Chapter 8 - To Be Stealthy or Not?
DIGITAL COMPANION
To read:
Zero to One: The bigger the secret and the likelier it is that you alone have it, the more time you have to execute, argues Peter Thiel in a lecture at Stanford, the notes of which formed the basis of his popular book.
Data’s ‘last mile’: We are now embarking on the “last mile” of data’s evolution, I explain in this series of essays I wrote for Data Prose, our in-house publication. Our new digital ecosystem is fast evolving in complexity and diversity, but it remains primitive.
Insight of Marc Andreessen: The market needs to be fulfilled and the market will be fulfilled, by the first viable product that comes along, explains the mega-VC in this essay on startup success and failure.
Who reviews? Almost 60 percent of shoppers cite product reviews as the eCommerce feature upon which they rely most, concludes this 2020 Bazaarvoice study, writes Kiri Masters of Forbes.
Chapter 8
To Be Stealthy or Not?
“If intelligence is our only edge, we must learn to use it better, to shape it, to understand its limitations and deficiencies — to use it as cats use stealth, as katydids use camouflage — to make it the tool of our survival.”
— Carl Sagan, cosmologist and communicator
During mid-2015, just shy of three years since we had taken Bazaarvoice public, I was on an extended break to catch my breath. To spend more time with my young family. To read broadly. To travel to India to study Vedic wisdom. To see what my parents’ life had been like as entrepreneurs focused on lifestyle, in contrast to the very intense work pace that I’d been living since before I even finished grad school. Sadly, both of them had already passed away, and this was a time to honor them. I had also taken time to mentor students as the Entrepreneur-in-Residence at the University of Texas at Austin’s McCombs School of Business.
But after this long intellectual and emotional deep breath, and having had the time to reflect on both the state of the world and the technology so rapidly transforming it, I was itching to “get back in the arena.” As a bundle of new ideas was surging through my mind, and having recently given a commencement address at University of Texas at Austin on how we are in a new Golden Age for technology, I was very deliberate in my first round of discussions. I texted two good friends who I had worked with at Bazaarvoice and was amazed by Jon Loyens and Matt Laessig. I asked them if they would like to privately brainstorm new business concepts with me — but only if we could think of something even more ambitious and better for the world than Bazaarvoice or Coremetrics. Ultimately, they were to become my co-founders of the radical new data catalog platform and community of open datasets that is data.world.
But the extraordinary technical complexity of what we were setting out to do (to date we’ve banked 60 patents and counting), the unique logic we were carrying into the venture, and its groundbreaking nature in a global space dictated we enter a kind of wormhole of secrecy until reaching our public launch destination. We wanted some buzz, of course, as we wanted the marketplace to be curious and know that we were “up to something.” But we wanted to reveal that “something” on our own terms. So much so, that for much of the first year of building and beta testing our URL was stealthco.world.
This is one way to go about a launch. But it’s certainly not the only approach I’ve used, and it may not be yours. Just how fast and with whom you share your ideas and plans is a tricky set of decisions that many new entrepreneurs make — or don’t make — for the wrong reasons.
When you put your idea into the wild too early, there is much that can go wrong, from simply the distractions of the gawkers to the erosion of your intellectual property or worse. When you emerge from behind the curtain too late, rival actors may well have stolen the stage. Which is why the word “stealth” is tricky. With its mystique hinting at a John LeCarre novel or a space-based video game, it invites the notion that it’s all or nothing: a sound-deadening “cone of silence” out of the novel Dune vs. a jubilant block party for everyone you’ve ever known.
It is neither.
As I’ve endeavored to emphasize throughout this book, the language and jargon of the entrepreneurial and startup realms often frame decision-making as a set of binary choices. In fact, at most of the milestones on your journey as an entrepreneur, you’ll find few “on-off” buttons. Instead, there are many dimmer switch-like “rheostats” that demand constant attention, judgment, and frequent adjustment. This question of stealth is just one of the decisions you will face. And so I pose the question that is the title of this chapter as repeated and ongoing food for thought throughout the many stages of launching your new enterprise.
As with much of my entrepreneurial advice, the right answer very much depends on the unique nature of your startup and your co-founders. Again on that term, “stealth,” I sometimes think we should ban this word from our vocabulary because of the binary thinking it invites. Not only does it promote on-off/yes-no thinking, but also the danger that what you end up cloaking is not your idea, but your self-confidence. It can cloak your belief in what you’re building, even the “soul” animating your endeavor about which I wrote at the outset of this book. At the moment you ultimately move to launch and hit the market, you, your co-founders, and everyone else involved need to be completely aligned on the “true north” of your mission. A reluctance to talk about that mission is often a pretty good sign that the founder hasn’t figured out the true north. When I meet entrepreneurs who won’t share their business idea, I’m very skeptical of them as entrepreneurs. Contrary to popular belief, exposure is not an idea killer as you get to crowdsource advice on how to evolve your idea and see current and historical parallels to it. Fear, however, will suffocate innovation and creativity while it’s still in the crib.
