A Roadmap for Saving a Failing Startup through Vulnerability

“The truth shall set you free.”

Those are the words I tell clients when they are faced with a high-stakes decision — to be real with their employees or sugarcoat the facts — as they decide how transparent they want to be when communicating difficult news.

For one startup, it was the threat of imminent layoffs.

For another, it was possible acquisition because their runway was depleting.

For one more it was talks about dissolving the company because the founders were at each other’s throats.

In business, like in life, people don’t think vulnerability is something to be shared openly. It’s weak. Opens you up to being manipulated. Or, worse yet, to someone using it against you.

And that couldn’t be further from the truth.

The Power of Vulnerability

Jeff Polzer is a professor of organizational behavior at Harvard that has studied the effects of vulnerability on group social exchanges:

“People tend to think of vulnerability in a touchy-feely way, but that’s not what’s happening. It’s about sending a really clear signal that you have weaknesses, that you could use help. And if that behavior becomes a model for others, then you can set the insecurities aside and get to work, start to trust each other and help each other. If you never have that vulnerable moment, on the other hand, then people will try to cover up their weaknesses, and every little microtask becomes a place where insecurities manifest themselves.”

Vulnerability creates a high-trust, high-purpose environment where everyone can drop the facade, be real, and start working together on the problem at hand.

But in order to do this the receiver of the message also needs to be open:

“The second person is the key,” Polzer says. “Do they pick it up and reveal their own weaknesses, or do they cover up and pretend they don’t have any? It makes a huge difference in the outcome.”

Startup leaders model this behavior to others.

Employees will start to open up about their own fears, which will make a huge difference in rallying the troops and making sure everyone is on the same page going forward.

Embracing Vulnerability

“Vulnerability sounds like truth and feels like courage. Truth and courage aren’t always comfortable, but they are never weakness.” — Brene Brown

Getting the team to come together starts at the top. Founders will need to embrace vulnerability for this strategy to work.

A startup I was recently working with was fearing layoffs but they didn’t want to tell their employees out of fear that many would leave right when they needed them the most.

“How can we expect to survive this if we don’t have any staff?” asked the CEO when we began working on their strategy.

To which I replied, “Put yourself in their shoes, if your employer was about to lay off a bunch of people, wouldn’t you want to know?

The four person founder team all agreed that they would.

While scary to them, this also became a major turning point for the founder team. By embracing vulnerability, they went all in and decided to use the situation as a learning opportunity that now, after having survived that hiccup in the road, got them to feel closer to everyone on their team.

“It’s almost like we went through the eye of a storm together and came out the other end unscathed, stronger, and closer together” said the CEO.

And he’s right. That’s the powerful effect that vulnerability has on creating strong team cohesion, especially after going through something intense.

If your startup is going through something difficult, follow these steps to make sure you align the right amount of vulnerability to the overall message you want to convey:

Step 1. Do a S.W.O.T. Analysis

Simply put: your employees aren’t stupid.

Even if a problem isn’t openly acknowledged, they can feel it.

Doing a S.W.OT. analysis at the start gets you clear on the areas of the messaging that’ll work to your favor while pointing to issues that may make matters worse. Ask yourself the following questions:

What are some information gaps that your employees may have?What are the goals of communicating the difficult subject?What’s the company’s formal position?What is the most pressing information you’ll need to share?

These questions will frame the message you’ll write out.

Step 2. Write Out the Message (and practice reciting it)

Answer the question that is on everyone’s mind first: is our startup doomed?

Be openly transparent with facts, share vulnerably how this has affected you as the founder personally, and what is expected.

Frame the message according to what information your employees need in order to stay focused on their jobs. Figure out what is appropriate, and lay out a strategy for conveying that information.

For the startup that was fearing layoffs, they decided to use the theme of “A Listening Tour” to frame the message.

They emailed everyone in the company that there was some difficult news that the founders wanted to share and that they would be embarking on a “listening tour” to get feedback from everyone about how the news personally and collectively affects them.

Step 3. Use town halls, 1:1’s & surveys to create trust

For this strategy to work your employees need to trust you. And if they are nervous or anxious regarding what is going to happen, you need to talk about this openly and strategically.

Communicate the message to the company via a town hall or other large-group format so everyone gets the same information at the same time. Provide opportunities for your employees to give you feedback about their concerns, and take enough time to do this.

Then provide follow-up opportunities via a confidential survey and/or breakaway feedback sessions with direct managers to give people a more private space to share their concerns.

Step 4. Leverage the awareness & hope through clear, sustained efforts

Most importantly, you need to provide a road map for follow-up steps and actions.

“Even if we fail, we need to provide clear guidance as to how we will get there” said the CEO of the startup fearing layoffs.

If the ship was to go down, by heck everyone would go down fighting. And that’s exactly the type of mentality that pops up when you create an opening via vulnerable sharing.

Their action plan included how the budget would be stretched, if and when layoffs would occur, and how those would be chosen.

The amount of transparency ensured that everyone had the information they needed to stay motivated. And it worked!

Team cohesion worked. People started putting in longer hours, working to make sure the startup survived. For this startup, a last minute investor saved the day.

Everyone, including the founder team, credits the renewed hope and high-purpose team atmosphere as having saved their startup through this rough path.

BOTTOM LINE: Vulnerability can be your best weapon in the fight to save your startup. But it all starts with the leaders at the top. They need to get out of their own way, admit some hard truths, and communicate those to their employees accordingly. Trust me, your startup will thank you for it.