I think their are valid times when stealth can be important. The most prominent example I know of would be Siri. In the words of Adam Cheyer: I'm convinced that staying in stealth mode was critical to our success.
He goes on to explain why: We were based on some fairly heavy technologies (natural language understanding, conversational dialog, context, local search, plan-based service delegation, PCI-compliant data stores, machine learning), and it took us two years to go from our initial prototype to something ready to deploy and scale. A few weeks after we launched, Steve Jobs called the office and the rest is history. As a startup, we were potentially competing with large companies with lots of resources (e.g. Google, Microsoft), and we needed a good running head start before anyone knew precisely what we were trying to accomplish.
For a more user-facing, social website where getting the right features is important, don't be stealthy, just get it up and iterate (c.f. http://change.org). But if you have a technology that takes some time to get right, being stealthy enables you to have buzz when you emerge and the head-start you need to compete with anyone.
Would Siri not have worked if the company hadn't been in stealth?
Google and Microsoft had already been working on speech technologies at this point. In fact, Google was already integrating voice into Android in 2008, well before Siri had a personal assistant. Microsoft has to date failed to capitalize on their significant investments in speech recognition in any meaningful way.
Siri seems more successful in speech technology than Microsoft, despite Microsoft's heavy investment and more than a decade of trying to make it work for them. If anything, this seems like proof that execution is what counts.
What about the idea, then? Would Google have cared that Siri was launching a personal assistant if they knew in 2009? I doubt it: they already saw natural speech as the future. Brin and Page sometimes talk about talking to computers naturally being on of their visions almost from founding. Computer personal assistants with computer voices appeared in sci-fi movies as far back as the 80s, and perhaps even farther back. This was not a new idea.
It's Siri's product - the execution - that made waves in the industry. Large organizations tend not to take notice of startups with ideas. There are simply too many people with great ideas for large companies to worry about.
Stealth startups may, in rare cases, be the right decision. I simply doubt the extent to which Siri's success was highly dependent on it's pre-launch stealthiness.
As for your overall argument, I agree that when the key is the integration of existing components, then giving away the game too early means that there will be copycats in on the idea before you get critical mass for effective traction.
This is a valid point, but I think it misses the reasoning slightly.
Much of markets are perceptions, and as everyone knows if you are a 'hot' startup there has been a tradition of the entrenched folks seeding fear, uncertainty, and doubt into the market to slow down your growth. If you are too open with what you are doing you give those who would have you not be successful time to construct a story about why you are a risk or shouldn't be trusted. Further, you get 'pre-announcements' which can make you feel like a 'me too' company rather than 'we're the first to be doing this.'
A recent example was that Apple Maps was launching with some new 3D features, word got out that this was part of the announcement and Google apparently rushed their map announcement ahead of Apple's to capture that aura of 'first mover.' (Clearly Google was already working on similar features but they moved their announcement to change the message that people heard in the media)
So if you are a startup working on "X" and BigCo could do X if they were investing time and money into it, and your 'buzz' was high and a lot of people were starting to like what they saw as you got closer to launch. It is very possible for BigCo to hold a press conference on the "future of X" with their vision of how it will work, and when you launch all the questions are "well how does that compare to BigCo's vision of X?" and the answer "Well they aren't even working on it while we are here delivering it so I can't really say" doesn't come across as 'leadership' so much as 'sour grapes.'
The OP focusses on the technology aspects of Stealth, which is to say that if you can't say what you are working on because the barriers to entry are so low as to make anyone a potential competitor, that is not a business. But the marketing message risk, regardless of technology, is very high. So stealth is definitely warranted if you are at risk of being marginalized quickly by the players you are choosing to disrupt.
There is a difference between "Oh I can't talk about it we're in stealth mode" and not running an ad campaign notifying the world of what you plan to do. As a start up Google and MS literally pay no attention to what you are doing. It is only after Apple picked them up that the big G even bothered attempting to put together voice search on android and did it relatively quickly.
what benefits did they derive from stealth? None as far as I can tell. Google didn't care about trying to re implement their idea until Apple showed interest and they needed a counter to Apple. As a general rule of thumb no established company is going to steal your startup idea until after you have launched and proved successful, pre-launch they have better things to do.
