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Carta CEO's response to the unsolicited outreach to their customers' investors
- QDeisseroh 3y agoIf one founder is getting roasted for inappropriate public display, the other (who actually started the whole thing publicly) needs to be also. Let's be consistent. Some of the information about this incident highlights a breach of information ethics, and the rest is all accusation from people who don't know the internal company data access protocols. Founders need investors, and investors want access to shares, pricing, and valuation info. The problem getting completely left out of all discussion about this, is that the usage of this data (which should be ethical and signed off on certainly) to enable private market liquidity MOST benefits the employees. Carta killing this business is a huge setback to financial improvement for startup employees. But you know, as long as founders feel cozy it's all good.
- alsodumb 3y agoHere is the HN discussion on original accusations: https://news.ycombinator.com/item?id=38886915 https://news.ycombinator.com/item?id=38886915 Carta CEO's first response saying it was a one time employee mistake that happened on Friday: https://x.com/henrysward/status/1743713154721554849?s=20 https://x.com/henrysward/status/1743713154721554849?s=20 Evidence by Karri that it happened well before Friday, and happened to multiple other companies too, questioning if it was indeed a one time incident: https://x.com/karrisaarinen/status/1743741496921383250?s=20 https://x.com/karrisaarinen/status/1743741496921383250?s=20 The linked tweet is Carta's CEO Henry Ward's comment ranting about how Karri should have reached out to them instead of publicly questioning the company, accusing him of using this incident to increase his twitter/linkedin exposure.
- alsodumb 3y agoHere is a detailed response from Karri about the call details: https://twitter.com/karrisaarinen/status/1743824345334714587 https://twitter.com/karrisaarinen/status/1743824345334714587 This particular detail stands out as to how the solicitation actually happened: "He (Carta's CEO) explains commonly Carta Marketplace looks for sellers and buyers in their platform who have opted in to it. But in this case the employee in question, again not employed by Carta but a separate business, Carta Marketplace, was able to access our cap table data by their “break the glass” system which requires approval to see customer data. He didn’t know how it was done, he offered that potentially the employee self approved the request. The employee in question was put on administrative leave." Lol, the employee (of technically a different business entity?) might have accessed the info through self approved request, but Carta's CEO is sure that this only happened this Friday to one company and is a one time incident. Yeah, I don't believe it.
- marcinzm 3y ago> “break the glass” system That begs the question, when is that system supposed to be used? In what sorts of situations would it be beneficial to Carta'a clients for another company (Carta Marketplace) to access their confidential information?
- mattzito 3y agoMy guess is that it’s a customer support system that has a mode where non-support agents like account managers can in emergencies access a companies carta account. Imagine a scenario where a founder is freaking out because it seems like the cap table in carta doesn’t match the spreadsheet they’ve been working on, and they’re in the middle of negotiating a funding. They might call their account manager in a panic asking for their help, and the AM might want to see their account setup so that they can more effectively communicate with support. Perfectly justified reason, and a reasonable feature. But I would bet that essentially everyone at “both” cartas who interact with founders or investors have access, and while theoretically every break glass is logged with a justification, and those justifications are audited, every single one says “helping company (company being accessed)”. That’s assuming anyone even looks at the audit trail (Narrator: they do not).
- deleted 3y ago[deleted]
- danielheath 3y agoHaving a “break glass” button is common for production access during an outage - the idea being that you should never touch prod manually (instead using code reviewed changes via normal deployment), except during incident response, where you can hit the button that lets you do so anyways.
- x0x0 3y agoI've built a break glass system. The trick is you need to actually audit the use. We reviewed every access, audited as part of our soc 2 commitments, at a +2 reporting level the next business day.
- clipsy 3y ago[flagged]
- threeseed 3y agoIt is his own unhinged response that is far more threatening to his employees. And what exactly is his argument ? That we should ignore behaviour at Enron, Theranos, FTX etc because people may lose their job.
- preommr 3y agoWell that's because those companies didn't apologize with enough :folded-hands-emoji:
- tdeck 3y agoUnfortunately I feel like this style of thinking is all too common. When company leadership ^w^w job creators do something bad to the employees, the needs of the business are the shield for their accountability. When they use the company to do something bad to an outside party, suddenly the needs of those employees are the shield.
