Stealth mode, schmealth mode

image I’ve never really understood why some entrepreneurs decide to put their companies in ‘stealth mode’ and so when I saw Vivek Wadwha’s Techcrunch post Stealth Startups, Get Over Yourselves: Nobody Cares About Your Secrets I was on it in a flash.

When I meet entrepreneurs with stealth mode startups I always ask why they are in stealth mode and we usually end up having a conversation where I repeat my conviction that the greatest risk for most startups is obscurity rather than having their idea stolen or missing the opportunity for a big bang launch moment.  The second thing I say is that keeping an idea within a close group of people limits the amount of feedback you can get and stops people from being able to help you.

With regard to VCs in particular, being stealthy stops them from letting you know if they have seen many other startups in your space and the extent to which your plan might or might not need to morph to become an attractive investment.

These are the main points that Vivek makes in his post.  Unless you are extremely lucky or extremely brilliant your product won’t be a great match for your customer’s needs until you have spoken to them about it and iterated a bunch of times.  As he says, you can’t do that in stealth mode.

He goes on to say that in most cases worrying about competitors stealing ideas is beside the point.  Firstly great execution is your main weapon, and secondly either your idea is pretty complicated and hard to copy or it is very simple in which case you are in trouble anyway.

Further – the big PR moment that goes with a Techcrunch launch is a fleeting thing.  To build lasting buzz you need relationships with a bunch of journos and analysts, relationships which take time to build and require you to be talking about your company.

OnStartups has a post that dates back to 2006 on this topic which is still on the money – so on the money in fact that I ‘borrowed’ their title (hope that is ok guys).  Their point is that most startups in stealth mode are doing it because they haven’t yet got their act together and saying they are in stealth is a way of avoiding making that obvious.  He lists four common ways that startups don’t have their act together – lack of direction, lack of focus, lack of commitment, and lack of a solution.  I guess if a startup consciously does this for a short period of time it might be beneficial, but it takes the pressure off.  Speaking personally, having to repeatedly pitch or explain something forces me to do the work and get my story straight, and if necessary change it.

OnStartups makes the additional point that recruitment is prohibitively hard for most companies that can’t talk about what they do.

There are of course a small number of startups with a legitimate secret that could be ripped off, or who have celebrities involved in a way that makes it easier to stay out of the limelight altogether, but these are the minority.

Reblog this post [with Zemanta]
  • bertn

    Nic,

    I agree. I also think that “stealth mode,” alongside large institutional seed rounds, is a byproduct of VC cycle/wave in the early 90's when barriers to entry were still very high and being “stealthy” was a significant competitive advantage to protecting IP/ideas from larger companies who could replicate the ideas quickly. Ideas are now the commodity in early stage and good management teams will become the necessary component to launching companies of scale in a quick and efficient way. Good post.

  • Tks Bert. Speed of innovation and commoditisation of ideas are important factors

  • Thanks for resurfacing the issue.

    Not surprisingly, I continue to debate this issue with entrepreneurs. Many still believe that they somehow need to “protect” their idea and in the process, do their idea a disservice.

    And for the record, I'm totally cool with you “borrowing” the title from the OnStartups.com article.

    Cheers,
    Dharmesh (the OnStartups.com guy)

  • Tks Dharmesh. And… you have a cool blog

  • Thanks for resurfacing the issue.

    Not surprisingly, I continue to debate this issue with entrepreneurs. Many still believe that they somehow need to “protect” their idea and in the process, do their idea a disservice.

    And for the record, I'm totally cool with you “borrowing” the title from the OnStartups.com article.

    Cheers,
    Dharmesh (the OnStartups.com guy)

  • Tks Dharmesh. And… you have a cool blog

  • Nik, my response is in stealth mode so I can't say anything here. But I am glad that we agree! 🙂

  • 🙂 The final email I'm reading before I turn off my computer for Xmas has made me laugh. Gotta be happy with that.

  • corporateculture

    Yup, with some rare exceptions, Stealth Mode is a declaration of something between naivety and arrogance. Accepting that some blue skies process innovation still goes on, it is more of a reality in our post-industrial landscape that the majority of activity is in fact services, even when it looks like manufacturing. And that is all about execution.
    I declare to anyone who asks that I am building a world class consultancy day by day and seek significant scale. Sure, you may be able to climb past me up my particular Everest – but you will have to try very hard – and, anyway, there is room for a quite few of us at the top. Build friends and contacts – not doubters.

  • Nicely put

  • Pingback: Is Flying Under the Radar Better Than Being Stealth? | Tech News Ninja()

  • Pingback: Is Flying Under the Radar Better Than Being Stealth? « Coworking Congress()

  • Pingback: the hive » Is Flying Under the Radar Better Than Being Stealth?()

  • Pingback: xepp magazine » Is Flying Under the Radar Better Than Being Stealth?()