What is a Stealth Mode Startup?

By Fernando Berrocal

If you have a fantastic concept in your mind and want to translate it into a new innovative business, then you should consider starting a “Stealth Mode Startup”. But then the two following questions arise: 1) What exactly is a Startup in “Stealth Mode”? and 2) What distinguishes it from a typical start-up? We'll address the following concerns and discuss the advantages and disadvantages of working in secrecy.

stealth mode



What is a Startup in a Stealth Mode? 

As the name implies, a stealth mode startup is a fledgling type of business that is working to bring a new product or service to market while maintaining a temporary level of anonymity (in this case the “stealth mode”). There are two types of stealth mode at its most basic level: 1) Total Stealth Mode. and 2) Company Level Stealth Mode.

In the first place, there is the “Total Stealth Mode”. That’s when a corporation goes into it strives to keep all of its actions hidden as much as possible to the general public. As a result, the corporation may deceive the public about its actual intentions and operations. It may have a website that keeps its staff and location hidden from everyone. It might even operate under a fictitious name that hides its type of business to the world wide web. This is the sort of stealth mode you'd use if you're contemplating whether or not to start a startup in stealth mode.

Secondly, there is the “Company Level Stealth Mode” and that is when a business it’s attempting to keep a new project or concept as hidden as possible until it can be launched. Microsoft, for example, has a long history of providing codenames to various programs to minimize scrutiny to a minimum. The main example of this was the codename Chicago for Windows 95 and Longhorn that was Windows Vista. This secrecy frequently extends beyond the reach of the general public. Internal and external stakeholders are held in check by using stealth mode within the startup, which frequently prevents early dismissal of a concept or idea.  

To keep its actions hidden, a business working in stealth mode might perform a variety of things, including:

  • Covert testing.
  • Creating a front-page story
  • Extra resources are being freed up to preserve confidentiality.
  • Employees on the project should sign a new non-disclosure agreement (NDA).

If you're a startup founder just getting your business off the ground, you won't require stealth mode until much later, when your business is working on its next product.

Advantages of Stealth Mode:

  1. Protection of the Intellectual PropertyIf you're launching a Startup and need more time to refine it, a stealth mode startup could be the approach to go. That way, you can safeguard your intellectual property without fear of someone else sneaking in and stealing it from beneath your feet.

  1. Allows you to remain anonymous until you're Ready:  Being in the spotlight might distract you from your team's performance and damage your business as a result. A stealth mode startup may be the ideal option if you want to focus only on your product without having to worry about things such as branding or public relations. This allows you to focus on things like strategy and capability development while minimizing the need for more public-facing initiatives.

  1. The Ability to Control Your Press: When your startup is in stealth mode, it is unlikely to receive much notice. However, this may be a positive thing because it allows you to keep your activities out of public view. It also means you have greater control over the information that potential customers and investors view. With the widespread use of social media sites such as Facebook, Twitter, Instagram, and even LinkedIn, creating your press is arguably one of the simplest things you can do these days.

Disadvantages of Stealth Mode:

  1. Finding The Right Market Fit Is Important: Finding the proper market fit for your product becomes increasingly difficult, if not impossible, while your startup is in stealth mode. You could believe that your target market is everyone. However, your desired market is significantly smaller and requires a different type of branding and marketing. If you run a startup in stealth mode, how will you know? You can't test your product without at least partially disclosing it to the public, which defeats the objective of a stealth mode.

  1. Feedback is Restricted: Receiving input on what works and what doesn't is critical to a product's success. However, by its very nature, performing a stealth mode startup restricts the amount of input you may obtain. This may not be an issue for certain startups. For others, though, it may be the difference between continuing in business and permanently closing the doors.

  1. Prevents Pre-Buzz: When you operate a regular startup, creating pre-buzz (building enthusiasm for your product or service before it launches) is very straightforward. When doing a stealth mode startup, however, you must keep your operations as hidden as possible. That implies there will be no pre-buzz. While this may seem OK if you're running a typical startup, a lack of enthusiasm can have a major influence on consumer, developer, and investor interest.

When should a Stealth Mode Startup be Started?

  1. You've already developed a strong Market Fit:  A stealth mode startup might be a smart choice if your product or service already has a strong market fit. For example, if you're introducing a product that improves (or differs somewhat from) an existing product, you should already know what the market is - the previous product established it for you — so secrecy might work in your favor.

  1. You'll need time to experiment with new Technology: It Takes time to Learn New Technology:  If your product is largely focused on technology, it may take a long time to perfect. Larger businesses with greater resources (think Apple, Google, and Microsoft) may adapt your concept, invest more money and manpower in it, and bring it to market faster if word got out about what you were doing.

  1. You've created a very Disruptive Startup:  Few products are disruptive in the sense that they cause an industry to revolutionize or change the world. Consider Walmart, McDonald's, Facebook, Amazon, and Uber if you're having trouble coming up with some genuinely disruptive businesses. Sure, your product may be cool, fascinating, or a new take on a market leader, but is it genuinely disruptive, like the Apple iPhone or Netflix's streaming service? If that's the case, go ahead and start a startup in stealth mode.

stealth mode



The best place to run a stealth mode startup:

If you're like most entrepreneurs starting a business these days, you're working with very little capital (at least at first). That is why it is critical to protect any assets you do have. Rather than hiring a costly, separate location or signing a long-term lease, a coworking space is a perfect option to house your stealth mode business. This type of flexible office setting provides everything you need to get the job done correctly — technology, infrastructure, furniture, and amenities — while allowing you to focus on your work rather than day-to-day operations.

Are you ready to bring your startup to the next level? Apply to MassLight’s next batch. MassLight supplies capital and a dedicated tech team. We take equity in return. Have questions? Refer to our FAQ page.

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