Why Business “Transparency” is Bullshit

If you spend any amount of time in the SaaS space, you hear a lot from leading companies about how committed to transparency they are.

And a lot of founders walk the walk. They publish revenue and fundraising numbers. They share detailed accounts of their progress on specific metrics. And they offer behind-the-scenes insights that can be really interesting when you’re first starting out.

But here’s the thing… if you follow their advice, you’re probably going to fail. 

I know that’s a strong statement to make, but the thing is, there are plenty of blindspots founders don’t realize they have when they post their transparency data publicly. Once you learn to recognize them, it’ll become clear why what they’re reporting doesn’t necessarily apply to your company.

The bottom line? It’s 2020. It’s time to start thinking for yourself. 

What Works for Them May Not Actually Be Working

Here’s the first big problem with so-called “transparency.” What works for one company may not actually be working as well as they think it is.

There’s a company out there — and no, I’m not going to call them out by name — that’s been really transparent about their revenue, their revenue per employee, and even what they recently sold for.

On the surface, that sounds great — like, it’s refreshing to see a business being so open about their numbers, right? But there are a couple of issues casual readers might not notice.

First of all, I’m looking at this data not as a founder, but the way a potential buyer would — and what I’m seeing isn’t all that impressive. Looking at all of the details they’ve shared, it’s clear that growth for the company has pretty much leveled out. They’ve effectively created a low growth, flat business with high costs.

And, like I said, the company has sold already, so I’m sure they’re not too worried about whether or not I’d invest. But what if you’re a founder who’s been drinking the transparency kool-aid and is thinking about publishing your own company’s stats? In doing so, you could accidentally wind up putting off potential buyers who understand the numbers better than you.

But even if you’re just a founder looking to learn from the example of others, there’s a problem here. If you aren’t skilled at analyzing the numbers presented, you might not see the problems in them. And if you aren’t able to recognize what they really represent, you could wind up modeling your company and your various growth initiatives off campaigns that have created sub-par outcomes for others — even if their numbers look good on the surface. 

The second major issue here is that, in putting too much stock in someone else’s transparency, you’re essentially watching someone else learn on the job. It’s great to have transparency through the process of success, but that doesn’t necessarily mean at any given time they’re right. They could be wrong — but they won’t know it (and you won’t know it) until much later.

That’s why, if you’re going to study examples of success, you can’t try to model your growth off of something like a $5M company. At that point, companies are still learning and growing. They may still have a first-mover advantage they haven’t worn out yet, or they may not have hit the growth plateaus that can occur when you’re no longer the hot new product in the market.

If you’re going to try to follow in the footsteps of another company, you have to look bigger. Look at $50M+ companies that have stood the test of time and surpassed their learning curves instead.  

What Works for Them May Not Have Worked Historically

I’ll admit it — founders have a tendency to get nostalgic. We look back fondly on our earliest years, conveniently forgetting all of the long nights, the stressful conversations, and the close calls that threatened to put us out of business just about every other day.

When you’re reading a founder’s account of what they’ve done in the past, what you’re reading is a recollection that may not be fully accurate, given the time that’s passed. Memories get less and less clear the further away from them you get.

Take the issue of work-life balance. I’ve seen companies that embrace transparency bragging about the environments they’ve built — how they don’t take funding, or how they run a lean ship working 40-hour weeks. 

But the reality is, what they did to get their current level of success isn’t the same as what they’re doing now that they have that successful organization. I’d be willing to bet money that, in the beginning, they worked longer, harder hours. And just because they can maintain work-life balance now doesn’t mean you’ll be able to do the same if you’re just starting out.

Don’t compare your present reality to someone else’s past memories. What works for them now may not have worked for them historically — if they’re even able to remember the past with any kind of accuracy. 

What Works for Them May Not Work for You

This is the big one. A lot of the success stories you see reporting their numbers today didn’t get started recently. They started back in 2003 or 2004 — maybe later, but the odds are that they’ve still been around for a while.

After all, despite how much we all love myths of overnight success, it still takes unicorns an average of seven years to hit their billion-dollar valuations. 

What that means is that these companies — the ones bragging about their transparency — were operating in different competitive environments than you are. Maybe they were the first to introduce new tech or capitalize on a trend. They almost certainly had less competition than you do now. Maybe they were able to tap into funding or talent you can’t access.

Regardless, what made them successful won’t necessarily translate for you. The conditions you’re operating under are too different. So if you blindly follow the recommendations they’re giving now, you could be setting yourself up to deal with challenges they never had to encounter.

Don’t believe me? Try setting up a referral program like the original Dropbox promotion. When you don’t see the results they did — and you won’t, since the novelty of the scheme has long since worn off — you’ll have evidence of how important it is to forge your own path, instead of following others.

So What Should You Do Instead?

My goal for this article isn’t to put down those who practice transparency or to argue that there’s no value in learning from the success of others. There is, but only if you keep the limits of transparency in mind.

Learn to take everything with a grain of salt — even the things I say. I’ve built my brand around sharing everything I know, but even my experiences may not apply to your situation. I’ve been in the startup space for a long time, and I’ll be the first to admit that I’ve created plenty of content over the years that’s no longer relevant, given how the market has changed.

You have to practice critical thinking. There’s a time and a place for business-building inspiration. It’s fun to read first-person accounts from founders who have reached the level of success you aspire to. Just don’t make actual business decisions off them unless you’re confident the lessons being shared really are relevant to you.

Finally, stick to the basics. Technology might advance, but business and marketing best practices don’t really change that much. They just aren’t that complicated. Focus on using them to build a strong, sustainable business foundation, and don’t let yourself get distracted by someone else’s story.

What do you think? Do you agree or disagree with my take on transparency? Leave me a note below sharing your thoughts:

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