Challenges of Carta's Transition to a Multi-Product Business

Carta's attempt to transition into a multi-product business has encountered several challenges. Despite starting with cap tables and expanding to fund management and a brokerage business, the original goal of disrupting the secondary market has led to a realization that the true value lies in SaaS software. The broker business only generated a few million in revenue, whereas the SaaS business brings in approximately 250 million annually. However, there is concern that the SaaS revenue could significantly decrease due to competition and low barriers to entry, potentially compressing a $250 million market to $25 million. This raises doubts about the attractiveness of the company for potential investors. Additionally, the competitive landscape has been affected by excessive funding during a certain period, leading to a crowded market. The challenge lies in finding an entry point and ensuring a sustainable upside, which is influenced by the difficulty of the tasks and pricing power. The key protective mechanism identified is having extremely leveraged op-ex and low cost to serve in the face of numerous competitors. The reliance on a standout product like Instagram or TikTok to overshadow others is not feasible in the realm of procedural software.