Loose Lips Sink Ships
Confidential Info is Serious Business
I recently sat on a plane coming back from SFO and was forced to listen (for three hours plus) to a vc and startup founder in back of me loudly wax poetic about a wide range of opinions about other vcs and startups. These people should have known better, and knowing some of these companies and investors, some of their info was just wrong.
You know a lot about a startup or investor about how much comes out of their mouth. The above example is on the extreme side of cluelessness, but there are various other forms I see all the time. When you hear things like “just between you and me” or “confidentially” from people you just met, suffice to say you’re not the only one with which they’re shared this information.
Generally people share more than they should out of insecurity. They are trying to impress the other person and sharing “in-the-know” information somehow will earn their respect. Most times this instead backfires as the other side quickly judges that this person can’t be trusted.
Many years ago when I worked in M&A, you could lose your job on the spot if you let out information that was deemed confidential. I was constantly asking myself what exactly I could share with investors about companies that we were representing. I am thankful for the Managing Directors above me who continually put the fear in us about the importance of confidential information.
Nothing rocket science here, but startups shouldn’t:
1) bad mouth their competition or say things they know privately about these companies or product, even if true
2) share information about other startups or founders that has nothing to do with anything
3) talk about their customers openly and their plans (unless you want to lose them quickly)
Investors shouldn’t:
1) talk about metrics or customers of startups in which they’ve invested or seen in other startups’ decks
2) share pitch decks without getting permission from the startup
3) throw around valuations of startups, however “overvalued” they may believe they are
The world has never been flatter — information travels at the speed of light in ways you never thought possible. Just because you know something doesn’t mean you should tell even one person about it. You never know who is sitting within earshot of you.
