Fred Wilson had a great post yesterday (well actually his partner Brad wrote the full length post on the Union Square blog, Fred just borrowed a quote from him) that discussed the topic of whether or not being completely transparent with your business is a good thing. The post(s) focused on whether or not it is valuable from a business standpoint to be completely transparent to the industry / investors and your users about what your are doing. They have noticed, at least anecdotally, that there is a direct correlation between those entrepreneurs that were completely open about what it is they were doing and their ultimate success. In other words the more open you are the greater success rate you will have. I would have to agree with Fred and Brad, but I think that they are only touching on half of the transparency equation.

The other part of the equation that I feel is equally important is the amount of transparency you as the leader of your startup show towards your team. If you are guarded or vague with what your plans are (or Value Proposition of the company to put it in other words), they less likely your ultimate success will be. If you are guarded or vague, it sends the message to your team that you are either unsure of what the plan is, or you do not feel that they need to know what it is. Either way, those are both bad perceptions to be giving your team. If the success of your company sits on the shoulders of the entire team, how do you expect them to execute on a plan if you either do not have one fully together or you are not giving them all the information necessary for them to make the company successful. It is paramount as a leader that you provide clear direction for your team, you clearly state what the Value Proposition is, and that you live by those words as well and execute right alongside them. That is being transparent with your team. The more they know and understand on what the direction is, the better equipped they are to get you where you need to be. Obviously there are some things that the entire team need not know in order to execute, but the Value Proposition and core direction of where the company is going is a must.

So as important transparency is outwards, it is equally important inwards. In my book, transparency is the best policy, but not everyone is reading my book ;-).