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Telling the stories of startup founders and creators and their unique journey. Each episode features actionable tips, practical advice and inspirational insight.
Greg Moran (00:01.63)
Welcome back to the Founders Journey podcast. Glad to be back, Peter. A week before Christmas, two weeks before Christmas. Glad to.
Peter Dean (00:10.41)
I'm excited, you didn't wear the new t-shirt I got you.
Greg Moran (00:13.406)
I did not, I had, I actually, you know what, I had a bright red velvet sport coat in the other room and I forgot to put it on. So anyway, I don't believe you. So we've got two Peters today on the call. So we'll do our best to sort them out. But yeah, glad to have Peter Walker with us today. So Peter is a guy that I've been.
Peter Walker (00:24.036)
I'm already disappointed.
Greg Moran (00:42.486)
It was just telling before we started recording, I've been following him on he's famous or infamous, whatever, whatever. On on LinkedIn, I've been a big fan of following is where Peter runs the insights team at Carta, which we're going to explain. I think a lot of founders listening are going to know Carta. I have about 27 Carta accounts right now from all, you know, from various companies I've invested in and things. But Peter's work is really around really looking for within the data, the key narratives around the private market.
ecosystem, VCPE, things like that. Before that, he was head of marketing for a media analytics company. And before that, this is actually pretty cool. I didn't catch this. But a lot of us sort of lived on the COVID tracking project for about a year of our lives. And Peter was the guy putting out that data visualization that a lot of us were going there religiously every single day. So really super interesting stuff. And he's got a new puppy.
Peter Walker (01:29.435)
Mm.
Peter Walker (01:39.065)
Yeah.
Greg Moran (01:41.474)
a new corgi puppy and lives in San Francisco. So that's probably the most important part of it. But Peter Walker, welcome. Welcome to the podcast.
Peter Walker (01:41.691)
Thanks for watching!
Peter Walker (01:48.986)
Yeah. Hey, thanks so much. Happy to be here, Greg. And yes, you hit on the most important part last, you know, proud puppy father. So nothing more to say there.
Greg Moran (01:56.586)
Yeah, that's right. That's right. Yeah, I would love I mean, I don't think we'll have time if we have time, I'd love to just kind of hear about the genesis of the COVID tracking project. I mean, it's just a super cool thing. And it was really in putting together your bios like why had no idea, but so many of us lived on that. But tell us, I mean, just kind of start from the top, right? How did you, you're obviously you're deep into data visualization, data analytics, how did you get into this? And how did you kind of start down that?
COVID tracking and over to Carta kind of path.
Peter Walker (02:29.783)
You know, it was just a series of serendipitous events, honestly. I was working at this media intelligence startup back East in DC called Public Relay. And I got a joint address out of school, was probably employee number, I don't know, 11, 13, something like that. And at that size of a startup, you know, as soon as you prove that you're mildly competent, you just get flooded with work, no matter what that work is, or if it has anything to do with the things you studied in school or are good at.
Greg Moran (02:53.75)
Yeah.
Peter Walker (02:58.779)
Um, and I just kind of found myself gravitating, you know, at first I was an analyst and then I did, uh, built a data, uh, analytics team there focusing on Tableau and Sisense and a couple other platforms. Um, and then I kind of got burnt out of data for a little bit, went over to the marketing side and so my background is this sort of, I'd say rather unique mix of product marketing and data and combining those two, as you mentioned, I got a chance to do that at the COVID tracking project, which was
you know, certainly the most noble work I've ever done. And it's just, it just kind of opened my eyes to the idea that a lot of organizations, companies and otherwise are sitting on this data. And there's this, there's usually a sense within the business that this data is incredibly valuable and we need to be very careful with it. And we need, we should monetize it if anything, but we should keep it to ourselves because data is quote unquote, the new oil, right? We don't want to just be giving it away. When my, my general view is that it's completely the opposite.
and that you would gain far more as an organization putting this data out into the world and educating your ecosystem on what's important about it than you do by hiding it or selling a PDF or something like that. And luckily the people at Carta agreed with that general worldview and then I got to come on and build this practice here.
Greg Moran (04:16.618)
So talk about a little bit what you're doing at Carta specifically, because I know Carta in the PE VC world and whether you're on the company side or you're on the investor side, and I've been on both, Carta is ubiquitous, right? It is the go-to source. Talk about what you're doing for founders and kind of what your role within using those analytics because it is the private market source.
Peter Walker (04:31.195)
Ahem. Yep.
Peter Walker (04:46.339)
Definitely. So I think you touched on the most one of the most important points, which is when I had come on to Carta, Carta had already achieved this level of market share and ubiquity that allowed us to take a look at the data that we had access to and to say something I think pretty meaningful about the market as a whole. Now, it's not to say that every startup in the U S uses Carta or every VC fund does, but enough of them do our market share is strong enough that the analytics that we can put out just from our companies.
