Being anti-stealthPosted: October 30, 2007 at 8:53 pm in management, nextny
Charlie O’Donnell has been taking an anti-stealth approach to his new startup Path101, where he’s blogging everything that’s going on with the company, from meeting agendas to funding strategies. His strategy sparked a great thread on the nextNY mailing list about the advantages of being anti-stealth versus being secret. I contributed to the thread, and I’m going to steal my email to be the bulk of this blog post, because I think it’s a great topic.
I’m going to start with Marc Andreesen’s premise that “The only thing that matters is getting to product/market fit” where he defines product/market fit as “being in a good market with a product that can satisfy that market.” Marc points out that it doesn’t matter how great your operations are or how good your people are if there’s not a market. And if you tap into a previously unexploited market, you can have terrible operations and mediocre people, but if your product basically works, “customers are knocking down your door to get the product”. So how do you find that fit between your company’s capabilities and a good market?
One possibility is planning. This is the myth of the MBA, where the MBA analyzes the market, plans out the strategy with fancy frameworks like the 4 Cs or the 4 Ps, does revenue projections, and the plan is executed perfectly, leading to market success. Yeah, right. As military leaders have known for centuries, no plan survives first contact with the enemy (or the market in this case). But this myth of planning leads to the emphasis on secrecy – keeping your plans secret makes sense if you are sure that you know everything about what you’re doing, who your audience is, and what the market is.
But in the real world, you know none of those things with certainty, so it makes more sense to be anti-stealth. You need to test your ideas in real markets as soon as possible. That will tell you if there’s a demand for the product, and if your potential customers believe that you can deliver a product that meets their demand. Being anti-stealth will get more people giving you feedback on your product, and the changes necessary to meet market demand.
If the most important thing is to find a product/market fit, then companies have to quickly find that fit. Taking a cue from Beinhocker’s Origin of Wealth, evolution is a good model for finding a niche in the battleground of competing business models. Going into stealth mode with your business idea is like hiding in an area with no predators – like large mammals in prehistoric North America, you can be very successful in such an area until a real predator finds you and destroys you (as humans did to those mammals). Being anti-stealth means getting out there and taking on all competitors; if you survive, your company will be the stronger for it. You have to change and change and change again to adjust to the environment, and if you don’t do that, you’ll fail.
There’s also an element of rapid prototyping and experimentation here. Test early, test often. If you’re going to fail, it’s better to fail earlier when you haven’t spent as much money. This is certainly true in engineering and development, and I think it applies in this arena as well – you have to identify the assumptions that are critical to your company’s success and test whether they hold true. You can’t fail if you are keeping everything secret. That may be why some companies stay in stealth mode so long, but it’s pointless because the company would save time and money by failing sooner.
I think an anti-stealth strategy also has real benefits from a publicity standpoint. Unless your network is phenomenal to begin with, you’re not going to know everybody who might have something to contribute to your project. Being anti-stealth gets your name out there, and gives you the opportunity for people you don’t know to contact you and give you help you didn’t even know you needed.
If a company is going to be successful in the market, it will have to have capabilities that nobody else has. There has to be a fit between what its employees can deliver and what its customers want; otherwise, any other company in the space could swoop in and take those customers away. Keeping the company’s strategy under wraps only delays the inevitable if the company has no differentiation from its competitors. Like security through obscurity, you are probably doomed if you are depending on keeping something secret. In other words, secrecy is not a competitive advantage.