How To Scale Your Business in 2025

0:00You're being over optimistic and you don't want to scare us so you're trying to do something but let me give you the preview We're gonna see you in 90 days and you're gonna be on the other side of this. So you're gonna have to admit to the problem and everyone at this table besides me because I'm ridiculous, but the rest of the people here are much more straight and they're gonna be pissed. So why don't you just tell us that shit's fucked up now and let us help you for the next 40 minutes instead of saying it's all good. Because to your point, this, let me hold it in and maybe I'll make it work by the time I see them in 90 days.

0:30When you see them in 90 days and it's double bad, AKA you didn't say shit 90 days ago and now you're saying it's an 11 out of 10 issue whereas 90 days ago you were saying it's all fine AKA it's a zero or a one or two out of 10. You're in deep shit because you've lost trust of the board and that's when the seeds start to sprout of are you the right person to run this company? Attention is the number one asset. Vayner Nation, how are you? Another exciting episode of the Gary Vee Audio Experience. decided that we've done a lot of motivation. We're doing a lot of innovation, but I want to get into operation.

1:09I want to get into the depths. I was really excited when the opportunity came to have this guest on the show because I think bringing leaders who actually did it are actually doing it, are building, you know, for me, building a business that from afar I admire in its longevity. It's not a fly by night. It's not a quote unquote unicorn, even though this is probably a unicorn in the way it's defined. But like, you know, like it's not, it's a unicorn, AKA a startup that's a big company, not a rhinoceros with a unicorn, with painting its horn and making pretend it's a unicorn, AKA a lot of the startups that are grossly overvalued and then disappear off the face of the earth because they were over leveraged and weren't actually building an actual business.

1:53And I want to tap into some of the minds of the people that are doing it because so many of you are on your journey of doing it. And so that's why I asked Henry to be on the show. Henry, welcome. Please tell everybody your full name, what you do, what the company is, and a little bit about the company. And I think we should get into a meat and potatoes episode here of the audio experience. Thank you for being on, brother. Yeah, thanks, Gary. Thanks for having me. Yeah, my name's Henry Ward. I'm the co-founder CEO at Carta. We're about 10 years old. We have three lines of business. We're about$350 million in revenue.

2:27About 60 % of that comes out of our core cap table business, which is where we serve startups and manage their cap tables. Another 30 % comes out of our fund administration business, where we manage the back office of venture funds and do their financial accounting and reporting to their investors, their LPs. And then we have a newer business, which is about 10 % of the business now. It's a couple years old, and it's our private equity business, where we're basically managing the cap tables and fund administration, private equity companies and funds. How did it start? You know, we saw this cap table problem.

3:04It was sort of interesting. People in 2013, 14, when we launched, were physically mailing paper stock certificates. Like if you see the old movies with the railroads. Brother, look at this. You've got four in your room. Facebook, Twitter and Tumblr. Beautiful, beautiful. All pre-Carta. All 2006, 2007. Nice, nice. Really nice to know what the valuations of those companies was back then. Totally, totally. And they're beautiful. They're embroidered. They look exactly like the stock certificates when they invested in the railroads. And we're still doing that in 2013. And we said, hey, can we do something like what PayPal did for cash?

3:51You know, can we dematerialize these stocks through DeBegas instead of sending papers, instead of paying, you know, mailing a check or mailing cash? Could we send equity through email the way PayPal sends money through email? Can we do that through the cloud? And that was the original idea. Could we push all this stuff in the cloud? And then once you did that, once you dematerialized equity and put it in the cloud, suddenly the option value on that exploded. exploded you know there's so many things we could do we could do cap table management we could do option management we could do portfolio management we could do liquidity we could do fund administration it just it took off we created an entire ecosystem once once you got things out of paper how quickly did you know this is a great question for the audience how quickly did you know we got something here you know we were in beta i think we kind of launched a free version of this product maybe in July of 2013.

4:50I'm sorry to interrupt. I remember it vividly. I was so pumped it existed. That's awesome. The concept that I was able to just forward it to somebody and be like, take care of this. And like the thing I needed to be done when I was making an investment was done. It was massive for me. Someone like me that cares about time over everything. Like it was huge. I remember those early days. I remember thinking like, this just changed my life. Totally, totally. Well, thank you for being an early user. It was a tough start. A lot of these companies where you're doing something completely new, nobody had bought CapTable software before 2014.

