Work @ Carta, Get Liquidity

Henry Ward
2 min readJun 8, 2018

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~2% of venture-backed companies IPO. Very few startup employees will ever receive liquidity for their equity. The lucky few who do wait years, sometimes a decade, to get it. Worse, many employees forfeit their equity when leaving the company because they can’t afford to buy their options. For most, startup stock options are a mirage.

We live in a strange world where we have hyper-liquidity in public markets, zero-liquidity in private, and nothing in between. Back in the 1980s, tech employees never received options. Equity for employees was unheard of until Fairchild Semiconductor and the Traiterous Eight started giving stock options. It quickly became a recruiting advantage for Fairchild. Other companies were forced to follow suit and so now today it is unimaginable for a tech startup to not give employees stock options.

Prior to Fairchild Semiconductor, there was a stable equilibrium where no companies offered employee equity. They flipped the market to a new stable equilibrium where every tech company offered employee equity. Like driving on the left side or the right side of the road, there is no stable equilibrium in the middle where some companies offer equity and others don’t. Recruiting competition punishes the laggards.

The same will be true for liquidity. There will be a handful of forward-looking CEOs, and companies, who offer liquidity as an employee benefit to compete in today’s fierce talent market. Others will have to follow suit and the equilibrium will flip.

Today, less than 1% of companies on Carta have ever offered liquidity to employees. Like stock options the market will flip and ten years from now it will be unimaginable for companies to give employee options without the liquidity to redeem them. Our generation of companies will look primitive and unsophisticated to future generations.

At Carta we have an insatiable need for the incredibly talented. Our commitment to liquidity at Carta is one of the ways we attract the best people. Today, we are at a scale where we can offer liquidity every 12–18 months. All employees with vested shares are eligible. (Management teams that give themselves liquidity but not their employees should be ashamed of themselves.) As we grow, we will be able to provide liquidity events more frequently. It is one of our employee benefits alongside healthcare, 401K matching, and free books.

Don’t wait years for an IPO. Don’t roll the dice to cash-in. Don’t worry your equity is worthless. Equity doesn’t have to be a mirage. Work @ Carta and get liquidity.

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