- rashidae 3y agoI loved the response. This is a founder to founder public response! Not a customer support deal, but a personal one… I’d appreciate more people talked their hearts out like this, openly.
- Apocryphon 3y agoIt would seem like Ward is no stranger to this sort of public candidness. But it doesn't particularly seem like the sort of transparency that actually puts users, or employees, at ease.
- 000ooo000 3y agoThis is a pathetic twitter slap fight between two dorks. It's so incredibly transparent that I honestly struggle to believe anyone could consider this a genuine exchange with a common goal of resolution. It's public shit slinging dressed up as humble, sincere tweets. It's plain embarrassing.
- deleted 3y ago[deleted]
- arolihas 3y agoUnfortunately his heart is in the wrong place.
- threeseed 3y agoI think you're confused. This relationship is between customer and vendor. And as a customer, I expect my vendor not to take my data and use it against me. And then when I simply ask for clarification why this is happening not be gaslighted and made to feel a victim.
- altdataseller 3y agoThey sell comp data from all their customers, and most of their customers probably aren’t aware of it?
- jpgvm 3y agoEh, all feelings no facts. Sorry but I just don't buy it. When you communicate this way it becomes apparent that the truth isn't on your side, or if it is then it's not what is most important to you. Stick to the facts guys. Either information was used inappropriately or not, it was either systemic (i.e happening all the time) or occured because of a lapse of controls or specific employee trying to get around said controls (in which case you should probably fire them). Identify and disclose which it is along with what you are doing to fix it. There is no need to muddy the conversation with the why/ethics/whatever of getting called out. The accusation was clear, as should have been the response.
- milkglass 3y ago"Sorry we got caught"
- caseysoftware 3y agoMy comment from Karri's initial LinkedIn post: At minimum, this is confidential information. At worst, they may be leveraging privileged information that only they and your Board have. Either way, it's ugly. Even with a good explanation and tight controls in place, it needs to be opt in for shareholders.
- blueridge 3y agoHa, from 2021: https://nitter.net/paulg/status/1356643841659572227#m https://nitter.net/paulg/status/1356643841659572227#m
- gurchik 3y agoSlightly worse situation here than in your linked example, from what I can see. paulg is talking about Carta apparently used to email investors to advertise the existence of their new CartaX (Liquidity) platform. I don't know the contents of these emails, but I assume it was something like, "if you ever want to sell, ask your founder to opt-in to CartaX." I don't agree with this practice, and Henry apparently also said "sending marketing emails to investors is at best poor taste if not just wrong"[1]. In my opinion this case is a bit different, because not only are they apparently advertising Liquidity to investors, but Karri is saying they are trying to broker deals and close sales through back channels without the founders knowing or opting in to Liquidity. Either way, in my opinion this history adds a bit of evidence to support this is a wider problem in how Carta employees treat data privacy. 1: https://nitter.net/MarwanRefaat/status/1357820073918910464#m https://nitter.net/MarwanRefaat/status/1357820073918910464#m
- bluecrab 3y agoHe's so shameless.
- benjaminwootton 3y agoIt’s funny how in a lot of these corporate missteps it’s the response which tells you more about the culture than the original incident. This is more likely to turn me off using them than the original incident. Apologising and saying you will put processes into place to prevent it happening again is corporate comms and emotional 101, and it would have blown over in a week.
- deleted 3y ago[deleted]
- skmurphy 3y agoKarri Saarinen tweeted this today (Jan 6) at 8:36am https://twitter.com/karrisaarinen/status/1743672776643535015 https://twitter.com/karrisaarinen/status/1743672776643535015 he provides a helpful perspective on why Carta might be tempted to leverage customer information to facilitate transactions. This buy order was for $2.5M, they take 2% transaction fee from the buyer and seller. We pay them about $10k a year for the cap table management but this transaction alone would net them $100k. So I can see the temptation.
- monero-xmr 3y agoIs this CEO 13 years old? What a terrible response
- deleted 3y ago[deleted]
- willcipriano 3y agoThese people are all so insufferable (praying hands emoji).
- gruez 3y agoI don't get it. Does he think he's so clever with the passive-aggressiveness? Who does he think he's fooling?
- sergiomattei 3y agoI think the first paragraph was enough. There wasn't a need to publicly bash your customer.
