do it in a fair way.
What was the reaction in the Valley when you first sought funding for a cap table company?
Our seed round for eShares (our original name) was in 2013. This was shortly after Facebook had bought Instagram and Snapchat was starting to take off. VCs are essentially lemmings, they just want to do what every other VC is doing. So I’m pitching stock certificates, and one of them actually said to me, ‘Hey, is there a photo-sharing component to these stocks?’ Back then, FinTech was all about payments, and nobody in the Valley knew anything about it. We got thrown out of every VC on Sand Hill Road. Then we went to New York, where they understood FinTech, and got three term sheets. It took a while for Sand Hill Road to catch up.
Tell us how you decide which markets to go after.
We only invest in what we call ‘N of 1’ markets. An N of 1 market is where there’s only one winner. For example, databases will never be an N of 1 market because there are too many different types of use cases. It’s a ‘1 of N’ market because there will always be multiple winners. We don’t even care how big a market is, so long as it supports a monopolistic approach. The beauty of this approach is that when you string enough N of 1 markets together you can build a pretty big company. And that’s what we’ve done.
When you look at reviews on Glassdoor for companies growing at scale, not all of them are awesome. How do you deal with that?
We’ve had a lot of good Glassdoor reviews, and a few bad ones where we clearly had wronged the employee in some way. So we ask ourselves, How did we hurt this person? We spend a lot of time soul searching and thinking about our process for letting people go. For example, we no longer make people sign separation agreements. I think it’s inhuman to tell a young person we’ve taken away their livelihood, then force them to sign an agreement saying they won’t say anything bad about us. At Carta, we have a program we call Next Chapter. It’s crazy to pay someone three months’ severance when you’re letting them go but nothing after they’ve worked for you for five years and leave on their own. So when you leave Carta, regardless of whether you initiated it or we did, we pay you the same.
What is the one thing Carta needs to do to enable scale?
I think it’s building a team that can cover your weaknesses. When I’m recruiting executives I tell them ‘I’m good at seeing an opening in a market where we can plant a seed and start something. But I’m terrible at figuring out how to get there.’ So I hire people who know how to get from A to Z. The people in our office are all about execution. They could run the Tokyo subway. So the question becomes, How do I scale people around me so that my weaknesses don’t take the company down? How do I make sure these people can help me grow?
People think I work hard. I don’t. They think it’s stressful. It’s not. We’ve been really lucky at attracting the kind of people who like to solve the problems we need to have solved. That’s one of the reasons why I’ve said I’m not sure I’d start a second company. I don’t think I could get that lucky again. It’s like flipping a coin and getting heads 32 times in a row.
OK, curveball question — what does ‘culture’ mean to you?
I hate the traditional culture stuff — do good things, be nice, show up on time. What we think about are virtues. We ask ourselves, How do we want to be remembered? How do we want to remember each other? We want to remember each other as helpful, transparent, fair, and kind. We want people to think of us as relentless, unconventional thinkers who are masters of our craft. How do we want history to remember us? We want people to think about a company that bent the arc of human history by tackling wealth inequality in a way nobody else had.
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