CEO Andrew Sather and his partner, Chris DeVore, director of business development, figured that to make their four-year-old strategic Internet consulting company, Adjacency, into a powerhouse, they would have to tap the entrepreneurial instincts of every staffer. In 1998, they started meeting with their 25 workers weekly to discuss the details of the San Francisco-based company's operations, including cash flow and potential customers.

The partners could tell that workers appreciated the honest communication. But it quickly became apparent that there were some things employees would rather not know. For instance, they didn't want to hear about Adjacency's close calls with missing payroll. Such near-misses are not uncommon in the entrepreneurial world, but they're unnerving to employees.

"We overestimated our employees' desire to be entrepreneurs, and sometimes we scared them," Sather says. The partners now avoid discussing the nitty-gritty cash-flow details.

Sather and DeVore also overestimated their staff's ability to keep secrets. In one meeting, they told employees about a potentially lucrative deal with a hot new client. One worker left the meeting so pumped that he bragged to a friend at a competing company. The "friend" relayed the news to his bosses, who promptly tried to persuade the coveted customer to dump Adjacency and go with them.

"We almost lost the client," DeVore says. "The client was livid, and rightfully so." Adjacency subsequently grew to 80 employees and was recently acquired by Sapient. The partners are now more careful to identify which information is top secret. "We've learned to get a lot more explicit about how information can be used," Sather says.