It’s Time to Stop Keeping Information from Your Investors


One thing that has struck me as interesting for quite some time, and especially over the last several months, is the hesitation that exists within us all to reveal uncomfortable information. Whether it has to do with an everyday company decision or a compounding, lingering strategic issue, leaders often refrain from shining a bright light on challenges when communicating with investors.

Clearly, the objective is to either preserve “character” or delay reality. However, shying away from a problem ultimately destroys both.

Facing challenges head-on is by no means an easy task. Based on my experience, both positive and negative, below are five outcomes of challenging yourself to always be transparent.

1. It builds credibility and trust.

Transparency establishes trust over anything else. Whether it is within the context of a personal or professional relationship, the more straightforward you are, the faster you and your partners become comfortable with one another. The same is true with your investor partners. The most profound indicator of integrity and respect is the willingness to reveal the uncomfortable things. The generated trust then leads to expedited resolution, a win for all involved. I like to send out a monthly update to our entire investor base with most of our metrics, regardless of whether they’re good or bad, to further nurture this trust with our partners.

2. It emphasizes team cohesiveness.

Facing the uncomfortable things leads to blood, sweat, and tears. And a team can either really come together or it can crumble. When we face problems at Smack that we don’t have an immediate solution to, we bring it to our investors’ attention. Stating the issue saves everyone a lot of time and positively channels everyone’s energy. Plus, the benefits are worth it: more time spent discussing the actual issues, and less time dancing around the elephant in the room means more “team training” for everyone involved.

In our case, both internal and external partners get to spend more time seeing how certain members respond to certain complexities, what certain characters’ buttons are, and so on. This leads to more cohesion among the company’s leadership and our investors. Our lead investor graciously offers to take time to meet every three weeks to touch on the most burning of issues. In the early stages, push your external partners to meet more often than not.

3. It constantly keeps your team on their toes.

If you know you are operating in a transparent environment, then you also know that any shortcomings will immediately come to light. Having this urgent mentality keeps you and the rest of your team on your toes, with no pause.

This goes for external partners as well. Knowing the depth and frequency at which we dive into strategic issues with our investors forces me to constantly ensure that our team is on our A-game. Transparent teams want to capitalize on every single opportunity and strive to squash every problem as quickly as possible. If investors know you operate on an aggressively transparent basis, it will force them to operate at their best.

Although we do not have an investor on our board just yet, we still go through the motions of having a formal board-type meeting every two months or so. It forces us to not only set ambitious yet realistic milestones but also to prepare us for operational scale.

4. It maximizes the probability of getting the right help at the right time.

The more known everyone’s problems are, the higher the probability that you will receive a lending hand. Years ago, when I hit a roadblock or needed help I would have been ashamed. This was all insecurity. Over the years, I’ve come to realize that when you are able to lean on other intelligent people you are able to accomplish so much more. Today I leverage my teammates and investors more than ever by letting them constantly know what keeps me up at night.

5. It trains you to accept failure.

There’s nothing worse than not admitting defeat or accepting wrongdoing, not because it gives people the perception that you’re not confident, but rather because it slows down the rate at which you receive feedback and subsequently the rate at which you learn. No matter how successful you or your business may be, feedback is the most powerful tool in becoming better at your craft and leading those around you. The more transparent you are, the more feedback you will receive. Always push your teammates and yourself to give and receive feedback.

I use to think that being transparent was overrated; not because I didn’t want to be open, but because I didn’t believe that there could be that much value to come from it. After all, being transparent sometimes means having to tell others what they may not want to hear. But I can safely say that I would not be working with the people I am today if it were not for my transparency. If days go by and you don’t receive any feedback, chances are that you’re not being straightforward enough with your real challenges.