The stealth mode startup

I'm betting 8 out of 10 startups begin by being in the 'stealth' mode (that's based on a scientifically conducted multi-year study of course). Most of the entrepreneurs I run into, who've just launched companies, are quick to claim they're stealth, or 'under the radar' - that's true for moi too - and it can persist for quite a while.

So why do entrepreneurs like me go 'stealth'? It's primarily because they don't want anyone else ripping off their idea. This presumably changes when they've got enough funding, staffing and traction that it doesn't matter - or more likely, when publicity is required to build traction. Of course that begs the question, is your idea that easy to rip off? Don't you have some deep, complex IP that takes six PhDs six years to construct? Not so much in the web world, and not even in the enterprise arena. And entrepreneurs are a paranoid bunch - and often need to be so. (I admit to sometimes using the 'stealth' term as a cop out since I don't really want to discuss it with a given person or group - a negative vibe thing.) So 'stealth' is understandable, accepted and occasionally considered glamorous and attractive, especially if you're stealth even after VC funding.

But there's a down side to stealth. There's not enough info about your venture to get people excited. And you and your team are constantly weighing what to say and to whom. Investors don't do NDAs, and standard business practices don't always favor the early stage entrepreneur. You can pick who you pitch to, but can't bet they're in the clear - for all you know, they might be doing due diligence on a competitor, and you're it. (That's another topic though.) What about potential candidates? In a tough market, what you do is an important part of the mix. How much can you tell? I did a previous post on this - TMI - and this is continuation on the musings.

The website is another big challenge. Usually people look at the website to get an idea of the company - not just what it is about, but what it is like. Most stealth ones say very little. Are you missing a key hiring edge? This is a question my team is struggling with right now. How can we make ourselves interesting without revealing too much. Not very easy to do, as we can't even look at other similar startups to see how they've handled it (they're in stealth, duh). But we're at least decided on what it should have: much ado about nothing.

TMI.

Every entrepreneur worries about giving away too much information about his hot idea until it is no longer an idea but a fait accompli. Here are just some of the one-liners (forget the 30-second pitch) I've heard recently about some ventures: "It's in networking, but hardware'; 'It's networking software'; 'It's a networking appliance'; 'It's social networking'; 'It's distributing networked content'. Impressive. These are clearly the result of much deliberation. Notice that there's enough information to know if the startup is about hardware/sofware or both, and they're all in some way involved with networking (which is only a mammoth market with myriad niches). But that's it. There's no hint of what it is the startup will actually do. Hey, I've even run across people who're starting consulting practices who clam up about the details (consult with high-tech manufacturers - now that narrows the field).

I understand the reluctance to say too much too soon to too many - I'm not crazy about broadcasting my own idea either (no, it is not in networking - or is it?). But how do you maintain a conversation without sounding like a delusional dweeb with a penchant for conspiracy theories? For example, how do you answer a specific followup like "what kind of content do you work with"? Do you sound vague and weak and in serious need of a shot of business savvy by saying "all kinds", or uptight and suspicious with "can't talk about it yet"?

In my opinion, the majority of people do not need to know much - maybe just that you're involved in a certain space, field, industry. So what if your one-liner is a conversation dampener - you can always segue to a story about your chihuahua if you have one. Your cousin's wedding or your high school reunion are not events where you should be pouring out your entrepreneurial dreams anyway. And avoid events like entrepreneurs' forums (especially if they're awash with VCs) unless you're ready to bare all - folks in these places are very good at dragging details out of you.

There are some people who you'd want to talk to in some depth though. Maybe you want their advice, or you're hoping to hire them, or maybe they could be a customer. There are some that you could do an NDA with (potential hires for example), but as one colleague asked, how do you enforce the NDA? I'm sure it can be done, and people have done it, but I'm hoping the NDA is evidence of seriousness, something that'll make the signer a little more cautious. But there are many folks I've talked to without an NDA - these tend to be super-experienced, business heavy weights who I treat as trustworthy because they've proven to be so. But even then, I don't give them all the details. As for customer prospects, they're most unlikely to sign an NDA, especially at an early stage. They're tricky to work with since if you think of them as a prospect most likely the potential competition will too, and few of them would be secretive about your ideas unless your rep's like Tony Soprano's. Best tactic with prospects is to let them do the talking and cover way more ground than you intend to focus on - it'll give you good background info and make them a little fuzzy about the specifics.

Reticence. Caution. Discretion. All dull-sounding traits, but that's what you'll have to practice for a while until your startup is solid. But some day, oh frabjous day!, when you've got actual customers, you'll be ready to flood the world with information (and/or marketing-speak) and limit your paranoia to intellectual property protection. And then you can retire those chihuahua-story diversionary tactics.