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October 12, 2005

Stealth Mode

I’ve recently been introduced to a number of startups that are operating in “stealth mode,” and have been thinking about what to make of this fact. In a post yesterday, Keith Robinson clearly articulated one of my conclusions,

“I’ve heard quite a bit about start-ups and “stealth mode.” Most of what I’d read told me that it’s not a good idea. Frankly I think that really depends on what you’re doing, how ready you are to take your company to the public and a whole bunch of other factors.”

I think that there are a number of good reasons why a startup would find the need to be covert about its plans. Alternatively, there are many motivations why a startup would pursue a clear, articulate, and open communication policy to their strategy and intentions. Masthead portfolio company NewsGator has pursued the latter approach (with both their corporate and founder’s blog, among others), which I believe has significantly benefited the company.

Yet there are indeed many situations in which I think it makes sense to operate covertly. Some argue that if a company has a defensible product, it shouldn’t worry about having its idea “stolen,” and that stealth mode is irrelevant at best or a sign of weakness at worst. I disagree – there are many reasons to keep a low profile, including avoiding tipping off large competitors of your plans, acquiring cachet to recruit employees, and the ability to create buzz when the product is unveiled. To completely dismiss a company as making a poor decision because it is in stealth mode is off the mark.

Moreover, the notion of “stealth mode” isn’t necessarily a binary either/or proposition – it’s a gradual scale. A company out of stealth mode can be clandestine about an upcoming product launch or keep its beta version of the product circulated to a limited set of prospective users or customers. There are many in-between shades of grey for revealing information to the public and when. Like all communications, information about a company’s current endeavors and future plans should be deliberately and consciously shared with the right people at the right time, depending on the complex set of surrounding circumstances.

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