Ask HN: How much info should founders share with early stage employees?
I'm the founder of a small 7 person startup in the fintech space.
Should I share info on upcoming behind-the-scenes partnerships, etc with employees to pump them up? Or is giving too much information counterproductive/risky if an employee leaves?
208 comments
[ 6.4 ms ] story [ 215 ms ] thread- making sure your business model is viable
- involving employees in the software development process so they understand the user's perspective when developing the product
- paying people fairly
- helping employees structure work/life balance
- having clear and scoped value streams to prevent undue burden on the organization
- rigorously test business assumptions on an ongoing basis
- leading by example through being a decent human and treating others humanely
While information is power, secrets are not what makes a company valuable. Corporate espionage is trivial these days -- you can't stop people from talking. Nowadays, the best competitive advantage is execution. If you can execute well on the basics, you'll blow 95% of the competition out of the water because it takes a certain kind of person to cultivate talent. Your competition is only human, and they naturally want to cut corners, which is why they rely on mind games, or what some might call _sales_.
Still, it seems polite to answer your question about the effects of pumping up your team with info on upcoming partnerships, so I will despite the fact that I think you're coming at it from the wrong angle. Ask yourself why would they care about this information you're providing? If they do seem like they care, either:
- they stand to gain directly from this partnership or
- they're putting on a performance for social and political reasons or
- you hired employees who fail to reason properly, in which case you have bigger problems than their enthusiasm
If you want to provide more context without giving away too much info, please feel free to. Otherwise, I hope this answers your question.
I’d go far as to say if early stage employees aren’t engaging with every part of the business you’ve employed the wrong people because at that stage of the game there isn’t space for people who just sit in their box and don’t venture out of it.
If the early-stage employees have significant equity in the company, then they'll be very interested in how the company is doing. If their upside is paycheck, bonus and equity proportional to their salary (as you'd find in an established company), then one employer is as good as another.
I think the question of how much information to share is heavily dependent on how loyal the employees are to the company, and loyalty is almost entirely a matter of how much equity they hold (and more specifically how much equity they hold relative to the founders.)
Take a good, valuable or loyal employee and treat them badly and you can probably lose them. Take a bad, incompetent or disloyal employee and no matter how much you compensate them I suspect you can not change them.
This is true even with a company that's just starting, because there are way too many aspects of running a company for a single person to contemplate, let alone do efficiently or well.
I can learn about my company’s deal flow and benefit from that without needing to spend six hours in Quickbooks
It’s good for me to know the feature I’m building is important to a prospective customer who has an emphasis on security, even if I don’t sit on a call with them
Even in a 7-person company, there aren't many direct interactions between disparate functions that are called for, or even desirable, for that matter. Employees and founders/co-founders have massively different incentives and need for information. Some functions, such as HR, actually rely on keeping a lid on certain types of information to function properly!
Also, give “Range” a read. It’s a fantastic book and may help change your mind.
Many early-stage startups fail because they fail to find a good product-market fit, or because they fail in marketing and sales, which are much harder to get right. I very much doubt that poor information sharing by the founders about the state of the business with rank and file (which is what is implied in the question here) causes disasters.
Later-stage startups often fail because managing growth is a supremely difficult skill, and if everyone is not rowing in the same direction or if there are strategic missteps, the growth engine sputters. Absence of growth is death in our industry. Sharing too much information at this stage may be counterproductive if the company is still trying to make unit economics work, improving sales efficiency, or burning cash to fight an external competitor while scrambling to secure more. Many of these will just drive away many employees, who show up for the paychecks.
Often, engineers and other employees have great ideas that lead to a development that changes your product or your market and helps you find fit. That can only happen if they both: a) have the info, and, b) care enough about the mission / company to think about it. That varied set of experiences gives you (the founder) a greater surface area to draw from when coming up with solutions.
Knowing what partners are in the pipe lets me contribute to landing the customer in the first place. I can work with exec to team on how we can improve the product to appeal to the customer. I can provide costing estimates to see if the customer is worth acquiring.
A big part of startup compensation is tied up in equity. If there is no insight in to the business health, I am not able to accurately value my employment.
