Food Of Thought For Entreprenurs

During today's Cornell University Alumni event at Google headquarters, I spoke to entrepreneurs about their startups. Most CEOs had already started selling ("traction") and were eager to speak about their companies.

However, a few CEOs in recent days said "We are in stealth mode" and they declined public comment.

Stealth mode means you are starting a new enterprise in secret. That is hard to do. But it is how you can surprise competitors. You might even shock them so much they give up when you go public about your company. Surprise can be an important element in building your unfair competitive advantage.

So how does a stealth startup operate? In a few words: very secretly, with a great deal of cunning.

Stealth startups have to recruit people by divulging a minimum of information.
Stealth startups get angel and venture capital firm money by exposing the minimum of facts needed to get the money.
Stealth startups tell reporters and bloggers a carefully prepared story, one that gets them curious but leaves them searching a false trail.

It feels something like taking your clothes off: you remove as little as possible to get the job done.

Candidates for employment move along a process that starts with bits of information and adds more and more as the process moves on to a job offer.

Venture firms are told just enough to get their initial interest and then get incrementally more information as they proceed to make an investment decision.

The prepared story for the media is intended to entice the curious but stop well before much is revealed.

The hardest part is to keep founders from bragging to their friends after a few beers. Startups are exciting. You want to tell the world all about yours. But to do so will make yours a public company and you'll loose your surprise power. This is a discipline that serial entrepreneurs are very serious about. They insist that all employees and investors adhere to secrecy as if the hidden secrets were top secret government facts that determine life or death.

BOTTOM LINE: Keeping your mouth shut is a sign of a wise entrepreneur. Until you are ready to go public about your company (typically when announcing the launch of your first product), you will gain a lot of power by keeping secret all that you can. It is one of the most important disciplines of a world-class unfair advantage core management team. I hope yours falls into that category.
More at:http://nesheimgroup.typepad.com/my_weblog/2007/05/stealth_startup.html