This doesn’t mean that I don’t believe in being in stealth mode — of course I do. But you should share your business idea with the “right” audience, especially those that can really mentor you or to whom you can ultimately sell your solution or product. I’ve never seen an overly protective entrepreneur build a very large company.
In place of a stealth strategy, consider this your “reveal strategy,” which would be the staged sharing to your concentric circles of co-founders, investors, formal, and informal advisors. This also includes your allies in related sectors such as the suppliers you intend to use, the news media, and of course the representative slices of the base clientele you hope to ultimately capture as your market. As legendary VC Marc Andreessen once argued in a blog you’ll find on the Digital Companion, figuring out the product-market fit is the most important criteria for the success of any startup. You do this in the “arena” I describe in Chapter 1, The Soul of the Entrepreneur, not in stealth mode.
As the serial entrepreneur and VC, Peter Thiel phrased in the notes for a Stanford lecture series that formed the basis of his popular book, Zero to One: “The bigger the secret and the likelier it is that you alone have it, the more time you have to execute.” You’ll find those notes on the Digital Companion as well and I encourage you to look them over.
Making Thiel’s point differently, I’d say it’s all about context. Every startup is unique. Osano, a company that we’ve invested in, is a data privacy platform offering a one-stop solution enabling firms to comply with data compliance rules and regulations around the world. Its talented founder Arlo Gilbert kept it under tight wraps until the moment of launch in 2019. In contrast, another entrepreneur we’ve backed, the energetic Eddie Madongorere, was totally transparent about his plans for MOON UltraLIGHT, a best-of-its-kind smartphone light accessory, long before he launched in 2017. Both approaches have been successful. As I was writing this chapter, Osana raised another $11 million to double its workforce. MOON UltraLight, meanwhile, was named one of the best inventions of 2020 by Time magazine.
Personally, the approaches I have taken pretty much cover the waterfront of stealth — or better yet, reveal — strategy.
My first company, a consultancy, didn’t need secrecy. It was quite the opposite as I was actively recruiting fellow students at Wharton as subcontractors. My second, an online community for MBA students, much like the early Facebook, was in the same category. And the third, an online retailer of sports nutrition products was nurtured and launched so quickly we didn’t even stop to consider stealth.
With the fourth, Coremetrics, I wish I had known then what I know now. We never really attempted to hold our cards close to the vest. The reason was that Coremetrics was competing in the early days of SaaS against the legacy leaders in the web analytics space, Accrue and NetGenesis, as a uniquely SaaS-native solution. We needed to contrast ourselves immediately and redefine the category of web analytics. But a few years after we launched, along came one of the fiercest, newest competitors in the space — a company named Visual Sciences. They made every new prospect sign a non-disclosure agreement before seeing a demo and kept the wraps on everything. They gave us fits as we and others tried everything we could to find out what they were up to, and the company disrupted us all in many ways. In retrospect, I should have found that balance between the conflicting imperatives that I’m advocating in this chapter. Frankly, I believe Visual Science did itself a disservice with its stealth strategy as they never exited out of that mode and that was among the reasons they were acquired by another competitor they might have bested, WebSideStory. At some point, you need to aggressively come out of stealth mode, market, and sell like crazy to win. But this was a time of deep lessons for all of us. And Coremetrics weathered many a storm, including the bursting dot.com bubble before we successfully exited to IBM for around $300 million. Onward.
When Brant Barton and I founded Bazaarvoice, my fifth company, we took these lessons to heart and decided to be in “stealth mode” for the first eight months. This was primarily because of the incredible response we were getting from our initial conversations with prospective retail clients. With how many customers we were signing quickly, including Golfsmith, CompUSA, and PETCO, we wanted to build up to proven case studies for the impact of our solution, so that when we launched, we launched with real force and were harder to competitively catch. The key executives we were working with at those companies, and others, were the “cool kids,” which you’ll be learning about in Chapter 16, Selling to the ‘Cool Kids’. But there were also several other important factors.
One was that our initial solution had been built by the team at Josh Baer’s Austin-based Capital Thought (a development firm off-shoot of his email marketing company), and it wasn’t very hard to replicate at the beginning. We needed time to grow the solution into something that would be harder for competitive entrants to easily duplicate.
Another reason we wanted to stay out of the technology press and off of the general media radar was that a primary inspiration for Bazaarvoice was the success Amazon was having with its product reviews, first introduced in 1995, just a year after the company was founded. A decade later, in 2005, as we were diligently building Bazaarvoice to eventually launch out of stealth mode, the product review ecosystem was still very immature, with only three or so retailers in the US with product reviews. But if we were looking carefully at what Amazon was doing, it was a safe bet others were as well.
Atop of this, everyone in the eCommerce industry, including the digital retail community, was wondering what company I would found next. They expected it to be good based on the success that Coremetrics had enjoyed. At that time, clients loved Coremetrics. This put the spotlight on me with both potential clients and competitors. We could waste no time.
