It’s sometimes best to keep a company concept hidden while it’s being developed (a.k.a Stealth Mode). There are situations, though, when companies maintain their confidentiality for a longer length of time. However, this would be applicable for companies that have been placed on the market.
It may be to keep the competitors from learning about a potential new product or service entering the market. Or even to keep the genuine aim of the organisation hidden. Stealth mode refers to a condition of concealment that might be temporary or permanent.
We will look to break this topic down into four parts:
- When is the right time to begin a startup under stealth mode?
- Advantages of developing under stealth mode
- Disadvantages of developing under stealth mode
- Testing whether stealth mode is working
When is the Right Time to Begin a Startup Under Stealth Mode?
Before understanding the inner workings of a stealth mode, it’s important to understand, that you will encounter two types of stealth mode startups:
- Startups in total stealth mode
- Startups in stealth mode within a corporation
When deciding how and when to establish a stealth mode business, it’s at this critical stage that you will need to consult alongside your co-founders and other team members involved. Also, pick which business strategy you want to adopt as a company.
Total stealth mode startups want to keep all of their activities hidden as much as possible. In-house stealth mode, is just the basis of which corporations will look to protect projects, by keeping them under wraps until the day of the launch.
You’re ready to begin your startup! Once you’ve decided on the type of business plan you want to use, consider: when is it ideal to implement stealth mode for your startup?
- When your product or service is perfect match for the market
- You’ll need to take ample amount of time to handle tech related matters
- Your company is genuinely one-of-a-kind and disruptive.
When Your Product or Service is Perfect Match for the Market
The secret to creating a successful product or service, is to come up with a solution to your consumers’ concerns. CB Insights state, that 35% of startups fail because of a lack of market demand. You can ensure that your product or service will fit within the market, if you make sure it can solve your target consumers’ problems. As a result, prior to introducing your product, you must first establish an audience.
Validation of the product is also critical. It’s the process of determining if your product has a chance of succeeding or failing on the market. It’s a means to see if your product concept is worth developing and if it adequately answers users’ concerns.
You’ll Need to Take Ample Amount of Time to Handle Tech Related Matters
If you need to devote a considerable amount of time to the product’s technical development, you may want to consider launching a firm in stealth mode. It’s crucial to preserve confidentiality in this situation. The reason for this, is due to larger organisations with a substantial amount of supply potentially stealing concepts ideas of concepts, or even copying it completely
Your Company is Genuinely One-of-a-Kind and Disruptive
A final reason to launch your firm in stealth mode is whether you are confident that your product or service is unique and innovative to create a shift in the market. You’ll be able to secure your concept while researching the market as a whole, keeping your competitors at a distance.
Advantages of Developing Under Stealth Mode
In this section we will be looking at the benefits of developing within a stealth mode:
Protection of Intellectual Property
The intellectual property (IP) plays a critical role throughout the process. IP rights enable innovators to safeguard their ideas and establish a distinct commercial identity. This is especially critical for firms who haven’t legally protected their intellectual property, or whose product isn’t yet ready. Staying as a stealth mode startup provides these firms more time to retain these trademarks under these circumstances
Avoiding Attention Early
This at first glance seem like a disadvantage, However, I can assure you that it does have its advantages too. One of which being that it can allow a workforce to work under less pressure, not needing to meet strenuous deadlines. When a product or service is about to be launched, and an announcement has been made, firms will be work hard to get the product or service out. This could cause the product or service being rushed and not fully developed enough to place on the market. This also takes away stress from public backlash in case of not meeting deadline, or the good being lacklustre due to the rushed nature of an organisation.
Your competition wont’t have much time to prepare for the launching of your product or service. Stealth mode can help you achieve surprising your competition, especially if they’re more concerned over other competitors. As a result, your competitors in the market won’t be prepared for what you offer they’ll be taken aback by what you offer to the table.
However, it’s critical to devote as much effort as possible to creating a really distinctive and innovative startup in order to bring the most impact on the market.
Disadvantages of Developing Under Stealth Mode
This section will analyse the drawbacks of within stealth mode:
Funding Options are Limited
The most significant drawback is the difficulty in obtaining money. When you are unable to openly reveal your goods or services, you instantly lose access to a significant portion of the investor market as well as venture capital financing opportunities. This places the burden on the stealth business entrepreneur to schedule discreet meetings, create great first impressions, and eventually get investment the old-fashioned manner.
No Public Interaction
As stated earlier, there were drawbacks to the not having attention on your startup. This comes in the form of the public being unable to have access to opportunities in revealing themselves to the public eye. Staying anonymous makes it difficult for potential customers to notice you. However, this is dependent on the type of startup you are. B2C organisations will find being a stealth mode startup especially challenging. Public corporations, on the other hand, may attract journalistic attention, control public perception, and establish a reputation over time.
Zero Customer Feedback
How can you gauge public sentiments or even find the correct fit for the market if your company can’t communicate with the public? This is a significant difficulty, and it is one of the reasons why stealth companies often seek out extremely experienced VCs that have the ability to see them through.
Testing Whether Stealth Mode is Working
The product validation process in public firms include putting your product’s concept to the test with potential customers. And collecting their honest input on its features, benefits, and drawbacks. Customer validation, market research, and testing the product concept with potential consumers — i.e. using the minimal viable product (MVP) approach — are traditionally the three phases to verify your product.
However, with a stealth mode startup, testing your product or service, or even concept may be more difficult. You may require project workers to sign a non-disclosure agreement or conduct covert testing.
Validation of Your Customer
Identify which one is your target user’s pain point before opting to create a product or service. What can you offer them that can resolve their issue?
The product validation phase is key, as it’ll open an opportunity to provide customers something they’ve never had. This stage does not require you be very in-depth, however, place yourself in the customers shoes and understanding what they want. Once you’ve identified the solution, you’ll have a better comprehension of which industry needs what kind of product. Make sure to capitalise in on the large gaps left in the market.
One of the best places I find to identify where people gear their frustrations about companies and/or products, typically can be found in spaces such Facebook and Twitter.
Research the Market
One of the major steps for any startup (which is also an obvious one), is producing market research.
Some of the best online platforms to research into a market be found on forums. Unlike Facebook and Twitter, online users may have meaningful discussions. Forums are laid out in such a way where people can speak on your competitors, without being bombarded with other angry comments as you’d find on Facebook and Twitter.
This will provide your startup and advantage in figuring out what you can do for customers that are not having their needs met.
You’ll need to evaluate if there’s a product-market fit before launching the entire product. You may test your product in a number of different ways. Prototyping or releasing a minimal viable product are examples of this (MVP).
Overall, Working within stealth mode has its benefits as well as its drawbacks. We at 7 startup. We urge to consider every angle of your startup, and weigh the pros and cons before getting close to launching. Depending on the type of industry you decide to work in, stealth mode can be beneficial or hinder your growth. A business that requires customers and public attention from the get go, may struggle to capitalise on the market if no one is aware of your existence. On the other hand, A firm that develops AI software, and sells it to other organisations (B2B), may prefer to stay hidden. This would prevent competition from researching into the AI software being developed.
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Amit has 18 years of experience in the industry and an MBA. He supports entrepreneurs with every aspect of their business including concept and product development, investor presentations, and fundraising. Amit & 7startup assist startups in the pre due-diligence process and help connect them to our vast network of investors. Reach out to us today and see if we’re a fit!