One of the opportunities in a startup is in learning how you might eventually run your own business. Learning about customer acquisition, about corporate structure and strategy, and about fundraising are all things I expect to be exposed to in exchange for much lower compensation.
Employees only care about their salary / stock options and professional growth and fulfilment. If an employee isn't confident in your ability to manage the business, they will jump ship (which is their right to do so, just as it is yours to fire them when the business falters). And so it is best to keep them focused and motivated on the job they have to do. There maybe some employees that you think have partnership or managerial potential. You should be confident you can groom them, and thus can share some business information with them and observe how they make the best use of that to help you grow your company and / or advance your goals.
If you don't want the risk and don't want to care, go in an established company.
But that all means that you should be transparent with startup employees, because many decisions depend on that at all level. If you hire employees who believe that they have infinite time and money to get the product to work, then you probably did not hire well, IMO.
As you said, not everyone can be into business. Which also means that not everyone can be technical. Who says that the business people are good at translating requirements from potential clients to technical employees? Isn't it likely that the technical people know more about what is technically possible?
If you share too much with your employees, what's the worse case? They leave with that data? So what? If the whole value of the startup is that the founder knows a bunch of business numbers, anyway it doesn't sound very promising.
However, if you don't share enough, maybe you miss very good solutions that they would come up with if they had access to all the data. Worse: if your interpretation of what the customers want and what is technically possible is slightly wrong, maybe you will send your whole startup in the wrong direction. All that just because you thought you knew what your technical people needed to make a good product.
I'm not asking to be rude, but if you are 45 having run a couple of startups (even if they both failed) I'd be really interested in this opinion and what experiences got you to it. If, however, you're still at college and this is "pure philosophy" it's of much less interest.
Forward-looking entrepreneurs are building in public. In my opinion, sharing news and information with core team is overall a positive investment.
If there's a lack of trust, maybe, there are bigger problems in the startup to fix?
I have made the claim in support of transparency before that it matters little if even my competitor would be able to get ahold of my road map as an extreme example of transparency. My forecast is that sure, they might zig or zag a bit differently but the reality is that their road map is already full of the things that they need to build next as well as their best ideas. They are my competitor, and generally they are going to consider their ideas superior to my own, so why would you expect them to change and copy my road map?
For future partnerships, the real risk isn't that your competitors find out. The real risk is that the partnership falls through and your employees feel demoralized.
So I think it's fine and good to share information about the discussions your currently having with bigger companies, but less of a good idea to preview the possible future relationship.
Demoralized is one thing, but also if enough partnerships are falling through they might get the sense that you’re not a good business person. Which may also be an accurate take away that you as a leader don’t want to hear/realize about yourself.
Without having been the leader of a startup I’d say the best thing to do is treat yourself like anyone else in the team ie the expectation of equal sharing back and forth. Help the team help you find out what your strengths are and what your weaknesses are.
Don’t try to hide your weaknesses or hope to get better at it. Especially if trying to hide/improve weaknesses are taking away from showcasing strengths. Instead get your team to hire in people to fill your weaknesses and learn from them. Meanwhile, double down on your strengths and continue the transparency and working as a team member.
Why I think you should share strategic information with your early employees? In my opinion, not sharing strategic partnerships to early employees misses the point of building trust with your early employees. Your early employees are in it for the experience of ups and down, and they will be benefit from both. Critical feedback from them is especially important at this time.
You will have situations where an employee or even a co-founder leaves, I think you have to be ready for that.
Being an early stage employee in a startup with significant equity means betting that your employer will eventually grow and you'll be somebody receiving the value rather than somebody creating it. That's how you reach the upper class in a capitalist economy and startups have successfully accomplished that for many founders and early stage employees.
So: startups are largely a vehicle to take money from hard working people's pensions (the LPs are often large pension funds) and put it in the pockets of employees who have created zero value.
Now that's a cynical take. But no more than the alternative view.
A positive take might be: startups are a financial vehicle to take a risk on a new business. The parties enter voluntarily, and different parties take different risks and have the opportunity for different rewards.
Moving from low-paying job A to high-paying job B not only benefits you, but causes average pay for A to increase and B to decrease, following a supply & demand curve. As more people switch from employee to founder, the value transfer and inequality you observe will decrease.