- neilv 3y agoThe tone throughout that tweet sounds ill-chosen to me.
- stn8188 3y agoI agree. I'm not that familiar with this situation but seeing a CEO use swear words (idk what's the adult way to say this, I'm used to saying "bad words" to my kids) strikes me as incredibly unprofessional when it's in public, written communication. If the intent is genuine apology, that language does not make it more genuine. If, on the other hand, there's some element of sarcasm in it, then I'd question the need for such a statement in public in the first place.
- neilv 3y agoI think it also comes across as aggressive and snotty. Who is ever going to want to talk with that CEO, if he posts a Tweet like this as a followup? Or do business with him at all? If you're a prospective customer or partner, and this is what you've seen, are you going to bother researching, to find out whether this was a fluke or typical behavior? So, if it was a fluke, I'd think the best move is to make the very next messaging be an all-out effort to un-fudge it all up. We all have bad moments, and I'd like to think there's an imminent un-fudging.
- DavidPastrnak 3y agoWhat are the main competitors or alternatives?
- coding123 3y agoContracts on paper
- booi 3y agoThat’s like saying the competitor to cars is walking
- alsodumb 3y agoPulley? https://pulley.com/compare/pulley-vs-carta https://pulley.com/compare/pulley-vs-carta
- orop8jrj 3y agoHeh iPhone 14 Pro Max, latest OS and mobile Firefox; in landscape their Pulley/Carta side by side shows Carta has a 30 day onboarding period. In portrait it says 90 day.
- phonon 3y agoYou're right...the mobile view changes the text
- ed 3y agoThey use Webflow which requires you manually apply copy changes at each breakpoint. Looks like they forgot one of them.
- bushbaba 3y agoLikely a bug from them updating the text at one point from 90 days to 30 days. But Ooph at such a mistake made. We’ve all been there so cut some slack.
- PLenz 3y agoTone deaf reply
- spacecadet 3y agoThis twitter/x? site mostly doesn't work for me, all I see is a log in screen? but some research suggest its a product for like minded extremist to angrily signal at one another?
- AlexandrB 3y agoFor some reason the nitter[1] link doesn't work properly either. I see the original thread but not the Carta CEO's response. Oh well ¯\_(ツ)_/¯ [1] https://nitter.net/henrysward/status/1743794996732735679u https://nitter.net/henrysward/status/1743794996732735679u
- xwowsersx 3y agoThis has to be one of the most harebrained tweets from a CEO I have ever seen. This is a great example of exactly how not to handle credible allegations. Gaslighting the original complainant and suggesting he's posting for LinkedIn cred....unreal
- phillco 3y agoThis Medium post by the same CEO a few months ago (https://henrysward.medium.com/what-i-tell-employees-about-negative-press-7c134e7a601c https://henrysward.medium.com/what-i-tell-employees-about-ne...), presumably written in response to a few ongoing scandals, isn't much better.
- cco 3y agoCan anybody explain the fundamental issue with the original reach out from the Carta employee? Barring something within the shareholder agreement (between the startup employee and the startup) that bars the employee from selling those shares on Carta's platform, what's the issue?
- theogravity 3y agoI think it messes up the valuation depending on the price the shares were sold at.
- j4yav 3y agoThey are hooking up potential buyers with private pricing info to help the buyer get a good deal, which makes the sale more likely and helps ensure Carta gets to take a nice cut.
- x0x0 3y agoAnd it opens the door to unhappy wondering about just who within Carta has this info, and who outside Carta are they sharing it with.
- weeblewobble 3y agoI think a rough analogy would be: You’re a startup who keeps a payroll spreadsheet in Google Sheets and the Google recruiting team accesses that data to recruit your employees and decide how much to offer them. There’s nothing wrong with Google trying to hire your employees, but it’s wrong for them to use your confidential data from another business unit to do so.
- cco 3y agoI must be still confused. The startup employee knows what their strike price was and here Carta was offering to hook them up with a buyer for those shares at price $X (which I presume is/was different than the strike price of the employee). Maybe I'm misunderstanding? But that doesn't seem like they're sharing cap table data with anyone. They've found a buyer for the employee's shares at some price. Is it implied that they shared the cap table info with that buyer (i.e. the third party investor)?