What did they lose by not talking about it? Who knows people around here like to talk about the serendipity of bumping in to the right person while at lunch.
The problem is that painting the world black and white generates much more traffic. I would bet a lot of money that "Stealth Startups Are Stupid Most of the Time" wouldn't have worked nearly as well for the author unfortunately.
> If you need to be stealth so you don’t tip off competitors, you need to really re-think if you are building a long-term business... At the end of the day, being a startup in “stealth mode” happens when founders put too much value in ideas, and not execution.
May I propose a contrarian narrative?
I see experienced founders use the "stealth mode" veil specifically because they are focusing on execution and don't really want to waste time in polite conversation debating the merits of an idea or rehashing a list of competitors. Talking too much about ideas is deleterious to the focus needed for building products. Sometimes the brain needs a break and a person wants to connect with other human beings for something other than work.
I'm sorry you weren't able to judge the last 5 people based on their ideas! You found another way, bravo!
They don't need to tell you the full story. But saying- we are trying to solve how people discover new products that their friends buy. We should have a product out in the next few months. That's a lot better than saying we are stealth. You didn't give away anything.
The problem is the response to that is almost always "Oh you mean like ______?". The answer to that is almost certainly no, but you can't really say or explain why unless you reveal too much about your startup at too early a stage. Then people get the impression you are working on some stupid idea that has already been done.
There are a lot of reasons not to reveal what you are working on exactly, but giving the industry isn't necessarily the best thing to do either. A lot of experienced founders will also do this because they don't want wild rumors flying around about what they are building / working on next from a one-liner that they mentioned without wanting or being able to get into the details about it with some stranger.
Agree perhaps, from a psychological standpoint I say stealth all the time because I am plain sick and tired of telling every person whom inevitably asks the question, "so whats your startup working on". I'd rather think of the code I need to write the next day or just talk about macro economy and other things. My life is 24/7 startup already. And may I add: seasoned entrepreneurs don't ask THAT question they either wait for you do talk about it yourself or don't pester you with it because they have all been there too.
Sounds arrogant or ignorant to me. You've got your solution so well figured out that you can't bother to talk to people about it and gauge their reaction? Sounds like a path to failure.
That's a little harsh. I've been using the term on LinkedIn because we haven't filed our paperwork for our S/C Corp yet. I'm perfectly willing to tell you what the general field we're working on but we're nowhere near ready to go live yet, or make promises about what we're going to ship.
I have other friends who are also working at "stealth" startups who don't want to tip their hands specifically because they're backed by relatively famous people in the space. If they start talking they're going to get a lot of unnecessary and unmerited attention just because of _who_ they are and not _what_ they're going to build.
Why exactly? Once you have convinced yourself and your team about the idea you are working on, it can reach a stage where talking to more people adds very little value. You can go back to people once you reach a stage in your development cycle that you are comfortable with.
I know of some currently successful companies whose founders used meaningful, honest, yet vague phrases like "we're trying to change the way people ___________". And they did. And I know of about 5x the startups whose founders used the phrase "we're in stealth mode" whose isolated, protected ideas showed complete mismatch with market need when launched.
Why?
Because that isolation reflects arrogance. You have two options here:
a) say your vague idea and hear from people who care about it, getting more data, more ideas, more market need (or lack of), more competitive landscape, etc.
e.g.,
The line: "We're working on fixing the calendar"
Person: "Have you tried Sunrise? It's great, but I can't use it because it asks for permissions my security team won't allow"
This gives you, as product creator, info.
Or maybe the person wants to come work with you, or knows someone who is passionate about it, or knows someone wanting to invest in that, etc.
b) Say "we're in stealth mode"
This shuts down any opportunity immediately.
