The Shift Towards Open Startups

As big tech grows, so do concerns regarding their business practices and lack of transparency for investors and consumers alike. Moreover, the past decade or so has seen tremendous growth of startups the world over, and with many of them turning into multi-million dollar industries, it can create false or inflated expectations for entrepreneurs just entering the world of business.

In both of the above cases, we end up with a situation of just not enough information and data being available about the company’s internal workings and KPIs, in order for consumers, investors, and budding entrepreneurs to make informed and nuanced decisions. Within this space, Open Startups emerged as a movement against the secrecy surrounding data sharing while actively working towards making company metrics public.

What is an Open Startup?

According to Openstartuplist.com, an Open Startup is

A company that shares its metrics publicly — metrics like visitor analytics, marketing experiments — even revenue.

An Open Startup, therefore, qualifies as such if it consistently shares its metrics, including revenue, users, traffic, KPIs etc on a dedicated platform. Many new companies have joined in the trend of sharing their metrics on social media platforms such as LinkedIn and Twitter.

One of the key differences between Open and Non-Open Startups is that the former focuses exceedingly on transparency of data, making sure that their investors and consumers know about the company on a statistical level. It builds trust in the company, as they are willing to put their numbers in the public domain.

Moreover, Open Startups function as learning opportunities for budding entrepreneurs by managing their expectations about the numbers in their early days, as well as giving a realistic outlook on the whole process of building your company from scratch. Effectively, these companies then also work as case studies for independent development, as every step of the way is documented and provides context and background for a startup that has to work itself up without funding.

Origins of the Open Startup Trend

In talking about the Open Startup trend, few names pop out in every list, seemingly being pioneers of the movement. One of the first companies to commit themselves to the movement was Buffer. As early as 2011, Buffer was sharing metrics and performance indicators in a limited capacity on Twitter. And this expanded over the years as the company started sharing more and more data with their consumers, investors and social media followers.
Ghost became another early adopter of the Open Startup trend, followed by ConvertKit, NomadList and other similar ventures.

With the growing popularity of Open Startups, there emerged a need for a dedicated platform that solely provides a service for companies to share their metrics with the public. Baremetrics capitalized on this trend by providing live metrics for Open Startups, making the numbers even more accessible to a wider variety of people.

Benefits of Having an Open Startup

Open Startups have recently gained a lot of traction, and there are several ways in which companies can benefit from positioning themselves as Open Startup.

1. Transparency and Trust Building

Having an Open Startup model for your company promotes transparency in the functioning and performance of your company, both internally for your employees, and externally for your investors and consumers. Moreover, as these metrics are available publicly, building trust and confidence in your brand.

2. Community Building and Product Promotions

As evidenced by the large number of companies that use social media and sites like Baremetrics to share their numbers, having an Open Startup model can promote community building for your company. People feel invested and connected to a company that is forthcoming with its data and allows a community of dedicated consumers and well-wishers to form around the brand.

Having garnered community support for a company often translates directly into the promotion of its products, and provides a competitive edge in a market that is competing for audience attention and retention. See for example, how in this article we have mentioned several of the Open Startup companies, naturally.

3. Marketing Strategy

In talking about promotions, Open Startups can often use the publication of their metrics as an effective marketing strategy. In a time where transparency and accountability are important, having your metrics be public can promote your company in indirect ways.

Recommended: Check out our Marketing Strategy templates for Presentations

For instance, many media outlets, blogs, digital magazines and business websites will often cite examples of Open Startups in their news pieces and op-eds surrounding the ethics of business and ethical business practices. One, it generates buzz around the brand due to its name being out in popular mediums. Two, having a company’s name attached to positive business practices automatically increases its credibility.

4. Growth in Independent Development

Having an Open Startup can foster a business environment that is conducive to the independent development of ideas and businesses, as it promotes and showcases real numbers and performance metrics for companies outside the purview of large and traditional corporations. Growth in this sector is imperative, as large corporations and mega conglomerates are exceedingly taking over business spaces, leaving little room for independent thought and growth.

Indie development communities are forming around such movements, which come as a direct antithesis to large corporations and their business practices. And in the long run, it can prove to be a key factor in the preservation of the free market by ensuring that the barriers to entry for any industry are not artificially inflated by mega-corporations and their predatory practices.

Cons of Having an Open Startup

As with any strategy, it is important to understand that the Open Startup model does have some disadvantages that need to be carefully considered.

1. Using the Open Startup model solely as a Marketing Strategy

While the marketing and promotional implications of having an Open Startup are unmistakable, the issue arises when the numbers become more about marketing your brand rather than making a bid for transparency.

The line in the sand is this — insincere and underhanded practices can become apparent to consumers and investors as your priorities shift from maintaining transparency with your numbers, to marketing your name as a beacon for business transparency. As long as there is a connection between your brand and the community built around it, using your metrics as marketing can be the perfect two birds, one stone situation.

2. New Competitors and Copycats

If you have a successful business and make your metrics public, other competitors will naturally appear. Furthermore, if the cost of entry is low, it is expected the competition will be increased significantly, making the competitive landscape very dynamic. However, as in other aspects, being the first and the leader can be advantageous.

3. Domino Effect

For amateur investors, not well versed in understanding or working with nuanced data and the background of a company, sudden spikes and upturns in performance can induce a domino effect of investing in your brand. However, this is unsustainable in the long run, especially if those gains were unwarranted or due to situations beyond your control and don’t reflect a general trend.

4. Negative Domino Effect

Contrarily, if a company sees a slump for unforeseeable reasons, consumers and investors have instant access to that information, leading to hesitancy in the company itself. As such, it becomes difficult to gauge public reactions to information that may not be fully understood by those not well versed in understanding the flows of business performance.

How to Present an Open Startup?

An Open Startup is still a relatively novel concept, despite being around for almost a decade now. As such, it is important to carefully create and curate presentations that can accurately provide information about your company to potential investors and a larger audience.

Using presentation templates can be a great way to save time and make an effective PowerPoint presentation for your company. Pitch deck templates and elevator Pitch PowerPoint templates can be helpful to present an open startup presentation. Furthermore, dashboard presentation designs where you can present the publicly available metrics in a clear and concise way can help to explain the metrics that matter to an audience.

Final Words

The Open Startups initiative provides a whole new dimension to the space of transparency and ethical business practices. They can prove to be highly effective at garnering public trust, and building a brand centred on accountability and metrics in the public domain.

As entrepreneurs are stepping into this new space, here are some key takeaways to remember:

1. Be honest with your community. Engage with them and do not falsify or embellish your story.
2. Be in a constant loop of feedback and improvements. One of the best outcomes of an Open Startup model is that it promotes feedback and criticisms, which can prove to be the best stimuli for constant and consistent growth.
3. Lastly, do not flake out on your promises. Similarly, do not fall into the trap of over-delivering when not required.

Understand if your business model can work within the Open Startup movement, and make informed decisions. And most importantly, be transparent about your decisions and practices to build a successful Open Startup.