The missed opportunities of not sharing is way greater than any misuse of the information.
- Share info that enables independent decision making and actions so your team can help recruit new teammates, sell to customers, choose designs, and at a personal level, make personal financial decisions. If not, you're hobbling your team, who are your main shot at success. Just be clear that info is internal.
- Level anything forward looking, good or bad. Relatively few people understand that good sales requires significant loss rates, what a slog fundraising typically is, etc, so when some big lead doesn't convert or a process takes awhile, bigger issue is avoiding unnecessary heartache & whiplash. So share progress good & bad, but always level it. Partnerships, key hires, leads, VCs, talks, releases: celebrate real wins and analyze losses, but it's a marathon, so don't pump people up too much on the barrage of things outside of your control. The sharing is mostly dependent on the experience of the individual receiver.
Or maybe to put it a bit more harshly: You're not important enough to be hiding details
Be open, honest, and realistic. Say what you hope will come to be as a result of your actions. Be clear when things aren't set in stone.
Be transparent so that they can all work towards the same goals. If you keep them in the dark, they wont have any intuition on how to take initiative. Let positive results pump them up.
Before I founded my company, I worked for another startup that wasn’t very transparent. It was not a healthy/empowering environment.
Now, when dealing with things like partnerships, customers, and finance (runway, burn, revenue, fundraising, etc) I ask myself “what type of company would I want to work at?” and I always lean towards transparency.
Having said that, this needs to be done carefully. Instead of pumping everyone up about a potential partnership that could fall flat, you should try to be realistic and objective about it. “I’m really excited about a potential partnership with X. Even though this partnership will require we invest some resources doing Y, I see the possible benefits to the company as Z. From my perspective, this is a good opportunity for us. This isn’t finalized so I’ll keep you up to date on our progress. Let me know if you have any concerns or questions about this.”
Yes, exactly this.
It's what I meant by:
> Be open, honest, and realistic. Say what you hope will come to be as a result of your actions. Be clear when things aren't set in stone.
Just be transparent with what you're trying to accomplish, what the risks are, what you're uncertain about, where things are in the process, what the next few steps are, and what contingencies there are.
Sharing things that are in-progress is harder. I'd recommend attaching timelines and probabilities. Basically saying "this should happen in the next X days" and "we're trying this idea, it may not work but we'll know in roughly Y days."
There are two huge upsides to a small, tight team:
a) there are LOTS of decisions made every day in every area. If people know what else is going on, they should be able to make better decisions. aka "This doesn't make sense to do for one customer.. but if there are 4 others in the pipeline, it's way more compelling."
b) people with varying strengths and areas of focus will not have your blindspots and perspectives and will see/understand things that you don't. Lean into that and you'll get a better solution.
Background: I was employee ~25 at Twilio, launched Okta's API security product, and am currently employee ~20 at ngrok.
If a particular employee seems keen to learn more, and you think they might benefit from knowing, you could privately let them know there are tentative things you're pursuing, and give an example or two, while being cautious with them and telling them it might fall through. But no need to announce things that haven't happened yet.
At your small size you will benefit from the additional trust and alignment this will bring. You may find yourself delighted in finding that many of your team can see and solve problems that you may have missed.
You can be super secretive to combat the BigCo mentality like Apple when you have the first class problem of being a BigCo.
I advocate balancing full transparency (I certainly don't mean to hide any info!) with a culture that can create a time and place for conversations that might go beyond today's work.
Hiring, mostly. If you hire people that don't want, care, or are able to understand the full picture, the transparency won't pay off. But at small sizes, you generally want to hire people that both can and are eager to understand the whole picture.
I would say this is frequently even the case for big picture employees.
I'm saying this also as the lowest compensated person at my company for ~5 years.
To me it's more of an ideal world vs real world. Ideally you can share everything, in reality the outcome is likely to have a negative impact on both employee satisfaction and profit. Ie most likely giving employees a raise and them still thinking they aren't getting enough due to them seeing the big $ in the bank.
My preferred approach is budget level (we can spend x on y, I am open to your ideas) and number light executive summary (we have x months runway, not we have y in the bank). You can also give someone a smaller piece of transparency and see how they react if you think the employee could be someone with the skill set to manage a budget in the future.