5:25It just didn't exist. There's companies where you're building something that already exists, like MongoDB is my favorite example. People had databases. MongoDB was like, I'm building a better database. And you didn't have to convince people to buy a database. You just had to convince people to buy a better database. And CapTables was different. Nobody ever in the history of the world had ever bought a cap table software product before. And so you had to convince people to buy something that they never bought before and they never thought they needed. And so it was hard to get going. You know, it's hard to convince people to do something they've never done.

6:00And we launched kind of an early beta in July 2013 that barely worked. And then we started charging in January of 2014. That's when we're like, OK. And we earned our first$120 on January 7th from a friend and company startup in Austin, Texas. And it was amazing. It was incredible. The first time you build something as an entrepreneur that somebody pays you for is a magical moment. You know what? That's a great call out. I genuinely remember the first Gillette deal for VaynerMedia. AJ was still in college. which I vividly remember kind of the first things I sold at my dad's liquor store when I was 15, Kenwood 1992, 1990 Chardonnay.

6:45Like literally I can sit here and tell you Kenwood 1990 Chardonnay from Sonoma Valley is like ingrained in my heart. This goes a little bit to why I want this episode, Henry. I view you from afar and we're getting to know each other a little bit here as a real, like an actual entrepreneur. and what I mean by that is it's in when you like love the game not the thing that has become which is like it's so cool like quote unquote everyone is you know like I love playing sports but I'm not a professional athlete when you love the game like you can like I don't think a lot of people can actually talk about the first thing they sold the modern entrepreneur right like they can remember when they raised the capital they can remember this that and the other thing but like the actual first client, especially if they're five, seven years in, in this new era.

7:35But I can remember the first wine I sold for my dad, the first client VaynerMedia had, like all of it, like vividly. Totally, totally. It's amazing. I remember we made$800 in January of 2014, and it was the most amazing$800, you know, we made. This year, we'll put$100 million of bookings on the board, right? And the thing is, is even, you know, 2 ,000 employees, you know,$350 million in revenue going to$450. I spent, you know, half my day. I talked to four customers yesterday that were unhappy. And that's what you do. That's no different than when you're a seed founder. Like you're just, you love the game.

8:13You love talking to customers. I have a little bit of a look right now. Back to your point. Am I right about this? 3.45 PM today. Client issue. I have 2 ,000 employees. How many employees you got? About 2 ,000 also. Yeah. There you go. Right? Yeah. It's amazing. Keep going. Yeah. No. And, you know, so, you know, at January, we made 800 bucks. We're like, okay, well, at least somebody will pay us for this. So that was amazing. So that was, I guess, milestone one. Somebody paid us for something we built, which is a super huge high. And then I would say that the second one was August of that year.

8:56and we moved our, you know, back then you still called, you know, to order something, you know. And so we had a phone system and it was one of these things you called in and you pressed, you know, one to talk to sales, two to talk to, you know, support. And we changed our phone system and broke something so that when you clicked one and it went to sales, it hung up on you. You know, the classic startup story, like we had no idea what we're doing. And so it just hung up on you if you tried to talk to a salesperson. And we sold more in August than we did any month prior. And we didn't even know until halfway through the month, somebody went in through support and was like, hey, guys, I'm trying to give you money to buy your software and I can't get to anybody.

9:39You know, what is going on over there? And I was like, oh, we have something. People are beating down the doors to get this product. And I would say the third one was we finally had so many sales orders, we couldn't onboard them fast enough. And this was in January of 2014, a year later, or sorry, December of 2014. And we're going into Christmas. And I told the sales team, all five or six of them at the time, I said, you have to stop selling, you're not allowed to sell. I'm going to put you on a draw for three months. And all of you are going to be onboarding managers. And we're going to close the doors, because our customers are furious because they bought, but we can't deliver because we're selling too much.

10:21And that was the moment. Yeah. Do you think that that is an incredible common mistake of successful? Like, obviously a lot of people end up figuring it out. Like, I actually think the story you just told, if you even have the talent and the product market fit to get to that problem, you 7.5 out of 10 times know what to do in that moment to get to the next place. Sometimes technology's not there. You might remember Friendster because you're a tech dude, you know, like Friendster being down all the time really eliminated it from having the opportunity of becoming MySpace or Facebook, right? I mean, Twitter got lucky a little bit because there was no unique competitor.

