I disagree heartily with Bloglines’ founder Mark Fletcher’s recent post saying that stealth startups suck. They don’t suck, and matter of fact, they are downright rational.
Mark argues his case along multiple superficially-compelling dimensions:
Fair enough. It’s sometimes good to be first. But many times (more?) it’s not-so-good to be first. Look at the history of personal computer industry. Or hard-drives. Or more recently, look at web search tools. In the last case along we chewed through at least five companies, all of whom were in the market long before Google, before Google came along and swept up the market. Don’t get so swept up in your urge for perceived primacy that you launch a product thinking that first-mover advantage is that big a deal. It isn’t.
Okay, but again, so what? The reason why rational venture capitalists (and some rational entrepreneurs) go the stealth route isn’t necessarily because they think they’re the first ones to do technology X, Y, or Z. Sometimes that’s the case, but more often it’s because they see no need to prematurely advertise what they are doing. Reminding people about an emerging category in a marketplace flush with venture capital is dumb.
Fine, but it comes at a risk and with tradeoffs. Sometimes it’s a good idea, sometimes it isn’t. See the prior two points.
Fine, but again, this doesn’t preclude stealth. You can ship early and often to a highly-controlled list of users without exiting stealth. Semi companies do it, so do software and web services companies. Shipping early and often is great, but shipping early and often and wide is often just a way to piss off a lot of people quickly.
See the prior point. You can get feedback just fine, thanks very much, without exiting stealth prematurely.
I take Mark’s point about stealth & web services companies, and I don’t want to sound utterly enraptured with the whole stealth thing (despite being in the process of selling a stealth company!), because it is a kind of instant ticket to plausible deniability in the venture business (“Oh, we never announced funding a company in that area”).
But you have to keep the role of stealth in context. It is a rational response to a marketplace with too much risk capital, low barriers to entry, and many entrepreneurial teams looking for ideas. Saying that many people will come to variants of the same idea at the same time is not the same thing as saying you should ring a bell and invite everyone and their favorite VCs to come and feast on your nascent startup.
Related posts:
On Stealth Mode for Startups
There’s a tad of a controversy this weekend on whether or not stealth mode makes any sense. Mark Fletcher and Om Malik say no, Paul Kedrosky and Russell Beattie (sort of?) say yes.
I wrote a while back about the impact that Groove had on Hotli…
As the CEO of a stealth mode startup, I couldn’t agree with your points more. I read Mark’s post last night, and while I’m sure there are cases where it might not make sense to operate in stealth mode for a while, in our case it makes perfect sense for the reasons you mentioned.
As the CEO of a stealth mode startup, I couldn’t agree with your points more. I read Mark’s post last night, and while I’m sure there are cases where it might not make sense to operate in stealth mode for a while, in our case it makes perfect sense for the reasons you mentioned.
I agree with Paul. It is easy for loudmouths without money at risk to say “stealth sucks”. But a CEO’s responsibilities are to his shareholders and his employees. Why should he hand out free insights to possibly hostile third parties by talking too early?
But some people take the “stealth mode” idea too far. They hand you their business card, or post a web site trumpeting what a great company they are, talk themselves up, then say “oh, but we can’t tell you what we actually DO all day; cuz we’re in STEALTH MODE.” As if I care. I always thank them for their time, thinking to myself that I will never ever get back those seconds that I wasted talking to them or visiting their dumbass stealth web site.
Stealth should mean stealth, not coy. It means staying at home and working quietly, not hitting the bars and playing the tease and doing the flirt.
Stealth Start-Ups Suck ? Yeah, right.
I have genuine respect for Mark Fletcher and what he has accomplished with ONEList and Bloglines, and therefore consider that he has credibility when writing about entrepreneurship. His ETech presentation on the topic was actually very practical and in…
One of the reasons companies stay “stealth” is because they haven’t figure out their messaging yet. Okay, so if you’re in the tiny tiny category of “Web 2.0″ startup, perhaps your messaging is clear — we do cool stuff. But if you’re building any other company, it’s important to get the message right at the start so that people don’t get confused by frequent changes. Staying in stealth mode lets you do all the background work so that when you do go live, your message is clear and doesn’t have to be changed a lot.
If you’re talking about startup companies as a broad category, I think Paul is right on the money but for the small group of startups in the Web X.0 space, such as Bloglines, I think there is a much stronger incentive to get out of stealth mode. The reason is that once you can start collecting clickthrough data and user query data (e.g. keyword searches), you can then do a lot of cool things to differentiate yourself such as: adding personalization (e.g. recommendations), optimizing site design based on consumer behavior, using user input to attract other users (think Amazon book reviews, Blogline popularity rankings), and so forth. In cases like RSS aggregation where competition is fierce, it’s relatively easy to put together a basic site, and repurposing user data can provide the “killer” feature sets, every month that goes by where you’re stuck in stealth mode and your competitor isn’t can place you that much further away from the goal post.
if these companies are in stealth mode why are they creating these bullshit teaser pages. we are not a laundry company. indeed.
Its just another attempt to build buzz. if they have a service to offer then offer it.
I totally disagree! This is a new idea that is why they gave it a patent! The Safety Bullet. Show me anywhere else this is shown or listed. Its not listed anywhere but on my web site and at the patent office.
Mike Worley
Stealth Mode: Pros and Cons
One of the topics that frequently comes up in venture capital is the relative importance of secrecy. Entrepreneurs are typically obsessed about keeping their “great ideas” secret — hence their obsession with NDAs and with P…
Tien observaties na een maand Californie
1. door de verkoop van MySpace aan Rupert Murdoch voor ruim een half miljard dollar denkt elk bedrijfje met een mailinglist, een forum en een half foto-album minstens 100 miljoen dollar waard te zijn. 2. de Sidekick, tot in…
Stealth Mode: Pros and Cons
One of the topics that frequently comes up in venture capital is the relative importance of secrecy. Entrepreneurs are typically obsessed about keeping their “great ideas” secret — hence their obsession with NDAs and with P…
Stealth Mode: Pros and Cons
One of the topics that frequently comes up in venture capital is the relative importance of secrecy. Entrepreneurs are typically obsessed about keeping their “great ideas” secret — hence their obsession with NDAs and with P…