Different companies/team compositions might have different best paths.
It's more "why are you hiring someone, when you could give everyone a bigger bonus" vibes. Where my goal is to say, give 2x the bonus in the future via the hire instead, but an employee could justifiably, for their own reasons, want more money today.
I'm saying that^ in the context, of, in my opinion, big picture employees as well.
I agree there's sometimes misalignment, everyone has their own goals/aspirations/career, and they sometimes aren't the same as the company goal/timeline. At the end of the day, that doesn't mean that they aren't capable of making valuable contributions or that we don't want to support their goals. That is ok, it's impossible to be everyone's everything.
Or even "we just invoiced $5k for that project, I didn't get $5k, that seems unfair". Some people find it difficult to see all the different places that gross revenue has to go in order to keep the lights on and the wheels turning.
If you were telling everyone you were broke, asking them to believe in the mission and endure low pay for the cause, and then it leaks out that you have plenty of cash, then yeah, I can see this question coming up.
It's surprising to me that out of 100 people no one asked for a raise after seeing a pool of money, although there's a lot of industries and types of employees out there.
It's a smart thing to do from the employee perspective-- I would do the same in their shoes, I don't hold it against them, I'm actually a big fan of ambitious employees, and I've granted their requests (maybe not the full value of their ask, but at least part) every time.
Your mileage may vary.
Why aren’t employees at Apple asking for a piece of their massive cash horde?
If the only thing keeping an employee from asking or demanding they be given some of the companies property is the knowledge that property exists then you probably don’t want them in your company.
It's a "coincidence" that occurs a short time period after seeing the information.
On the other hand, I'd never want a "what should I do?" person as an early startup hire.
This doesn't apply to tanks or healers, only dps. Playing tank as an infra person I would do my team a disservice if I didn't make myself available on a dime to unblock my team. Big picture is fine for the planning meetings but on small teams I'm usually the only one, I have a bunch of cooldowns to keep track of, and don't always have the context because I have a separate workstream that has to telegraph out ahead of the dev work.
I am always asking what I should do that has the most impact for my devs.
* Looking for people who caught aggro and getting out ahead of it is the bulk of my work. It's how I prioritize my workstream. The problem, and where the metaphor breaks down, is that I'm not omnipotent or have Grid2. If my devs don't tell me their pain points or I don't pull it out of them by asking what deliverables they would like to see out of me I would miss out lots of higher priority items than what I can see.
* The whole reason I'm on a team is because I have a specialized skillset and am but one stakeholder among many who want things from me. I will never run out of stuff to bring to planning but ultimately it's a group discussion about what I should do next. For larger companies s/me/the infra team.
I have never seen transparency hurt the productivity of these employees. They know they can look and see the big picture any time, they just don’t bother to look:
But for some people "transparency" also means a more active communication of this information, and this definitely confuses some (other) people because they will consistently interpret "we want to do X" or "we are going to do X" as "I should, right now, do (sub-part of) X".
It's the ultimate "let's hide this because we know people won't like it" phrase.
Excluding private HR data obviously.
EDIT: I think this is a good way of phrasing it https://news.ycombinator.com/item?id=32630650
I say this as someone who leads a team that handles the promotion and enablement of engineers into a role where they have a lot more visibility into sales and strategy, and have learned that they really need to have someone reassure them until the point that they realize that things are working out just fine.
That being said, I'm not sure of the wisdom of inflicting that stress on employees that don't have a need to see the Backoffice negotiations. Is there anything productive they can do, other then getting stressed?
7 person startup, right? Presumably they hired people who can wear lots of hats and who can deal with uncertainty.
> they start wondering "are we failing?", "am I not doing a good enough job?", "is our product a failure?" etc etc.
Good. Questions lead to answers where there's transparency. I'd hope that the people making the product would understand the product, the business, and the customers.
Are those really the sort of people you want joining your <10 member startup?
They ask for clarification, you provide it, and they are that much more effective.
If they think their people will be confused, they don't trust their people.
That's not necessarily the same thing as hiring the wrong people.
This is something a lot of founders seem to overlook.
Also, along with spotting problems - people who are engaged in a transparent org can more easily spot unexploited opportunities and bring them to the table.