I think speak really well to the overall trends in the marketplace. So when I came onto Carta, you know, the general tagline for my role is make Carta data more useful. And that can take a lot of different forms. The ones that are probably the primary ones that you interact with are, you know, we put out a ton of graphics on LinkedIn and other social platforms, just little snippets of important things for founders to know, you know, what are safe valuation caps these days? How should you treat equity for your earliest employees versus your later employees?
How much should you compensate an advisor in equity? All these questions that we get constantly from founders, we have the data to answer it. So we should go and answer it. And we should answer it in public and then other people can cite us as a source of truth. We also then build a business or like a deeper insights function, bigger reports on the state of the market, deep dives into special topics. We have a data minute newsletter that's about 20,000 subscribers strong this year. And we've got a whole lot of ideas
put Carta data into the ecosystem. It's funny that you use the word ubiquitous. My goal at Carta now is to make Carta data ubiquitous and to have us be the source of truth for VC and startups in the US. Luckily we get to play in this space and we're not selling a lot of this data. So we sort of, I wouldn't say we compete with places like PitchBook and CB Insights. It's more of a co-op petition model, I would say.
Peter Dean (06:37.506)
Mm-hmm.
Peter Walker (06:41.055)
But we're not making money on any of this data. We just think it's useful for us to be a source of truth in the ecosystem.
Peter Dean (06:52.962)
Go ahead and give me what you did right now.
Peter Walker (06:57.283)
Everyone, that was a fantastic question from Greg. We just missed it. Yeah, we just missed it. Exactly. Yeah, well said, well said. Yeah.
Greg Moran (06:57.726)
Yep. So what do you think, Peter? Sorry. Yeah, I could do that. Right. I make the mistake all the time. What I was saying was just a really quick plug. The newsletter is Cardamonit. Is that the name of it, right? And Cardamonit. Yeah, it's awesome. If you don't subscribe to it and you're listening to this, do it.
Peter Dean (06:59.214)
hahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahah
Peter Dean (07:04.846)
I think it's great. Yeah. Me? I can actually comment on that question.
Peter Walker (07:11.419)
I did.
Peter Walker (07:19.979)
Yeah, cart a data minute.
Greg Moran (07:26.258)
If you're in this world, it really is a it really is a great piece. I follow it pretty closely.
Peter Walker (07:27.077)
Thank you.
Peter Dean (07:31.806)
Yeah. And the importance of getting that benchmark data for a founder, because there's some founders that have done it before. There's a lot of founders that haven't done it before. And they're trying to get this information. They're trying to understand, are we doing this right? Are we following the right process? Is this make sense? That is so valuable, uh, to founder, because we just don't know. Like it's not what you do every day. You do the other stuff, you build the product, you do all that. So that, that's really important. And we appreciate you guys sharing that.
Peter Walker (08:02.267)
The point there too is that if you're a first-time founder and you're looking for this information, oftentimes the only people that can give you a sense of just beyond anecdotes or the last couple of people you talk to are your VCs and your lawyers. And let's be honest, that can be an adversarial relationship or you're not always aligned on these things. So we think we can provide this sort of baseline source of truth that's at least more independent than the other places that you might be getting this information from.
Peter Dean (08:21.27)
Right.
Peter Dean (08:31.19)
a real healthy way to preserve that relationship in a way that you can bring something up with the benchmark that you have a conversation around instead of maybe being led down some road that's maybe not a good place to be. So that's really good.
Peter Walker (08:43.616)
Exactly.
Greg Moran (08:48.674)
Peter, do you want to start to dive into the data a little bit? Peter, do you?
Peter Dean (08:53.49)
Yeah, so like, yeah, first question is like, what it what would you how would you characterize the state of the startup economy today? How would you characterize that?
Peter Walker (09:03.02)
Mm.
Peter Walker (09:06.683)
I think it would be difficult to use any glowing words here. I think the obvious headlines are we're way down from where we were in 2020 and 2021. The boom is over. Startups are now focused on being capital efficient businesses, et cetera, et cetera. And generally speaking, fundraising is just harder for everyone. I think that is a true headline as far as it goes.
Peter Dean (09:10.551)
Yeah.
Greg Moran (09:11.85)
Hmph.
Peter Dean (09:17.533)
Mm-hmm.
Peter Walker (09:32.527)
But I think it actually kind of hides some of the nuance in this market. And the major nuance that we're seeing is that there's starting to be a bit of a barbell market where founders without connections, first time founders are having to show a lot more traction in order to raise any capital than they used to and second time highly networked founders are raising like it's 2021. And it's like the gap between those two groups of people.
