There are many reasons and explanations that best demonstrate the illogical and one might even say, insane nature of entrepreneurship in the world of innovation. The stats are well known, a vast majority of startups will crash and burn.

There are many inherent paradoxes in building a successful startup. There is the famous "We need money to acquire users, but we need users to raise money." There is also the painful "We need users to provide value, but no users are onboarding until there is value."

One more catch-22 that you don't hear spoken of often is the Communication Paradox. On the one hand, as a CEO, you need to communicate and display confidence and optimism in the future of your venture. If, as a leader, your employees often witness negativity regarding the feasibility of the company's success, that will quickly become a self-fulfilling prophecy. Your pessimism will cause those that surround you to lose faith, become less productive, and sometimes even, give up.

On the other hand, if you, as the CEO don't communicate responsibly, offering full transparency on the challenges and failures the company is encountering, if you don't communicate that, who will?

Which One is it? Transparency or Optimism?

So, as a CEO, are you overly optimistic and positive in your communication or do you focus on the failures and downfalls of the company? Of course, the answer is both. It is the balance that makes a great leader. Your ability to provide positive reinforcement when relevant and constructive criticism when necessary is what ultimately separates the winners and the losers.

You might have read an in-depth piece regarding Jeffrey Immelt's Success Theater at GE, and how his communication, as CEO, creates a "Reality Distortion Field" that the article claims ended up created a mismatch between his rhetoric and the reality on the ground and ultimately led to the GE stock cutting its value in half.

As entrepreneurs, among the many challenges of building a sustainable business, is the importance of accurate, responsible, and transparent communication. This challenge starts literally on day one with the need to communicate your product's value proposition in a clear and concise manner.

Not What or How, But Why.

What you built, or how you built is, is relatively easy to communicate. The challenge is to communicate the Why. Why did you build it? Why do I care? Why do you do what you do, as an individual and as a company? Try to answer that question and you'll find yourself or the person you are speaking to repeating the phrase "But why?"

Then, as the company grows, so does the communication challenge. Investors need a different type of communication. Not only do investors need to know "Why you do what you do?" but also, in the most subtle way, you need to communicate how your "Why" will generate a return on their investment.

Why you? Why now?

Then comes the most challenging communication of all. Sales. Partnerships. You need to communicate the dream, the vision, the reason you started this all. The future of your company literally depends on your ability to communicate not what you believe, but what the person with whom you are communicating believes. Get into their head, walk a mile in their shoes, and scratch an itch that your research shows they have.

As the company scales, the need for effective communication only increases. Where your ability to communicate is really put to the test is how the managers communicate with their teams. Internal communication might be the most important type of communication and the point at which the future of your venture is defined and determined.

Often times, engineering, sales, and product are viewed as tangible and concrete components of the overall workforce, while marketing and communication, a bit less, more abstract. The reality, of course, is a bit different. A bad line of code is something that can easily be corrected, bad communication is a bit more complicated to fix.

The balance between communicating hope and optimism on the one hand, while never ignoring the mistakes the team makes along the way, is yet another difficult but necessary skill set that every CEO must possess.

Here Is the Trick

In my experience, effective communication comes down to one rule. Think about your audience, think about their needs, put yourself in their shoes, and then, only then, start communicating.

This is no different. Your team appreciates transparency, they want to know what's going on, but they also want to have hope that the challenges the company is facing are possible to tackle. Think what you would want to hear if you were sitting in the audience and focus on that when communicating internally.

Hey, no one said it would be easy.