When Startups Fail (or Why Transparency is Paramount to Success)

One of the key tenets of both leadership and personal integrity is conducting one’s affairs from a position of honesty. Honesty, however, carries many ranging and individualized interpretations, and so perhaps transparency is a term better suited to driving this discussion. When leaders aren’t transparent and fail to include, inform, or advise their teammates of both the good and the bad, disaster is imminent. Withholding information from your team – or worse: from yourself (by ignoring reality) – handicaps your position from the very start because problems are infinitely easier to solve by group effort. That is, new ideas originate, face criticism, and evolve into eventual vetted solutions that wouldn’t have developed otherwise. This, presumably, is why most organizations hire not just those with the most talent, but also those who see the bigger picture – aren’t afraid of taking a different route to get there.

I recently found myself in a position wherein a seemingly positive startup environment suddenly turned wholly toxic. This toxicity had been brewing long before it surfaced; that incubation period represents an extremely unfortunate failure of leadership. Rather than bringing fellow teammates in to brainstorm, the co-founders in question decided to hide the fact that they had long since run out of funding and couldn’t pay to keep the team going. Moreover, one of these “leaders” was quietly attempting to oust the other. To their credit, the team worked hard and churned out a quality product – but we had no idea that our families, livelihoods, and careers were on the brink of debt-laden disaster. To those in the know, cash flow issues are no rare occurrence in the startup world. But there’s a massive difference in knowing that an issue exists ahead of time and finding out not only that your previous invoices might not ever be paid, but also you probably won’t be earning another dime any time soon. (As an aside, this is also a great example of why you should have an emergency fund). Continuing to work for equity in such an environment is a fools game: any remote chance of future success would be in spite of – as opposed to because of – chosen leadership direction.

Being a good leader means doing the right thing and empowering others to be greater than they currently are or greater than they think they can become – even if that means you don’t get what’s best for you in the end. Strong leaders guide teams through times of crises and get out in front of potential roadblocks; they take and deflect blows from reaching their followers. Likewise, teams who both believe in and trust their leaders work together to drive through hardship and don’t run in times of trouble. While I view the entire situation above all else as wholly disappointing, it has proven to be an incredible, priceless, and life-changing learning experience. Additionally, like most endings, better beginnings have sprouted from the ashes, and I’m very humbled, mindful, and thankful for that.