Is it normal for a startup to not disclose burn rate and other details to its employees?

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JASON LEMKIN

I’m on the fence here.

I’m 100.00% in favor of transparency in general. And specifically, I believe employees should generally know at least as much as you share in board meetings.

But … on burn rates … and in particular, Zero Cash Dates (when you run out of money) … I’m on the fence unless you carefully and thoughtfully provide context.

I do think employees should know how much you are burning each month, with the proper context. That way they can understand if they are overspending, if we are overhiring, etc.

But in terms of Zero Cash Date, the day you will run out of money. The thing is, companies almost run out of money all the time. And they run the gas tank down to Almost Empty. I do think you should share your Zero Cash Date as well as your burn rate. But. Employees get confused. At least, I think make sure you provide context. What the ZCD means.

Information without proper context to understand it can undermine your transparency goals.

It’s easy to overspook the team. Be honest, direct, and treat them at least as well as your investors. Just don’t spook them, unless there’s really truly a reason to be spooked.

More here: Knowing — and Sharing — Your Zero Cash Date

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Published on June 14, 2016
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