Carta to exit secondary trading business(henrysward.medium.com) |
Carta to exit secondary trading business(henrysward.medium.com) |
My company is still taking our business away from Carta, and I don't think anyone's plans should change because they repented after being caught. Things might be different if the CEO stepped down, but he hasn't yet.
https://sfstandard.com/2023/10/25/carta-san-francisco-lawsui...
If you think about it if a company acts in a way that makes you no longer want anything to do with them, the best thing is a vague blog post bragging about how much money they make doing other stuff
I have to commend them for making this decision and removing the conflict of interest.
However they didn’t address the fact that sales people had convenient access to data and how long & broadly that access was abused.
Edit: fixed “Linear CEO” to “CEO of Linear”
If Carta shows respect for your data and privacy I believe they could still offer an opt-in secondary market, and I can see plenty of companies being interested in participating in it.
No one was complaining about the secondary market, they were complaining that Carta was double dipping with their data without consent. This whole post feels like he's just trying to move the goalposts.
Ultimately it's about treating customer data with respect, building trust, and operating with transparency. They can't do those things, so they have to shut the whole thing down?
Smells funny.
My issue with Carta is now the permission vs forgiveness thing. They won't get the opportunity to ask for forgiveness again at least in my case.
Personally I think it's great that they removed this potential conflict of interest, but the fact that the announced this while conveniently omitting the events that led up to this makes me still distrust them.
How We Handle Cap Table Information - https://news.ycombinator.com/item?id=38906749 - Jan 2024 (88 comments)
Linear CEO alleges Carta mishandled sensitive cap table data - https://news.ycombinator.com/item?id=38899001 - Jan 2024 (36 comments)
Carta CEO's response to the unsolicited outreach to their customers' investors - https://news.ycombinator.com/item?id=38897363 - Jan 2024 (98 comments)
Carta doing unsolicited tender offer outreach to their customers' investors - https://news.ycombinator.com/item?id=38886915 - Jan 2024 (80 comments)
The Carta CEO has botched the response here multiple times now and this latest pass just comes across as an oops sorry we got caught, we won’t do that anymore response… but still dodging the hard questions on how data was being managed.
Also, 409a is a conflict of interest, but since it doesn't negatively impact our biggest revenue streams, we'll keep doing it (at the expense of tax revenue).
Henry" https://twitter.com/henrysward/status/1743713154721554849
Any future unwitting potential customer who didn’t think to search for the current CEOs personal medium account to find a damming scandal about the company will be none the wiser.
This feels like the wrong solution. I mean, the reason we need a secondary market is because companies are going public much later than the used to. Why? Because the government made it a lot more onerous to go public. Why? Because companies were abusing the process to enrich insiders.
If we make the secondary market easier, we'll just be right back where we were, and then the government would probably just step in and make it onerous again.
I think the actual solution here is to make going public easier again while addressing the loopholes for abuse so that companies can go public sooner and everyone can get liquidity sooner.
Another example of where the honest people get penalized with a heavy process in the name of zero fraud.
What’s an alternative to Carta’s solution?
This knowledge might be outdated, I quit that game and opted to join public companies since a couple years ago.
Yes it’s an upfront risk that employees take when joining but man does it not also feel incredibly one sided and smelly, esp the later stage the startup gets
If they shut it down, their claimed US$8 billion market cap goes poof, doesn't it? Maintaining cap tables as a service can't be good for more than a few million a year in revenue.
$250M is more than a few million.
“Fast forward to today, our business is broken down as follows: the captable business is about $250M/year, fund administration is about $100M, private equity is about $20M, and the secondary trading business is about $3M.”
Is that assumed to be yearly revenue? Earnings? Something else?
But this all begs two questions:
1) Do their legal agreements protect customers sufficiently in terms of use of customer data? I'd argue no. They are a bit of a mess, but very broadly give rights to Carta and its affiliates to use customer data in all sorts of ways. Quite arguably they had every right to do what they did here.
2) Legal agreements aside, forget policies on use. How on earth did a CartaX employee get access to Carta customer data?
The reality here is that the loose legal restrictions on Carta's use of customer data plus what appears to be loose internal restrictions on employee access to customer data makes me wonder what ELSE they are doing with customer data that we CAN'T so easily see.
That is my fundamental question after all this.
It seems incredibly risky and foolish to try, to the point that I don’t expect them to. But this post leaves room for other attempts.
Trust is quickly lost and hard to win.
Edit: we did just spend 2 days pouring over every negative detail, I don't think this has to be at -5. I will consider it a karmic offering of the karma I got for being negative
They didn't deep dive retro it, but in that, we know the answer.
The whole thing just feels so off. Some big moves but very little details from Carta.
Commitments just sound like empty promises now, especially when they're presented on Medium. Did any customers receive assurance or details of what went down?
Nothing about those concerns actually being valid. This is vague misdirection at best.
He's the CEO "of" Linear, not a linear CEO :)
This is largely a result of how long each product has been available, i.e. the older products are more mature. Hopefully Pulley and AngelList continue to catch up so there is a diversity of good options available.
I always decline to answer these questions by saying "it's not relevant; I'd like to be compensated according to my background/experience and the role". If there's a specific number I'm looking for, I'll also ask for that. But I'd never directly answer the "what was your last salary/comp?" question.
Throw in liquidation preferences, etc. and it's not really possible to know anyway. I've been at three startups. Two were acquired and one is still plateaued over 10 years after I left. Total value of my stock so far? $0.
It'd have to be some rare unicorn for me to treat startup options as anything other than a lottery ticket.
Given their customers are startups, but more specifically founders themselves, and they handle cap tables, I’m sure they’re getting plenty of direct questions from legal departments with the interest of C suites everywhere. Assurances might well be coming in to form of legal agreements and external audits, and possibly SEC investigations and discovery for lawsuits.
> On Friday we had an internal policy violation that affected three companies. I’ve been in touch with the founders and I’m appalled we made that mistake and it should never have happened. It is unacceptable and we’ve dealt with the violation on Saturday morning and are continuing the investigation to make sure it never happens again.
Carta and Pulley, etc. do a solve a valuable concern here for non-executives who are compensated with stock options and want to keep track of stock vesting, exercises, and shares in a transparent way, I’d say.
(And yes, Carta/Pulley are often portcos of those VCs pushing you to use them)