This article has been updated.
Carta has gone through a few bad press cycles and we are going through another one. I know other CEOs have to deal with this so I wanted to share what I shared with employees in case it’s helpful for other CEOs thinking through similar problems.
It is a really long read but hopefully helpful. The TLDR is:
1. Press is a consequence of legal strategy
2. Press incentives are perversely distorted
3. Most negative press is sensationalized noise (media)
4. Employees matter most
I’m also happy to chat with other CEOs dealing with negative press if you want to reach out directly. Below is what I sent to employees recently.
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Hi everyone, I want to write a note to you about the recent press. I’ve been thinking a lot about how I can be helpful. I think there are many questions people have so I’d like to try to answer some of them here. Warning, this is a really (really) long one so my apologies ahead of time. But I hope it is helpful.
Why do we keep ending up in the press?
Because of a decision I made in 2017. That’s when we had our first legal claim. At the time I told the legal team that our policy is if we believe we treated an employee poorly we should settle their claim fairly and error on the side of generosity.
However, if we disagree with a claim, we should rely on the judicial system. We should let a judge, jury, or arbiter decide if we made a mistake. We would trust the courts to decide what’s right.
Most companies don’t do this. They avoid going to court. Instead they set aside money to settle claims in exchange for employees signing NDAs to not speak negatively about the company. It is considered a cost of doing business.
I didn’t love that idea. As many of you know I’m quite principled, sometimes to a fault. And this is an example. But as much as I’ve wanted to get to court, we’ve never actually gotten there. The litigants kept pushing the trial dates out. In one of our cases they requested 19 extensions. Their legal strategy switches to avoiding a court trial for as long as possible to push press coverage until we settle.
But Henry! The press wouldn’t write it if the allegations weren’t true, right?
This is a tough one to answer. If I don’t say anything I implicitly admit guilt. If I refute the allegations I sound defensive. I don’t want to do either. So let me see if I can frame a backdrop for this.
When John Carreyou won the Pulitzer Prize for his coverage of Theranos it changed everything for tech reporters. Their career path changed from reporting interesting technology trends to exposing corruption in tech companies.
So between 2017–2022 there were hundreds of tech takedown pieces ranging from high profile big companies like Uber and WeWork to up and coming startups like The Wing, Outdoor Voices, and Cleo. Reporters built careers exposing companies, and CEOs, for bad behavior. Other reporters started copying that playbook looking for stories that existed, and sometimes creating stories that didn’t. The most unfortunate part of that era was that female CEOs were the first most targeted group. The world needs more female CEOs and journalists purged a lot of them in 2019–2021.
I would gently propose that the press is biased. For example, when the NY Times reported in 2020 about discrimination at Carta, about 20 female Carta employees wrote letters to the editor (I did not know about this until afterward) citing their experiences at Carta conflicted with the story. The NY Times courteously replied, telling these women it was “not the story we want to report.”
That still doesn’t address the validity of Jerry’s allegations that Fortune reported on. The Board retained the law firm Paul Weiss and hired Loretta Lynch, President Obama’s Attorney General, to conduct a four month, $3M investigation into the allegations, interviewing about 40 people and reviewing tens of thousand pages of documentation.
Of the approximate 25 allegations, Loretta Lynch and the Paul Weiss team “could not corroborate or substantiate” any of them. To be fair, that isn’t proof of innocence. It just means they just couldn’t find proof of guilt. But after four months of investigation, the Board concluded that the allegations didn’t warrant further investigation and they closed the matter in December 2022.
I still might not be innocent. I could be guilty and the investigators just couldn’t confirm it. But if a reporter writes a story about an investigation into allegations, it feels like they should also include the results of the investigation.
But what about all the people named in the articles?
Anybody that knows Jeff knows the accusations against him are ridiculous. He is a good and moral person. If that weren’t true people would leave him in droves. Instead he has one of the highest employee retention rates of all executives at Carta.
Additionally, the accusation that I retaliated against Jeff’s accuser because she reported him to HR is equally ridiculous. I am not privy to HR investigations for exactly that reason. I didn’t learn about the accusation against Jeff until we got the financial demand letter from the accuser’s lawyer.
The worst part of the stories is that they doxed dozens of former Carta employees without consent or context. For example, Fortune cited our former Chief People Officer Suzy leaving as an example of problems at Carta. But Suzy is a close friend and one of my favorite people in the world. We have dinner when she visits California. I do reference calls for her and she does reference calls for me. I feel bad that she is named in the news. (I called her before including her here and she was happy to support us).
Conversely they name other people we have departed as examples of problems at Carta. But unlike Suzy, many of them have thick HR files. Did we fire them because we are the problem? Or did we fire them because they are the problem?
For example, we have extensive documentation that Jerry was inappropriate with women and abused his position as CTO. It also turns out, we discovered after he left, that he is a misogynist and a racist. We fired him. That’s what the press gets wrong. Our mistake wasn’t firing him. Our mistake was hiring him.
So what do we do about it?
One idea is to settle. The risk of course is that we invite more claims and do another press cycle in the future. Also, something just feels wrong about paying millions of dollars to greedy people behaving badly.
Another idea is I could resign. I have asked myself and others if Carta is better without me. I don’t think so but I want to be conscious of hubris and pride. Carta has created thousands of jobs, millions of owners, and billions in wealth. It is bigger than me. My job is to play whatever role supports Carta the most. I still think Carta is better with me leading it than without, but if that changes I will be the first to let all of you know.
A third idea is we keep building and ignore the noise. Many of the allegations referenced are from years ago. And most aren’t real. For example, there is a widely reported allegation of a sales rep exposing himself at an event in 2019. It turns out, after investigation, it never happened. Another male sales rep was jealous that the accused person received a promotion so he started the rumor to get him fired. He admitted it during the investigation but Jerry, and the press reported the rumor as though it were true. That’s why I call these stories noise. They are clickbait.
Two thousand of you show up every day to build together. And you are doing great things. We are expanding in Europe, Asia, and the Middle East and becoming a global brand. We are launching new products at a furious pace. And we continue to grow fast. For some reason people on the outside like to gossip about Carta. But we, and the world, are moving on. Hopefully Jerry and the journalists can too. And Fortune (and others) can get back to their roots of being thought leaders of our industry rather than the TMZ of it.
But what do I tell my friends and family when they ask?
Tell them the truth. If your lived experience at Carta is positive and contradicts the press, then say that. Or if your lived experience at Carta is awful and consistent with the press, then tell them that.
That leads me to the most interesting part of these claims. Every claim in the press about how awful Carta treats employees is from employees we fired. That’s the irony. All of them were at Carta for years and wanted to stay at Carta until we let them go. They only complained about being here when we told them they couldn’t be here.
That’s another reason to challenge the press narrative. If the lived experience of most employees were consistent with the press reports, we wouldn’t have a growing company. People would leave en masse. But that hasn’t happened. Instead people stay at Carta because they want to stay at Carta. And when they do leave it is heart wrenching. Reading our #goodbye channel is a scrolling series of love letters to Carta and its people. Feel free to show our #goodbye channel to any friend, family member, or customer if they are curious about our culture.
My last thought to leave you with is that I’m sorry you have to deal with this. I know when you joined Carta you didn’t sign up for negative press cycles. It isn’t fun. I am deeply grateful and proud to work with all of you and I hope you feel the same working with each other. If you want to chat more about everything that’s going on just ping me. I’m always a DM away.