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Carta to exit secondary trading business

henrysward.medium.com

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Re: Carta to exit secondary trading business

#61

Post by granshaw »

jedberg wrote: post #57
granshaw wrote: post #32

Separate of what did or didn’t happen here, I hope more companies crack the secondary market puzzle. The current environment really sucks for startup employee liquidity and might be going on for a lot longer.

> I hope more companies crack the secondary market puzzle. 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 w…

From reading your first paragraph I thought you were heading to an opposite conclusion, but yes, completely agree that we should make it easier to go public

Re: Carta to exit secondary trading business

#62

Post by helloericsf »

__loam wrote: post #17
smt88 wrote: post #6

This is the best response, but remember it's a response to getting caught. They didn't grow a conscience or replace leadership. 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.

This is also the second shady article I've seen from carta this year. https://sfstandard.com/2023/10/25/carta-san-francisco-lawsui...

Wow, this is bad.

Re: Carta to exit secondary trading business

#63

Post by enra »

jjtang1 wrote: post #54
enra wrote: post #35

I’m CEO of Linear who raised the alarm on this. 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”

Are you leaving Carta for Pulley or other platforms? We've been long time Carta customers at Rootly.

We’re starting to evaluate other platforms, Pulley and Angellist.

Re: Carta to exit secondary trading business

#64

Post by helloericsf »

hipadev23 wrote: post #47

They let $3M out of $373M jeopardize the entire company. What incredibly poor foresight and management controls.

In the beginning, Ward positioned it as an internal process violation. "Hi Karri and everyone, I’m appalled that this happened. We are still investigating but it appears that Friday morning an employee violated our internal procedures and went out of bounds reaching out to customers they shouldn’t have.

Henry" https://twitter.com/henrysward/status/1743713154721554849

Re: Carta to exit secondary trading business

#65

Post by Animats »

ipsum2 wrote: post #42
Animats wrote: post #39

So are they spinning the secondary trading business off into a separate company, or shutting it down completely? 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.

> 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. $250M is more than a few million.

The poster with the original complaint said they were paying about US$10,000 a year for their cap table service. Are there 25,000 startups using this service?

Re: Carta to exit secondary trading business

#67

Post by jjtang1 »

jjtheblunt wrote: post #49
enra wrote: post #35

I’m CEO of Linear who raised the alarm on this. 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”

what is "linear"? [ edit : thanks below! ]

Linear is the only thing saving startups like ours from using Jira ;)

Re: Carta to exit secondary trading business

#68

Post by dboreham »

asylteltine wrote: post #37

What does carta do that a spreadsheet can’t? I don’t understand how that can be so hard you pay an entire company to manage it.

Does this question need to be asked when there are countless (even very successful) SaaS companies that do something that can be done with a 100-line bash script.

Re: Carta to exit secondary trading business

#69

Post by colechristensen »

milkglass wrote: post #48
CityOfThrowaway wrote: post #43

Earlier quoted context omitted.

They did address it... by completely eliminating the department. They didn't deep dive retro it, but in that, we know the answer.

So strange. What are the data retention requirements for situations such as this? 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?

Some financial institutions are basically required to retain everything for years, Carta may or may not be outside some of those stricter requirements.

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.

Re: Carta to exit secondary trading business

#70

Post by choppaface »

enra wrote: post #35

I’m CEO of Linear who raised the alarm on this. 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”

I'm a former employee of a place that did Carta. Employees are already left in the dark about the cap table, liquidity preferences, venture debt, and the C-Suite's relationship with the Board. Based on this exchange, I'd now see usage of Carta as a red flag when looking at any new start-up. Maybe Schwab or Shareworks are ok (Shareworks has been fine in my own experience). The investors are already doing hyper-leveraged arbitrage with my labor, I don't need the HR Comp software to do that too (even if they say they don't, and even if they say that business is only worth $3m/yr vs $250m/yr for accounting). If they want to do that, they can pay me directly.
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