Hacker News Reader

Comment by jedberg | Hacker News Reader

It's unfortunate that potential LPs can't be trusted to keep these kinds of things secret, because it makes it harder for founders to trust them in the future.

As an occasional LP myself, I always consider financial documents like this just as secret as my own bank statements and health records.

View on HN

This is an embarrassing question... what's an LP?

Limited Partner. I.e. the people with the money behind the venture capital firms. The big VC firms solicit money from LPs to fund startups which the VC managing partners select.

wow

you must be rich.

Oh honey, he's teasing you. Nobody has two television sets.

The clear solution is to give each LP different revenue numbers. That will make it trivial to identify the leaker.

Then by that same logic, can't the LPs just leak slightly modified number so they're not identified?

You monster

Not a bad idea, except that it's illegal. If they invest on your phony numbers then they can sue you later for lying to them.

you never met a lawyer.

send notice to LP #1. subtract value from sending that note. send new value on a note to lp #2. subtract cost... put a note on all notes that they may be an hour out of date but represent the values as accurately as the law demands for that day.

Even if only a few cents?

What if you give everyone the same numbers in a different order? Or one spelling mistake in each release?

Those other options would probably be more legal but less likely to "propagate" to the leak.

"Number watermarking" is a very good solution against many different kinds of leaks. I wonder whether there exist services for big companies to "watermark" internal documents with very insignificant errors.

Why do they need to be secret? If secrecy is such a large concern, why not go the TPP route and keep the available copy in a locked room under supervision?

I had this discussion with my manager once. I was of the opinion that there is no need for secrecy, which is why we were very forthcoming with the stats about reddit. However, he had one pretty good reason to keep financials and other stats secrets: It gives your competitors information they may not otherwise have.

For example, one stat is cost per unit. If your competitor knows that your cost per unit is say only 1% more than theirs, then they know how to undercut you to hurt your business.

I can see the logic in the case of a cut-throat competition. I want to argue that if you find yourself in a business keeping 1% secrets, it might be time to look for other solutions to your problem.

Part of the reason a company stays private is to have more control over the release of financial information. Why would a company that values privacy choose to do business with a firm (a16z) that it can't trust?

That doesn't give a motivation for the secrecy.

I don't know why someone would or would not do business with a16z. Was a particular contact breached here? I don't remember reading such an allegation, but I may have missed it.

Privacy is a reasonable thing to expect in basically all business transactions, regardless of whether it's listed specifically in a contract. Firms that want to maintain good relations with the startup community want to be seen as trustworthy.

I'm reading lots of justification, but no reason for why the secrecy is desired.

Competitive advantage is the reason for secrecy.

Interesting. Do you know of any ways to compute the competitive advantage of holding a given secret?

Reply on news.ycombinator.com