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Preaching Equality, Start-Up Didn’t Practice It With Employees

SAN FRANCISCO — Onstage at an industry conference last year, Henry Ward, chief executive of the financial technology start-up Carta, described his vision for transforming the way that workers get paid.

Working for a paycheck had evolved from indentured servitude and serfdom, he said. In the next era, employees would own a stake in their companies.

“Our mission is to create more owners in the world,” Mr. Ward said.

Carta has turned that message into a $3 billion valuation and become one of Silicon Valley’s hottest start-ups. But even as it espoused its ownership-for-all creed, the company behaved inequitably to many of its own 838 workers, according to interviews with more than a dozen current and former employees, along with reviews of emails, internal communications and corporate documents.

The current and former employees, four of whom spoke on the record, said they were often belittled, excluded from meetings and made to feel as if they were at fault for their own mistreatment. Those who voiced concerns said they were sidelined, demoted or given pay cuts.

Many of those who were mistreated were women, the current and former employees said. One woman was fired after an emotional outburst in a meeting. Another was pushed out after raising regulatory concerns.

Some former workers are now pushing back. Three of them, including a former top operations executive, have sued Carta in the last year, accusing it of wrongful termination. In a suit last month, Emily Kramer, a former Carta marketing executive, said that she had been paid less than her male peers and that Mr. Ward had disparaged her with a vulgarity after she voiced concerns about a presentation. She said that incident had forced her out of the company.

Ms. Kramer’s lawsuit and others said Mr. Ward set the tone by denigrating employees and dismissing concerns. While his blunt management style fostered loyalty among some, the current and former employees said, it alienated many others.

The discontent at Carta has emerged as the mission-driven facade of many idealistic tech start-ups has started cracking. In recent months, workers at the apparel start-up Everlane, the feminist work space The Wing and the therapy app Talkspace have criticized the mismatch between their employers’ public messages of empowerment and justice and their private actions.

ImageCarta advertised its ownership-for-all creed on billboards in San Francisco.
Credit…Cayce Clifford for The New York Times

The current and former Carta employees said what they had experienced was directly at odds with the start-up’s crusade for fairness for workers and more equality for women. Mr. Ward not only stated those goals publicly but had Carta advertise them on billboards in San Francisco, including one that implored other tech companies to close a “gender equity gap” faced by women.

“This is a company that makes a conscious decision to market itself as a company that cares about fair practices,” Ms. Kramer said in an interview. “I know it’s smoke and mirrors.”

A Carta spokeswoman said the start-up was a “consistent, vocal and passionate advocate for gender equity, internally and externally.” She said that one-third of Carta’s top executives were women and that its female employees had reported higher satisfaction than men in its most recent survey.

Jane Alexander, Carta’s chief of staff, said of Mr. Ward: “Henry has a polarizing style that is a combination of his personality, his vision and his passion. It does not work for everyone.” But, she said, he “is fair and cares fiercely about Carta’s employees.”

Mr. Ward, 44, has worked in sales and operations at Silicon Valley start-ups since the early 2000s. In 2012, he founded Carta, initially called eShares. Investors, start-ups and their employees use Carta’s software to manage, issue and value their equity; the company takes a fee for the use of its systems.

The start-up, which is based in Palo Alto, Calif., has raised nearly $700 million from investors including Andreessen Horowitz and Goldman Sachs. Among Carta’s customers are the stock trading app Robinhood and the fitness booking service ClassPass.

Mr. Ward hired new employees quickly. In public, he said he wanted the “Cartans” to stay for a decade or more. But he privately told executives to “hire fast, fire fast” lest workers become too comfortable, said three former employees who heard him. A Carta spokeswoman denied Mr. Ward had said that.

In a 2015 memo to new employees, Mr. Ward offered a warning: “Doing Carta is hard. You will learn that soon.”

Issues surfaced. Liz LeCrone, a product manager, said a young female employee staying in Carta’s corporate apartment told her in 2017 that she had woken up to discover a male co-worker, who was senior to her, in her room naked. The woman reported the incident to the company, Ms. LeCrone and two others with knowledge of the situation said. Carta excused it as sleepwalking.

Ms. LeCrone, who left Carta in 2018, said that while the company had believed the woman’s account, “how they handled the situation proved to us that they did not value her.”

A Carta spokeswoman said the company had fully investigated the matter and handled the situation accordingly.

That year, Mr. Ward attended a meeting with an internal group that was set up to discuss women’s issues. The group proposed that Carta create a way for women to anonymously report harassment or discrimination without fear of retaliation, four people who attended said.

