For most business owners, the thought of telling the world all of your financials is intensely frightening.

The prospect of the whole world seeing and analyzing your every business move is enough to put even the most seasoned entrepreneurs in the corner crying.

But as we’ve seen with companies like Buffer, that sort of transparency and openness is becoming less and less of an outlier. For many, it’s actually part of the very foundation of their existence!

More and more startups are finding being transparent beneficial. To highlight those startups and help give the transparency movement more momentum, we’ve created the Open Startups initiative, where you can follow along in real time with companies who are committed to being publicly transparent with their finances.

Why on earth would any sane business do this? Is it something you should do with your business? What other companies are committed to this type of transparency?

Let’s dive in and take a look at the transparency movement and what it could mean for your business—and for business in general!

transparency movement

The start of a movement

Transparency within companies has been around for ages. Most notably, Whole Foods has made employee salaries available to everyone internally since 1986.

It’s the external that’s been picking up steam lately. That’s also what’s the most frightening for business owners.

Most of the public transparency for tech startups began around late-2013/early-2014.

Buffer’s first post on the Open blog, in April 2013, was about adding titles to their leadership team. Four months later they were sharing traffic numbers. Two months after that, they were all in sharing their revenue numbers…back when they were making $12,000 a month. Today they’re bringing in nearly $500,000.

Groove started their Journey to $100k blog in September 2013, when they made their revenue public and started documenting their progress as they grew. At the time, they were doing around $28,000 a month in revenue. Now they’re doing over $130,000.

At Baremetrics, we made our entire revenue dashboard public in February 2014 (Buffer followed a few months later). When we made our metrics public, we were barely making $3,000 a month. Now we’re doing north of $30,000.

Why transparency matters

There are two main groups of people for whom transparency is a major win.

Entrepreneurs: A new measuring stick

As great as the startup community is, there’s one thing it’s overflowing with that only hurts entrepreneurs: hype. You ask any entrepreneur how business is going and he or she will invariably tell you some form of “amazing.”

But statistically speaking, that’s impossible. A 90% failure rate is scary. And everyone telling each other they’re doing great isn’t helping anyone.

This is why transparency is a big win for entrepreneurs. It lays all the cards out on the table and gives new entrepreneurs a measuring stick to understand what “normal” is, or could be. It’s a way to show real world examples of how high churn hurts growth.

Customers: Confidence and accountability

For customers, being transparent adds humanity to what’s generally thought of as faceless. It keeps companies accountable instead of allowing them to hide unnoticed.

Transparency nurtures a certain level of responsibility on the part of the company. When companies are transparent, customers have a better idea of where their money is going. And when companies are failing left and right, transparency helps show customers who’s got their best interest in mind.

I believe it also can be a major motivator for businesses to do better, simply because they want to prove to customers that they’ve got a sustainable business.

The rewards of being transparent

Hopefully I’ve convinced you, at the very least, that transparency has the potential to be positive. But what are some actual, tangible benefits?

Let’s take a look at three companies I mentioned earlier: Buffer, Groove and Baremetrics.

Buffer: Press attention

Buffer started around late-2013 with their Open blog, and as you can see from the graph, that’s when you notice a change in their revenue trajectory.

buffer_transparencyTransparency made Buffer a unicorn in the startup world and brought them a lot of attention, especially from the media.

Groove: Community involvement

My favorite thing about Groove’s transparency was the way they pitched it. Their live revenue progress bar made you want to root for them. The startup community rallied around their journey, and Groove grew their monthly recurring revenue from $30,000 to $100,000 in 15 short months because of the attention their transparency brought them.

groove_growth

Baremetrics: An approachable product

For Baremetrics, the initial urge to be transparent honestly came out laziness. We have an analytics product, and I wanted a public demo that potential customers could use to try out our platform.

I could have spent days or weeks generating massive amounts of fake data…but I chose the lazy route and made our own dashboard the actual demo.

This paid off in a huge way. It made it much easier for customers to try out the platform, but past that, it led to major partnerships, such as Buffer making their dashboard public.

baremetrics_transparency

Given that our entire market is other businesses, using our own metrics as the demo made us much more approachable.

