With Pulley, her fourth start-up, Yin Wu is pouncing on the niche market for cap table management software, now dominated by scandal-scarred Carta.
On Sunday, January 7, Yin Wu’s inbox kept pinging with prospective customers asking about her company’s product, which helps startups track ownership of their shares, a.k.a. cap tables. At first, she was mystified. “No one is thinking about their cap table on a Sunday evening, typically,” says Wu, 35.
But the source of all that interest quickly became apparent. A LinkedIn post by Karri Saarinen, the CEO of software project management startup Linear, rebuked Carta—the clear category leader in managing companies’ capital tables—for shopping Linear’s shares on its secondary marketplace without his consent. Saarinen and Carta CEO Henry Ward sparred on X (formerly Twitter) throughout the weekend as the controversy spread through Silicon Valley, with Ward blaming a rogue employee and Saarinen claiming other founders had experienced the same issue. Finally, on Monday, Ward published a mea culpa on Medium and announced Carta was shutting down its secondary private shares trading business to restore trust. By then, many of its 40,000 customers were already wondering about alternatives.
Enter San Francisco-based Pulley, the most visible challenger to Carta and a newcomer to this year’s Fintech 50 list. Cofounder and CEO Wu quickly jumped into the fray, promising on X that if founders switched to Pulley by the end of January, she’d discount Pulley’s fees to cover the cost of their existing cap table contract, so they wouldn’t have to pay for two vendors at once. Requests for demos increased eightfold compared with the previous month, and about 400 new customers signed on, bringing Pulley’s client count to 4,600, more than double the 2,200 it started 2023 with.
It was a lucky–and well timed—break for serial entrepreneur Wu, who isn’t at all intimidated by the fact that she entered the cap table game seven years after market leader Carta. She’s gambling that you don’t necessarily have to be first to win the long game.
“When Stripe was getting started, it wasn’t the first payment processor. Braintree, Amazon Pay and Paypal all existed,” says Wu. “But when you talked to folks that were actually using any of these payment networks, it wasn’t like they had such an amazing experience on these platforms. It was more like, well, this is kind of what exists.”
For now, Pulley still lives in the long shadow of Carta, which has 40,000 customers and was valued at $7.4 billion during its last fundraising in August 2021. Carta declined to comment to Forbes, but an analysis on X by market research firm CB Insights found that 89% of its surveyed customers still intended to renew their plans.
Pulley, for its part, has $50 million in funding from Stripe, Founders Fund and angel investors including Elad Gil, Jack Altman and Avichal Garg, Wu’s husband, and notched a $250 million valuation in its Series B round in October 2022.
But Wu insists Pulley’s fundraising modeling technology is superior, helping founders understand exactly how much their stakes would be diluted by complex early-stage funding structures and what control they may be signing away should they offer to give away pro rata shares or “most favored nation” status to attract early investors. She also highlights Pulley’s offer letter tool which seamlessly tracks equity grants to new hires on the cap table and facilitates the logistics of getting offers approved by the board and sending out option grants.
Pulley charges customers $1,200 per year for its lowest-priced tier that can track up to 25 stakeholders. A growth tier for $3,500 annually includes up to 40 stakeholders and yearly 409A valuations (fair market valuations needed for tax purposes). Many customers are on custom pricing plans for more advanced features. Pulley expects to triple in revenue this year and bring in tens of millions of dollars in 2024.
“How we win in the market is serving our customers, having that customer obsession that Bezos always talked about at Amazon,” says cofounder Mark Erdmann, a software engineer based remotely in Calgary who mentors Pulley’s engineers. “These founders are giving us their precious dollars, and they’re trying to stretch every dollar so that they can help their startups succeed.”
If
anyone knows the struggle of getting a startup off the ground, it’s Wu, who started three companies before getting around to Pulley. A Louisville, Kentucky native, she first got interested in computer science in high school, doing some coding to help with science fair projects. She was a finalist in the Intel Science Talent Search recognizing a select group of high school seniors nationwide and was planning on going to medical school. Instead, she quickly caught the entrepreneurial bug at Stanford, where she majored in computer science and became the co-president of the Business Association of Stanford Entrepreneurs in her senior year.
