How Secrecy Can Undermine Your Startup

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Secrecy is exciting, especially in the technology industry. If you’re an executive at a major company like Google or Apple, the easiest way to prod the tech press and investors into frenzied excitement is to mention you have a highly secretive product in development that will “change everything.” Products in development often come with enticing codenames such as “Yoda” or “Terminator.”

But secrecy isn’t just used to drum up excitement; in the highly competitive world of tech, where databases are hacked and physical prototypes stolen (or lost) on a not-infrequent basis, secrecy offers a genuine competitive advantage—to a point. As suggested by the recent experience of mobile-payments startup Clinkle, tech companies that keep things too secretive risk tumbling employee morale and mass defections.

According to TechCrunch, Clinkle’s management not only “withheld information from employees about acquisition talks with Apple,” but also refused to offer much insight into the company’s rapidly shifting strategy. That lack of information, combined with the firing of key employees, has reportedly led several others to defect to other companies. (In the span of a few short years, Clinkle has gone from a much-envied startup to a sort of running joke among many in Silicon Valley.)

But wait, you say: Don’t Apple and Google keep most of their respective employees in the dark about pretty much everything? Don’t other major tech firms shift strategies on a fairly frequent basis, without mass employee defections?

Indeed they do, but those companies also have a track record. If you’re running a startup or small company that hasn’t had its first big hit, transparency is a solid way to build loyalty—and keep your best people around. Besides, if whatever you’re working on is exciting enough, chances are good the press (and your competitors) will find out about it, anyway.

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