Peter Dean (09:53.291)
Yes.
Peter Dean (09:57.549)
Mm-hmm.
Peter Walker (10:00.855)
I think has widened more in the last 18 months than we've seen it in quite some time.
Greg Moran (10:06.41)
Yeah. Well, sorry, go ahead, Peter. No, go ahead. Good.
Peter Dean (10:10.191)
Are you seeing that in certain segments, or is it in all segments? Is it all?
Peter Walker (10:12.523)
Mm. I'd say it's in all segments. I mean, if you take a look at the fundraising data that we have, it's true that later stage has been hit more than early stage, although everything is down from 21. I think that the way that we talk about it internally is that it's actually a pretty good time to start a company. But it's a pretty difficult time to grow one. And so the founders who perhaps they started their company in say, let's say 2019.
Peter Dean (10:23.886)
Mm-hmm.
Peter Dean (10:32.896)
Yes.
Peter Walker (10:41.435)
and they raise the seed round or maybe they even got to a series A by the time early 2022 happened, they grew up, their formative startup experiences were in a completely different macro economy. Interest rates were zero, money was free, all of these things, everyone was super excited about startups or crypto or whatever. And now they have to whiplash change to this new world. Whereas the founders that are starting right now,
they're growing up in the difficult conditions and that it's actually easier than having to change track in the middle of your startup growth.
Greg Moran (11:12.522)
Yeah, you know, there's a lot to that. I started my last company in 2008. We literally incorporated the day that Lehman went under. Right. And there really is something to that. When you start kind of at that very bottom, when you don't know what the good days look like, your good days are actually pretty dismal. Right? You just don't know it, so they're fine. But it's the reverse. And you see this all the time. We see this in.
Peter Walker (11:20.097)
Well, yeah.
Peter Walker (11:35.483)
Right. Yeah. Right.
Greg Moran (11:42.302)
you know, portfolio companies that we talk to or in that, you know, when you grew up at that peak, grew up like in your infancy at that peak, right? You now are in this situation where the amount of time it takes most companies to react to this kind of change is enormous. Right. Because everyone believes that the good days are right there again. And it's not so much that they're bad days.
Peter Walker (12:01.856)
Mm-hmm. Yeah.
Greg Moran (12:12.526)
we're kind of reverting to what is kind of more normal state. Right? I mean, would you agree with that or is that?
Peter Walker (12:17.923)
Yeah.
Peter Walker (12:23.432)
I think a lot of people have said this is a quote unquote, we're getting back to a healthier ecosystem or a more realistic one at least. And I think again, that is definitely true. I don't think it was sustainable at all for valuations to go up into the right and skyrocket the way that they had been and all this cash and stuff. I do wanna be careful to not then make the second claim that this is like morally good.
Greg Moran (12:28.735)
Right.
Greg Moran (12:38.08)
Right.
Peter Dean (12:48.27)
Great.
Peter Walker (12:49.419)
It's still an incredibly difficult time for a bunch of founders. And, you know, sometimes you get you read all these comments online and people are like, well, you know, all these founders were just, you know, just trying to take advantage of zero interest rates and they probably didn't even believe in their businesses. And I just don't think that's true. I think most of the time, most every founder believes they're building a generational company and they're just doing it in the water, quote unquote, that they get to swim in every day. And if that water is zero interest rates and free money, that's great. And so they're going to build differently.
Greg Moran (12:50.836)
Yeah.
Peter Dean (13:12.735)
Okay.
Peter Walker (13:18.499)
The biggest thing that I think has happened this year, which again, I'm sure that all the founders listening have heard before, is that there's just been this quote unquote renewed focus on profitability, unit economics, capital efficiency, whatever you want to call it. The thing that I'm really, I don't have a good idea or prediction on for next year is, okay, we've been through 12 months where the focus was on capital efficiency, but in the end, venture is a growth business.
Peter Dean (13:31.284)
Yeah.
Peter Walker (13:48.195)
Like VC depends on growth. And when will the message start flipping back to growth is the most important factor for these new rounds? Cause when we talk to founders, honestly, some of them are like, look, I made a lot of changes to my business. I became a lot more capital efficient, but now some of the VCs that I might've raised my next round from are telling me I'm not growing fast enough. And it's like, did I, did I get the balance right? Or is there a way that I can, you know, have both hold both of these ideas at one time in the same company. And that's really hard for a lot.
Peter Dean (13:50.327)
Mm-hmm.
Peter Dean (14:18.754)
Do you think it was like this big pendulum swing that's now got to come back a little bit? It's kind of what you're talking about.
