"Stealth mode" is this thing startups do where they stay quiet about what they're up to--presumably until some grand reveal. It can mean very different things, ranging from a cryptic website and a few hits on LinkedIn, to, "We've stopped talking to media since that Forbes exclusive that went badly."
Discussions about stealth mode get heated. Either it's a ridiculous marketing gimmick that cuts you off from market feedback, or it's an essential tactic to avoid distraction and the startup hype cycle in early days. Nextview's Lee Hower has a good summary of the pros & cons.
Boston serial entrepreneur Yuchun Lee (of MIT blackjack team fame) is firmly on the pro-stealth mode side. He kept his latest startup, Allego, under wraps for two years. Meanwhile, his founding team worked on the idea, developed the technology and won its first customer accounts.
Allego accomplished a lot while staying under the radar. It didn't seem to suffer from any of the drawbacks. I asked Lee to explain how they did it.
What can you do while you're still in stealth mode?
While in stealth mode, you can focus your time creating and designing your product and validating the value of the business as a whole with preliminary customers. You can hide your key ideas from competition and build distance between what you have and what it will take somebody to catch up. And, you can reduce operating expenses.
Can you get market reaction privately?
Yes. Business contacts and referrals can go a long way to provide a mixture of the right early customers to help fine-tune the product.
How do you figure out the "right mixture," who you need to talk to?
It depends on business strategy, but the company should try to get customers whose profiles most closely match the target market. But, these early customers, or at least the business sponsors, should be willing to take more risk than your normal customers. Overall, you are looking for visionaries as your early customers.
What do you do with your website?
Have a website! But no need to optimize it. It's there to have a minimal presence and for people to contact you if they find you. Don't expect too much traffic though.
How do you generate leads without being public about what you’re doing?
Referrals are the best leads at this stage. If the business is able to show success, word will travel from customer to customer. At Allego, we were able to grow to more than 50 customers in almost three years, before we even launched.
Does a stealthy company need a marketing department?
Not on day one, but shortly into the life cycle of the business. Once a version (or two) of the product is delivered to early customers, marketing is critical in helping the business tune the positioning of the company through early customer experiences, testing product pricing, generating product collateral and content to support individual sales efforts, and collecting competitive information. Long before a public launch, the marketing department needs to start to work on launch and ongoing programs (it took us 9 months to prepare for launch), collecting customer success stories and testimonials, enhancing the website, and building the entire marketing communications and lead generation strategies.
