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7 Reasons to Break Out of Stealth Mode

November 2, 2013 by


7 Reasons to Break Out of Stealth Mode

The entrepreneurship community thrives on sharing ideas and prides itself on having a mentorship-friendly ethos. As new entrepreneurs get into the game, there is increased demand for established entrepreneurs to share their daily routines and explain how they accomplished specific goals.

Alex Turnbull, founder of Groove, recently started a series of blog posts documenting the company’s  journey to $100,000 in revenue. Every post is packed with detailed revenue and membership figures, charts, survey results, and customer emails.

Take a look at the comments section below each post and you’ll find it filled with questions and advice from engineers, marketers, and other entrepreneurs. By bringing everyone along for the ride, Alex has created an audience engaged in and rooting for the success of his company. This fantastic publicity strategy would not have been possible if Alex had hidden behind a wall of secrecy and NDAs.

Running a “stealth mode” startup isn’t a smart approach for most entrepreneurs. Here are seven reasons why you should be open:

  • High-quality feedback is exactly what you need to find product-market fit. Businesses are built on products that customers want to buy, not what the CEO or the Lead Engineer thinks is going to sell. The faster you are able to  either validate or disprove assumptions in your product and business model, the faster you will see results. Actively soliciting customer feedback allows you to pick up on preferences and features that are not yet being capitalized on.
  • Being open helps you identify actual and potential competitors. If you think you have no competition, you’re delusional! A company with no competition actually doesn’t have a market, so it’s best to find out early. Secrecy will just breed complacency and ultimately the death of the company. Let the market know what you’re up to, and the market will reward you with valuable competitive intelligence in the form of questions like “what makes your product better than this other solution offered by Brand X?”
  • It frees you from the mistaken belief that your ideas will be stolen and you must be first to market. Remember the blood, sweat, and tears it took to get your idea turned into a functional prototype? The effort required to put a plan into action usually stops idea thieves dead in their tracks. Furthermore, no matter how obscure or revolutionary your idea might be, dozens of other “wantrepreneurs” have had similar ideas. Finally, being first to market can often be a liability because competitors can learn from your mistakes. While it makes sense to protect your “secret sauce” whenever possible, there’s no reason to go overboard with secrecy.
  • It shows you have nothing to hide. Secrecy and paranoia breed suspicion. Analysts, pundits, and journalists will start to wonder what your company is hiding. Is it a sub-standard product? Is it the company bleeding money month after month? Are you creating expectations that you can’t live up to?
  • You open yourself up to valuable networks of angel investors, VCs, and other entrepreneurs. You never know when a chance encounter at a cocktail mixer, a networking event, or a demo day will turn into the opportunity of a lifetime. One contact leads to another, and any early buzz generated about your company can help open doors later when you’re seeking investment or partnerships.
  • It’s great for public relations. Being open and honest about your company reveals your good character to the masses. It will help you position yourself as the public face of your company and as an expert in your field. You can gain valuable media attention and great word-of-mouth advertising by keeping your business out in the open.
  • Marketing channels like a company blog or newsletter give you a great soapbox to promote your dedication to customer service and highlight positive outcomes. Great customer service builds trust and loyalty. Potential customers want to know that you stand behind your product. Give them the confidence to click on the “Buy Now” button when you release your product.

The sort of transparency practiced by Groove and others is not for everyone. Here are three things to be aware of before you start opening up:

  • Familiarize yourself with securities law and consult with your attorney. Alex Turnbull self-funded Groove, and unless you plan to do the same (and also never offer any kind of equity compensation), you will need an attorney to make sure you remain compliant with state and federal securities regulations. If you do plan to pursue funding in the future, protect yourself and your company by first understanding how making certain disclosures may affect you and your shareholders.
  • You need to be prepared to live under a microscope. This has more to do with maturity than experience, but the positives of an open startup will be greater for a seasoned entrepreneur than a rookie. Groove is Alex Turnbull’s second startup. First-time entrepreneurs might not be prepared to go through an on-the-job learning experience in public view. Which leads me to…
  • How do you plan to address failures and missteps? This is probably the toughest pill to swallow. Yes, it’s great to provide an in-depth explanation about how you hacked a 26% increase in conversions on your landing page, but what happens when you lose half your active users in a month? Do you openly address it or simply bury it?

In general, the benefits of openness far outweigh any perceived benefits you might obtain from staying in stealth mode. Tell the world how you plan to make it a better place, and the world will help you on your journey.

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  • Mahmoud El-Darwish

    All very lovely, but how do you protect IP ?

  • Michael Bian

    very interesting.