11:04There was Pounce, if you remember, that popped for a while. But I mean, Twitter was a real problem in 2006, seven, eight. Just wasn't up. Then there's the other thing, like under delivering on what you sold. big issue for me in a client service business because I'm completely human based you have a smart business I have a stupid business if I wasn't building something bigger on top of it and so you know I think I think for us it's very hard when you're scaling people as you can imagine with technology uh or product it's a lot quote-unquote easier when you get your supply chain or your tech team down but you find that to be a common problem and then more importantly for the people that are in it right now that problem like you've over promised and under delivered.

11:45Do you recommend they take your track, which is a drastic tack? Or do you feel like they should do things that have worked for me in the past, which was more of a, okay, fuck it. I'm just going to hold my breath and fly the plane, keep flying the plane, but fix it while I'm flying the plane and make sure that doesn't get out of whack. Both. What's your thoughts on that? Yeah. Well, so we did this, you know, we didn't really have marketing back then. So our version marketing was me and my assistant and or chief of staff, I think. And I asked my chief of staff, I said, hey, go talk to 50 customers and interview them and ask them how they heard about Carta, why they decided to buy Carta and what that sales cycle was like.

12:26And all of them kind of heard a little bit different. Somebody came in from a friend, an investor, Google search, whatever it was. But the one thing that was 100 % consistent, 50 of 50 customers asked somebody else who was a Carta user what they had heard of Carta to decide whether to buy. And so we knew that the most important thing we could get right is that when that phone call happened, the person who did have experience with Carta would say a good thing. That was like the number one thing. Nothing else mattered. And so I said, it doesn't matter as we have to make sure that the reference checks go well.

13:02And if people aren't happy, it kills everything. And I'm willing to take a three month closing the doors on sales to make sure that's always true. And it was a tough decision, right? To tell the board, hey, I'm not going to sell for three months. That's a tough, tough conversation. Let's segue back to me wanting it to be a meat and potatoes table. talk to me about the pros and cons not just from your perspective because you have yours and obviously there's been a lot of success congratulations so I have a funny feeling people are feeling pretty decent on the board at least at this point but tell the kids or the OGs I'll tell you who's a big listener to this Henry that I think we can inspire a 47 year old very successful corporate player who she or he feels they're ready they're ready and because they've been successful for 25 years in that environment are gonna actually have like a real board and real investors right talk me through your perspective but more but more importantly i was gonna say equally but i'll actually say more important because and through the eyes of many of the founders you've been around over the last 15 years the watch outs and the ways to best use a board let's do that yeah so i have two tips on this that have worked well for me so one is you know the boards are always hungry for information they they want to know what's going on, you know, et cetera.

14:23And one of my favorite lines from the Ben Horowitz book is, you know, apply pressure, either feel pressure or apply pressure. And I think, you know, he's really talking about executive teams when the exec teams are like hounding the CEO and the CEO is like, oh my God, I don't know what to do. You know, everyone's on me. I feel so much pressure. He's like, turn the tables, apply pressure or feel it. I think that's true with the board. And so I used to tell the board, you know, hey, I want to put you to work. and we had what's called an adopt a business unit program where I'd have the board, each board member would like pick a business unit.

14:54So I'd have Matt, you know, work on cap tables and I have Mike work with the liquidity team and they'd meet with the team once or twice a month. And it was great because one, they helped me, they helped scale me in terms of the strategy and sort of influencing the organization. I could run a flatter organization that way. And two, when the board meetings came up, they all had firsthand data. It wasn't just me trying to explain everything. Like everybody kind of had data. So when they're like, Henry, what's going on with the liquidity business? I'd be like, Mike, what's going on with the liquidity business?

15:23You know? And so it really brought them in. The second thing I would say is the goal that, you know, the number one rule on boards is don't surprise them. Like that's just it. Like as long as you never surprise the board, you'll be okay. and so that takes a lot of - That is the classic mistake that very entrepreneurial, someone like me who would be like, I'll figure it, like never had a board before. Like I really don't have board life because I knew that this would be a huge mistake of mine. And ironically, I'm on boards and I help the Gary in that situation. I see the CO is doing the mistake I would make and I make it safe for her or him be like, hey, I know what you're doing.

16:06when it's okay, because I don't want to be a hypocrite. I do this shit all the time. You're being over-optimistic, and you don't want to scare us, so you're trying to do something, but let me give you the preview. We're going to see you in 90 days, and you're going to be on the other side of this, so you're going to have to admit to the problem, and everyone at this table besides me, because I'm ridiculous, but the rest of the people here are much more straight, and they're going to be pissed, so why don't you just tell us that shit's fucked up now, and let us help you for the next 40 minutes, instead of saying it's all good, because to your point, and this was, I'm glad you went there because I really want to give you the, I'm on the podcast all the time.

