Importance of Transparency in Startup Ecosystems

Transparency can be an empty promise, or it can be a true practice to engender trust. At Rubrik, we’ve always believed that it should be a true practice - which is why we held open board meetings for our first 7-8 years, till a few years before we went public. Our open board meetings showed our employees that we were genuinely committed to transparency, and this commitment was key to our success as we grew…because it bred trust. When you’re an early-stage startup, you often bring in top talent and ask for their prime years as you work hard to build your company from the ground up. The least leadership can do in return? Provide full transparency about the company’s status so that employees are never in doubt about where their efforts are going. Plus, early-stage startups have no obligation to be transparent about their financials the way public companies do - so sharing information without anyone asking is a great way to show employees that you care about them being in the loop as you grow. This full transparency has a cascading positive effect, in that it breeds a high-trust environment. In a high-trust environment, everyone has the same information as everyone else, so it’s easy to align and easy to move fast. That’s exactly the sequence we’ve seen as we’ve built Rubrik: we started with transparency, built trust, and moved fast. Now, we’re a public company with a bright future. Transparency is a superpower - so don’t just talk about it. Act on it.

The game industry is notoriously secretive. This is a mistake. Every team can benefit from radical transparency. By being open with your team, you foster trust, alignment, and accountability—critical elements for any successful startup. Here’s how to implement radical transparency and build credibility as a leader. The Trade-Off of Radical Transparency Radical transparency comes with risks. Startups are a rollercoaster, and not everyone wants to be exposed to every high and low. There’s also the chance of a leak or breach of trust when sharing sensitive information. However, the benefits of transparency far outweigh the risks. When you share as much as possible with your team and trust them to use that information, you empower better decision-making throughout the organization. 1. Communicate Clear Goals Don’t shy away from communicating the key goals that will make or break your team’s success. Boldly sharing big objectives can feel uncomfortable, but it’s foundational to transparency. If your team doesn’t know what they’re working toward, how can they make informed decisions? Every team member should be able to clearly articulate the goals and understand why those goals were chosen. 2. Explain the Decision-Making Process Transparency isn’t just about outcomes—it’s about the process. There are two crucial elements here: Clarify Decision Ownership: Make sure it’s clear who the decision maker is. This can feel awkward in some team cultures, but if it’s ambiguous, the entire decision-making process is set up for confusion or failure. Provide Post-Decision Clarity: After a decision is made, offer full details. Anyone should be able to ask about the process, the options considered, and why a particular choice was made. Even if people disagree with the outcome, they will appreciate understanding how and why the decision came about. 3. Deliver Bad News Transparency isn’t just for good news. Leaders build credibility by delivering bad news openly, honestly, and humbly. Avoiding problems or pretending everything is fine creates a culture of secrecy that prevents teams from addressing challenges head-on. Share the results—good or bad—so the team can learn and grow together. 4. Answer Questions At Proletariat, we held weekly all-team meetings where leadership answered questions from the company. This can be intimidating for leaders, especially as the company grows, but it’s one of the most powerful ways to build credibility. Answering questions authentically builds trust, and mastering this skill is crucial for both internal and external communication. 5. Avoid Surprises When people are surprised, it usually means they were left out of the loop. While not every surprise can be foreseen, many can. If you anticipate that an event might shock your team, it’s a sign that you haven’t been transparent enough about what’s happening in the company and how it will affect them. I post weekly here: https://lnkd.in/ewzbkpUd

"You can't play four-dimensional chess when you can't see the board." Here's the scenario: A founder, brimming with ambition, asks, "How can we make this VC invest?" or "What's the secret to making this enterprise buy faster?" My response? "You f***ing can't." You can't force people to buy anything. All you can do is make what you have look appealing. Why? Because in the world of startups, especially when dealing with VCs or large enterprises, you're living in a state of highly imperfect information. It's like trying to play chess blindfolded. - Is the VC partner you’re talking to coming off a run of iffy bets? - Is the enterprise swamped with other priorities? - Is there a crisis or strategic shift you're unaware of? You simply don't know. And without seeing this metaphoric chessboard, any move you make is a shot in the dark. So, what's my advice? In a world where both sides have imperfect information, the best thing you can do is create more perfect information for the other side. You can't force them to divulge anything, but you can divulge anything you want. So, be radically transparent: ✅ This is exactly what's going on. ✅ This is why we want to work with you. ✅ This is why time is of the essence. The hope? If they have perfect information, they'll make a choice that's good for both of you. At the very least, they'll make a choice that's good for them. And that's better than no choice at all. Some might call this naive. I call it strategic trust-building. By being radically transparent, you create an environment where people WANT to work with your company. And the assholes? They self-identify, and show themselves to the door. In the high-stakes game of startups, you can't see the whole board. But by sharing your own moves openly, you are more likely to turn the game from competitive to co-op. -- PS. Startup founder? I've got some time free on my calendar in the coming weeks and I'm dedicating it to helping people grow their startups. Send me a DM saying “obvious” and we’ll have a chat - if what you do is in my wheelhouse, I'd love to spend an hour seeing if I can help you move the needle.

