When considering this type of transparency, there is a spectrum of types of people. Some prefer radical transparency where every possible pitfall and challenge is openly acknowledged and noted. On the other side of the spectrum, a lot of people don't want to have any knowledge of the challenges, and in fact, work most productively in a state of naiveté.
Part of hiring is understanding how different people respond to this sort of stress. For me, I really prefer this sort of off-the-record honesty. I know a start-up is challenging, and a failure to acknowledge a reality that I know exists is a huge turnoff. But I can definitely imagine that some hires would find this scary and would find a startup that seems much more "perfect." You attract who you want to attract.
Part of hiring is understanding how different people respond to this sort of stress. For me, I really prefer this sort of off-the-record honesty. I know a start-up is challenging, and a failure to acknowledge a reality that I know exists is a huge turnoff. But I can definitely imagine that some hires would find this scary and would find a startup that seems much more "perfect." You attract who you want to attract.