Angela, thanks a lot for your post! Although, I’m generally a big believer in transparency, I feel that deciding what to tell (or not) to your employees might not be as straightforward.
Especially in early stages, each startup is balancing on the brink of failure. What would need to happen for you to tell the employees that the startup is failing? How would you decide when it’s the right time to tell them?
Or would you rather share the news as they come (e.g. “We weren’t able to raise the financing this week… again… We’ll run out of cash in two months…” or “Customers don’t place repeat orders… But maybe they will start once we change the website…”) and let the employees form their own opinion about the likelihood of failure? While management and investors – and perhaps officers and some others in the company – might be able to absorb (and digest) the news as they come, some employees might not. Quite likely there will be people who simply won’t know what to do with that information… They might feel insecure… even scared… and perhaps under unnecessary stress or pressure…
I believe that it’s the responsibility of the management to guard the information flows and make decisions in the best interest of employees (and other stakeholders). Sometimes it might be in the employees’ best interest not to know everything. Of course, the time will come when it’s right, ethical and smart to tell the employees that the end is coming… My question is how do you make the decision that the time to break the news has come? This might perhaps be material for another post.
Great post Victoria! I asked myself a fairly similar question. Your suggestions are great. However, I feel that there is a delicate balance between founder’s personal ambitions (not to get fired) and doing what’s best for the company (which actually might be stepping down/ getting replaced by someone more experienced). On that note, I’d be interested in hearing your thoughts on preparing for the moment when a founder realizes that it is time to step down.
Great post Jay! I wonder to what extent your points #1 & 2 drive your point #3. In other words, one could posit that (at least some of) these companies are still ran by their founders precisely because the companies (i) have transformed our lives, and (ii) are the winners. I’d argue that (for at least some of these companies) these two factors contributed to major up rounds of valuation, which in turn allowed the founders to maintain significant share and control of their companies. Thoughts?