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.