Henry Ward - Transforming Private Markets

**Patrick O'Shaughnessy** (0:00)
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**SPEAKER_2** (2:04)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
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**Patrick O'Shaughnessy** (2:29)
I guess today is Henry Ward, co-founder and CEO of Carta. Started in 2012, Carta helps companies and investors manage their cap tables, equity plans and ownership.
Last year they launched CartaX, a platform for private companies and their employees to access secondary market liquidity.
Our discussion is a detailed exploration of private market infrastructure and Henry's views on building an enduring business. Please enjoy my conversation with Henry Ward.
So Henry, where to begin this conversation? Carta is such an interesting business because it is effectively infrastructure for other companies. A topic that I love and obviously you love too. Maybe the right place to go is all the way back to the beginning and whatever the first insight or founding risk, however you wanna frame the first key mental moment for you around this business and how it came to you. I'd love to hear that story and then build on it because it's been quite a 10 year run.

**Henry Ward** (3:23)
Thanks for having me.
I would break Carta's beginning or origin into two parts. One is the observation that started it and then the solution that we started building. And the observation was we live in this weird world where you have hyper liquidity in the public market, so much so that people are trying to buy machines closer to the exchanges. We talk about nanosecond liquidity and then the private markets, there's zero and everything's done in paperwork. There's zero liquidity to invest in two founders in a garage, takes 30 days, tons of paperwork, $20,000 in legal fees and so on. And so that dichotomy was an interesting observation for us. And our explanation for why this dichotomy existed was that there was no infrastructure for private companies and private financial infrastructure, that all the infrastructure had been built for public securities, but nothing for private. It was still trapped in contract law, which meant it was still trapped in paperwork.
So that was observation one. Solution was, well, how do you build the infrastructure for private markets so that it can look more and resemble the public markets? And our idea was, could we build this database, which would be, think of it as like the MLS, but a private assets. I just wanted to know what everybody owned.
And if we had this database, that would become the central clearinghouse for all private market securities. And we could build an exchange on it. We could build liquidity. We could do all kinds of things on this database. Think of it, if you're familiar with the Depository Trust Corporation, the public world, that's what we were building. It's the DTC of private markets. The hard part, of course, is how do you get people to tell you what they own and get those assets? And our idea was, let's build a really easy and simple way for issuers to issue stock certificates, issue securities online via email, just like you would send money with PayPal 20 years ago. We're gonna send securities via email with e-shares. We're now called Carta. Back then, we were called e-shares.