Underhyping your startup

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?

Jeff

This does go in the opposite direction to 4square though, who hyped so much that everyone else became clones, even companies that were doing what they were before them.
http://www.aweissman.com aweissman

It's the “Don't Get High On Your Own Supply” mode – http://bit.ly/Xzms0

http://www.cdixon.org chris dixon

isn't it more like “Keep your stash to yourself”?

http://www.aweissman.com aweissman

different words, same idea

joshuakarp

BTW, I don't know all of the details, but the folks behind Groupon took investment (7 figures) some time ago for something called ThePoint. They worked incredibly hard, and ultimately was able to migrate to Groupon, and to build it into what it is today. My point is, Groupon wasn't the original idea, and they weren't bootstrapped into a $30mil Accel investment. I tend to agree with your premise, but I don't know if Groupon is the best example – they didn't need press to gain users to go from bootstrapped to angel, or seed VC.

http://www.cdixon.org chris dixon

“[groupon] didn't need press to gain users to go from bootstrapped to angel, or seed VC.”

that's exactly my point. the didn't get (lots of) press until they were already big. I think we agree…?

joshuakarp

i think so, but my point was that they probably couldn't have gone that route without having investment money already. it would have taken an amazing amount of discipline to not try to get press, and to focus on getting revenue. those guys are pretty good, so maybe; but certainly my inclination would have been to get the press talking as soon as it looked like i could sell the thing to businesses.

Andrew

Groupon has had press almost since it launched and had been actively seeking it out. However, they were smart and went to the places their potential users were like Time Out Chicago and Local News stations. Tech media readers only overlap very slightly with potential Groupon customers. Tech media hype only brought competitors, the properly targeted media hype brought customers and users.

ThePoint.com was heading towards its last legs when Groupon was launched and it saved them, customer acquisition was their main focus and you couldn't have missed them if you went to a Chicago-based website and saw a google ad but there was no reason for them to be on TechCrunch until after they were successful

joshuakarp

thanks for the clarification, andrew…

abhic

I agree completely. Groupon is a good example of underhyping a company and driving it with quiet resolution to tweak till they got the fundamentals right.

I think a lot more entrepreneurs (including myself) need to talk less and do more.

http://giffconstable.com giffc

what, you mean focus on execution rather than being a celebrity? shocking concept

what do you think “underhype” mode (and the mental shift away from the big product launch) says about changing startup dependence on PR and media coverage?
http://www.darrenherman.com dherman76

I've seen too many entrepreneurs recently really want to be a celebrity rather than build a sustainable company. It's not good.

http://www.bestmusicever.net/ Aphrica

it's not just entrepreneurs. there will be people in every field doing the exact same thing. in any profession that has the potential for greatness, there are those who will want to take any shortcut possible to become rich/famous.

http://charliepark.org/ Charlie Park

No comment on the business strategy itself, but I'm sorry for you and Chris (and al3x) that you can't record your fleeting thoughts without someone trying to capitalize on it. It's a sad commentary on the state of tech/biz press.
mattcarnevale

Wouldn't it depend on where you are in the development of your product. If you're in early stage development or not ready to scale properly you might want to keep it quiet until you have enough traction, especially if the product has a low barrier to entry. On the other hand if you ready to scale why not get the word out it
http://www.optimizeandprophesize.com/ jonathanmendez

hype of course coming from hyperbole meaning exaggeration. never a good idea for any business to exaggerate their success. sharing real success in my experience had always been a huge plus.

people worry too much about competition. it's a big world. every mcdonalds needs a burger king. every home depot needs a lowes. competition is good and healthy for markets and helps drive success. if anything it should be embraced and used for motivation and if your idea is *that good* in the first place (unique) it would take anyone a decent time to catch up once you've built something.

man up. talk the talk but walk the walk.

suyogmody

i've got to agree … maybe a serial entrepreneur needs to worry about staying in underhype or stealth mode. for a new entrepreneur, it's best to get as many eyes/ears on the idea and the success. worst case, you'll have a competitor but ideally the differentiation of your idea or execution will make you stand apart!

http://www.linkedin.com/in/rajatsuri rajatsuri

what about the latest TC post where Marc Andreesen says a 'hot' startup can command at least 4X the valuation? the low dilution and ease of raising money seems to be somewhat attractive

I actually agree with you and our startup is as underhyped as we can manage it. But there are cons as well as pros

http://www.cdixon.org chris dixon

Certainly press has it's virtues too…

http://www.gamechanger.io/ Kiril

Seems to me that the tech media is fixated on a very small portion of the actual innovation taking place in the industry. The vast majority is neither sexy (“oooh, LBS! iPhone!”) nor “obvious” enough to be good fodder for hype.

