In the traditional corporate world, knowledge is power. Middle managers hoard information to secure their status and make themselves indispensable. In a startup, this behavior is fatal. You do not have the time for secrets. To move fast, you need a different operating system. You need Transparency.
Transparency is operating in such a way that it is easy for others to see what actions are performed. It is the practice of making the internal workings of the company visible to the employees.
For a founder, this is not just about being honest. It is about efficiency. If your team has to guess what the strategy is or wonder how much cash is in the bank, they are wasting mental energy that should be spent on the product. Transparency aligns the collective intelligence of the organization.
Default to Open
#The easiest way to implement transparency is to change your default settings. Most companies operate on a “need to know” basis. Startups should operate on a “default to open” basis.
This means that unless there is a specific legal or privacy reason to hide a document, it should be visible to the entire company.
- Meeting notes from executive sessions should be public.
- Product roadmaps should be accessible to sales and support.
- The financial runway should be shared in all hands meetings.
When you democratize information, you empower individual contributors to make decisions. They do not need to ask for permission because they have the same context as the CEO.
Radical vs. Responsible Transparency
#There is a trap here. Some founders confuse transparency with radical oversharing. They think they need to livestream their anxiety to the team.
This is dangerous. There is a difference between sharing the problem and sharing the panic.
Radical Transparency (often associated with Ray Dalio) suggests sharing everything, including harsh personal critiques in public. For many startups, this creates a culture of fear.
Responsible Transparency means sharing the context and the data, but filtering out the noise. You should share that a major client churned. You should not share the angry, unedited email the client sent unless there is a learning opportunity. You must respect the line between professional openness and personal privacy, especially regarding HR issues.
The Salary Question
#The ultimate test of transparency is compensation. Should everyone know what everyone else makes?
Partial transparency is often the best route here. You may not publish a spreadsheet with everyone’s specific salary, as that can lead to interpersonal conflict. However, you should absolutely publish the salary bands and the formula used to calculate them.
If an engineer knows exactly what skills are required to move from Level 1 to Level 2, and exactly what the pay increase is for that jump, you remove the suspicion that pay is based on favoritism. You replace negotiation with clear metrics.
Owning the Narrative
#The most critical time for transparency is when things are going wrong.
If you lose a funding round or a lawsuit, the rumor mill will start instantly. The rumors are always worse than the reality. If you try to hide the bad news, you destroy your credibility.
Treat your employees like adults. Give them the bad news directly and immediately. Explain what happened, why it happened, and what the plan is to fix it. If you trust them with the truth, they will often surprise you with their resilience.