Peter Walker (14:24.907)
I do. And I do think that there's been, you know, we've all seen, there's been a ton of layoffs across private tech, just like there was in big tech and all, et cetera. So I do think that I don't expect us to get back to the heyday of 2021 in terms of employee counts and all that kind of stuff anytime soon. But I'd be shocked if at some point in 2024, the message didn't swing back to like, growth is like you want to focus on growth again, at least perhaps not to the detriment of
unit economics, but you know, growth is the primary focus.
Greg Moran (14:56.958)
Yeah, I think, you know, one of the things, Peter, is you end up, and I know you look at this because I've been on both sides of this, right? I've been an operator in good markets and bad, and I've been an investor in good markets and bad. And it is it is a completely schizophrenic market, right? Where you sit there and on one hand, you're saying to a founder, cut expenses, get lean, get, I don't, you know, just hold your position. Right. And.
Peter Walker (15:08.495)
Mm-hmm.
Greg Moran (15:24.826)
And it's important and you need to do that because the base, you know, the basis of that is don't run out of cash, right? Because you won't live to fight in the good days. But it is a, it is a brutally difficult thing for both sides to get that balance. Right. Because you're, you're absolutely right. Yet without growth, nothing, you know, nothing is going to occur. Nobody's going to get a return on this investment. Right. So finding that balances and it's so easy, like Peter Dean said, I mean, it's so easy to, you know, that, that pendulum.
swings all over the place. And for a founder, it's like, look guys, I don't know what in the hell you want me to do today, right?
Peter Walker (16:00.635)
Right, yeah, give me some clear direction here, you know? Yeah, yeah.
Peter Dean (16:03.074)
Yeah
Greg Moran (16:03.606)
That's right. But it's because the market's not clear. Right. And that's the thing. Everyone kind of responds to what's in front of them. And if when you don't know how long that kind of interest rate environment is going to last or you don't know, you know, if something breaks in Ukraine or something like you, you just when you when you have that much uncertainty, everyone kind of sits there and says, just hold, hold. Right. And so we kind of fast forward a little bit like.
Peter Walker (16:06.808)
100%.
Peter Walker (16:20.11)
Yeah.
Peter Walker (16:24.943)
Totally.
Greg Moran (16:30.57)
Where do you see this? I mean, and you alluded to this a little bit, but how do you expect these trends to start to play out in 24? Things start to loosen, that pendulum starts to swing a little bit.
Peter Walker (16:41.195)
I think the thing that I am really looking at, which is certainly, I'm not alone in this, is when do IPOs come back? I think it is an under-reported aspect of the venture ecosystem, just how much of a cap the lack of IPOs puts on the entire market. It is like the price discovery mechanism for these late-stage companies. And if without that, the late-stage private investment marketplace cannot, by definition, be healthy.
There's just like, there's not enough of information to know whether or not you're building towards something that will eventually be an exit that your investors can be happy about. So IPOs, when are those coming back? And even within the IPO market, I think that there's a, you know, we had Klaviyo and a couple others this year, they did middlingly well or not that good, depending on who you ask. I think that there's also an underrated aspect of like certain names, certain names coming out of the private tech ecosystem and going public.
will have a much bigger impact than others. Not to downgrade anybody's business here, but like as an example, if Stripe goes public in 2024, that will be a huge deal. I'm not predicting that they will. I can see it from both sides, but like we kind of need that like rallying cry, that moment where it's like, okay, we're back. Like let's, you know, to take a joke from Elon's social network these days, like we're so back if Stripe goes public.
Greg Moran (17:59.361)
Right.
Greg Moran (18:03.85)
Right.
Peter Walker (18:06.167)
The other part of the market that I think is going to be hard to deal with, and you use the word schizophrenic, and I think that's actually a pretty good word, the way that I've been thinking about it is like a dichotomy. I do think that fundraising is going to get marginally easier or there's going to be more cash flowing into VC next year, at least invested into companies. And simultaneously, there's going to be a lot of startup shutting down. And so it's going to feel like this very bifurcated market of
You'll read about big AI rounds and then you'll read about all the startups going out of business and you maybe read them in the same TechCrunch article. And it's just going to feel very, very all over the place.
Peter Dean (18:37.611)
Mm-hmm.
Peter Dean (18:41.418)
Is this the hangover from the past valuations that we had and investing maybe a little frothy in areas and now we have some really good fundamental new stuff coming that is like the future? Is that kind of what you're seeing?
Greg Moran (18:41.772)
Yeah.
