Want to catch up on the Carta news that's been unfolding over the last 24 hours? Start here. I prefer lukewarm takes to hot ones, but here's an early thought: this CEO came up in the Kalanick/Neumann founder era. (If you're not a fintech nerd, you may not even know he's been CEO the whole time, 11 years and counting.) That's the founder playbook he's following. It involves being brash and digging in your heels--behavior that venture investors traditionally have rewarded. I believe we've been moving into a new phase of tech leadership, where other traits like transparency, accountability and humility are more highly held. But startup employees and customers have embraced that paradigm more quickly than his generation of startup founders (and certainly the investment community writ large). I point this out to explain the gap between how he's responding to the crisis and the disbelief of many onlookers. Until there are consequences for inhabiting the old way of startup CEO'ing--and there have been many, many reasons why there should have been by now for this company--why would he change his behavior?
Founder Principals Media / Modern Storytelling for Business Leaders / Former Global Head of News Product at Bloomberg
Carta is at the center of a very modern crisis communications storm that more and more companies and PR firms are likely to face. Friday night, an influential customer dropped a bombshell complaint on social media. Karri Saarinen, CEO of Linear, said that Carta was soliciting buyers for shares of the private company without permission. It’s a red flag because Linear, along with 95 percent of other startups, use Carta to keep track of their investor base. That means Carta is privy to info about who owns the company. Essentially, Saarinen was alleging that Carta was using that confidential information to develop a new service, a secondary market to sell stakes in private companies. Instead of trying to work it out in private, Saarinen made the complaint on social media, posting on X and LinkedIn. And he came out swinging. “This might be the end of Carta as the trusted platform for startups,” his post began. It took Carta 19 hours to respond, also in public on Linkedin and X. Carta CEO Henry Ward apologized. “I’m appalled that this happened.” He said that it appears that "Friday morning an employee violated our internal producers and went out of bounds.” It was the “rogue employee” defense and Saarinen was having none of it. He responded with screenshots showing another investor had been approached in December and claimed another was contacted several months earlier. Ward responded that Carta had been trying to call him yesterday. Saarinen responded that he was busy spending time with his son. The two then talked with Saarinen posting that his position hadn’t changed. Meanwhile, the original post on X racked up 1 million views and scores of people weighed in, including some heavy hitters like Joseph Jacks, who demanded Carta cease and desist efforts to build a business selling shares. The general consensus was summed up in a post by Pranay Srinivasan, CEO of Manufactured.com: “zero chance an employee just went rogue, accessed a private cap table and sent an email making an unauthorized tender.” Other tweets leaned against Carta: “This is damning for Carta.” “I’ve been sounding the alarm on Carta’s conflict of interest for two years.” Tiffany Duke “This sounds (like) Carta’s employees are incentivized to sell and pay the percentage.” “Every startup plays fast and loose with user privacy until they have a come to Jesus moment.” What makes this novel and challenging from a communications / PR point of view: --It started on social media --It is playing out in public --The CEOs are communicating directly This is uncharted territory for most companies. Companies are used to fielding customer complaints in private. They are accustomed to controlling the information and narrative. And the communication is typically handled by comms departments. There are echoes here of the dynamics we are seeing in Ackman vs Harvard. It shows how social media is upending the communications landscape.?
Superb summation Leslie. Every company on earth is one CEO (or any employee), social media post, email, presentation, statement, repost, etc. from a full scale reputational crisis. It’s just more frequent that it begins on social versus WSJ to social. It just re-emphasizes the importance of monthly crisis preparations, table top exercises, updated FAQ and holding statements.
Spot on analysis.?It's time for old-school tactics to evolve.
Pretty revealing what Carta is doing. This could develop into a pretty ugly legal battle. Right about now is the best timing a Carta competitor could emerge and capitalize on this crisis to get Carta clients jumping ship. Really interested to see how Carta navigates the remainder of this fall out and what unfolds.
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Great recap! This is exactly how a crisis unfolds in crypto. Social first.
interesting.
Wow!!!! This is unbelievable!!!
General Partner at Joyful VC | Ex-Silicon Valley Lobbyist | #1 Bestselling Author | Founder of VWS | Keynote Speaker | Rolling Stone Contributor
10 个月Last month, Carta also emailed our LPs without permission and sent sensitive documentation about an anchor LP to the rest of the fund. They said it was a “mistake”, but clearly there is an ongoing pattern here.