You are staring at a spreadsheet that refuses to balance.
Maybe the runway has shrunk to three months. Maybe a key client just churned. Maybe a lawsuit just landed on your desk.
The knot in your stomach is familiar. It is the physical manifestation of a secret you are keeping from your team.
You walk into the office or log onto Slack, and you put on the mask. You act like everything is fine. You smile. You encourage. You talk about the vision for next year even though you are worried about surviving next week.
You tell yourself you are doing this to protect them.
You think that if they knew the truth, they would panic. They would start looking for other jobs. The culture would crumble.
But there is a nagging question in the back of your mind.
By hiding the reality of the situation, are you protecting them, or are you deceiving them?
And perhaps more importantly, are you robbing yourself of the very help you hired them to provide?
The Psychology of Uncertainty
#The instinct to hide bad news is rooted in a misunderstanding of human psychology.
We assume that negative information causes anxiety. Therefore, we reason that the absence of negative information must create calm.
This is incorrect.
Neuroscience and organizational psychology suggest that uncertainty causes significantly more anxiety than negative certainty. The human brain is a prediction machine. It is constantly scanning the environment for threats. When there are gaps in information, the brain does not fill those gaps with positive assumptions.
It fills them with worst-case scenarios.
Your team is smarter than you give them credit for. They notice that you are in closed-door meetings more often. They see the CFO looking stressed. They notice the hiring freeze even if you haven’t announced it.
When you stay silent, you create a vacuum.
In that vacuum, rumors thrive. The rumor is almost always worse than the reality. If you have lost a client, the rumor mill will decide you are going bankrupt. If you are pivoting the product, the rumor mill will decide you are firing the engineering team.
By trying to protect the team from the specific stress of a problem, you subject them to the generalized, corrosive stress of the unknown.
The Savior Complex
#We need to examine the founder’s ego in this equation.
Why do we really hide the bad news?
Often, it is because we suffer from a savior complex. We believe it is our job, and ours alone, to fix the mess. We want to be the hero who emerges from the burning building with the solution, not the person pointing out the fire.
We tell ourselves we will share the news “once we have a plan.”
But in a fast-moving crisis, a perfect plan might take weeks to formulate. By the time you have the solution, the trust may already be eroded.
This approach also reveals a fundamental flaw in how we view our employees. If we hide the truth, we are treating them like children who need to be shielded from the harsh realities of the world.
But you did not hire children.
You hired adults. You hired experts. You hired smart, capable people who likely left safe corporate jobs because they wanted to build something real.
When you deny them the truth, you deny them their agency. You prevent them from helping you solve the problem.
If the runway is short, your engineers might know how to cut server costs. If sales are down, your customer support team might know why users are churning. By keeping the problem to yourself, you are fighting with one hand tied behind your back.
Radical Transparency vs. Contextual Transparency
#So, should you just dump every anxiety and financial detail onto the company All-Hands meeting?
Probably not.
There is a difference between radical transparency and emotional dumping. Radical transparency, popularized by Ray Dalio, suggests putting everything on the table. While noble, in a fragile startup environment, unfiltered data without context can be weaponized or misunderstood.
We should aim for Contextual Transparency.
Contextual Transparency involves sharing the hard facts but wrapping them in the logic of the business and the control we still possess.
It requires a framework.
First, categorize the news. Is it existential (the company might die) or operational (we missed a target)?
Operational bad news should be shared immediately and frequently. It normalizes the fact that building a business is hard. It builds a callous against failure.
Existential news requires more care. You cannot just shout “fire” in a crowded theater. You must point to the exits.
When delivering bad news, use this structure: The Facts, The Impact, The Plan, and The Ask.
Start with the cold, hard data. “We have lost 20 percent of our revenue.”
Explain the impact. “This means we need to reduce burn by 15 percent to reach our next fundraising milestone.”
Share the plan (even if it is incomplete). “We are cutting software costs and pausing new hires.”
Finally, and this is the most important part, make The Ask. “I need the engineering team to review our AWS spend. I need marketing to focus entirely on organic channels.”
This pivots the energy from fear to action.
The Unknown Variables of Resilience
#There is a risk we must acknowledge. Not everyone is built for the volatility of a startup.
When you share bad news, some people will quit. Some people will shut down.
This is a data point we often fear, but perhaps we should view it differently. If someone leaves because the road got bumpy, were they the right person to help you climb the mountain?
Transparency acts as a filter. It repels those who want a safe 9-to-5 and attracts those who want to solve hard problems.
However, we still have much to learn about how different personality types process organizational trauma. We do not know the long-term effects of constant “wartime” transparency on creativity. Does a constant state of alert stifle innovation?
This is where the art of leadership comes in. You must read the room. You must balance the heaviness of the news with the lightness of the mission.
Trust is Built in the Trenches
#Think back to the best teams you have ever been a part of. Were they the ones where everything went perfectly? Or were they the ones where you faced a massive challenge and overcame it together?
Shared struggle creates bonds that shared success never can.
When you bring your team into the inner circle and trust them with the ugly truth, you are telling them that they are partners. You are telling them that they are vital to the survival of the organism.
Most people will rise to that occasion.
So the next time you feel that knot in your stomach, do not push it down. Do not put on the mask.
Prepare your notes. Gather the team. Take a deep breath.
Tell them the truth.
It will be scary. But on the other side of that conversation is a team that is no longer wondering what is wrong, and is ready to get to work on making it right.