Peter Walker (18:56.075)
Yeah, exactly. Well said. And I do think that there has been an increased recognition on the part of founders and investors that valuations in 2021 got out of hand. Where, you know, down rounds on Carta, it's like 20% or so of all the rounds on Carta that happened in 2023 have been down rounds. That's the highest percentage in our entire history. In some ways, I view that as a silver lining. That's people getting into a room and saying
Peter Dean (19:15.998)
Yes. Yeah. It's insane.
Mm-hmm.
Peter Walker (19:23.391)
instead of forcing all the structured terms on you and these high liquidation preferences, let's all do a down round. Let's admit that we got this wrong and let's continue building. And I love that for founders and investors, but that's still only 20% around. So like, you're not going to, there are still, even though it feels like 21 is a long way away, there are still companies out there who have done everything they can not to go back to the fundraising markets and just not to get revalued. And at some point they're going to...
Peter Dean (19:30.326)
Move forward. Yeah.
Peter Dean (19:48.769)
Yeah, we-
Greg Moran (19:51.562)
Yeah, yeah, you see it. No, yeah, you see it.
Peter Dean (19:51.758)
They're gonna run out of runway the runways. It's it's almost Yeah, and then you Took Greg's point then there's no growth. Then what do you have like if you if you just like Crammed it down so far you went from like Lots of potential to maybe like what is this real? Is there something good here?
Peter Walker (19:53.711)
They're gonna run out of runway. You can only slash so much, right? Like, yeah, at some point you start hitting bones.
Greg Moran (19:58.89)
Yeah, and, right.
Peter Walker (20:03.84)
Right, exactly.
Peter Walker (20:13.739)
Yeah, not to not to say that there isn't a lot of business models out there. You know, this I don't know what percentage of startups fall into this category. But there are a lot of startups for whom the way they went to market and made money in 2020 21 is just no longer available. Like that sort of like that sort of growth is just not available to them. Maybe they'll get bought, maybe they'll add new features that are a different kind of thing. But there are there are some of them that are just like, they don't make sense in this new world. That happens. Yeah.
Greg Moran (20:13.995)
Right. Well.
Greg Moran (20:41.422)
Mm-hmm. Yep. Yeah, for sure. What are the things that I've had a lot of conversations with founders about is this real aversion. And I get it. I've had a down round before. It's not fun. It's also not the end of the world. Right. And, you know, it is one of those things that, OK, it's kind of part of the journey sometimes. Right. And.
Peter Walker (20:51.602)
Mm.
Peter Walker (20:58.34)
Totally.
Greg Moran (21:06.386)
It's not. And especially when you're looking at a lot of these startups, you mean these are 10 year cycles in a lot of cases, you're going to have things. We don't normally have a 10 year boom cycle, right? We just did, but we don't normally, you know, we're going to have these cycles and there are going to be times when a down round just simply makes sense and makes sense for everybody, investor and founder. So just accept, just take it like, take it and move forward. Right.
Peter Walker (21:29.027)
seconded for sure. And the one thing that I'll say, which is not true across all founders who've taken down rounds, but I think some of the best ones have done this. When you're you know, part of the reason why a down round is so scary or has the stigma is that you're not only saying to the world, hey, we got this thing wrong, you have to talk to your own employees and be like, hey, you may have joined in 2020 and 2021 and your equity is not worth what you thought it might have been worth and that was, you know, to some greater or lesser degree.
Greg Moran (21:47.905)
Right.
Peter Walker (21:57.919)
one of the biggest reasons why you joined this company. So you could have upside in the equity outcomes. We have seen companies do repricings on equity, not candidly, not a lot, not nearly as many as who've taken down rounds, that's for sure. So just making sure that founders know, hey, this affects your employees as deeply as it affects you and you wanna be open and upfront with them about what this means for their equity.
Greg Moran (22:20.974)
So that's actually a really good segue into a question we had for you, which is, you know, if you're an employee today, how are you feeling about the startup economy?
Peter Dean (22:23.988)
Mm-hmm.
Peter Walker (22:31.663)
You're asking for cash over equity whenever you can, that's for sure. I think, um, I think that you're following the same sort of cycle where startups were the hot hottest thing to do in 2019, 2020, 2021. You may have joined with the promise of a rocket ship. You may have joined a unicorn that is now underwater because of your equity got revalued. There's a whole host of reasons. Um, hopefully the.
Greg Moran (22:34.442)
Right. Yep.