I guess b) is reasonable when you are disinterested in further conversation (totally legitimate)[1], otherwise it just accomplishes nothing other than providing an air of arrogance.
[1] When I was at Apple in mid 00s, the standard line to strangers was "sorry, we're prohibited from discussing features or future products for legal reasons". This shut down conversation immediately, which was the intention.
I generally agree - but the only thing I'll say to defend stealth startups is that sometimes it makes sense to keep quiet until you have something to show people. Not for competitive reasons, or because you're worried someone's going to steal your idea, but because you want to stop your idea from being judged out of context or before it's ready.
Once it's ready (enough) to be shown, at least then people will judge it fully baked, instead of basing their opinion on the elevator pitch.
It's totally okay to keep quiet about what you are working on- but you typically have a vision or idea of what problem you are trying to tackle. You can just talk about that when people ask you...
Yes. There is a world of difference between talking publicly about your ideas and talking privately. It is incredibly ignorant to assume the person you're talking to is going to somehow hurt your business.
Not only that, but you miss the opportunity to get feedback on your idea, making you more likely to fail.
One thing that worries me about "stealth" start-ups is that it implies (not all the time, but often) a lack of market research and validation ahead of time. While there are ways to get potential customers excited about a product and challenge your assumptions without necessarily revealing everything, more often than not, it seems like the majority of the assumptions will not be tested until launch, which ends up being a few hundred thousand (or million) too late. [0][1][2]
There are some products that don't necessarily need that level of validation ahead of time. There are some founders who have networks so wide, that they can start with a userbase of 5,000 people regardless of what they build. But for everybody else, proper validation of your assumptions might be the one thing saving your start-up from failure. And not telling anybody about it seems like a pretty easy way to get there.
Of course replying to an inquiry that the project is in stealth mode is like a slap in the face. This can be avoided by using a decoy project. This will be less brutal and will avoid attracting attention.
Regarding secrecy, obviously the secret sauce has to be kept secret. But the problem one tries to address can be exposed and will allow to collect new feedback. This is valuable because if the existence and seriousness of the problem you try to address is confirmed you earn a new prospect and a new validation of the pertinence of the project. You may also learn new aspects of the problems or expected solutions you may have initially overlooked.
I'm not sure I wholeheartedly agree with this. Giving potential competitors months of lead time to either clone the USP of a startup or make changes to lessen its impact doesn't seem terribly sensible in a lot of situations.
I think the value of stealth mode really depends on context. E.g. I think GroupOn's series A created a lot of competition, as VCs all told their portfolio companies to pivot in that direction. http://blog.eladgil.com/2011/04/is-stealth-mode-stupid.html
This statement is far from 'elegant', it is tens of thousands of words that ultimately say nothing. The relevant section is 7B, which says that their ultimate success was not keeping a secret!
No it doesn't. 7b says "The right time to bring people in is rarely at the very beginning, all at once." It also says that whether or not (or to what degree) stealth mode makes sense depends on the environment.
Time ago was on a workshop with a serial entrepreneur/investor on SV, and he told to the audience to be not afraid to tell to "the right people" your idea(you need to let the world know about your business) "at right time".
He goes on to explain why: We were based on some fairly heavy technologies (natural language understanding, conversational dialog, context, local search, plan-based service delegation, PCI-compliant data stores, machine learning), and it took us two years to go from our initial prototype to something ready to deploy and scale. A few weeks after we launched, Steve Jobs called the office and the rest is history. As a startup, we were potentially competing with large companies with lots of resources (e.g. Google, Microsoft), and we needed a good running head start before anyone knew precisely what we were trying to accomplish.
For a more user-facing, social website where getting the right features is important, don't be stealthy, just get it up and iterate (c.f. http://change.org). But if you have a technology that takes some time to get right, being stealthy enables you to have buzz when you emerge and the head-start you need to compete with anyone.
Here's the link: http://www.quora.com/Stealth-Startups/Is-there-a-single-exam...