Transparency Trustfund

Glassware, Fab.com

Glassware, Fab.com

Back in June I enthused about just-launched flash sale site Fab.com. My ardor was fueled not only by the site's great product and design, but also by founder-CEO Jason Goldberg's commitment to a level of transparency surprising in any company, especially an early stage, venture-funded one.

From Day One Jason has shared liberally, publishing graphs, charts and notes on his personal blog revealing Fab's strategy, traffic levels, conversion rates, sales volumes, even sales breakdown by product category--information extremely valuable to anyone else selling design- and lifestyle-related products online.

It takes confidence, conviction, a willingness to move against conventional wisdom, to lay it bare. Just three short months after launch Fab.com has more than 600,000 registered users, has booked more than 80,000 transactions and is on track to generate $10 million in revenues in 2011.

CEO transparency is tricky. Wielded deliberately, effectively, backed by a clear, well-crafted corporate strategy, it amplifies a positive message, personalizes and attaches a likable face, voice to the brand across a company's ecosystem--with consumers, employees, investors, suppliers, partners.

Wielded recklessly, ineffectively or in tandem with a corporate strategy that is unclear, muddled? It amplifies all of the wrong things across that same network, eroding a company's real and perceived value.

A case study of the risks and challenges of heartfelt CEO transparency, playing out at the same time that Jason has been laying the Fab foundation down: Reed Hastings of Netflix. A long-time darling of investors, Netflix has lost over half of its market value since early July, as founder-CEO Hastings has struggled to communicate significant pricing and business model changes to customers and the market.

By all means it is easier to be transparent when the news is good, the company is small, business accelerating. CEOs who hone the art of effective transparency during the good times build up a transparency trustfund--for themselves and their company--goodwill that can be drawn on as the company grows, when it does encounter the inevitable bumps. These CEOs are few and far between and an inspiration to watch. Pay attention, as Jason Goldberg leads Fab forward.

An insightful post by Andreesen Horowitz partner and former IronPort CEO, Scott Weiss, on the managerial value of pursuing a policy of transparency--and the challenges of maintaining it in the transition from private to public company--is here.

You can see Jason in conversation last week with TechCrunch's Alexia Tsosis here. A longer conversation with entrepreneur, investor and Digg founder Kevin Rose is here. In July Fab.com announced that it had raised an $8 million round of venture funding. Led by Menlo Ventures, Rose participated in the round--as did Ashton Kutcher.