Peter Walker (23:00.203)
the view on startups isn't that you're not joining solely for the chance to become a millionaire with this equity because frankly, those outcomes are pretty rare. You're joining because you believe in the mission, you get all this responsibility. You know, like back to my first company out of college, you know, being that junior or that, you know, only, you know, 10 to 20 of us, you just have so much more responsibility. You just get to do things that you wouldn't get to do at a big company and that can set you up for success. I will say that when we talk to startup employees or when we help
compensation questions around startup employees today. They're very focused on, you know, what is the strike price of this equity? Does it make sense for my long-term package? They're asking for cash, as I mentioned, whenever possible, but they candidly don't have a ton of leverage at the moment. You know, hiring across startups is definitely nowhere near as, you know, roiled or boiling as it was in 21. So it's very likely that if you...
you know, if you were going out at that point, you might have had two, three, four job offers. Now you probably have won and negotiating on that one is harder. So it is a more difficult market for employees as well.
Greg Moran (24:07.39)
Yeah, yeah, no, I mean, that's certainly, you know, consistent with the experience that we see all the time, right. It's the they're just start. They're just start nearly as many opportunities. And when you don't have as many opportunities, it's, you know, one of the things that we've talked about with, you know, in a lot of our companies is, you know, and you experience this right. That that early stage of a.
of a company when you can get in there as an employee to your exactly the experience you shared. And this was my experience, right? At a really early stage, I got involved in a company that really took off. And you know, the thing I think that employees and startups really need to remember is yes, I mean, maybe you'll make some money on the equity. Best advice I've ever heard on the stock option piece is great. Take the piece of paper the day you get it, stick it in a drawer and don't open that drawer again.
Peter Walker (25:03.326)
For sure.
Greg Moran (25:04.214)
Because you just have no idea, right? But the real value in it is you can.
Peter Walker (25:08.503)
I mean, hopefully, by the way, you are not getting actual pieces of paper and you get it on card up, but we'll leave that aside. Yeah. I mean, like, I'd be kind of worried if you were actually getting some actual stock certificates on paper these days, but fair point. Yeah.
Peter Dean (25:12.928)
Hahaha!
Greg Moran (25:14.734)
Right, exactly. Just lose your login like I do.
Peter Dean (25:15.894)
Hahaha.
Peter Dean (25:23.007)
Hahaha
Greg Moran (25:25.466)
I have no paper. No.
Peter Dean (25:26.795)
Why did you send me this doc? Like why am I getting these?
Peter Walker (25:29.659)
Hahaha
Greg Moran (25:30.67)
That's right. I do send it to you, Peter Dean. I just I wrote for my companies. I just write it in crayon pay to the order of Peter. But then
Peter Dean (25:32.61)
Great.
Peter Walker (25:35.851)
Yeah, for sure.
Peter Dean (25:37.526)
And that's still like, that works, right? I'm good. Those are good.
Greg Moran (25:40.202)
You're good. You're good. You're fine. Don't worry about it. That's right. You know, you don't need to worry about it. So but the thing is, I mean, you can build your career. Your entire career can be based on those experiences, right? Whether you make money or not, it's that those experience can be so extraordinary. We've got a lot of listeners and I'm super curious about this. A lot of my portfolio is actually outside the United States today. And we've got a lot of listeners outside of the US today.
Peter Walker (25:41.541)
Legal tender, legal tender for sure.
Peter Walker (25:50.187)
Yep. Totally.
Peter Walker (26:05.88)
Yeah.
Greg Moran (26:10.286)
You wrote recently about the valuation disparities between the US and particularly Europe, right? Can you talk about that a little bit and what you're seeing there?
Peter Walker (26:16.204)
Yeah.
Peter Walker (26:21.715)
Yeah, so I guess there's two sort of different valuation types that we can talk about here on the preferred valuation, you know, that the company is worth X million dollars, the post money, the thing that you're usually talking about. What we've seen and Carta is to take a step back, a US dominated business, but we have companies across the globe, Canada, Israel, the UK, Singapore, all over the place. We actually did we acquired a Carta for Europe called
We do have some data on how things are going there. I would say that most of the time, the trend begins in the US and it ripples outward to the other markets. Europe in particular, the valuations are down just like they are here. I think the chart that I was maybe putting out there most recently is just, if you're an employee, this is good for you to know. In the US, the system of 49A valuations basically is the independent arbiter of what your strike price will be.
And you can just think of it as the price per share of your private company stock. And that's the thing that you'll have to pay in order to exercise your stock options. In Europe, there's a whole lot of different regimes about how this gets done. Some more favorable. In some cases, the UK is actually more favorable than the U S in some cases, France, Germany, other places, the strike price, what you end up paying is much, much closer to what the investors actually are also paying. And so.
Peter Dean (27:27.938)
Mm-hmm.
Greg Moran (27:46.668)
Right.
Peter Walker (27:46.839)
If you're an employee, you want that delta to be rather large. You're taking a lot of risk, even at a series A company, and you want to be able to have more upside in your equity. So it's just a kind of a call for employees across the startup ecosystem globally to really take a moment and deeply understand what's the strike price on my equity, how does it become real? What's the likelihood that I'll ever see any liquidity from this? You want to make some like good personal financial decisions and not just be kind of blinded by the idea.