So, by being in stealth at Bazaarvoice, we got a head start in the nascent industry. But we knew we had to move quickly to lead it. Our main competitor, PowerReviews, was founded just a few months after Bazaarvoice — and funny enough, they were initially in stealth too with their first company name being Pufferfish.
If you went to the Bazaarvoice site in those initial eight months, all you would see is the image below — absent even the text. Just the image and our first logo — designed by our first intern. That was Jacob Salamon, who went on to success in Los Angeles with his launch of Wisecrack, a popular YouTube channel, but only after having a huge impact at Bazaarvoice across a number of different roles, including head of marketing in Europe.
Bazaarvoice’s logo and image used on the site, sans the text
I didn’t want to give away too much to just any viewer. At tradeshows, potential clients would ask, “Does it mean, ‘Speak no evil’?” Actually, it kind of meant the opposite, as a key pillar of our ultimate success was that negative views were (and still are) posted along with the positive. Without this objectivity and authenticity, I knew our credibility and the value of the product review ecosystem we were building would crumble. This was a difficult sell to some — including one global brand that I had to walk painfully away from until it saw the light and returned. Remember this was 2005. Facebook was closed to the public. Twitter didn’t exist. There was certainly no Pinterest, Snap, or TikTok. And there were no iPhones or Android phones. Digital social interactions were far from what they are today. But still, customers were talking to each other as best they could, which represented a set of conversations we were seeking to amplify. And we had to convince our customers to embrace the negative voice of their customers as well as the positive. Some people wondered if what we were building was “bizarre voice.” I suppose it was to a certain degree, after all (reference Chapter 7 - What’s in a Name? for more on naming). But it worked. The intrigue factor was high which helped us get an audience before the right people.
This is another way of underscoring my point above, that stealth should be less about secrets than really your definition of a set of concentric circles signifying those with whom you'll share details and when you’ll do so. During those eight months, we showed potential clients everything. We showed them how our solution worked. We demonstrated how our services worked. We plotted out for them exactly how our product roadmap was unfolding. After all, they were betting on a very small company with few resources at the time. We signed and launched those big-name customers with the “cool kids” at the helm, and we ran like hell to lead the industry. Clients will give you all the credibility you need, even when in stealth, and they will serve as a reference if you’ve done a great job for them.
At the end of that eight months of cloistering, Bazaarvoice came out roaring, fit, and strong. Our launch was a lightning strike as our founding CMO Sam Decker blogged on the launch and my long-time friend, Emily Brady at Brady PR, riveted the media attention that we had been waiting for until the right time — when we had strength. By strength, I mean the fact that on launch day we already had a customer base ready to be our references, and the funding that enabled us to sprint. These backers included Austin Ventures, First Round Capital, Ralph Mack and Julie Constantin (both of whom had backed me at the beginning of Coremetrics), Eric Simone, and Jamie Crouthamel (the founder of Performics). We knew we had to quickly branch out and build more solutions than customer ratings and reviews to have a real platform — and today Bazaarvoice has a very broad conversations platform.
So moving along with my own chronology, how did my co-founders and I apply these lessons at data.world? Well, we were very stealthy. For more than a year. We knew we had a lot of functionality to build. In fact, data.world was the most complex technical build of our careers. We wanted to make sure that when we launched that there was enough functionality for the very broad, global community we were trying to attract and that it would “take.”
In those early months, we did something similar to the exercise at Bazaarvoice with our website’s homepage. As mentioned, our website was stealthco.world. While we had the data.world domain, we felt it would be too telling. So it was to this temporary address that we redirected all visitors. You’ll see on the following page the image they saw, as we started to emerge from stealthco.world to at least reveal the data.world name as we approached our launch:
data.world’s website during “stealth mode”
When we finally launched the data.world platform on July 11, 2016, we gated initial access both for performance reasons and to make sure we studied how our initial community members were using our platform. It was only later in 2016 that we took all of the governors off and the flood of community members rushed in. Word of mouth had helped our cause. And it worked — today we are the world’s largest collaborative data community and getting cited regularly for changing behavior. We are also helping enterprises with our modern catalog for data and analysis, a new category in which analysts such as Gartner and Forrester Research are helping educate the market.
We have created and are empowering the brains and nervous system of the emerging, data-driven “metaverse” that is transforming every aspect of business, commerce, education, transport, and life as we’ve known it. We have many enterprise customers turbocharging their businesses and we also have more than 1.6 million-plus community members who use our platform for free to collaborate on confronting climate change, poverty, the ravages of the pandemic, and more. My reflections on this are to be found on the Digital Companion.
Stealth mode can be among your most powerful tools when launching a new company. Just keep in mind that nothing great will ultimately be created in total secrecy, and you need to bring in allies, investors, partners, and foundational customers in a thoughtful, deliberate, and open way. Success is not in the way you hide what you do. It is in the way you reveal it.
“ ‘What we are doing is so mind-blowing, so unique, so incredible, I can’t tell you about it…’
… ‘Really? I doubt it.’”
— Journalist John Greathouse, writing in Inc. magazine