Transparency shouldn't be a buzzword you say. It should be part of your core startup DNA. In a world where most startups operate in stealth mode, we've made a conscious choice to be radically open at Motion (Creative Analytics) From our founder Reza's regular All Hands updates to our public dashboard tracking key metrics, we believe in sharing the good, the bad, and the ugly with our team. Why? Because we trust our people. We trust them to: 1. Handle the truth, even if it might be uncomfortable 2. Contribute to solutions, not just point out problems 3. Act like owners, not just employees And that trust? It's a two-way street. When leadership is transparent, it builds trust with the team. And when the team feels trusted, they're more engaged, more motivated, and more invested in the company's success. Now, does that mean we share every single detail of every single decision? No. Of course not. But it does mean that we default to openness whenever possible. Because in the fast-paced world of startups, transparency isn't a luxury. It's a necessity. And at Motion, it's non-negotiable. P.S. How do you balance transparency with the need for discretion in your startup? I'm curious to hear your approach.

How I CEO (part #2): On the importance of transparency. I think I shied away from being transparent with my team in my earlier days as a founder. My assumption was that revealing potentially distressing information when things weren’t necessarily going according to plan (which is basically all the time at a startup) might cause team members to panic or leave. It was a perspective probably based on fear and apprehension more than anything else. But I remember one example from my time as CEO of my previous startup, Heyzap, where the company was on the verge of this tipping point where we were running out of money and only had about six months of runway left. The team may have had a general awareness of our financial position, even without us having said it. Even so, the thought of confronting the issue head-on felt uncomfortable. In any case, we decided to be straight with them and told them flat out our position and that our only option was to get profitable within the next six months. We anticipated that once we’d laid our cards on the table, we might see a good chunk of the team leave, so we were prepared for the worst. To my surprise, only two people ended up leaving. Instead, almost everyone stayed and was excited about the challenge. Something that seemed like this quite existential, scary thing to me and my cofounder was actually received well and embraced as an opportunity by the team. It almost had this galvanizing quality to it. And so, we laid out an action plan of how we would achieve profitability, and that was that — we got to work and turned the ship around. .... Read the full article: https://lnkd.in/gbPamPNT

Some of your favorite CEOs blindside their teams weekly. Sorry to break it to you, but it's true. Here's why I never have, and never will. Transparency is a core value at Proxima—and I apply it to everything. From team feedback to our metrics around cash burn and runway, we share it all. Here's why: my team is giving me so much of their time, energy, and mindshare. I owe them transparency. Not only does this create an extremely motivated and driven team, it builds loyalty and trust. Especially when times are tough, sugarcoating the state of the business isn't going to help anyone. They need to know the reality to help you fix the problems. You hired them to help you grow the company, so why keep them in the dark? Rough times are part of the journey: → Stock price drops → 90% of startups fail → You're extremely volatile in early-stage So it's important to communicate transparently. That's how people stick by you longer during the tough times.

Startup founders often tout being "transparent," yet when challenges arise, true transparency is tested. From dwindling runways to shifting roadmaps and vanishing term sheets, the reality sets in. Through experience, I've come to understand that transparency isn't merely a comfort but a display of courage. It's not uncommon for founders to hide behind vagueness, only to realize that this shield is fragile and shatters under pressure. In my entrepreneurial journey, I've found that honesty never led to a company's demise; rather, it's the silence that proves detrimental. It's crucial to comprehend that if your team or investors struggle with facing the truth, perhaps it's time to seek new partnerships. Transparency not only fosters trust but also serves as a litmus test for alignment. It's during challenging times that honesty truly shines, determining the loyalty and commitment garnered when the tides are favorable. #TransparencyInLeadership #FounderReflections

Our past few new hires have been shocked at how we operate our culture here at Because. It's made me realize that a lot of companies aren't taking the approach we are around culture so I wanted to share in case it helps others working to define what matters 😊 Here's a few things our newest employees have said immediately stood out to them: 💛 We're uber transparent - we share all the good and all the bad about the business at all times. Our whole team always knows where we're at - whether we're closing customers, losing customers, making hires, etc. 💛 As a fully remote team, we're still hyper connected. We're on huddles, calls, or slacking back and forth all day long. 💛 We actually know each other. We had a team zoom happy hour last week where we all answered funny questions anonymously. We then guessed which answers belonged to which person. One of the rounds was "If you were in a band, what instrument would you play?" Based on literally just seeing the word "guitar" or "sound technician," we each guessed every single person correctly. I always hear Founders say their least favorite part of starting a company is managing people but I actually think it's my favorite. I love building my team and our little blossoming culture 🌻 We have 12 company values (1 for each month of the year). Here's the one we highlighted during July: "We own when we mess up and we own when we succeed. We share both our wins and our losses with our team and our customers. We value transparency and honesty above everything. We go to bed at night knowing we didn’t have to sacrifice our morals at work." What other values are important to an early stage startup culture? What did I miss? ❤️