Up and to the right, this is gonna be a rocket ship.
Greg Moran (28:18.474)
Yeah, yeah, I think that's great advice.
Peter Dean (28:21.922)
Yeah, that's good.
Peter Walker (28:22.171)
spoken as the guy who like hopes that you exercise your equity, obviously.
Peter Dean (28:25.899)
Yeah, absolutely.
Greg Moran (28:26.255)
Totally! It... Yeah!
Peter Dean (28:29.546)
So I have a question. We have, we've interviewed a number of female founders and more diverse founders. What are you seeing as far as funding goes in that environment? Because the data really hasn't been that great for if you're female owned or if you're equity like minority or, you know.
Peter Walker (28:46.372)
Yeah.
Peter Walker (28:52.291)
Yeah, it's probably the most depressing, dispiriting, saddest part of this year is that we just put out this report called the Carta Equity Report, which we do every year. And it's just a general look at who receives funding by founder, gender, race, ethnicity, and then who receives equity and how much equity for all the startup employees on Carta again, by those demographic categories. And it's, it's just like, there's not a ton of
Peter Dean (29:12.663)
Mm-hmm.
Peter Walker (29:22.199)
hope or like good data points to point to, you know, the amount of funding that goes to women only founder teams fell this year. The amount of funding that goes to black and Hispanic founders fell this year. And it's, it's sort of a, we had been making just incremental tiny bits of progress in the last couple years. And then the downturn hit and it seems I don't want to, we don't know exactly why this is happening. But to me, it seems pretty obvious that what happened was
Peter Dean (29:41.91)
Mm-hmm.
Peter Walker (29:52.831)
in the downturn, people just retreated to what they knew. So you're far more likely to give, make an investment for a warm intro or someone that's already in your network. And if you're giving more time and attention to repeat founders, well, who were the founders five years ago, that could be repeat now they're more likely to have been white male, et cetera. So I just think that it's the downturn has not been fun for anybody, but it's, it was a sad year for the amount of cash going to underrepresented or female.
Peter Dean (30:11.054)
Mm-hmm.
Peter Walker (30:22.442)
for sure.
Greg Moran (30:24.29)
Well, super glad we could end it on a high note, Peter. Good to have you.
Peter Walker (30:27.941)
That's what I'm here for, just adding a little bit of dismal to your day, you know?
Greg Moran (30:35.029)
I mean, it really is an important thing. And I think it goes back to the barbell comment you made before, right? Which is, I mean, where do you invest when you have this much uncertainty, you start to invest around people you know. And unfortunately, those people you know, look the same exact way as what has happened for and you see that kind of retreat.
Peter Walker (30:42.306)
Yeah.
Greg Moran (31:02.458)
It's a super unfortunate outcome. You see it in a lot of ways in the economy, but it's definitely a super unfortunate outcome here. So to kind of wrap it up, and I'm really curious, I was kidding about ending on a down note. I want to end up on a high note. If you're a founder, right? You're kind of looking at all this, you're looking at this kind of sea of data. If you're a founder, what are the green shoots? Where are the optimism? Where's the optimism that you look at in the data and say,
Peter Walker (31:07.995)
Totally.
Greg Moran (31:30.326)
That's where I think this goes, or that's what I'm really starting to feel good about.
Peter Walker (31:36.119)
I think there definitely are bits and pieces of optimism across the ecosystem. So the one optimistic story that everyone has spoken about this year is AI, obviously. It is a massive increase in AI funding. A lot of that is going to San Francisco companies, at least in the States. But if you are building an AI and or building, I think what will happen over the next year or two, will it will stop being that AI is like the first thing that you say on your pitch deck.
and it will start being that AI is just infused into the business and investors are sort of just expecting that. So definitely some hope there. The other part that I thought was relatively hopeful, at least in my view, even though a lot of investing across these different sectors is down, it does seem that VCs are now more open to non-software businesses. So building in atoms instead of building in bits.
Peter Dean (32:07.798)
Mm-hmm.
Greg Moran (32:08.257)
Right.
Peter Dean (32:31.427)
Mm-hmm.
Peter Walker (32:33.703)
energy, these places that could have real outside impact on the general economy beyond just tech. I think that there's been a little bit of a turn back towards, well, if SAS isn't going to return 30x to us, then we might as well take a better look at some of these more capital intensive industries, which I think is just a net good for humanity overall, if we have young ambitious founders who are building an energy hardware, biotech, nanotech, that kind of stuff, as opposed to just, hey, I'm going to make another wonderful sales tool.
