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Do Stealth Startups Suck?
glinden writes "In 'Stealth Startups Suck,' Bloglines CEO Mark Fletcher argues that 'stealth mode for a web start-up is the kiss of death.' He says that moving quickly and getting feedback from early users is much more important than protecting the core idea or trying to launch a perfect product. Is there any good reason for a web startup to not be open about what it is doing? What about other kinds of software startups? What about hardware startups?"
While I agree with him in general, one thing you need to be aware of is: Be careful that advertising before your product is ready doesn't tarnish your company's reputation. While such a thing can be turned around later, it can easily kill your company early on.
:-)
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One other interesting thing he did say, though:
My rule of thumb is that it should take no more than 3 months to go from conception to launch of a new web service. And that's being generous. I'm speaking from experience here. I developed the first version of ONElist over a period of 3 months, and that was while working a full-time job. I developed the first version of Bloglines in 3 months. By myself. It can be done. And I suck at it! Just ask all the engineers who have had to deal with my code.
This somewhat ignores the amount of business development that has to go on behind the scenes. It takes time to get funding for one, and much more time to build a network of providers. In fact, building that network can still be going on years after the service has launched! You may not even be able to launch the service if you don't manage to find an existing provider base that's willing to go with your idea. Most of them will want to sit on the fence and see how it goes first.
Of course, this strengthens his original point in that you can't gain a provider base until you get the word out to your customer base.
On another topic, this talk of investors has me curious. How does one connect with a VC or angel investment firm? Most of the more public ones don't seem to want to do business with you unless you're something other than a caucasian male. It seems that it can pay off to be considered ethnic.
What about other kinds of software startups?
You do need a product before you can release 1.0. Also, you need to have an advertising campaign in place with a one-two punch. First, release the product with much fanfare. This will generate interest and some sales. Then follow up with an army of salepeople and catchy advertising to prevent those initial sales from waning.
What about hardware startups?
Surprisingly similar to software products, only it can be much harder to release a patch. In fact, if the hardware fails to live up, it may be the death of your company. i.e. You may not be able to do another manufacturing run until you generate sufficient sales of the initial run.
Javascript + Nintendo DSi = DSiCade
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The War of 1812... the good 'ol days when the federal government actually tried to save New Orleans.
I spent about a year working for a consulting company that was developing the presence for one of these "stealth start-ups". They were certainly not counterevidence to the thesis.
They spent millions, much of it on our programming fees, as we went through endless iterations of design-as-you-build. We tried repeated to reign them in, get them on a rigorous development process, and convince them to get a basic system live and build from there. They insisted on dotting every i and crossing every t, and rolling out from day one with ridiculous bleeding edge multimedia features that had nothing to do with their business model, before ever revealing the site. All the while we billed them T-and-M. They went broke and dark within a month of their actual debut on the Web.
It was stupid, frustrating work for a stupid, frustrating client, but the paycheck sure was nice...
Trouble making decisions? Just flip for it.
A stealth startup is a risk. When it is done smartly, the cash is bigger, when it is done badly, the failure is bigger. If you get more feedback early on, you can be more sure in the product, but on the other hand you face risk from the competition.
Nothing new here, it's been like this for hundreds of years.
It takes a man to suffer ignorance and smile
Be yourself no matter what they say
Dear Mr. Gates,
I have just released a new product to surf the "World Wide Web". I call it "Netscape".
I think something as important as this should not be kept under wraps. I would appreciate any feedback you may have!
Yours,
Marc Andressen
Toronto-area transit rider? Rate your ride.
On another topic, this talk of investors has me curious. How does one connect with a VC or angel investment firm? Most of the more public ones don't seem to want to do business with you unless you're something other than a caucasian male. It seems that it can pay off to be considered ethnic
Call or write them and ask for a meeting. Chances are you'll get 5-15 minutes of their time. If they're interested, you'll get more. VCs have a lot of money sitting on the sidelines right now, so they're eager to hear ideas.
Oh, if you want them to sign an NDA, forget it. Almost never happens.
"I'd rather be a lightning rod than a seismometer." -Ken Kesey
Be open and perhaps a larger company will buy you. This could open up all sorts of opportunities now that you'll have a larger resource pool (assuming you are still included in the project of course). However, you do have to have a quality deliverable. While being open is very nice, being available for public scrutiny while your product or service is still in its formative stages may be a bit much. You have to draw the line somewhere and balance is important. While getting constructive criticism is great, opening up your project too early could lead to ridicule and hurt your future growth.
"If we hit that bullseye, the rest of the dominos will fall like a house of cards. Checkmate." -Zapp Brannigan
...to your newsletter. Put me down for $100,000.
Stealth Startups Don't Suck
Well, it doesn't have to be all or nothing. I didn't want to advertise my game, Warband 1066, until it had been through a few rounds of testing from my friends. They gave me valuable feedback while I honed the gameplay over a period of months. Now, while it's not finished, it is ready for a larget audience, and I have confidence that I won't chase away early adopters with a game that sucks.
So there is a gray area between keeping it hidden and telling the world.
This guy has coded one little program that he runs on internet ("web service" as he calls it) and then he considers himself expert of everything and generalizes the work it took him to code that application to every program that has html interface. I would really like him to code for example a multilanguage e-commerce platform for real world use that handles tens of thousand simultaneous customers in 3 months and without "lot of money" and then write another article about the subject.
Our company has been programming a business "web service" for a global customer for about 1,5 years now and it definitely was not even in a prototype stage in 3 months, few real world projects that have real customer are. AND we are profitable, still in slight stealth mode and have no VC money.
My quality social news site.com.
First, there is such a thing as a unique idea and it can be important to keep it quiet. You certainly need to get your patents filed first. The fact that the author suggests otherwise simply means he has never worked in a truly inovative environment.
The first mover is important argument is not a truism. In fact, the first mover usually looses. Netscape is a poster child for that.
I'd suggest trying a couple more startups. The author can then look back at this article and smile at his naïveté.
Alright, many of the preceding posts have hinted at it, but I'll lay it on the line:
If you're a startup, you have limited resources across the board. Okay, okay, If you have tons of VC money, feel free to follow his advice, then explain to the VC dudes why you didn't get them the massive ROI they expected two years down the road.
The worst thing you can do in any business is advertise a product too soon. Whether you're selling the Osbourne 2 or Team Fortress 2, early hype is "the kiss of death".
A previous poster commented something to the effect of the mantra I've followed for a while: Ideas are cheap; it's execution that matters. TFA seems to think that Ideas are what matters, and that stealth is all about protecting those. While I agree that stealth is a dumb way to protect ideas, it is a great way to shield your staff from "outside distractions" while they execute that idea. And it's also a great way to control the media -- and there's no business in the world that doesn't benefit from positive media control.
Having been involved in several startups with budgets ranging from hundreds of millions of dollars down to one that's self-funded, I've found that the key is in knowing when to listen to your customers versus when to tell them what to do. Most people don't believe this, but there are times when you need to tell people what they should be thinking. After all, you're hired not only for your ability to service a customer's needs but also for your expertise, and if you keep asking people all the time what they want then they start wondering whether you know what you're really doing. The message that you want to convey to any new customer is "Hey, I know what I'm doing, and I want to use that knowledge to help you with your needs."
If you don't want crime to pay, let the government run it.