Reproduced for HackerNoon. Some minor edits for improved readability.
The original question on Quora:
What are the advantages and disadvantages of being in stealth mode as a start-up versus being more open and public?
I have never understood the concept of a stealth-mode startup. I understand it even less if I talk to you and get to see that you have plans to scale it up to tens of millions of users at some point in time. It baffles me.
Don’t get me wrong. There are businesses that need to play it close to their chest. If they don’t, they would lose out on a lot of competitive edge. But, almost every single time, these will be businesses that have defensible IPs and trade secrets to protect. Think your pharmaceutical industry, robotics, manufacturing. Anything that requires tons of R&D, a lot of time, energy, bandwidth and capital. Almost every time, these are the products that businesses file patents for. Think for yourself — if boeing were to come up with an engine design that is 30% more powerful and 20% more efficient as compared to any tech that exists today, would they not want to keep it under wraps till they were in a position where they felt confident enough to talk about it? They would, and they must. Disclosing it a little bit too soon will open them to the onset of more competing forces, more rigorous scrutiny, a lot more espionage and prying eyes, and quite some pressure from media and investors. They need to be really possessive about the market potential this upcoming gamechanger could be having, they want to safeguard their intellectual property (which is the result of millions of dollars and years invested in research), and they also want to be confident enough of the product to talk about it publicly so as to just reap the positive benefits of the news breaking out.
Apple files for multiple patents around how it manufactures its devices.
The scope of these patents ranges from displays to tamper-protection. And these give Apple an edge over its competitors. But once again, there are countless hours of research and development that goes behind getting these things ready for market rollout, and it makes sense for Apple to protect its interests.
Facebook applies for tech patents. It is always on the lookout to patent different algorithms it uses so as to add more value to its consumers, i.e. the businesses, the advertisers. From patents ranging from emotion detection and tracking to bucketing users into different socioeconomic groups, Facebook is once again trying to protect its multibillion dollar annual interests.
Yes, even your tech products need to be secretive about their products, because that one algo could be the backbone of what is making (or could potentially make) millions for them.
So, secrecy is good. Secrecy is required. For all of these cases. It just makes good business sense, and as business, these companies have a fiduciary duty to its investors to make sure they take every step possible to protect the company’s interests.
But, for most of the startups you see around you, it doesn’t make much sense. It is actually counterproductive.
Most of the stealth-mode startups I have come across aren’t secretive because there is something they need to be secretive about. They are secretive on “what they are doing” because they feel as if they are onto something so amazing that can only be out-shadowed by sliced bread, and they don’t want someone else ‘stealing their multi million/billion dollar idea’.
You can’t tell me you haven’t come across a quora question looking for some reassurance on the fact that the VCs aren’t out there to steal your idea.
Remember that scene from Silicon Valley where there were a bunch of analysts at a venture firm hanging on to every word Richard was saying in the meeting? Yes, they were ‘stealing’, but they were not stealing the idea. The idea was not something new. Many people have had that same idea. Richard was actually able to do what many had set out to achieve, and noone was able to figure out how to do it. So yeah, stealing it was. Classic espionage. And a classic case of how you need to make sure you are safeguarding your intellectual property.
But most of the startups you will come across are not like that. They don’t want to describe in detail what their business would be doing and how. They don’t want to detail out their marketing strategy, their customer acquisition plans. They basically want to present to you a whole bunch of headlines while redacting the entire story underneath those headlines.
And to that I call — bullshit!
Hey, I would not recommend you being secretive anywhere. I would not suggest you asking for investors to start signing NDAs before you can tell them about their business. I would not suggest you being smug in investor meetings, acting as if you have the secret sauce to success but you can’t tell them — because stealth mode man!
But to be honest, I don’t care much about what you do with investors. They are not the ones who make or break your business. Your customers do. And when you go all “We are not yet ready with our product, so I will tell you all about the exciting stuff we are doing once we launch” — yeah, I lose all interest. Perpetually.
#1. Because, in all probability, you will launch a product that sucks
There are two things that happen whenever I talk to someone about my ideas:
While I try as much as possible to do those things by my lonesome as well, we all need to be aware of our limitations, and bouncing your ideas off of someone new always helps. No two feedback loops will be the same. So every time you are describing your business to someone, you are essentially talking about it in a new fashion — at least for parts of that discussion. Believe me, that is all the help you need sometimes.
#2. Because you don’t understand the value of consumer behavior, feedback, interaction
Remember every single time Facebook has changed its look and feel? Remember all the outrage that followed those changes? And remember how noone stopped using facebook as they had claimed they would, owing to the change? It wasn’t because people were hooked on to facebook beyond all reprieve. It was because those changes were made inline with consumer behavior on the platform and how they were interacting with it. Same applies to Quora, Google, Uber, and any product you think of.
That’s what makes good product better, and then amazing. Because they constantly keep on improving themselves based on how users are interacting with their system. By shutting your users out at the very onset of things, you are setting up a bad precedent, and believe me you would not be the first one. And I can tell you what will happen when things don’t go the way you expect/want them to:
#3. Because you will give consumers a product you think and believe they need, not one they want
Henry Ford famously said:
If I asked people what they wanted, they would have said — faster horses.
And that’s true to a large extent. You can’t really drive innovation by asking your consumers what is it that you should be building to add value to their lives. But you MUST talk to your consumers so that you can get to understand what is it that their basic problems are. In the case of Ford, the problem was that the horse carriages were slow and as a result ineffective for long commute, and not to mention time consuming in general. He solved the problem in a way much better than faster horses would have, but he started with the problems people were facing. And unless you talk to your consumers, you will never understand what is the problem that’s plaguing them. You would simply be imposing onto them what you think is the solution to the problem the general populace is facing — a problem, it is possible, that exists just for you.
#4. Because you think growth is all about tactics and antics
In the past 12 months, I have come across at least 10 companies who were busy implementing a referral system in their products because that is what will bring them the virality, the growth.
That’s not really true. Just because it worked for Dropbox, Airbnb and Uber, it doesn’t mean it would work for you. It worked for these companies because their existing users were already amazed by the services they were getting off of them, so getting incentivised to spread the word just acted as icing on the cake. People are not going to go out of their way to tell people of your existence for a few paltry bucks if they can’t defend the question — “what’s so great about them?”.
So, this is what my recommendation on the topic would be for anyone struggling with the question — “Should I keep my startup in stealth mode or not?”:
Originally published at www.quora.com.
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