Peter Dean (32:34.487)
Mm-hmm.
Peter Dean (32:56.663)
Mm-hmm.
Peter Dean (33:01.45)
like build a really good company and you can get funded. That's what you said in the beginning. You're like really good fundamental early stage is not a bad place now, right?
Greg Moran (33:01.964)
You know.
Peter Walker (33:10.679)
Yeah, it's definitely the case that you we have seen more companies get funded in more places even this year than we have in past years. Like it is no longer a requirement that you be in Silicon Valley in order to have an opportunity to fund these businesses. It may be that you can't be everywhere at the later stages, but to get something off the ground like you can do that from wherever you are with the people that you trust.
And hopefully you can build a business that has real traction before you ever need VC funding. That's one of the biggest things for me coming up this year is how much VC funding will these new companies need? And are there going to be more Mailchimp's that bootstrap to a $10 billion exit? I could see that definitely happening. We haven't seen too many of those exits yet, but in this new world with AI and capital efficiency, maybe that's the outcome that we can hope for.
Greg Moran (33:54.625)
Yep.
Greg Moran (34:06.682)
I think it's a great point. And you have to be able to see that, right? You have to be able to see that more of those, that bootstrapping really starts to occur. I mean, we interviewed a founder just a couple of weeks ago, Ben Wright, founder of Velocity Global. You may have heard of those guys. They're really large. You know, bootstrapped to over a hundred million. I mean, it's, you know, was the story there.
Peter Walker (34:19.662)
Yeah.
Peter Walker (34:26.875)
Mm-hmm. Yep.
Greg Moran (34:35.574)
you do start to see that. And I think that's what this kind of downturn, if there is good in this sort of break point, not, this is a hard message, I think, for a lot of companies to receive. Not every company, very small amount of companies should actually ever get VC funding. And one of the problems that I think we were seeing was that so many companies were getting VC funding that should not have gotten it because it was so much capital ahead of get deployed.
Peter Walker (34:55.641)
Totally agree.
Greg Moran (35:05.462)
So you start putting it everywhere and what you end up with is, you know, instead of 3% or 5% of startups, I think it's, I think it's like three, right? Two or 3% actually historically. I mean, you ended up with this huge number, right? And, and it's not healthy. And what it does is it, is it can take really good businesses that with some more creativity or with some dad or with some early stays angel, you know, just angels and friends and family stuff could have bootstrapped themselves.
Peter Walker (35:13.163)
Yeah, it's, yep.
Greg Moran (35:32.866)
through this and instead now they've got this enormous pressure to grow, now cut, cut and do all the schizophrenic things that we talked about, right? And it kills a good company.
Peter Walker (35:41.451)
Yeah, it's. It can. It has killed many good companies, and I do think that if there were one point that I'd advocate for founders is that you've got to take a really long look at whether or not VC makes sense for your business. Not just could I raise VC, but once I raise VC, what hamster wheel am I on? And is that the right wheel for me? And like there's I do. I agree that maybe this downturn, one of the silver linings is that more founders are perking their heads up and saying.
I know I want to be a founder, but that doesn't necessarily mean I need to be VC backed. And what are the other ways that I can fundraise or grow in order to build the business that
Greg Moran (36:21.71)
That's right. That's right. And that's, that will be a net positive coming out of this. You will see more solid, sustainable businesses that will come out of this because they're going to have to find a way. Right. And because you're not going to stop a founder, right, who's on a mission to go do something, you may just have to give them another path. And that's, that I think is the, is really the true silver lining. So Peter, this is awesome. The work that you guys are doing.
Peter Walker (36:28.025)
Yes.
Peter Walker (36:34.378)
Yep.
Greg Moran (36:51.962)
is really phenomenal. Follow Peter on LinkedIn. You'll be glad you did. We'll make him more famous than he already doesn't think he is. And subscribe to the Card to Date a minute. And it really, they're just doing an incredible amount of work. And if you're a founder trying to really understand what's going on out there, whether he said, like, you know, what's the difference between a safe and convertible dad? And what are the, you know, all these things?
Peter Walker (36:57.819)
Thank you.
Greg Moran (37:20.162)
They're the go-to source of information. So Peter, what you guys are doing is awesome. It's really appreciated, and it's certainly appreciated to have you on today.
Peter Walker (37:28.215)
Yeah, had a lot of fun guys. I appreciate the invite.
Greg Moran (37:31.09)
Awesome. Well, we'd love to do it again at some point in the future. Once we see the market start to turn, it'll be super fun to get you back here and give a more up to the minute update when we see that kind of that turn happening. So Peter Walker, thanks so much for being on the Founders' Journey podcast.
Peter Walker (37:50.683)
Thank you so much.