The risks of being transparent

Now, we can’t talk about rewards and transparency without mentioning a few risks. Being open with your numbers and your company is still a unique situation, and I know for us there have been some downsides.

Increase in competition. Within a few months of making our numbers public, similar products began coming out of the woodwork. It’s a common tendency to want to repeat success stories instead of making one’s own.

Now, I’d argue copycats aren’t actually a problem. There have been dozens of Baremetrics knockoffs in the year since we opened up our metrics. But none of them have had any sort of meaningful impact against us. I think customers are generally gravitate towards companies who are genuine.

Extra scrutiny. When everyone can see your numbers, there can be a tendency to make assumptions without understanding the full picture. You may have temporarily high churn at the moment that you’re well aware of and are OK with while you make changes to your business, but it could appear to others that your business is unhealthy.

Decrease in focus. Especially in the early days, you might need to be laser focused on building a solid product and business. It’s easy to get sidetracked publishing your metrics and touting your transparency when you might be better served making your product better.

It’s also easy to get worried about what others think about your business, which can be distracting.

These risks, for many startups, seem too daunting. For us at Baremetrics, we’ve felt the effects. But when looking at the big picture, the pros have far outweighed the risks.

How to support transparency

It’s a big step for an entrepreneur to be open with their metrics. For many it’s a scary move, namely because of those risks I mentioned.

To support the businesses that have made the move and to highlight how they’re doing, we’ve created the Open Startups initiative.

These companies are sharing all of their revenue metrics: MRR, ARR, LTV, churn, customers and more!

open_startups_example

Today, seven startups are part of this initiative.

Others are in the works. Read more about the initiative and if you’ve like to be involved, please get in touch.

What about you? Have you thought about being transparent at your company? What’s keeping you from doing it?

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Written by Josh Pigford

Maker. Founder of Baremetrics (SaaS analytics for Stripe). Writes about growing startups, transparency and more on the Baremetrics blog.

  • Good stuff Josh! I’m going to have to get http://www.leadfuze.com on this. Been providing monthly revenue reports, but I can see this being awesome!

    • Justin! We’d love to have you. Just hit me up when you’re ready. :)

  • Josh, great post. This has been great for Hubstaff. Justin, for sure get Leadfuze on it.

  • Farron

    Excellent post. I see the “extra scrutiny” as one of the bigger blockers for becoming more transparent especially when stakeholders aren’t always aware of the larger picture. Josh, in the case you mentioned on some metrics appearing unhealthy to others, where do you draw the line with oversharing?

    • Great question, Farron!

      So, the bigger thing in this scenario is that “oversharing” is relative. It’s all just perception. One person may perceive 5% churn as being par for the course while another person may think it means the company is burning to the ground.

      I think this plays in to @ciotti:disqus’s point in his comment here about how the context matters. I touched on that briefly in the article, but I think you just have to get a feel for your market and decide if it’s a good idea.

      Being transparent (especially with financials) isn’t always a good thing and in many cases can absolutely hurt you. I think it’s about taking baby steps…testing the proverbial waters and finding out what the balance is for your company and your customers.

    • The extra scrutiny could be a huge issue for publicly traded companies due unpredictable effects on the stock price. It requires a shift in thinking to focus on fulfilling people’s needs instead of fixating on stock price or growth. Then transparency would not be a problem anymore.

      It would be nice to see a similar report about transparency in companies which are no longer startups.

  • I’m all aboard with transparency and fully support the movement. :)

    That said, some thoughts:

    * Your “for customers” section was noticeably short
    * Meanwhile, “the rewards of transparency” had multiple sub-headings

    Opening the kimono is not a brave nor altruistic act in itself. There needs to be more questioning around, “How is this helping people?” rather than identifying “How does this help the business?” We already know the answer to the latter.

    Transparency in teaching is an amplifier—done well, it heightens the impact of what’s shared by showing it in practice. You see exactly how the thinking has been applied, and walk away better equipped to implement it yourself.

    But formerly taboo information can also masquerade as learning. The truth is you often learn nothing; it’s infotainment.

    I hope more attention is given to the context — to how this information is helping those who can now view it.

    But that’s my forever contrarian side. :)

    In reality I couldn’t be more on-board — who wants *more* secrecy from the businesses they support? Not I.

