I recently tweeted:
New early-stage start up trend: get big quietly, so you don’t tip off potential competitors.
Chris Sacca agreed:
@cdixon Agreed. As of this morning, I have four companies who don’t want investors mentioning that they’ve been funded.
Business Insider took these tweets to mean “Stealth mode is back.” But that’s actually not what I meant. The companies I’m referring to (and I think Chris is referring to) are publicly launched, acquiring users and generating revenue. They are modeling themselves after Groupon, where the first time the VC community / tech press gets excited about them, they are already so successful that it’s hard for competitors to jump in.
This trend strikes me as a response to the fact that 1) raising money from certain investors can be such a strong signal that it triggers massive investor/tech press excitement, 2) things are “frothy” now – meaning lots of smart people are starting companies and easily raising lots of money, 3) word seems to travel faster than ever about interesting startups, and 4) there are big companies like Facebook and Google who are good at fast following.
I don’t know what to call this but it’s not stealth mode. Maybe “underhype” mode?