In my experience, software, business processes, and hardware are best kept close to the vest until sufficient momentum and maybe market saturation is reached.
It does not matter if the item holds a copyright/patent/trade mark; they are post even re-active solutions. It's like an ambulance after a car crash. Excellent if there are good doctors in the ambulance, but better the avoid the car crash all together.
Putting together a team of competent engineers, developers, etc and having them create something meaningful is hard enough as it is. Trying to copy someone else’s tech doesn’t lower the bar all that much.
There are myriad of other examples, or different scenarios where an NDA or non-compete failed, and another company just puts out a product faster and cheaper. Happens with software, hardware, and of course business processes.
[0] https://www.hongkiat.com/blog/amusing-knockoffs-popular-tech...
[1] https://www.buzzfeed.com/alannaokun/30-knockoff-products-tha...
[2] https://www.liveabout.com/hilarious-knock-off-brands-4767601
I don’t see any out there that indicates they beat the original idea to the market by way of breached NDA or non-compete.
I think anyone who credits stealth mode with their success probably doesn’t realize they would very likely have also been successful without it.
- Avoid generating too much expectation, which can lead to frustration if things don't materialize, and impact team morale.
- Always provide context so the team can better understand how/why events took place and decisions were made.
- Think preemptively, put yourself into your team shoes, and try to address doubts that may arise from your communication upfront.
- Always give space for clearing doubts, and follow up to your staff to assess the impact of your communication. You'd be surprised in how many ways people can react to the same information.
With time, you get to better know your team, build trust, and become more effective communicating with them.
I'd be very hesitant to share partnerships until they're done. Either because people will inappropriately mention them (a junior salesperson running his mouth on a phone call cost a former employer $5m++. no joke. a partnership deal that wasn't inked got rescinded after he told the wrong company and it got back), or more likely, get misset expectations about deals that can still fall through.
That's different than sharing rev numbers, about which I think founders should be very open. I'd share deals when they're inked, along with a lot of repetition about what can and can't be shared externally.
Also somehow it’s not even close to 43 minutes, not sure where I got that from! Sorry to the poster :-)
Customer or partnership deals can be useful to share because the team can help with those but talking about future fundraising might be just distracting and the team might not be able to do anything.
We do monthly business review with the whole company (25ppl now), going through growth, revenue, cash flow, customers etc.
A soldering technician on our team can literally see how we’re doing on cash and collections at any time.
We have company-wide updates 2-4 times a month where we brief all employees on important ongoings for 30 minutes.
Siloing info rarely benefits anyone. At best it builds incompetence and distrust (lack of full picture), and at worst it dooms best laid plans.
If you can afford $1m/y in payroll, you're not small :)
> Should I share info on upcoming behind-the-scenes partnerships, etc with employees to pump them up? Or is giving too much information counterproductive/risky if an employee leaves?
The kind of person who needs "full transparency" that these Internet randos are advocating isn't going to be working very hard. You can't afford to blow $1m/y on people who use Twitter. That said, don't conflate "full transparency" with having meaningful direction and vision, and rising above the fray of agile development.
Some folks don't want distractions. They don't care about the state of things that don't directly pertain to their job. They just want to build stuff.
Other people, like myself, want to know everything.
If you want honesty and transparency from your employees, you have to create a culture of it. Which means it starts with you.
I think the worst thing that can happen is that your employees stop trusting you. They're still on the payroll but they're there only until something better comes along.
Be careful with your answers to them when they ask for information you don't want to give out.
If it's confidential, say that straight out and explain why. If the employee doesn't understand it or feels you're being deceptive or not totally honest, accept that there now has been a breach of trust between you.
The places I've worked that were basically "open books" and super transparent tended to be more successful than the more opaque places.
Largely because people felt they had more of a stake in it, felt more involved and engaged, and would bring more ideas/contacts/knowledge to the table, etc.
The more opaque places that practiced unnecessary levels of "need to know" tended to not work as well, as the company couldn't leverage its peoples experience, networks, etc as efficiently, and people generally work less well if they are kept in the dark.
Being open tends to create opportunities, and your employees can warn you about risks you might be missing.
Being closed? You lose that advantage.
A decent NDA and properly written contract will cover you if someone leaves.