16:40I can put out content to these people all the time. I want them to hear different voices. This, let me hold it in and maybe I'll make it work by the time I see them in 90 days. When you see them in 90 days and it's double bad, AKA, you didn't say shit 90 days ago. And now you're saying it's an 11 out of 10 issue. Whereas 90 days ago, you were saying it's all fine. AKA, it's a zero or a one or two out of 10. You're in deep shit because you've lost trust of the board. And that's when the seeds start to sprout of, are you the right person to run this company? And if you have a board that has say in you being, aka, you didn't structure in a way where you can actually get ousted, you better be real careful, aka, forget about over-promise, under-deliver, under, under, under-promise to your board and over-deliver, yes?

17:27A hundred percent. And totally with you, Gary. I'll live and raise you one, which is like, even if it's like, you know, you're previewing bad news, whenever anything, you know, is like, I think is going to be a little controversial or, you know, people will have different opinions on or anything. I do, I do what I call the rounds, which is like, I text, I call all the board members one-on-one and I say, Hey, you know, I want to give you a heads up at the board meeting. I'm going to bring up, you know, such and such. And I wanted to get your, you know, I want to preview this with you before, you know, it's a group setting.

17:57So you can tell me what you think, you know, blah, blah, blah. and it makes them feel special. It makes them feel connected. You know, they can tell you things that they may not want to say in front of seven other board members, you know, et cetera. And it's incredible amount of work. Like, you know, to call seven people, eight people and have the same conversation, you know, to do that. But it's that work that instills the trust so that by the time the actual board meetings happen, everybody already knows what's going on. It's been quote unquote sold before you even had the meeting. totally and and i like when my board members zone out in board meetings and like they're bored and they're like we've seen this like i i actually people like my exec teams always like come out of these board meetings go i don't they hey henry were they interested do they you know do they care and i'm like that i'm like oh my god i'm managing the board so well when they're like enough we get it already like like that means i've overdone it i've over communicated everything there's no surprises.

18:58Like, yeah, when the board is literally bored, like I've done my job well. By the way, Get Your Bored Bored is like a book. It's definitely a real blog post. What's the biggest mistake you made in 13, 14, 15, 16 as a leader that you're better at? I talk a lot about me being better at candor. I used to struggle with delivering bad news because I have a disease it's called I love my employees and I mean it I love people you're getting to know me a little bit here like I'm just them who I am like I really like people and I screw up and I've gotten way better and especially the last three years I wrote a book that touched on it aggressively I talk about in my content more candor was my kryptonite if I asked you 2013-14-15 Henry versus 2022-3 going into 2024 Henry what's been the biggest gap you've closed as a leader Yeah.

19:52Well, I have two thoughts. One on the candor side. I've always had a problem with the kind of the candor, radical candor thing. I remember talking to Kim about it. And I love Kim. I think she's fantastic. But I always said, the problem I have with the book is it's a one size fits all. Radical candor kind of works with no matter who you're talking to. Whether you're talking to a shy 23-year-old first job employee or your 25-year veteran CFO that you've worked with for six years, right? Like it's, it's the same. And, and everything I know about people is, uh, know your audience, like how you talk to them.

20:27Yeah. Yeah. It matters. To your point, Kim's awesome. Like, by the way, I call it kind candor at VaynerMedia because I think radical people feel like, Oh, let me give you the purest form of it, which I actually think seeps into people's real struggle with candor, which is they don't, they don't deliberate with enough empathy, compassion, sympathy, and context. Totally. I would even go, so here's the, I do this all the time in my management training, right? You go, okay, so the manager's working with their employee and the employee's not doing great in the manager's view. And the manager says, okay, you know, so I'm going to deliver the feedback.

21:04And they basically say, you know, employee, you know, I don't think you're doing great. And, you know, I always ask, you know, the most important thing to figure out is it doesn't matter yet what you think. What matters is what the employee thinks, right? If the employee agrees with you and is like, I don't think I'm doing great either. That's a very different conversation than if the employee's like, I don't know what you're talking about. I'm crushing it. And so the first thing to say after you say, hey, I don't think you're doing great is, what do you think, right? And if they're like, I don't think I'm doing great either.