As part of that role, she helped organize YCombinator’s “Startup School” and developed relationships with Jessica Livingston and Paul Graham, the couple who were among the cofounders of the prestigious startup accelerator that seeds hundreds of companies in two batches every year (and that was run by OpenAI CEO Sam Altman from 2014 to 2019). One term short of graduating with a computer science degree but without a clear idea of what she wanted to do, Wu sought Livingston’s advice. “She was like, ‘Why would you go into consulting or something when you could start a company?’” Wu recalls.
Wu dropped out of Stanford when she was accepted to YCombinator’s 2011 batch for her first company, AdRaid, which developed technology that made it easier for creators to superimpose ads in videos, slapping logos onto surfaces to assist with post-production product placement. It was a hit at YCombinator and raised $1 million in a week after its demo, but it never gained traction with advertisers or content creators. Within a year, Wu shut it down.
In 2013, she and cofounder Xuwen Cao tried again with Prim, a same-day laundry delivery service piggybacking off nascent startups that were sprouting up in other industries like DoorDash or former on-demand home cleaning and handyman firm Homejoy. Wu frequently handled laundry pick-up and delivery duties herself. “I got really good at folding t-shirts in particular,” she says. But the market for upper-class people in the Bay Area willing to overpay for laundry rather than doing it themselves wound up being too small, and competition from mom-and-pop laundromats was too fierce. Wu and Cao unwound Prim and sold some of its technology that managed deliveries to a small private equity firm.
Wu and Cao then pivoted into Echo, a customizable smart lockscreen for Android phone users that effectively serves as a priority inbox for notifications, ensuring important updates don’t get buried behind irrelevant ones for other apps. The third time was the charm, with the app garnering more than five million downloads. They sold Echo to Microsoft in 2015 for an undisclosed sum, where it still exists as Microsoft Launcher. The sale was “not life-changing, but it was also more money than I had made in my entire life,” Wu said at a talk at YC Startup School in 2022.
“The first time you start a company, you’re often okay with a small exit,” says tech investor Elad Gil, who has known Wu since she was running Echo and invested in Pulley. “Then they go into something bigger the next time around because they feel a bit safer or they have less impostor syndrome and they know the basics of starting a company. On average, second-time or third-time founders actually do much better than first-time founders.”
Wu stayed on to work for Microsoft for two years, but was quickly thinking about her next project rather than a career of climbing the corporate ladder. In Seattle she reconnected with Erdmann, who she had met as a college intern at machine learning firm CrowdFlower where he was working as an engineer. After a brief attempt at a blockchain project for decentralized information curation that fizzled in the crypto bear market of 2018 and 2019, the two founded Pulley in 2019—seven years after Carta got a head start.
For Wu, it was the crystallization of nearly a decade of lessons learned. On her first try with her advertising startup, she says, she understood the technology but not the customer. That led her to a more relatable pursuit as a 20-something annoyed with the inconvenience of living in an apartment without a washing machine herself, only to realize she didn’t feel passionately enough about devoting her life to laundry. She returned to her love of software with Echo, and now she wanted to serve customers she felt she understood better than anyone: other founders. She called it Pulley to evoke a “simple machine” that eased the overwhelming task of starting a company.
“At the end of the day, it always comes back to who do you want to help? Who do you want to spend all of your time with, because there’s no guarantee of success for any startup that you work on,” says Wu. “You get energy from people that you’re helping and working with, and that makes a pretty good day, and for me, it came back to founders.”
In 2020, Wu went through YCombinator for a third time, this time with Pulley. She did it, she says now, more to make connections with other founders than to attract capital. It worked. She got the majority of her class in YCombinator to sign on to the platform and Pulley has been grabbing an upwards of 70% market share in recent batches of YCombinator graduates, she says.
“Whichever company ends up winning the YC companies I think is going to be the platform that ends up winning overall,” says Wu. “The founder community is really tight, and they hear about it from other companies and they get on board.”
Pulley is ascendant among this certain demographic of Silicon Valley startup, though it still has a long road to becoming the dominant force nationwide and faces competition from not just Carta but peers like AngelList, which manages 2,500 cap tables itself. Pulley is working on expanding its suite of offerings beyond its core cap table product, implementing features in the last year like a tool to help customers comply with stock-based compensation reporting requirements. It also began tracking token distributions for blockchain startups last year.
“We want to win all the new startups, and we also want many of the existing companies to switch over to Pulley,” says Wu. “If you create a 10x better product, a lot of times the market is bigger than what a lot of people believe.”