Latest / Startup Stories with Fexingo: Conversations About Founders, Funding, and Building Companies from Zero / How Buffer Built Transparency Into Its Business Model
Transcript
- Lucas: So, Buffer. The social media scheduling company. Most people know them for the tool, but honestly, the more interesting story is how they built a business around radical transparency. Luna: Radical transparency — that's the thing where they publish everyone's salary, right? Lucas: Exactly. And not just salaries. They've published their revenue numbers, their pricing formula, even their equity formula. It's all out there on their blog. Luna: I remember hearing about that. But isn't that kind of risky? Like, doesn't it invite competitors to poach your best people? Lucas: That's the obvious concern, and we'll get to the trade-offs. But first, let's rewind. Buffer started in 2010, founded by Joel Gascoigne and Leo Widrich. They were early to the social media management space, and they grew fast on the back of guest posting and a very public company blog. Luna: So the transparency was part of their brand from early on? Lucas: Pretty much. They started publishing their revenue and user numbers publicly in 2011. Then in 2013, they went all in — publishing every employee's salary, calculated using a formula they also published. The formula factored in role, location, and seniority, and it was gender-neutral on purpose. Luna: A formula for salary. That's pretty radical even now, let alone in 2013. Lucas: And they didn't stop there. They published their equity formula, their revenue dashboard, even their board deck after funding rounds. The idea was that trust is the ultimate currency, and transparency builds trust. Luna: But did it actually help the business? Or was it just a gimmick? Lucas: Well, here's a concrete number: their revenue went from around one hundred thousand dollars a month in early 2013 to over four hundred thousand by the end of that year. Now, correlation isn't causation, but the transparency was a huge part of their brand story. Luna: That's a big jump. And it happened right when they went all in on transparency? Lucas: Yes. And it wasn't just revenue. Their blog posts about transparency were getting massive traffic, pulling in new customers who wanted to support a company that operated that way. Luna: So it was a growth engine, not just a philosophy. Lucas: Exactly. And it also attracted talent. People wanted to work at a place where they knew everyone's salary and that it was fair. Buffer's hiring pipeline became a lot stronger because of that reputation. Luna: But there must have been downsides. What happens when you publish salaries and someone feels underpaid compared to a peer? Lucas: That's the thing — it forces you to be consistent. You can't secretly give someone a raise based on charisma or negotiation skills. The formula had to be defensible. And when the formula changed, everyone saw it. Luna: So it's almost like a constraint on management. You have to be fair because everyone can see the numbers. Lucas: Right. And that's a good thing, but it also means you lose some flexibility. You can't easily hire a rock star at a premium without explaining it to the whole team. Luna: I can see how that would be a challenge. They've also had their fair share of public missteps, right? Like when they had to walk back a change in pricing or when they laid off people in 2016? Lucas: Yeah, that 2016 layoff was a big test. They handled it publicly, explaining the reasoning behind it. But it showed that transparency doesn't make hard decisions easy; it just makes them more visible. Luna: And sometimes visible means messy. Lucas: Messy, but also authentic. And that authenticity is what their customers and employees say they value. In a world where companies often hide behind polished PR, Buffer's raw honesty stands out. Luna: Now, Buffer isn't the only company that's tried radical transparency. There was also a company called GitLab, but they took a different approach. Lucas: GitLab published a lot of their internal documentation, but they didn't publish individual salaries. So Buffer is still pretty unique in that extreme. Luna: It's interesting because transparency can be a spectrum. You can be transparent about revenue, but not about salaries. Or vice versa. Lucas: And Buffer has actually scaled back some of their transparency over time. They used to have a public revenue dashboard, but they made it private a few years ago. They said it became a distraction. Luna: Oh, really? I didn't know that. So even they had to draw the line. Lucas: Yeah, they still publish salaries and the formula, but they're more selective about what they share. It's a lesson that transparency isn't an all-or-nothing game. You have to decide what serves your company and what doesn't. Luna: That's a nuanced take. So for a founder listening, what's the takeaway? Should they try radical transparency? Lucas: I'd say start small. You don't have to publish everything. But you can be transparent about your mission, your revenue, your pricing logic. See how it feels, how your team reacts, how your customers respond. Luna: And be prepared for the fact that once you're transparent, it's hard to go back. Lucas: Exactly. The genie doesn't go back in the bottle. But if you're willing to embrace it, transparency can be a powerful differentiator. Luna: And speaking of differentiators, I know our listeners are always looking for an edge in their own work. If these conversations have moved your work forward in some small way, there's a simple way to keep them coming. Lucas: Yeah, a handful of listeners chip in monthly through buy me a coffee dot com slash fexingo, and that's literally what funds making this many of these. No ads, no sponsors, just that support. Luna: And it's not about a big contribution — every little bit helps us keep the lights on and keep digging into stories like Buffer's. Lucas: So if that's something you're into, you know where to find it. Now, back to Buffer — I think the real lesson here is that transparency, when done right, can be a moat. It's hard to copy because it's not a tactic, it's a culture. Luna: And culture is hard to replicate. So maybe the question for founders is: what are you willing to be transparent about? Lucas: That's the question. Buffer's answer turned them from a scheduling tool into a symbol of a different way to do business.