How Honest Should CEOs Be With Their Board Members?
Three things you should always tell your investors, and three things you should never tell them
I’ve asked this question to a lot of startup founders, and most of them think the answer is obvious. The trouble is, their answers disagree. Some say it’s obvious that honesty is the best policy. Others follow the view of Lucy Kellaway, the in-house professional cynic of the Financial Times, who argues in a witty column that there are four lies every CEO must tell.
Lucy’s advice may work well for CEOs of big public companies, but it has perils if you run a startup. When you compare venture capitalists on the boards of private companies with institutional investors on the boards of public companies, the VCs usually have more ownership, more power, more inside knowledge, and more perspective.
Unless you believe you are smarter than all your investors put together, there’s a high risk of being found out if you are dishonest — especially when you remember the old saying attributed (tenuously) to Abraham Lincoln:
“You can fool all the people some of the time and some of the people all the time, but you cannot fool all the people all the time.”
