What Is A Stealth Mode Startup?

stealth mode

Table of Contents

At the moment of developing a startup idea, it’s sometimes better to keep it secret. However, there are times when startups keep this state of secrecy for a longer period of time. That is, once they are already installed in the market.

It might be to avoid alerting the competition about a new product launch. Or even to avoid revealing the true purpose of the organization. This state of secrecy, whether temporary or permanent, is called stealth mode.

In this post:

  1. When should you launch a stealth mode startup?
  2. 5 reasons to build in stealth mode
  3. How to test if you have a stealth mode startup

When Should You Launch a Stealth Mode Startup?

To begin with, we should know that there are two kinds of stealth mode startups:

#1 Total stealth mode startups

#2 In-company stealth-mode startups

What’s essential at the moment of choosing how and when to launch a stealth mode startup is to discuss with your co-founders and/or team members. And decide which business model you’ll like to follow as an organization.

🤫 On one hand, total stealth mode startups are those who choose to keep all of their actions as secret as possible. On the other hand, in-company stealth mode exists when a company chooses to keep a certain project a secret until it’s time to launch.

After you’ve decided which kind of business model you’ll like your startup to follow, you’re ready to launch! However, there are some things that you’ll have to take into account. When it’s a good idea to launch a stealth mode startup? 👇

  1. Your product or service has a market fit
  2. You need plenty of time to work on tech-related stuff
  3. Your startup is truly unique & disruptive

1. Your Product or Service Has a Market Fit

The key to building a successful product is having an idea that will solve your users’ problems. According to CB Insights, 35% of startups fail due to a lack of market need. However, if you make sure you’re product or service is able to solve your target customers’ pain, you’ll assure that it will have a market fit. That’s why it’s essential to build an audience before launching your product.

“Build a product people want” is a common piece of advice among entrepreneurs. That’s what product validation seeks to prove.

Also, product validation is fundamental. As it’s the process of checking whether your product has the potential to succeed or fail on the market. Meaning it’s a way to determine if your product idea is worth pursuing and if it solves users’ problems appropriately.

2. You Need Plenty of Time to Work on Tech-Related Stuff

You could decide to launch a startup in stealth mode if you have to dedicate a lot of time to the tech development of the product. In this case, it’s important to maintain secrecy. Why? Because there could be larger companies with more resources that could take your idea and replicate it (steal your idea 😅).

3. Your Startup Is Truly Unique & Disruptive

Another reason why it could make sense for you to launch your startup in stealth mode is if you’re sure your product is unique and disruptive. That way, you’ll make sure you’re protecting your idea while analyzing the market and potential competitors.

5 Reasons to Build in Stealth Mode

  1. Protect intellectual property
  2. Remain anonymous
  3. Take care of your reputation
  4. Avoid early attention
  5. Surprise your competitors

1. Protect Intellectual Property

In most success stories, the boom of a startup can be traced back to a good idea, which made a long and complex journey to gain a place in the market.

Throughout the whole journey, the intellectual property (IP) system becomes vitally important. IP rights allow creators to protect the fate of their innovations and create a unique identity in the market.

In turn, as the organization expands (i.e. seeks investors, engages with collaborators, hires employees, and establishes itself in the industry) the role of IP varies. However, it remains just as important.

But according to Clara Pombo Morales, corporate director of IP Strategy ClarkeModet, “there is a lack of IP rights protection culture in the business world”. Paradoxically, this is most prevalent in “young, innovative companies with technology-based business models” whose assets tend to be the development of intangible inventions. Also, they often work on collaborative projects.

The WIPO stresses that startups should be aware that, “in addition to strengthening their competitiveness, IP can help them manage risk“.

In this regard, Pombo Morales warns that “for startups, IP is a vehicular issue that can compromise the survival of the business“.

In other words, a startup that ignores intellectual property can infringe the rights of others, be blocked from entering domains that others already occupy, or lose key assets to other companies that request protection first. So building in stealth mode, at least at the beginning, could be beneficial on this matter.

2. Remain Anonymous

Building your startup in stealth mode will help you remain anonymous during the process. This might have its cons (i.e. less feedback, preventing the pre-launch buzz). But it also saves you the stress of being in the public eye. And having to handle yourself in the right way publicly. In addition, you avoid the imposed deadlines and demands from the outside, which will help your team work more relaxed.

Building in anonymity
Building in stealth mode = building in anonymity

3. Take Care of Your Reputation

Maintaining a good reputation when launching or in the early stages of a startup can be tricky. Monitoring what appears about the startup online, reading positive and negative reviews, and generating content for potential customers. These are many tasks that could be avoided by maintaining anonymity with a stealth mode approach.

