Pros & Cons of Transparency

Your team isn’t going to agree with or even understand every decision you make. No matter how transparent you are, you’ll always have just a bit more context about where the business could go than they do.

Realizing that fact makes you wonder… how transparent should you be?

What are the real benefits and risks of total transparency? And what does “total transparency” even mean? Is it sharing financials with your team, or the public like ConvertKit does?

It’s easy to see successful companies being totally transparent and come to the conclusion that building in public is inherently a good thing for your startup.

But, as with most things, it’s neither good or bad — and there are tradeoffs on both paths.

This week I’m sharing:

• The pros and cons of transparent leadership

• My own experience dealing with untrue leaks from disgruntled employees

• My framework for how to think about transparency

• The most important part of being transparent

The Pandora’s Box of Financial Transparency

Once you commit to transparency it’s extremely hard to reverse course and become less transparent. But being transparent provides real competitive advantages, especially early on when your team is still small.

Pros and Cons of Transparent Leadership

One thing to keep in mind as you read these: the “pros” often feel better in the short term and can be a competitive advantage when things are going well, but at least some of the “cons” tend to happen on a long enough timeline.

Pros

Increased Buy-In and Trust

If you’re transparent in the early days, your team will trust you and buy-in to you as a leader. If they’ve got equity in the company (which they should), the impact of transparency is even higher. They feel true ownership over the company and like they’re learning more about how startups are actually run.

The feeling is contagious across your team and within each individual — employee retention will likely be high, they’ll work hard, and see the longterm path to success.

While nobody will have the level of buy-in you do as a founder, an increase in the level of responsibility they feel for the company can boost morale

It’s one of a few good tactics you can use to build an us-against-the-world, cult-like mentality amongst your team. An employee at my previous startup even got a tattoo with our logo.

Better Prioritization

Speed is your best strategy with a startup, and being transparent can save you the time you’d otherwise need to carefully explain various decisions you make.

In a transparent startup, your team will understand your decisions faster because they’ll see the metrics that are driving them.

More importantly, they’ll be able to orient their own time and work around company goals more easily (and hold each other accountable to making progress against them).

Their “why” becomes more self-evident.

Cons

You Could Be Opening Pandora’s Box

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