Would You Open Your Books?
Entrepreneur|January - February 2017

Some companies are taking transparency to the extreme and showing the world their cash flow. It’s scary, but maybe not crazy.

Clint Carter
Would You Open Your Books?

LAST SPRING, JOEL GASCOIGNE realized he’d made a big mistake. He’s the CEO of Buffer, a social media management company, and business was doing so well that he aggressively staffed up—going from 34 to 94 employees in just more than a year. But although Buffer was still bringing in $875,000 a month, the increased salary burden was eating up all that money and more.

“We didn’t get the productivity impact or growth we thought we might get from hiring that many people,” says Gascoigne. Buffer was likely to be broke in five months.

So in June 2016, he laid off 10 recent hires. Then the 29-year-old CEO faced an even more daunting challenge: He’d have to explain all this—how he failed, how the company’s finances suffered, and how he’d fix it—to his customers, employees, and investors. That’s because Gascoigne had previously committed to running a “totally transparent” company, which meant revealing everything at all times. He couldn’t back down now.

Business transparency usually falls into two categories: At a publicly traded company, finances are revealed quarterly and the CEO answers a barrage of questions from analysts and shareholders. At a private company, the CEO is accountable to a select few people and can otherwise often hoard information. But transparent companies, sometimes called the “open-books movement,” create a third, somewhat radical way: The leader of any company commits to putting its intimate financial details right out in the open, so nothing about its health is hidden.

This story is from the January - February 2017 edition of Entrepreneur.

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This story is from the January - February 2017 edition of Entrepreneur.

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