- phkahler 3y agoWhy is this guy broadcasting a message for a specific person to the whole world? I wouldn't want to do business with someone like that. Also, he seems to be trying call the other person out on some kind of contradiction - again publicly - while also appologising?
- xivzgrev 3y agoWhat a petty response. I was expecting more of a statement: Carta does not spam or solicit our customers’ investors. In this case, there was a salesperson who broke our rules, and they have been terminated. We apologize for the mistake. Please contact your account rep if you have any concerns.
- Waterluvian 3y agoThis CEO lives in a different reality. It’s bizarre to see their logic and what matters to them.
- starkparker 3y agoIf you work at a company that grants and manages options through Carta, is there a way as an employee to opt out and manage options some other way? Is there any way to go back to paper stock certificates and options exercise agreements? I'm utterly ignorant about this, I think every tech company I've worked at that offered options has used it, and I've often wondered how things worked before it existed.
- meindnoch 3y agoI hope you do have paper/PDF stock certificates. Carta is just a tool to display your vesting progress. It holds no weight in court.
- nojvek 3y agoThat was a good example of how one should NOT openly respond in public and air dirty laundry. Should have left to “it has come to my attention that X has happened. It was a one time incident and we did Y to rectify it. I am sorry this happened and we are doing Z so it doesn’t happen again. We deeply value our customers privacy and trust. Our mission is X and I will ensure we will do right by our customers. - Yours truly, CEO “
- minimaxir 3y agoHacker News doesn't like corp speak...but sometimes corp speak is infinitely better than the alternative.
- deleted 3y ago[deleted]
- jpgvm 3y agoAddressing what happened directly and providing the concrete steps taken towards rectification is not corp speak. Deflecting and talking about values and abstract things to avoid directly addressing the issue is however and is what should be condemned on HN. Your point still stands though as the emotional petulant rant in this case was even worse than a spineless corp speak response.
- j4yav 3y agoOh and now that you have found a couple more instances, those were also ones that I was aware of but there definitely were not any others.
- mlplat 3y agoFolks, this is a masterclass in how not to give an apology. 1. Apology (great, I hope they end it here) 2. Shift the blame slightly (uh oh) 3. Attempt to make him feel bad (yikes) 4. Question the initial incentive (big yikes) 5. Full conspiracy (big big yikes) Extremely manipulative and weak feeling.
- blindriver 3y agoThis is a resignation-worthy response from someone who is unqualified to be a CEO. If he is like this on Twitter, I wonder how he is to his employees and direct reports? I think the board needs to ask for his resignation immediately.
- JimDabell 3y agoHe is alleged to treat his employees in “an aggressive and demeaning manner”: https://sfstandard.com/2023/10/25/carta-san-francisco-lawsuits-insider-fortune-reports/ https://sfstandard.com/2023/10/25/carta-san-francisco-lawsui...
- kevinmchugh 3y agoHe also actively brought attention to the issue by emailing Carta users. I wouldn't have known if he hadn't made me aware!
- xyzzy_plugh 3y agoGuess what I wrote in the thread yesterday can't be wrong either way: https://news.ycombinator.com/item?id=38888060 https://news.ycombinator.com/item?id=38888060 Sure is starting to look like they cooked their own goose. How can the CEO state with a straight face that "it's a separate company" but they can "self-approve" (he doesn't even know?? Why would you even agree to hop on a call with a customer without knowing. Come on.) to breakglass access everyone's cap table? They're fucked. Not looking forward to all the email threads I'm going to see on Monday. Didn't have this one inked on the Q1 plan. Now we're all wondering what other shenanigans they're likely pulling.
- altdataseller 3y agoWhat do you mean by they’re fucked? In what sense? In that customers may stop using Carta? If so they probably will not suffer the consequences that badly If it’s legal and only if it’s legal and the whole company has to be broken apart will they suffer for this. But I’m not sure how they’re breaking any legal laws?
- xyzzy_plugh 3y agoIt doesn't matter if it's legal. No founder in their right mind would use them if this is how they act. Many angels will not want to touch this. Many investors will be rightly pissed off. But I also doubt that it is legal. I am not a lawyer but I'm sure over the next week plenty of lawyers will be reviewing the same documents that I have read, and it doesn't seem like this is above board. I'm sure their legal team is scrambling to contain this before any discovery arrives. Carta depends, critically, on it's reputation as a secure and trustworthy platform. By any measure they appear to have violated that trust.
