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20VC: Carta Founder Henry Ward on Why The Best Companies Are Not Product Led But Distribution Led, 3 Requirements Needed For A New Market/Investment To Be Exciting and Why Small Markets Are So Attractive

Apr 12, 2019

Henry Ward, Founder and CEO of Carta, shares his journey in revolutionizing cap table management. He discusses why the best companies prioritize distribution over products and the nuances of evaluating executive capabilities during growth. Henry confronts the unfair blame dynamic between founders and executives, revealing how leadership strategies evolve. He also highlights the advantages of targeting small markets for unique opportunities, challenging conventional wisdom in startup funding and market dynamics.

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ADVICE

Decision-Making Evolution

In later stages, prioritize making fewer, but higher-quality, decisions.
Involve the executive team to ensure alignment and understanding.

INSIGHT

N of 1 Markets

Focus on 'N of 1' markets, where one player can dominate, instead of market size.
Carta prioritizes market ownership for defensibility and expansion opportunities.

ADVICE

Distribution-Led Growth

Build distribution-led companies, not just product-led ones.
Secure entry points into businesses, then expand offerings through your distribution channels.

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Henry Ward is the Founder & CEO @ Carta, the startup that helps private companies, public companies, and investors manage their cap tables, valuations, investments, and equity plans. To date, Henry has raised over $147m in funding from some of the industries leading investors in USV, Spark, K9 Ventures and Meritech and then also leading founders including Flexport's Ryan Petersen, Transferwise's Taavet Hinrikus and Slack's Stewart Butterfield. Prior to founding Carta, Henry was Founder of SecondSight, a portfolio optimization platform for retail investors.

In Today's Episode You Will Learn:

1.) How Henry made his way into the world of startups and came to found the gamechanger of cap tables and valuations with Carta?

2.) What does Henry mean by the term "executive half-life"? How does Henry determine between an exec that can scale with the company and an exec that cannot? What are the leading indicators? When weaknesses are revealed, how does this manifest itself? Does the exec open up and admit to it or does the leadership team have to be proactive?

3.) Question from Manu @ K9: As a first time CEO, what have been the biggest personal challenges for Henry in the scaling of himself? Why does Henry think it is unfair founders are given exemption from blame in scaling but execs are not? How does Henry make decisions differently now to the early days? What have been the improvements?

4.) How does Henry buck the conventional wisdom with his willingness to go after very small markets? What does the N of 1 vs 1of N rule mean here? Why does Henry believe the N of 1 markets is the most attractive? What are the core advantages to owning your market? How can founders think about insertion points? When is the right time to add additional products? How does Henry respond to the traditional notion of "focus"?

5.) Why does Henry believe most founders are afraid to put investors to work? If fundraising is, as Henry suggests "an auction process", what can founders do to optimise it? How does Henry approach the element of value creation and value extraction? How does this influence his approach to pricing? How does Henry think more tech founders can leverage acquiring services businesses and automating their processes over time? Where is the arbitrage in pricing here?

Items Mentioned In Today's Show:

Henry's Fave Book: The Essays of Warren Buffett: Lessons for Corporate America

As always you can follow Harry, The Twenty Minute VC and Henry on Twitter here!

Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.