Should startups stay stealth during development?

I’ve asked a number of people this question and done a fair amount of reading online and haven’t come across a compelling reason why we shouldn’t be in stealth mode during development. Being stealth protects our idea. It guards against the possibility of having the idea stolen (though extremely rare), but more importantly, it prevents competitors from capitalizing on our innovations. The anti-stealth arguments generally go like this:

  • the idea doesn’t matter, it’s all about the execution
  • it’s very very unlikely for someone to steal your idea
  • you can generate buzz pre-launch and have potential users lined up
  • if you tell people about your idea, you can get feedback, make improvements, and launch a better product

These arguments just didn’t cut it for us – the risk reward isn’t very compelling. Yes execution is more important than the idea but just because the probability of having our idea stolen is low doesn’t mean it’s zero – the lottery still pays winners on Wednesdays & Saturdays. Unless the idea is truly revolutionary and barriers to entry are high, you probably have competitors and you likely have strong differentiation or at least believe you have it. The risk of competitors implementing the features that makes you different is much more material than having your idea stolen. The more you publicize your idea, the higher the odds your competitors will hear about you. If you don’t aggressively publicize your idea, then you’re safer with competitors but you won’t get the buzz.For us, we’re working on a consumer web application so we don’t think the prelaunch buzz is that critical. There’re so many powerful vehicles online that can be leveraged to quickly generate buzz & drive traffic, we don’t think the benefit of prelaunch buzz justifies the risk. We’re diligently doing our homework and creating a solid marketing strategy ready to execute on day 1 or launch. With consumer websites, it’s always hard to tell what will happen until after launch – the feedback we would get from publicizing our idea is unlikely to add that much value. We used our personal networks for feedback and it’s been extremely helpful. Here’s another article I recently came across on this topic by Seth Levine and found it helpful.

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