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.

David Beisel

David Beisel is a co-founder and Partner at NextView Ventures. He has been focused on early stage Internet startups his entire career, both as an entrepreneur and venture capitalist. As an investor in the digital media space, David was most recently a Vice President at Venrock and previously a Principal at Masthead Venture Partners. Prior to becoming a venture capitalist, David co-founded Sombasa Media, an e-mail marketing company best known for its flagship product BargainDog. Sombasa was successfully acquired by About.com where David served as Vice President of Marketing. David holds an MBA from the Stanford Graduate School of Business and an AB in Economics, magna cum laude and Phi Beta Kappa, from Duke University. He also founded and leads the Boston Innovators Group, an organization which holds quarterly entrepreneur events drawing a thousand attendees.

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