March 22nd, 2023 | By: Wil Schroter | Tags: Strategy
Startup Founders love the idea of full transparency when it works for them.
At first glance, it's hard to argue against the idea of "full transparency" in our startups. Who wouldn't want the inside information about what's really happening at a startup? Doesn't that make everyone feel more informed, safe, and supportive?
But try running a startup for long enough, and you'll quickly start to see that the concept of full transparency only works when things are good. The reality of running a startup quickly devolves into lots of shitty situations where going "full transparency" is more likely to sink our startups than improve them.
Startups often love the idea of full transparency in the early days when things are positive. That's because so many things are a "win." We got our first customer — yay! We raised a seed round — alert all social media! We made a dollar of profit — SO much more to come!
At this point, we want to talk about everything. We want to share finite details about our financial performance, we want to give all team members detailed looks at everything we do so they feel included, and of course, we want to share everything publicly.
We want to do that because we have something positive to say. There's no cost or consequence to telling people that we've added more customers, hired more staff, or raised more money. Transparency feels awesome.
The moment all of those good signs turn bad, startups suddenly get real quiet. The first casualty of transparency is good news. My favorite casualty of transparency is the self-congratulatory staple, the "Startup Year in Review."
When times were good, we couldn't wait to be transparent about our stats. We emailed all our customers, posted on social and even tried to rally some press around it.
But when was the last time someone published a Year in Review showing all stats in the negative, highlighting how many team members were laid off and how far behind all their project timelines are? All of a sudden, "full transparency" isn't so important anymore, is it?
The reason startups don't get to be fully transparent is because transparency is terrifying. If we're being fully transparent with our staff, we'd tell them they may not have jobs in the next few months. We'd be telling customers we don't have nearly the resources to support them the way they think we do. We'd tell investors there's no way to maintain our KPIs as we scale.
Most of what we would be sharing would scare off all of the very people that we need to avoid those catastrophes to begin with. The reality is, as Founders, we shoulder those burdens and obscure those realities for the very benefit of those that rely on us. It's not fun or easy, and sure AF isn't convenient. It frankly sucks, but that's the cost of leadership.
We need to call transparency what it often is used for — a "good times" PR tool. But if we think that being fully transparent at all times with all stakeholders will always be for the best, well... good luck with that.
The Emotional Cost of Being a Founder. When we talk about building startups, we talk about lots of costs: Staffing costs, the cost of capital, cost per acquisition, and opportunity cost. But we never talk about the biggest cost — the emotional cost.
Why Do I Feel So Alone? No one ever tells you in the “Starting a Company” brochure that the journey will not only include crippling anxiety, drowning in personal debt, and endless challenges — but also a healthy dose of personal loneliness.
How Transparent Should I be With Staff? (podcast) How much is too much when it comes to Founder transparency?
Wil Schroter is the Founder + CEO @ Startups.com, a startup platform that includes Bizplan, Clarity, Fundable, Launchrock, and Zirtual. He started his first company at age 19 which grew to over $700 million in billings within 5 years (despite his involvement). After that he launched 8 more companies, the last 3 venture backed, to refine his learning of what not to do. He's a seasoned expert at starting companies and a total amateur at everything else.