“The ability to articulate your story or that of your company is crucial to almost every phase of enterprise management…An effective CEO uses an emotional narrative about the company’s mission to attract investors and partners, to set lofty goals, and to inspire employees. Sometimes a well-crafted story can even transform a seemingly hopeless situation into an unexpected triumph.” Peter Guber, Chairman and CEO of Mandalay Entertainment

Your story is everything.

As a startup, your goal is to move from someone with an idea to a true global player capable of disrupting markets by altering how business as usual is conducted with new products and new ways of thinking. The journey from fast-growing startup to global leader is long and full of ups and downs. Along the way, you might become a unicorn, you might strive as a mid-level player, you might change how kids interact with one another and you might rewrite the rules for shooting high def footage, yet none of that will happen if your company loses control of its narrative through loss of trade secrets and sensitive financial data.

First, a Word on Normality

If you’re a startup, a middle level player or a unicorn, the idea of your data leaking onto the open market should scare you into action. While secure data leaks won’t happen to every company, many firms – Target, Google, Monster.com, Linkedin, Visa, Mastercard, Sony, Ashley Madison and even the U.S. Government – have all been hacked causing various forms of fallout.

The lesson here being: it is in your best interest, regardless how big or small you are, to utilize secure technologies when conducting all business transactions and to educate your employees on best practices.

To highlight our point, we want to turn our focus on Snapchat.

The Hijacking of the Snapchat Narrative

In November of 2013, Snapchat turned down Facebook’s buyout offer of roughly $3 billion. At the time, the story around the company – a company of only a handful of employees – was either:

  1. Evan Spiegel and Snapchat are insane for declining that kind of money
  2. Snapchat must know something everyone else isn’t aware of.

Both stories make for a great message and helped Snapchat surge in attracting millennial users. The narrative around Snapchat helped to grow the brand from a few million users to roughly 200 million (accounting for 400 million snaps per day, compared to 50 million tweets per day) with more than $1.17 billion in investment.

However, in the summer of 2015, that narrative shifted from one of growth to that of a company plagued by financial troubles as a direct result of Gawker capitalizing on an internal data leak allowing the media outlet to define Snapchat’s story. Instead of Snapchat defining their brand as one which just started to monetize through 2014-2015 – bringing in $3 million – Gawker framed the the company as one of massive financial loss as opposed to incredible short term intake.

It should be noted the last Series E investment amounted to $337.6 million in May of 2015 which could indicate a slowing in market trust in Snapchat. Speculation aside, it’s clear that Gawker leak hurt the Snapchat narrative and put the brand at risk even as younger users continue to flock to the social story provider.

Key lesson. Having your confidential data leak onto the open market when you’re a rapidly growing startup will enable the media to define your brand and put all of the power in their hands.

This begs the question, how do you control your messaging as a company looking for investment?

Acting Securely

If data leaks can transfer ownership of your story to media outlets, it should follow the best way to control your brand is through hardened security protocols. Let’s look take a look at how and why secure channels of communication matter as your company strives to join the upper ranking a startup can reach – unicorn status.

Three Interesting Statistics

  1. Enterprises now evaluate cloud-based applications and service providers on security first (82%), followed by data privacy (81%) and cost (78%).” Security is what matters most for enterprises looking to leverage startup tech.. – 2014 KPMG study
  2. Since 2011, 53 U.S. based tech companies have risen to the level of “unicorn” status and globally, there are over 140 unicorns – a tech company valued at $1 billion or more. More telling, in 2013 there were just 39 unicorns in operation with an average “born” rate of four per year. By the end of 2014, another 38 unicorns were created. – CB Insights & Business Insider
  3. Unicorns aren’t that rare. In 2015 alone, 84 U.S. based companies have been classified as unicorns representing a jaw dropping increase of 115% since the end of 2013. According to TechCrunch, there are now nine “decacorns”, $10 billion-plus firms, an increase of 3x since the end of 2013.

Two Interesting Conclusions

  1. For a startup of any kind security means more than cost. To secure a solid investment round and to continue to grow towards becoming a unicorn, you have to be able to prove your solutions are secure and data leaks, like the ones that happened to Pinterest, Snapchat, WeWork, Uber and Palantir won’t happen to you.
  2. With more startups coming into existence, the avenues they use to communicate and conduct business, i.e. secure workspaces, are essential. Without security measures in place to protect internal data and assets, global growth fueled by VC funding will never occur.

If security is paramount to helping to maintain control of marketing, what are some features startups should look for to conduct their business communications?

  • Secure Communication Channels: All business transactions need to be accountable to all parties involved. Accountability means only communicating within a platform hardened by 256-bit secure sockets layer encryption.
  • Data Management and Access: Secure workspaces should allow you to control file rights ensuring only the right parties can access critical data.
  • Workspace Monitoring: Secure workspaces should allow you to monitor live environment activity, track all documents and gain complete history of interactions through comprehensive auditing. Moreover, your workspace provider should allow you to shut off access to downloaded documents stored in a hard drive.
  • Blocking Outside Indexing: Secure workspaces should block any outside browser indexing ensuring your private data and communications don’t find their way onto the front page of Google.

The Importance of Controlling Your Story

Outside of growing into a unicorn and becoming a true global disruptor, controlling your public perception as a swiftly evolving startup is important for various reasons, the least of which, as shown already, is losing a potential round of funding.

  • Money and Clients: Losing control of your brand is a potential loss in revenue and clients. As shown from the fallout of the 2014 Target credit card hack, in the aftermath of the scandal, Target not only had to pay out roughly $38 million in insurance claims to customers, it also expected a $148 million dip in revenue intake. This story has played out time again with Sony, Anthem, JP Morgan Chase, Home Depot and others.
  • Heaping More Doubt onto the Cloud: Public perception already exists stating how unsafe the cloud is. Unfounded or not, if you are an IT provider like AWS, being hacked not only sends shockwaves through the industry, it also furthers the perception that the technology you use to conduct business is lacking in security. Driving clients to other brands on account of hacking is bad enough, but putting the entire bedrock of an industry at risk is much worse.
  • Damaging your Name: From the early days when you came up with your game changing idea to the moment your company was included on the NYSE, you’ve built your reputation and client list by providing solid products backed by reputable services and employees. Once your security gives way and compromises your narrative, your good name is dragged through the mud, impacting not only how clients view you. but how potential employees perceive you. If a hack causes potential quality employees to shy away from your brand, you’re looking at a long road to ruin.

With the world growing more dependent on tech innovation, startups and those looking to achieve unicorn level of funding must expect higher levels of scrutiny. As more and more unicorns come into existence, they need to meet rising levels of expectation by mitigating data threats. This means startup management teams, especially CFOs and general counsels, will need to take an active role in controlling how information is shared. The alternative is letting Gawker define your company as a troubled mid-level player as opposed to the true global disruptor you really are.