Henry Ward on Private Markets and Startup Evolution

In Brief:

The private markets are fundamentally reshaping American capitalism, with private companies now driving most new job growth while public markets shrink—yet 99% of Americans remain locked out of accessing this wealth creation engine. Henry Ward, CEO and co-founder of Carta, a technology company managing cap tables and equity for over 50,000 private companies representing trillions in institutional capital, spoke with Bloomberg's Barry Ritholtz about the structural transformation underway in private markets. Ward argues that congressional efforts to push companies toward public listings miss the point entirely—the future lies in creating safe retail access to private capital rather than forcing companies into a "shrinking product" of public markets. With $57 billion under management through Carta's platform, Ward has spent a decade attempting to build liquidity infrastructure for private companies, ultimately concluding that venture startup liquidity "will never happen" in the form of public-style exchanges because the markets operate on fundamentally different physics. Ward detailed Carta's evolution from a $20-per-certificate email service to a $350 million cap table business that has materialized private stock the same way Nixon dematerialized cash from the gold standard, while simultaneously lobbying Congress to democratize access to the private markets that now dominate American economic growth.

Big Picture Drivers:

• Public Market Contraction: Fewer public companies exist today than a decade ago, with private companies and private capital driving most new U.S. job growth while everyday Americans lack access to this wealth creation

• Materialization of Private Stock: The shift from physical stock certificates and paper equity to cloud-based digital infrastructure has fundamentally transformed how private markets operate and scale

• Regulatory Liberalization: Current administration efforts to expand retail investor access to private equity and private credit firms represent potential structural shift in capital markets

• Industry Convergence Limits: Software businesses fundamentally cannot become data businesses due to customer trust dynamics, forcing companies to choose between workflow tools and data monetization

Key Themes:

• Love of the Game Over Financial Outcomes: Successful entrepreneurship requires intrinsic motivation for building companies rather than wealth creation, as founders spend years poor with uncertain outcomes before any potential success materializes

• Adjacent Market Discipline: Growth requires strict frameworks around competitive advantage and speed-to-market rather than pursuing obvious adjacencies, leading Carta from cap tables into valuations and fund administration through unique data advantages

• Private vs Public Market Physics: Private markets operate on inverse principles from public markets—prices set by first buyers not last, easier to sell $100M blocks than single shares, power law rather than normal distribution of outcomes

• Mountain Jumping Over Hill Climbing: Early career success depends on randomly exploring different fields to find global maximum opportunities rather than optimizing within a single chosen path that may represent only a local maximum

Key Insights:

• Materialization Resistance: Even Silicon Valley venture capitalists and their lawyers initially resisted Carta's digital transformation of stock certificates in 2012-2013, with attorneys arguing that 200 years of green embroidered certificates couldn't simply be replaced by cloud databases, requiring grassroots adoption by startups to overcome institutional inertia.

• Subscription Model Survival: When Carta faced potential failure from its $20-per-certificate transactional model, Ward emailed all 2,000 customers admitting his pricing mistake and unilaterally moving them to subscription pricing, losing almost no customers because many had already questioned the business model's sustainability.

• Private Market Liquidity Impossibility: After spending a decade as "one of the top five people in the world" working on private market liquidity, Ward now believes venture startup liquidity will never function like public exchanges because the markets operate on fundamentally opposite principles including price discovery, transaction size dynamics, and distribution outcomes.

• Software-Data Business Incompatibility: Software businesses cannot simultaneously operate data businesses because monetizing customer data with the right hand while promising confidentiality with the left hand cannibalizes trust and the core software business, explaining why even Salesforce hasn't launched a data product in 30 years despite obvious opportunity.

• Wealth Management Gap: No financial advisory industry exists for employees sitting on $1-2 million in illiquid private equity while earning $150,000 in cash, as traditional wealth managers cannot monetize illiquid assets at basis points and don't understand private market dynamics, creating partnership opportunities with firms like Morgan Stanley.

• Paradox of Entrepreneurial Skill: The more entrepreneurs enter the market, the harder entrepreneurship becomes rather than easier, because when everyone operates at high skill levels the role of luck increases dramatically—requiring both exceptional execution and fortunate breaks rather than just one or the other.

Memorable Quotes:

• "Public markets is actually a shrinking industry. There's fewer public companies today than there were ten years ago by quite a big margin. But the number of private companies is growing astronomically, and that's largely fueled by there's a lot more private capital than there used to be." - Henry Ward, explaining the structural shift away from public markets toward private capital as the primary engine of business growth and job creation

• "Private markets are so different from public, it's really kind of the upside down world. In public markets, the price is set by the last buyer, not the first. In private markets, it's set by the first and not the last. In public markets, it's easier to sell one share than $100 million worth of shares. In private markets, easier to sell $100 million block than it is to sell one share." - Henry Ward, detailing why attempts to create venture liquidity infrastructure have failed despite a decade of effort by top experts with comprehensive data

• "It will be weird in 20 or 30 years that we locked out 99% of Americans out of private capital." - Henry Ward, explaining his congressional testimony advocating for retail access to private markets rather than pushing companies toward public listings in shrinking public markets

• "Software businesses cannot be data businesses. If a software business has customer data by selling software and service to this customer, and they monetize that data on the other side, it cannibalizes their software business because customers won't trust them." - Henry Ward, articulating why Carta won't launch data products despite having extensive private market data, using Salesforce's 30-year absence from data businesses as supporting evidence

• "We realized we wanted to move to a subscription based business because we needed to bundle other things that were more subscription based. We emailed all 2,000 customers and I said, 'Hey, I made a mistake. I priced this wrong for you and I need to change.' We lost almost no customers." - Henry Ward, recounting the existential risk of unilaterally changing business models mid-flight, with customers responding that they had wondered if the pricing would force Carta out of business

The Wrap:

Ward's decade-long journey from $20 email certificates to a $350 million cap table business illuminates the broader transformation of American capitalism toward private markets that now drive most job growth while remaining inaccessible to ordinary investors. His failed attempts to build venture liquidity infrastructure—despite being uniquely positioned with comprehensive cap table data—reveal fundamental structural differences between private and public markets that resist convergence regardless of technological capability. The congressional push to force more IPOs misunderstands this shift, treating symptoms rather than addressing the core challenge of democratizing access to where actual wealth creation now occurs. As regulatory liberalization accelerates under current policies, Ward's lobbying for safe retail access to private capital represents a more pragmatic path than reversing decades of market evolution. His partnership with Morgan Stanley to create wealth management for illiquid asset holders addresses a genuine gap where employees hold millions in private equity without financial infrastructure to manage it. Ultimately, Carta's success in materializing private stock mirrors Nixon's dematerialization of cash from gold—a fundamental infrastructure shift that seemed impossible until grassroots adoption made alternatives obsolete, suggesting that retail access to private markets may follow similar adoption curves once regulatory barriers fall.