Mr. Ward dismissed the idea. Attendees erupted into emotional outbursts and raised voices, the people said.


The next day, Carta fired one of the women who had spoken up in the meeting. She was told it was because she did not receive feedback well and had shown frustration in meetings, according to four people, as well as a review of emails and text messages.

Carta said “departure paperwork” for the woman had been filed before the meeting. The company said it created the anonymous reporting tool last year.

Caroline Griffith, who worked on Carta’s sales and marketing teams in 2017 and 2018, said she was fired in 2018 for reasons that were not made clear to her. When she received an offer for a new job afterward, a Carta executive whom Ms. Griffith had little contact with told her future employer that she was difficult. The offer was rescinded, she said.

Carta said it prohibited providing information on former employees, other than confirming dates of employment.

In 2018, the company published a study on women and equity, called the Gap Table. It also examined its own compensation practices and found pay disparities based on gender.

To fix those, Carta added $2 million in annual payroll and issued $8.3 million of equity to employees. But equity is doled out in tranches over years and rises in value when start-ups raise funding at higher valuations, rewarding those who joined early and stayed longer. Carta did not make up for the lost time or higher valuation for the employees who had been underpaid.

“I’m embarrassed that we are part of the problem,” Mr. Ward wrote in a blog post about the study. “But we want to be part of the solution.”

He wrote that Carta would add its first female board member by the end of 2018. The company has not done so. Carta said it was still committed to appointing one.

When Carta raised new funding last year, Andrea Walne, head of liquidity solutions, attended the investor meetings because she led the business side of CartaX, an exchange for private stocks that the company was planning. She said it had become clear that she was not supposed to speak, even when executives told investors that CartaX — which has not been released — would be available by mid-2020.

“I was there as a prop,” she said.

Ms. Walne said she had raised concerns to the legal team that CartaX would not get regulatory approvals by mid-2020. Soon after, she said, she was informed that she had performance issues, though she was not provided details. Then she was offered a “revised” compensation plan of 35 percent less and given 24 hours to decide whether to accept, she said. She left the next week.

Credit…Madeline Cass for The New York Times

A Carta spokeswoman denied Ms. Walne’s allegations.

Ms. Kramer said she had been sidelined after she protested a slide in a Carta presentation last year that included a reference to slavery. She said the mention of slavery was offensive.

In November, Mr. Ward told Ms. Kramer in a meeting that she had received passes because she is a woman. He called her an “asshole” who needed to go into recovery for her behavior, her lawsuit said. She left Carta, saying she had no other choice.

Ms. Kramer also said in her suit that she had been granted only a third of the equity of her male peers. While Carta later rectified the disparity, it did not accelerate her vesting schedule to make up for the lost time, she said.

In a Slack message about Ms. Kramer’s departure, which was viewed by The Times, Mr. Ward praised her work. “She bent the arc for us,” he wrote. “We will always be grateful.”

Carta said Ms. Kramer’s allegations were “unfounded.”

In December, Frank Han, a senior vice president of operations who left Carta in March 2019, filed a lawsuit accusing the company of wrongful termination and retaliation. In his suit, Mr. Han said Mr. Ward had recruited him in late 2018, persuading him to walk away from a different job offer he had accepted.

But less than three months after joining, Mr. Han was demoted and Carta tried to lower his compensation, including reducing his equity grant by almost half, the lawsuit said. When Mr. Han protested, he was fired, according to the lawsuit.

He declined to comment. Carta said the suit “has no merit.”

Tyler Borer, who worked in Carta’s client services, also filed a wrongful-termination suit last year. He said in the suit that he had been fired while hospitalized. A lawyer for Mr. Borer said that the case had been resolved and that the resolution was confidential. Mr. Borer and Carta declined to comment on the suit.

Last month, three days after Ms. Kramer’s lawsuit became public, Mr. Ward addressed it on a Zoom call with employees. He repeated the conversation that Ms. Kramer cited in her suit and said many had agreed with him. He also described two times when he had snapped at other employees, displaying his online conversations with those workers and reading one of his apologies aloud, according to two people who attended.

In a question-and-answer session afterward, employees asked about Carta’s gender ratio and efforts to change its culture. Mr. Ward dismissed the questions, the attendees said.

He later posted a message to the company’s Slack channel thanking employees for their feedback.

“I realized I should have started by reiterating that gender and racial inequality in the workplace, particularly in technology, is a serious issue,” Mr. Ward wrote.