When Should Startups Practice The Art Of Keeping Secrets

Secrets are hard to keep.

We all know that, also understand very well that every entrepreneur, investor, company or government has not just one but many undisclosed agenda items to unveil. Many of the successful companies’ founders are obsessed with privacy.

Firstly they identify and prioritise information basis its importance be it for investors, employees, customers or tax authorities. Secondly, they study current information flow hierarchy and perform risk assessments at all levels. Third, they put up a strict regime on appropriate information disclosure both for internal & external purposes. They ensure very well that no information goes in or out of the people, memos, emails, computers & office buildings without a reason.

Indoctrinating a culture of secrecy is a journey rather than a one-time event.

While government’s right to information is important for accountability but total openness & transparency is not advocated. The Government of India worked in stealth mode. It was successful with the currency ban. It is important to understand the potential implications and ramifications had the mission to demonetise failed, due to leakage of information.

Loose Lips, Sink Ships

Black money hoarders would have misused the ambitious black money declaration scheme (IDS) had they learned about this move beforehand. This biggest attempt to counter black money was planned and administered from past six months. No one had any clue until Prime Minister Narendra Modi announced the decision to the country.

While all deception requires secrecy, all secrecy is not meant to deceive.

Corporations like Apple have used mystery about its product releases to its marketing advantage. They have demonstrated multiple times that they can keep a secret better than most enterprises.

Only A Handful Of People Are Aware Of The Full Picture

…While others are provided limited information on a need-to-know basis. It is said that Apple products are omnipresent, but information about the corporation is barely available in public domain—which is exactly how Apple wants it. In the automotive industry also the mantra they follow is that if the new model launch hasn’t been disclosed to you, then it’s literally none of your business.

As with any secret society, trustworthiness is not assumed within these corporation walls.

Today, with startups, there is less demand for the art of deception. In a small team, transparency is the norm, not the exception. They should keep secret as little as possible.

Still, Secrecy Has Its Perks

For startups aggregating public data, privacy should be revered within the team with no open door policy. In today’s increasingly litigious world confidential information can be misused to commit illegal activity. Failure to properly secure and protect confidential information can lead to the startup to close down business itself.

Get the right processes and procedures that keep things under wraps. The reason also not to leak information is to hide opportunity from competition, not to damage the market potential of the product to be released. Operating incognito helps a startup to protect intellectual property until the product is launched.

Lastly with startups, strategy with PR is outright deception & is never about free flow of information. Not all confidential information held, needs to see the light of day.

[This post by Sanjay Mehta first appeared on LinkedIn and has been reproduced with permission.]

[Note: This article is part of The Junction Series. Sanjay Mehta will be speaking at “The Junction” in Jaipur in January 2017. Get a deep dive on angel investing, investment thesis, exit strategies with him. Learn more about The Junction here!]

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