4. Avoid Early Attention

Unlike public companies, building your startup in stealth mode will avoid early attention from the public, the press, and your competitors. Also, as we mentioned earlier, this could have its pros and cons.

The pros include working teams don’t have to worry about maintaining a reputation or meeting certain deadlines. And it saves founders the stress of being in the public eye.

However, the cons include that it won’t gather journalists’ attention or build a reputation throughout the years of development, which could help establish itself as a leading company in the market.

5. Surprise Your Competitors

If you build your startup in stealth mode, your competitors will have less time to prepare for your launch. Therefore, they will be surprised by what you’re bringing to the table.

However, it’s important to dedicate as much time as possible to building a truly unique and disruptive startup to cause the revolution you want in the industry.

How to Test if You Have a Stealth Mode Startup

In public companies, the product validation process consists of testing your product’s idea with potential users. And getting their most sincere feedback on its features, pros, and cons. Traditionally, the three steps to validate your product are customer validation, market research, and testing the product idea with potential users —i.e. through the minimum viable product (MVP) technique.

However, testing your product, idea, or service in a stealth mode startup could be a little more complicated. As you might need project employees to sign a non-disclosure agreement or do covert testing.

Taking this out, product validation techniques to test products in stealth mode startups are almost the same as in public companies.

1. Customer validation

Before deciding to launch a product or service it’s essential to know which one’s your potential user’s pain. And what solution can you offer them?

💡 Understanding what solution you can provide to your potential consumer is key during the product validation process. Because by understanding how you can solve your target audience’s pain, you will be able to define what kind of product you’ll offer.

There are great online spaces you can use to detect problems and build solutions. While the most popular ones are Twitter and Facebook, the real gold is niche communities.

As a product manager or startup founder, you can be part of these spaces with no need to disclose which startup you belong to! There, you’ll have the opportunity to interact and build a relationship with those who might become your first customers.

2. Market research

According to Failorymarketing mistakes are the biggest problem for startups, causing around 56% of them to fail. As we mentioned previously, that means that there’s a lack of product-market fit.

Analyzing your competition is one of the first steps during market research, both in public and stealth mode startups.

To do so, you can join online communities or forums around products that bring a solution to a similar or the same problem you’re trying to solve.

This will give you access to first-hand information about the experiences of your competitors’ users with their products. In turn, this information will help you think about how your product can solve the problems that your competitors can’t.

3. Testing the product

Before launching the product as a whole, you’ll need to test if there’s a product-market fit in order for it to be successful. There are multiple ways of testing your product. These include prototyping or launching a minimum viable product (MVP).

Examples of Stealth Mode Startups

While Microsoft is clearly not a startup, Windows 95 (which was called Chicago in order to keep anonymity) and Windows Vista (AKA Longhorn) are two examples of projects which were kept in secrecy until they were ready to launch.

Coda

The no-code tool Coda was first known as Krypton. And it was built by ex-YouTube executive Shishir Mehrotra. The startup had a $400 million pre-launch value while it was being secretly developed by Mehrotra.

YouTube video

Berkshire Grey

Berkshire Grey emerged from stealth mode in early December 2018, announcing that it had been secretly deploying AI-enabled robots since its founding in 2014. These robots are way faster and more accurate than humans. The Silicon Valley startup sells its robotic systems to customers who need to automate tasks like packing, and sorting for e-commerce and retail.

Koverse

Koverse is an AI company that uses big data to help businesses create new goods and services. The company was founded by Jon Matsuo, who began his career at Stanford University’s Artificial Intelligence Lab.

Before starting Koverse, Matsuo worked for several years as a project manager at Google, leading teams that designed large-scale information retrieval systems.

Unlike other stealth-mode startups, Koverse’s purpose was kept secret due to its clients. “Our customers don’t want us talking about what we’re doing with them,” Matsuo said in an interview, “We’re generally helping these organizations with something that’s fundamentally ingrained in their service. A new product or service, or something that really gives them a competitive edge.”


Building a startup in secret is only up to you! However, if you decide to build your business in stealth mode, make sure that your product or service has a market fit, and that you follow the right steps to validate your business idea. Also, assure that you trust your working team and that your startup is unique and disruptive for the industry you’re in! And you’re ready to go 😉

Victoria Mortimer

Victoria Mortimer

Get the latest news 👇

Community building, entrepreneurship, and new communities