Lessons From Theranos: The Importance of Transparency for Startups

Startup

To anyone in the know, the word Theranos holds a significant amount of meaning in a variety of capacities. On top of that, the nature of that meaning has shifted vastly in an incredibly small window on top. At first, it was a shock to see a college student leave college to found a company which she labeled as her dream as well as the future of the medical industry. Then it was amazement as said company garnered enough funding to buy out multiple small countries entirely. Following that, skepticism reared its head as whispers of uncertainty and failure to meet expectations ran rampant throughout global media. Finally, came resolution paired with disappointment as the once massively promising startup completed its fall from grace with bankruptcy. The message of the story of Theranos is that of transparency. Alex Bogusky, a professional marketer, furthered this idea, “Transparency is not a choice. The only choice is, does it happen to you, or do you participate in it.”

Obviously, no startup wants to follow in the footsteps of the ill-fated Theranos. This is why we connected with a few business experts who will highlight the importance of transparency. 

More ideas

Dawn Kendall is the co-founder of 8 Sheep Organics, a brand offering all-natural pregnancy products. She suggests leaning into crystal clear relationships because it presents more opportunities for good ideas. 

“Take a few minutes to look through the Wikipedia pages of some of the biggest companies that immediately pop into your head. Now, I’d be willing to bet that every single one of those companies was not built on the backs of a single individual. This leads me to believe that when more people are involved, in a realistic manner, the better odds a company has to make an impact in whatever industry they’re attempting to navigate. Don’t close your company off to transparency because you’re just closing yourself off to the chance of more, and possibly impactful, ideas. 

It’s a relationship builder

Few things are more effective at building trust than transparency. SaneBox is a business providing the ability to stop pointless emails from arriving in an inbox. Their head of partnerships, Thomas Yuan, advises this approach to help nurture said trust.

“Nobody wants to go into business with, or buy a product from, someone who they cannot place any confidence in. That’s just how humans work regardless of the situation. Building relationships is a surefire way to go about building said confidence. It starts with being honest and evolves from there. But you need that first element before anything substantial can happen. No entrepreneur sits around hoping their startup stands pat for the rest of their days. They likely want as much growth as they can secure. Just as you do, I assume. So dig into your relationships with honest vigor.”

Easy paperwork

Hybrid2Go specializes in replacement batteries for hybrid vehicles. Their COO, Cole Steverson, considers transparency imperative because seeking to avoid it will only create more problems. 

“If you have any level of understanding for how large corporations have gone about money laundering or any other illegal activity, you know how much additional effort goes into covering, changing, or eliminating a paper trail. I really can’t think of an example where cutting red tape corners to save time or money has resulted in a positive outcome. After all, trained experts will view most of your important documents so sooner or later, even the smallest mistake could change the directory of your startup forever. Alongside this, keeping everything legal could actually save you money. All-in-all, it makes zero sense to lie your way through your work day.”

A better work environment

Brandon Lurie is the marketing director of Y Meadows, a brand offering customer service support technology. He cautions others to focus on transparency so as to foster a healthy workplace. 

“Most of us have the ability to read a room as well as the people currently in the room. Somehow, we’re aware of whatever emotions are hanging in the air. If you’ve ever worked in an office space of any kind, you know just how true this is. If a boss or superior is outright lying, people are going to be quick to pick up on it. Trust has a trickle down effect so if your employees are trusting of you, your employees will extend that sentiment towards the people in their work life. And, there’s no better team than one who trusts its entirety.”

Operations

It may be impossible to find a startup which has no interest in running more efficiently. Diamond Mansion is a business providing affordable diamond jewelry. Their CEO and founder, Omid Semino, proposes striving towards transparency for efficiency’s sake. 

“Without clarity, any type of business move that requires an incredible amount of attention will falter quicker than it takes to blink. Not literally, but you see my point. If people don’t know what they’re doing, who they’re supposed to communicate or even the general goals of the company, everything is going to fall apart rapidly. It’s easier said than done but be sure to work at demonstrating clarity. It will do more for you than you might imagine and those results will probably bring a financial windfall your way.”

Accountability

Allara specializes in virtual care for women who have polycystic ovary syndrome. Their founder and CEO, Rachel Blank, believes transparency allows for a sort of checks and balances to take place regularly within a company. 

“By making openness accompanied by honesty a focal point, it inherently allows for tasks, projects, and people to be more accurately tracked and managed on a day-to-day level. Think about it this way, if everyone is aware not only of what they need to accomplish but also the responsibilities of their coworkers, a company comes close to eliminating as many blind spots as possible. There’s no reason for employees to work in the dark, figuratively speaking, so give this idea some serious consideration. If you can do less while your employees do more, it seems like a win-win to me.”

It involves the consumer

Guna Kakulapati, the CEO of CureSkin, a brand offering dermatologist given treatment kits. He advises others to guide their business’ in a way which incorporates the outside people’s tendency for keeping the business afloat financially. 

“Our society has reached a day and age, thanks mostly to the internet, where every person online wants to be involved however they can. I suppose it’s a bit like online tribalism in that users will actively look for the areas they feel they fit in. The same is true of the consumer. Therefore, it’s in the best interest of all parties to be proactive about transparency. Without it, confusion will rule every interaction and lead to more than just a simple disruption. People would much prefer you welcome them into something so give that a shot often.”

The bottom line

All startups are in the business of making money, though their path of choice may be noticeably different. Nue Life is a business providing psychedelics paired with professional mental health help. Their co-founder and CEO, Juan Pablo Cappello, considers this vital to realize. 

“Everyone who has launched their own business more than likely did so in the pursuit of turning a profit. There is absolutely nothing wrong with these intentions. In fact, they’re applaudable. Transparency on any and all levels can only be a good thing. Our human relationships are at their best when both parties have worked towards and gained clarity. By extension, the bottom line is at its best too. Don’t let this be your only driving force in this endeavor either or more problems will show up.”

As seen above, transparency can easily bring about more than what meets the eye. That being said, it is nothing to shy away from as it holds the power to make a significant difference to the recipient.  Author Trent Shelton spoke to this, “Your transparency will lead to other people’s transformation.”

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.