Transparency in business is a hot topic these days. From the extreme transparency of Buffer, sharing everything they possibly can, to simple financial transparency like Baremetrics, or just roadmap transparency, there’s an entire spectrum of options. When you’re getting started, transparency is worth considering, but consider it cautiously.
At an abstract level, transparency is great–it’s a way of sharing, teaching, and lifting up those following in your footsteps. Share what you’ve learned, and everyone can benefit. But it can also be a distraction to maintain, and to answer the questions that arise from it.
Transparency as a gimmick isn’t worth it. For many companies it’s just an optimistic marketing ploy, but that doesn’t carry much weight and likely creates more problems than it solves. If you want to share things, you need a worthwhile reason. Is it to help others learn? Does it build a closer relationship with your customers? Does it tie in to what your business offers?
For instance, Baremetrics sells financial software, so there’s some interesting motivation for them to share the data and let people see how their tool works for a real business. For Buffer it makes sense because it’s a core part of who they are. That doesn’t mean it’s easy for them, but at least they have a deeper motivation.
To really think about it, let’s explore the high-level benefits and drawbacks of transparency. First of all, transparency is an extreme form of honesty. That’s not to say that a lack of transparency is dishonest, but at the heart of it, genuine transparency is about additional layers of honesty. On one level, then, the most important consideration is whether your business needs more honesty. What’s the value?
Let’s start with the most extreme example: public companies. Once companies go public, they’re required by law to be more transparent. That enables a degree of trust, but it also creates overhead and expectations. As a small business, you won’t need the layers of auditing that public companies have, but it will create a degree of overhead. Once you start sharing information, it’s difficult to stop sharing it. That’s fine when there’s value in the sharing, but if you’re sharing without deeper motivation, it’s going to turn into one more distracting task. When starting a business, you have enough distracting tasks, and the burdens of oversharing can quickly become something you’re less committed to than you originally thought.
When you’re getting started, transparency can be a blessing and a curse. The mere existence of transparency engenders trust, but if you’re small and sharing financial details, people may question whether you’ll still be in business in a year. That’s not to say it can’t work, but it’s something to bear in mind.
Another drawback of sharing your financials is that when you’re successful, you’ll inevitably encounter a handful of copycats. More often than not, imitators don’t have the staying power to hurt your business, but it’s one more possible effect of opening your books.
Moreover, if you ever want to sell your business, buyers are often turned off when a company’s financial details have been public information. Of course, for every buyer or investor turned off by public financials, another who wouldn’t have been interested will be because of the transparency. By itself, that’s not a reason for or against transparency, but, depending on your goals, it’s worth considering.
That said, there are countless other forms of transparency beyond full financial disclosure. Some businesses, like Baremetrics, disclose financial and business metrics, but not their full books or expenses. Alternatively, Jonnie Hallman openly shares the costs of running Cushion but not the revenue.
Other teams are extremely transparent about their tools and processes. This is the easiest form of transparency because it’s not ongoing, and it’s low risk. It’s purely about sharing knowledge so others can benefit. It’s no coincidence that these kinds of blog posts see a lot of sharing activity. A great example of this is the trend of companies like Airbnb and Etsy open-sourcing much of their work and blogging openly about their engineering efforts. In these cases, the likely driving force behind the efforts is to aid in recruiting.
Since recruiting is unlikely to be your most pressing need in the early days, if developers are your target audience, transparency in engineering can be a great way to generate awareness of your product. You’ll have a larger context for sharing in that you’re hoping to educate and appeal to developers who could potentially become customers.
One of the more interesting opportunities for transparency is your product roadmap. With Sifter, I’d guess that 20–30% of the support requests I received were really about features, our roadmap, and priorities. There’s a significant risk with sharing this because priorities change and evolve, and you run the risk of your software looking like vaporware.
The good news with a public roadmap is that there are varying degrees of transparency. You could merely list your next two or three in-progress features. You could include target launch dates or exclude them. Or you could avoid features and focus on sharing your highest priorities. For example, you could say that in the next three months, you’re focused exclusively on reporting. This can help inform customers without making grandiose claims about what you may or may not do.
With roadmap transparency, the important thing to remember is that transparency generally helps your customers and potential customers with their decision, but it can also create a dilemma: you work on a feature but later decide it’s just not a good fit, or maybe it’s going to need much more work before it’s ready for prime time. That can be frustrating for customers who are looking forward to a feature.
Transparency can be great for your business, as well as the larger business community. If you’ve thought it through and you’re committed to transparency, regardless of which aspects you make transparent, then do it. But if you’re not committed, don’t dabble in it. Focus on what you do, and leave transparency to the others.