    Nice work making this easy, Josh. With the friction reduced, I could see a lot of companies making the leap.

    Cheers!

    • “I love this BUT let me tell you why this is the worst thing ever.” :P I kid, I kid.

      Context is certainly important. Right now I’m taking a top-down approach of “here’s all the things” and then I’ll explain the bits and pieces as it makes sense.

      It’s like when doing data analysis…you’ve got a big hairy pile of data, then you’ve got to take your time sifting through to surface the actionable stuff.

      We’re in the “big hairy pile of data” stage at this point in the “movement” and we, as well as Buffer and others are slowly working on brining all the pieces together in to something really meaningful.

      • Classic Italian move, as seen in every Sopranos episode.

        “With all due respect…” and then you say something cranky.

        ;)

  • Juliet

    Thank you for posting this article, Josh. What a perfect timing! I was literally just talking to the new team I am forming about the benefits of being transparent, and of course, I came to Buffer Open blog for some reference. And you’ve summarised it nicely in this post! Absolutely on board with the movement, and would love to have a chat with you once my new team is more structured! :)

    Another aspect of the transparency movement for me is also humanity. “Companies” and “people (or customers) have long been seem as separate and disconnected, and people seem to forget that companies are formed by people as well! By being transparent, it reconnects us simply as human-beings. This way, companies are simply groups of people who want to bring their expertise to help improve certain things in the world, and customers are simply those who can benefit from these improvements.

    This connection, I believe, can help people to be more mindful about what they create, what they sell, and what they purchase, which can radically change how we do business and create healthier and more sustainable economy :)

  • Derek Winter

    For more examples of companies that embraced transparency, and proved that it works at scale, consider AES, a Fortune 200 global power company at one point employing over 40,000 people, founded in 1982 by Dennis Bakke. His approach can be read about in the book “Joy at Work”. Also, Semco Partners, led by Ricardo Semler from the early 80’s to be a 212 million USD company in 2003. His approach can be read about in the book “Maverick”.

  • Cioaca Virgil

    Great article Josh. I love this approach and I also like to follow income reports from bloggers and other startups which give details about the numbers, actions they took that month, reason for growth etc.

    That’s why a few weeks ago I started a small side project http://www.incomereports.co , which is like a dashboard of public income reports with an email round-up feature(and a blog soon).

    There are 19 startups and blogs listed so far, including WPCurve, Groove, SmartPassiveIncome and thanks to baremetrics, these 7 great startups. For those which don’t use baremetrics, the aggregation was done by hand from their income reports blog posts, it took a while but I think it’s worth it.

    I hope more companies realize that being transparent takes the customer relationship to another level, the trust I see it gives is amazing…and I really think it helps with retention as well.

    Regarding the risks, you’re spot on. A few solutions though:
    1. Increase in competition – they can replicate the product (I know so many competitors to baremetrics appeared, one even copied your website layout), but it’s very hard to replicate your customer support, relationship, marketing, sales, etc. Depends on the market, but it’s not like you build the same product and they will come….it’s more than that.

    2. Extra scrutinity – Also include a blog post and explain the numbers. People will understand. This also gives you other benefits. That’s why I like income report blog posts.

    3. Decrease in focus – Maybe make the numbers public when you are more comfortable with them. Probably it won’t take you much time to make the numbers public, but you might get worried about the impact they will have.

    • IncomeReporters.com

      We really enjoyed using your website @cioacavirgil:disqus but its been down for a while :(

      Taking a page from your book we just recently opened the doors to http://www.incomereporters.com cataloging as many blogger income reports that we can find on a monthly basis.

      The transparency that bloggers and companies such as Buffer have in regards to their monthly revenue is a both motivational and, more importantly, educational resource for many of us.

  • Alex Flom

    Couldn’t agree more!
    BTW, we are a transparent startup as well, and share everything about the process in our blog, check it out if you have a minute: http://www.kilometer.io/blog/

  • Aaron Parnes

    Josh,
    Where do you draw the line on openness? I mean, do you share your Google Analytics data with the world?
    The point to draw the line is obviously when public release of this information will do more harm than good. The question is – when is it really more harm than good?

  • Good article. I just started being transparent on my own blog. only time will tell if its the right move.