Should all startups not have a radical transparency policy? The case of Buffer

Last month the whole Buffer team’s salaries got posted online, sparking a near viral conversation on the subject of business transparency and privacy. All employees were one board with the decision, though that didn’t stop some people question the effectiveness of such a business philosophy. Below is some business implementations encouraging this experiment and their explanations.

Seeing that the company has been showing impressive growth indicators recently, could this characteristic be one of its main drivers of success? If so, I think it’s definitely something African startups should learn from.

Social sharing startup Buffer is one of the few that believes the best way of breeding the right environment of trust comes from having extreme transparency. Company founder and CEO Joel Gascoigne calls his current company philosophy radical or default transparency which translates to having your company basically stripped down to its delicate undergarments.

Customers, co-workers, potential investors or mere bystanders now know exactly how Buffer’s US$56,208 December revenue is made and spent:

• 69.3% increase in Monthly Recurring Revenue (from $19 190 to $32 491)
• 156% increase in total revenue (from $22 250 to $56 208) (versus 27% MoM decline in Nov)
• Buffer for Business is 23.9% of total Buffer revenue ( from 11.4% last month)
• 222% increase in new paying Business users (from 107 to 345)
• 260% increase in new trials started (From 826 to 2 972)

Inside out
In an online world of paranoia where a daily conversation about NSA data swaps with Facebook, Google and Yahoo are sparked left, right and center, a stance for radical transparency should become a viable option to gain trust and therefore respect, not so?

The same way I was intrigued by this level honesty, it still irked me somehow as I was raised in a society where talking or inquiring about salaries is not taboo per se but for some reason certainly not as common. Either way, I still believe transparency will help clarify myths or perceptions of not only business, but all levels of society — something African startups should welcome with open arms.

“Lots of traditional, widely accepted, and perfectly legal business practices just can’t be trusted by customers, and will soon become extinct, driven to dust by rising levels of transparency, increasing consumer demand for fair treatment, and competitive pressure,” Don Peppers and Martha Rogers writes in Extreme Trust: Honesty as a Competitive Advantage.

South Africa for example currently sits 64th out of 189 countries that participate in the Transparency International Corruption Index — a position that’s thanks to both public and private scandals over the past few decades. Countries like New Zealand and Denmark have shown clean, well-kept books with a number one ranking.

While such international perception clearly hampers business, the beauty of operating and actively engaging online is the fact that it’s pretty damn easy to make revenue figures, company changes public.

Gascoigne who of course isn’t be shy about earning a US$158,800 annual salary, gives us an idea of where he currently stands:

“There are many reasons we default to transparency at Buffer, and perhaps the most important is that I genuinely believe it is the most effective way to build trust. This means trust amongst our team but also trust from users, customers, potential future customers and the wider public who encounter us in any way.”

Checks and balances — by putting yourself out there in the limelight you’re publicly liable to follow through on your before said goals and actions. This, in turn, will pressure you and your startup to perform according to your core principles and thus your vision instead of being lead astray or overwhelmed by.

Lack of focus is one of the biggest deterrents helping small businesses skid off course.

Outside in
Not only does business transparency supposedly further B2C relationships, internally at Buffer, every email sent between any two people has a certain list cc’ed that is accessible for everyone on the team.

To further self-improvement and stay accountable internally, Buffer uses an app called IDoneThis which helps you log your team’s progress each day. This, and other such implementations, “breaks down barriers within the team drastically. This is simply because defaulting to transparency means that you share every idea or new direction very early, before it’s completely solid,” argues Gascoigne. Each individual employee’s progress and priorities are clear which is partly why they don’t mind having their salary figures shared and tweeted a couple of thousand times.

Ryan Smith, who is co-founder and CEO of private research company Qualtrics, and Golnaz Tabibnia, have found that business radical transparency is a massive driver of increased company performance. In the blog post they write that it’s “particularly true of young, fast-growing companies driving to meet stretch revenue goals and keep their investors happy.”

Smith and Tabibnia go so far as to provide insights from neuroscience research showing improved business performance in terms of team focus, engagement, and growing and recruiting talent.

Whichever way the cookie crumbles, the fact remains that what might work for company A won’t necessarily be ideal for company B. Though what Buffer’s experiment is demonstrating is an interesting approach to help solve popular issues startups face today, and one that should be take note of.

Instead of being economical about the truth, are you ready to put your business out to dry?

Image via Spatula