21:35You're like, amazing. So let's talk about how I can help, right? That becomes a collaborative discussion of fixing it. If the employee is like, I'm crushing it. I don't know what you're talking about. That's a very different conversation. Right. And then the second, you know, if you go down the decision tree, the second thing managers always do is I say, OK, what do you say if they say, manager, you're wrong. I'm crushing it. I don't know what you're talking about. The manager will always what they do is they double doubt. They're like, no, no, here. Here's all the reasons why you're not doing good.

22:05Right. And I'm always like, that's the losing battle. You never do that. Right. Right. And my my advice is always to say to the to the to the employee, I said, oh, amazing. I'm so glad you think you're doing well. Why? Why do you think I don't think you're doing well? And and right. So so you lead with curiosity because that's the thing to figure out. Right. It's not it's not the the question to solve is not, you know, if the employee is doing well or not. The question to solve is why are you seeing the same thing differently? That's the question to solve. You know, I love you for that, because we do something here.

22:39where I train my leaders to say, hey, Henry, in my subjective opinion, from my purview, which is all I can really rely on, and the data that I've gathered from others, I believe you're not crushing it. Instead of like, this is definitive fact. And that really triggers people because we know this, a lot of managers are wrong. A lot of times you're right, a lot of times you're wrong. By the way, I've watched managers for years give feedback to people only because they wanted to keep them down because they knew that person was better than them. Totally. 100%. Idiosyncratic manager bias, I think is one of the worst diseases in an organization.

23:18I couldn't agree more, brother. Real quick, just almost like, we interrupt for this commercial break. I really do love your product. And so one more time, who who's listening here should really discover Carta and why and what does it do and where should they go? Oh, thanks for letting me do that. Yeah, I really, you know, people, I've done this podcast a long time. I never do this, but I wanted to do this for two reasons. I wanted a steak and potatoes meeting, which we're doing. And honestly, I really think I'm about to help a lot of people who listen to this show. So I'm being a little selfish and I'm thrilled that it's good for you.

23:56Yeah, thank you. So, you know, we serve two types of customers. So one is if you're an entrepreneur running a company, whether it's, you know, a two person startup, whether it's an LLC, you know, small business in the Midwest, like we have products for you. Basically, we want to help you manage your shareholders, your stakeholders, your employees. So we'll help you on understanding the capital structure of your business. That's what we do for entrepreneurs. And then on the other side, if you're a venture fund manager or a private equity fund manager, we'll help you manage your fund. And like Gary, you're a customer of ours for your venture fund.

24:36And we help people like you. I have this kind of view of the world, which is America as a country, we're great at producing accountants and lawyers and doctors. We're really good at that. But we're really bad at producing entrepreneurs. We just don't do that well. We don't produce them. And what happens to them, I'm gonna show you something Henry that is appalling. This is my report card. Look at my class rank. It looks like mine. Yeah. You and I have started a company from scratch with 2000 employees, knock on wood, are doing extremely well. I mean, I was literally the 11th worst student in my class.

25:16You're absolutely right. Now look, I actually would argue a different point. I actually think America is great at creating entrepreneurs, which is why it creates entrepreneurs in the macro, in the micro, aka school system and like a lot of social norms. We have the inspiration for entrepreneurship here. We put it on a pedestal. And there's plenty, I was born in a place where we demonized it. It was called the USSR. I was born in the Soviet Union. You know, and so I think that, but to your point, we definitely don't teach it. You're either born with it and you fight the system. You're the one that really bothers me, which I think is what you're touching on.

25:50You're born with it and the system and your parents take you out of it, which is the devastating one. Some of the greatest entrepreneurs were talked out of it to be lawyers, you know, and doctors. And that crushes me. So I love where you're going with that. So go ahead. Well, to your point, yeah, you know, entrepreneurs in America, we're, you know, we're celebrated, but we're the aberration, right? We're the weird ones. To your point, your report card shows it, right? You're the exception, not the rule. and that's why I say like it's a weird thing and it just goes from like the way the way we we teach school right school is taught you go kindergarten first grade second grade you know 11th grade you know freshman in college and then you become a junior associate and then a senior associate and it just there's a ladder in entrepreneurship there's no ladder it even goes to like the way we do school like tests right it's so weird tests you start at 100 percent it's bounded.

26:47And then everything you get wrong, you get dinged and you go down as opposed to you start at zero. And then everything you get right, you go up and it's unbounded because that's what entrepreneurship is. You start at zero and you go up and it's unbounded. But that's everything we're taught in school is the opposite.