- _xivi 3y ago> In what sense? In that customers may stop using Carta? If so they probably will not suffer the consequences that badly Are you saying Carta doesn't give a fuck about their customers? Wow, lol. You (ironically?) hit the nail on the head. Anyway, they're not pissing off just the ones you see directly affected here, each one of those will likely advocate against them in his/her own circle, and any business they might be involved with in the future. Also, these discussions and this incident, will live on the internet forever. Carta's brand, and their CEO's reputation will remain tainted, no matter how trivial you might view this, and it will be a golden edge for their competitors. They'll experience the power of the almighty Word-of-mouth marketing but going downhill.
- haltist 3y agoThis is just good capitalism, enabling market transactions and profiting from the trades. The people arguing against Carta are advocating the prevention of perfectly valid market transactions because some CEO of a tech company got the ick about what Carta was doing even though it is all just good and sound capitalism and profiteering. What exactly is special about series B shares that should prevent Carta from making a market for trading such shares? Does anyone have an actual argument that would actually be sensible in a capitalist framework?
- jedberg 3y agoThey used confidential information to figure out who to email and set the price. The breached the trust their customers put in them to keep their data private.
- haltist 3y agoSo you are willing to deny Carta the ability to generate profits because you do not think that confidential financial information should be used to set prices on some financialed instruments and commodities. Did I get that right?
- jedberg 3y agoNot without permission from the owner of the confidential information. I don't think that's controversial.
- symmetrist 3y agoIt is controversial if you are a free market supremacist like myself and believe that the market should be setting any and all prices. Removing market inefficiencies is what capitalism is all about and preventing the trading of pre-IPO shares seems like a very glaring inefficiency for setting the actual price of Linear.
- 3y ago
- juli1pb 3y agoThe tweet actually reflects the culture of Carta, how they care about their customers and the experience I had when I used them. Carta was charging me $8,000 per year at the time I used them. I found an alternative that had all the features for 10% of the price (Cake Equity - https://www.cakeequity.com/ https://www.cakeequity.com/ - for the curious). It took me multiple calls with customer representative to cancel my account because Carta did not want to automatically add an option for people to cancel their plan. There are competitors that have (1) better product (2) cheaper and (3) better customer success. Nobody has to stay with Carta. Just move away, and you can get better service at an affordable price. I used Cake Equity, but I am sure there are other options available.
- clipsy 3y ago> they care about their customers > It took me multiple calls with customer representative to cancel my account because Carta did not want to automatically add an option for people to cancel their plan. This is not how most people would describe "care about [...] customers."
- mkl 3y agoYou snipped off the key word. juli1pb said this is "how they care about their customers", i.e. as sources of money to be clung onto.
- aspenmayer 3y agoRight, as in: to what condition and/or to what degree.
- lippihom 3y agoCake Equity looks like a nice product. Will check them out.
- wonderwonder 3y ago"Karri, you are free to share our conversation. What I remember is that you appreciated we made a mistake that affected you and two other companies. Thank you for understanding. We fucked up and I’m sorry we fucked up. I hope you will forgive us." Could have just ended it there and it would have been over, acknowledge the issues, apologize and promise to do better. Then for some unknown reason he just said Forget it and set the company of fire.
- dwynings 3y agoNot all that surprising given: https://sfstandard.com/2023/10/25/carta-san-francisco-lawsuits-insider-fortune-reports/ https://sfstandard.com/2023/10/25/carta-san-francisco-lawsui...
- mellosouls 3y agoPossibly relevant; a blog by the CEO here on what he tells employees about negative press: https://henrysward.medium.com/what-i-tell-employees-about-negative-press-7c134e7a601c https://henrysward.medium.com/what-i-tell-employees-about-ne...
- skygazer 3y agoI realize meritocracy is more an aspiration than a reality, but the frequency of these disastrous cases of tone-deaf CEO messaging really give the impression that the inversion is most common.
- coryfklein 3y agoMy thought after reading this, “wow a CEO can be a huge SPOF for a business.” Some, like Elon, may seem to be untouchable in the end, but I can’t imagine this is good at all for Carta’s – checks notes – cap table?
- happytiger 3y agoThat’s one especially disappointing reply.