Carta Goes Rogue

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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.”

“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.

BRIEF OBSERVATIONS

GOING TO THE DOGS: Even the dogs are getting more competitive. Fabulous chart showing the Iditarod dog times are improving at a rapid pace.

MEDIA WINTER: Readership of mainstream media sites continues to collapse.

THIS ISN’T TRUE: I don’t think this is true. Proprietary data IS a moat. And controlling distribution IS a moat. But the tweet sounds good.

TESTING FOR SUCCESS: The inequality gap continues to widen.

THIS IS BEAUTIFUL: Sometimes technology helps you see things in new ways.