Carta CEO Henry Ward on the Ownership Era and what it means for the future of private markets
Dec 20, 2022
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Henry Ward, CEO and co-founder of Carta, discusses building a category-defining company for private markets, being a 'plate spinning company' with network effects, and the future of private market liquidity. They also explore the concept of equity ownership, the impact of data on private markets, and the importance of building an ethos of equity ownership.
CARTA aims to revolutionize private markets by creating a centralized database for stock ownership, providing easier access to equity ownership.
CARTA prioritizes equity ownership, empowering employees to become investors in private markets and fostering a culture of ownership.
CARTA sees auctions as the future of private market liquidity, allowing companies to manage volatility and tailor liquidity options to their specific needs.
Deep dives
CARTA's Mission to Revolutionize Private Markets
CARTA, founded by Henry Ward, aims to revolutionize private markets by creating a centralized database for stock ownership. They saw that the public markets operated efficiently and seamlessly, while the private markets relied on paper stock certificates and contracts. Their solution was to build a cap table platform that captured all private stock ownership in one centralized database. This idea was born out of the need for infrastructure in the private markets and the desire to provide easier access to equity ownership. By starting with cap table management, CARTA expanded its services to include 49a valuations, fund administration, and compensation benchmarking. Their goal is to create a stock market that works for all types of companies based on their liquidity needs.
The Importance of Ownership and the Value of Employee Equity
CARTA's philosophy is centered around ownership, both in terms of the company's values and the services they provide. They believe that people work harder when they have a stake in what they are doing, which is why they prioritize equity ownership. CARTA's platform allows companies to provide equity ownership to their employees, empowering them to become investors in private markets. This approach has resonated with employees, as the majority of alternative asset holders are now employees of private companies rather than traditional risk capital investors. By enabling employees to participate in the potential financial upside of their companies, CARTA aims to foster a culture of ownership and help individuals build wealth through their equity stakes.
Transforming Private Market Liquidity through Auction-Based Trading
CARTA sees auctions as the future of private market liquidity. They believe that continuous trading, characteristic of public markets, is not the ideal approach for private markets. Instead, they advocate for high-frequency auctions that align with the liquidity needs of different companies. This adaptive approach allows companies to manage volatility and find equilibrium between supply and demand. CARTA's vision is to create a stock market that caters to companies' specific liquidity requirements, offering a more efficient and tailored approach compared to the one-size-fits-all structure of public markets. They are also exploring ways to make alternative assets more accessible, both through enabling wealth management for illiquid assets and advocating for amendments to the accredited investor rule.
Private markets offering better liquidity than public markets
The podcast episode discusses the idea that private markets can offer better liquidity options for companies compared to public markets. It highlights that smaller companies can benefit from going private and having more control over their liquidity needs, setting their own intervals for liquidity events. The podcast also suggests that public companies may not always benefit from mark-to-market valuations or the short-term focus of quarterly earnings releases, as it can hinder long-term strategic planning. The goal for CARTA, as mentioned in the episode, is to provide a liquidity product that surpasses the benefits of the public markets, offering better-managed volatility and more control for CEOs.
The ownership era and the advantages of employee equity
The episode touches on the concept of the ownership era in labor compensation, emphasizing the shift from working purely for cash to working for long-term financial gain through ownership in productive assets. The discussion explores how equity ownership can create alignment, patience, and a sense of ownership among employees. This can be especially valuable in the technology sector where equity ownership is widespread. The episode suggests that expanding equity ownership to other industries can foster innovation, long-term thinking, and greater employee motivation. The goal of CARTA is to simplify and promote equity ownership, making it as accessible as payroll and eventually becoming the operating system for venture capital.
We have a special episode today on Alt Goes Mainstream.
Our guest today is Henry Ward, the CEO and co-founder of Carta, one of the most innovative and exciting companies in private markets.
Henry founded Carta from the kernel of an idea and they are now trusted by over 30,000 companies, 5,000 investment funds and 2.1 million employees for cap table management, compensation management, liquidity venture capital solutions and more. They’ve raised over $1B from the likes of Silver Lake, Union Square Ventures, a16z, Tribe Capital, Meritech, and many others.
Carta has been included on the Forbes World’s Best Cloud Companies, Fast Company’s Most Innovative list, and Inc’s Fastest Growing Private Companies.
Henry is a serial entrepreneur who was previously the founder and CEO of Secondsight, a portfolio optimization platform for retail investors. He built Carta with a deep sense of passion for helping people to become investors in private markets and equity owners.
Henry and I had a fascinating conversation, covering a lot of ground. We discussed:
How he’s built Carta into a category-defining company for private markets.
Why it’s beneficial to be a “plate spinning company” and how that’s good for a network effects business.
Why competing with spreadsheets can create a special business – and how it leads to the creation of other successful businesses as time goes on.
The ownership era and what it means for founders, employees, and investors.
The future of private market liquidity.
Gems on people management and company building.
Thanks Henry for coming on the AGM podcast to share your wisdom. We hope you enjoy.
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