Think Like An Owner
Why I’m Joining Carta
I have deep admiration for entrepreneurs — those special individuals with the conviction to start a business from scratch. I’m fascinated by the act of company formation and scaling, whether at a technology startup or a traditional local business.
One of my favorite local businesses in San Francisco is Mission Pie. The establishment opened in January 2007 with an extremely narrow focus: baking delicious pies with locally sourced ingredients. What were they thinking? Starting a business dedicated to a niche market is counterintuitive, but Mission Pie is still open after 12 years. How did they do it? The owners built a resilient business by focusing on a non-obvious category, and delivering the best product in its market.
Peter Thiel promoted a similar strategy during his YC Startup School lecture. In his presentation — provocatively named “Competition is for Losers” — Thiel declared it possible to build valuable businesses even in relatively small markets. He cited the specific example of Google creating a massive company by having “a big piece of a small pie”. (In the same lecture, Thiel asserted that restaurants are terrible businesses — so think carefully before opening a pie store.)
Henry Ward and Manu Kumar targeted a non-obvious market when they founded eShares in 2012. TechCrunch reported on the eShares seed round of funding and described the business:
A new startup called eShares was formed to help private companies, as well as investors and employees, move beyond paper records for their shares and options. It does this by transferring their paper stock certificates into electronic shares, which should help all involved keep track of their shares and how much they are worth.
Unlike public markets, where investors and employees have been issued and have traded electronic shares for years, private companies are still stuck in an archaic world of paper stock certificates...
One year later, eShares described significant progress in its Series A Pitch Deck. Union Square Ventures recognized the company’s potential and led the Series A funding round. But many other VCs declined to invest because (in their minds) the market wasn’t big enough.
I used to try explaining that $20 stock certificates were an entry point into something bigger. It never worked.
The eShares team persevered with the belief that dominating an initial small market would enable expansion into related verticals. Within a year, eShares raised a Series B round of funding led by another prescient investor: Spark Capital. At the time, The Wall Street Journal described the problem eShares was built to solve: the lack of transparency in private company ownership:
Getting information about a private company’s ownership structure, including the changing value of ownership stakes over time, means relying on a paper-based system, paying attorneys $600 per hour and settling for limited information.
In 2017, eShares raised its Series C round of funding and rebranded to Carta. The new name was chosen to reflect the company’s ambition beyond electronic shares. Carta announced its new brand in a blog post that also described its mission: to create more owners — giving workers a piece of the ownership pie. Carta’s goal is to map the ownership graph, starting with corporations.
Carta aims to demystify the concepts behind corporate fractional ownership. The Carta blog is a resource for anyone wanting to learn about equity concepts, including: stock options, RSUs, valuations, private financings, cap tables, and more. Carta’s blog is useful for company founders, employees, and investors alike.
As a system of record for private company equity, Carta is uniquely positioned to provide industry insights. Carta partnered with #ANGELS on a comprehensive study of cap table data by gender. The published report had an alarming conclusion, the Silicon Valley’s Equity Gap: Women Own Just 9%
This study quantified an ownership disparity among startups, a problem that has been referred to as #TheGapTable. As a consequence, Lightspeed and #ANGELS held a Negotiation Summit to promote inclusive ownership in the tech industry. Lightspeed Partner Jana Messerschmidt described Carta’s role in the event:
Henry Ward, Founder & CEO of Carta, kicked off the day with a fun whiteboarding session that went deep into how to understand your equity package. For more details on Equity 101, check out this helpful blog series from the Carta team.
If you’re joining a company that offers stock options, don’t fixate on the current value of the stock. Think about what the stock could be worth in the future. Think like an owner.
Not all stock is created equal. What matters far more than how much you get is the quality of that stock. And most people treat it like dollars, like it’s a commodity. They’re trying to get a larger slice of the pie [rather] than the right pie.
In December 2018, Carta successfully completed its Series D round of funding to expand its product suite. Carta’s near-term plan: provide tools to manage stock options from company formation to IPO (and beyond). Looking to the future, Carta hopes to expand to other fractional-ownership asset classes.
To bring more transparency to startup fundraising, Carta shared its Series D pitch deck which includes company details like Annual Recurring Revenue, Customer Growth, and Payback Period. Carta’s business momentum is propelling it forward to even bigger ambitions.
There are no great companies today that are tackling capital markets, that are truly taking on Wall Street financial infrastructure. We are going to be that company.
Carta’s growth trajectory has been acknowledged by illustrious VCs including: Andrew Parker (Spark Capital), Brad Twohig (Lightspeed Venture Partners), David Sacks (Craft Ventures), Fred Wilson (Union Square Ventures), Mark Suster (Upfront Ventures).
The beginning of 2019 has been a watershed for Carta. Several high-profile publications have simultaneously listed Carta as one of the fastest-growing startups in the tech industry:
- Breakout List for 2019
- 57 Tech Startups VC Insiders Say Will Boom in 2019 (Business Insider)
- 50 Future Unicorns (CB Insights/NY Times)
- Fintech 50 2019 (Forbes)
- 2019 Career-Launching Companies List (Wealthfront)
Draw a Venn diagram of these 5 lists. Carta will be at its center.
This week I’m starting my new role as VP Engineering at Carta. Why am I joining? Because of Carta’s market opportunity, mission, and momentum. Carta is poised to become a great company.
My fantasy is not that Carta will be a great company. My fantasy is that when you eventually decide to leave Carta, you will go on to do even better things […] The greatest thing Carta will produce is you.