Sharing Bad News: Transparency At Your Startup

Founders often struggle with how transparent to be with their team about the setbacks or challenges they encounter. If your fundraising isn’t going well, how much should you really tell your team? If a key teammate is threatening to leave the company, when do you share that possibility with other teammates? And if you’re running out of cash, when do you ‘fess up?

These are difficult decisions and there is no comforting chart I can offer where Column A lists out what you should tell your team and Column B is what you shouldn’t tell them. And the decision is more complicated than just whether to tell, but also when to tell and how much to tell. I never offer prescriptions to the founders I coach, but I do advocate strongly for being more thoughtful about the choices you make to withhold information or share it.

When you make a choice to withhold bad news or your latest crisis from your team you are, in effect, saying one or both of the following things about your teammates:

  1. They can’t handle this.
  2. They can’t help me with this.

Now ask yourself: Is that really true? Really?

Let’s explore each of these beliefs in more depth.

 

“They Can’t Handle It.”

Founders often fear that certain teammates will either be distracted by bad news or, worse, destabilized and paralyzed by it.

Self-coaching questions you can ask yourself:

1. How are you handling this bad news?

Start with how you feel physically and emotionally. Find a private place and try saying how you feel out loud. “I feel exhausted. My stomach feels like a clenched knot. My head hurts. I feel nauseous. I feel withdrawn or detached. Etc. etc.” Your emotions influence your decision-making so it’s helpful to check in with yourself and really figure out how you feel.

2. What assumptions are you making about the bad news and the emerging challenge? How could you challenge the accuracy of those assumptions?

It’s generally not what happens that triggers emotions, but rather the thoughts we have about events that give rise to our feelings. You might be making assumptions or leaping to conclusions that are limiting how you view the bad news or the emerging challenge.

 3. In what ways might this news distract or destabilize the teammates you are considering telling?

Challenge yourself to defend the assumption that the news would be distracting or destabilizing. What are you specifically worried about? Is there precedent for that?

4. How might you communicate this news in a way that won’t fundamentally destabilize anyone and will minimize the distraction?

Sometimes all it takes is to ask yourself how you might do something to realize there is a way.

5. What are the long-term risks of not sharing or disclosing this news?

I have often seen founders choose to withhold bad news for fear of destabilizing other teammates. This decision might protect teammates in the short-term, but founders take on a lot more exposure to an important long-term risk: losing the trust of teammates. As someone who has seen this happen to other founders more than once, let me be direct: with very few exceptions, it will take you a lot more time to earn back the trust of your teammates than it will to re-focus them after some bad news. And sometimes you may never get that trust back. 

 

“They Can’t Help Me.”

Yes. It’s true that your teammates are not your support group. It might not be appropriate, responsible or effective management to use them to vent extreme emotion or indulge in a massive whine-fest. But my guess is that they could be more helpful to you than you might even realize. They have information, skills, perspective and connections that you don’t have.

And—to be clear–when I said it might not always be sound management to vent extreme emotion I did not mean “don’t show emotion to your team.” Disclosing struggles and sharing your own vulnerability is a mission-critical component to enabling other people (i.e., your teammates) to feel closer to you. Expressing doubts; sharing fears; being moved to tears—all of these emotional expressions have the potential to bring your teammates closer to you. And when your teammates feel closer to you, they will be more open to influence from you. And in dark times, when you need to motivate the team to dig deeper, act faster or believe just a little bit more—you’ll be thankful for every drop of influence you’ve got.

I’ve coached enough founder-CEOs who have been in this exact position that I can probably guess the protests that are rising up in your head right now as you are reading this.

“But I don’t have enough information yet!”

“It will paralyze them.”

“It would be irresponsible.”

“They will think I am complaining.”

Where do these protests come from? A good place. A place where once upon a time you decided: “It’s my job to keep my team focused. It’s my job to remove barriers. To make their job easier.”

I refer to this phenomenon as Startup CEO Caveman Mode. It looks like this:

You’re a startup CEO. You walk around outside and do battle with VCs and you get the money. And then you do some BD and you land some deals. And then you sign a lease (office space!). And you pick a health care plan! And you bring all these goodies back to your startup cave so your little tribe is taken care of. Great! You did it.

But like most things. You start to overuse that strength. You are keeping your team in the cave for fear of exposing them to the harsh reality of the world. This can be good to a point. But when you are keeping things from them that they could actually help you with? That’s too far.

Your teammates are not dumb. They probably know more than you think. And they can definitely sense more than you realize. Why?

  1. You’re the CEO — everyone watches you! (Seriously. They do.)
  2. You are human — and even if you don’t explicitly express them, your emotions leak out of you through tone, facial expressions and other non-verbal cues.

Ben Horowitz would advise you to tell your team everything you can. Here is what he wrote in his famous post “The Struggle”:

Don’t put it all on your shoulders – It is easy to think that the things that bother you will upset your people more. That’s not true. The opposite is true. Nobody takes the losses harder than the person most responsible. Nobody feels it more than you. You won’t be able to share every burden, but share every burden that you can.

Your load is heavy enough Founder-CEO Caveperson. Share every burden that you can. Most definitely the ones your cave tribe can help you with. Because there will be things they can’t help you with or things that you alone can barely handle. (Yup, I’ve seen a few of those too.)

Remember: It is not your job to close your team off from you in the name of “protecting” them from the dangers that will always be lurking outside the cave.  That would just keep them in the dark and cut you off from the most important survival resource you have.

It is your job to enable your people to focus on the things that matter most–whether that’s developing your next weapon, hunting down their own deals or, in some cases, helping you save the company from the enemy outside the cave.