“Hypedness” has less to do with the startup, more to do with what generates pageviews at the moment.
austinbillc

As someone who is running a start-up I kept my business a secret for a long time because I was afraid that someone else would hear my idea and copy it. I read your post “Why you shouldn't keep your startup idea a secret” and agreed with most of your points and decided to launch the site earlier than I planned. I think it was the right decision.
http://blog.calbucci.com/ Marcelo Calbucci

Chris, I think there is a strategy at play — which people forget about it — as to why make a big deal when you get funding, and that is to get top talent. Yes, you can hire recruiters and work your ass off trying to find top engineers, top marketers, top sales people, but once you're in the news, quite a few of them tend to find you.

The reason this strategy is lost is that a lot of startups announce their funding just to brag, without a good PR strategy behind it.
http://www.venturevoice.com gregory

Facebook was a great example of this themselves. The dominated college campuses before any angels, VCs, journalists or tech pundits were creating profiles on it. I wonder how much of their advantage came from having a non-early adopter user base early on.
http://twitter.com/Clarkebar Clarkebar

I think the biggest reason we're starting to see more and more start ups work “underhyped” is because they're getting funded earlier and earlier as seed stage deals. Their ideas are still getting put on paper when they get the publicity of big name investors. In school people always guarded their answers during the test and boasted about how right they were afterward. A lot of these start ups may not be ready for that blow out marketing at the lunch table… for some they're still taking the test.

Another thought, brought up most recently by Sarah Tavel's blog post, is the growth of a start up ecosystem in ny. A lot of the recent seed deals with the most press are made up insiders on both sides of the table. It's obvious that the riskiest deals are supported by that social validation but I'd argue that for guys like me, first timers out of industry, the walls to the in crowd might be
getting taller.
http://kirklove.tumblr.com/ kirklove

How does this jive with your earlier post about not being secretive when developing new idea? http://bit.ly/d2VA5z

Just curious how you see the two relating if at all?

http://www.cdixon.org chris dixon

I think you can do both. Talk about your idea, especially when in formation phase, but then be discrete about your success fundraising, getting users, revenue etc.

http://twitter.com/jkaljundi jkaljundi

Sounds like “work mode / growth mode / work & grow mode”
http://lmframework.com/blog/about David Semeria

Along similar lines, I think it's better to be not profiled by TC until it wouldn't make any difference either way.

Better to build-up your business slowly and solidly than be famous for one day.
Miklo

Chris, what do you suggest startups do when they find out a competitor is doing something very similar to them? Holding off getting out the word makes sense if this isn't the case … but if a competitor getting initial positioning in a market or category is a concern … doesn't getting that initial press or other coverage before they do make sense (even if your product isn't as good as you'd like it to be yet)?
http://gustavvonsydow.com vonsydow

Having presented at both DEMO and Techcrunch50 I can safely say that as far as customers are concerned, neither of those conferences would have made any difference for us at Burt – but that might just be due to our core audience (creative ad agencies) being rumored to be technology averse to the extent that Marc Andreesen told us to give them up completely hahaha…

Anyhow, a feature in a decent size newsletter or speaking at a major (creative/production focused) advertising event usually nets 3-5x quality invite requests compared to technology equivalents. So as far as end-customer marketing is concerned, my experience is that tech/startup/business press is kind of overrated.

However, I *am* extremely glad that we did our presentations at both TC50 and DEMO.

First of all we've had loads of fun and got to meet people I've admired basically my whole life. And second and more important it has allowed us to attract great talent that otherwise would have no idea who we were and where to find us.
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AndreaF

I agree that it makes sense to keep it relatively quiet not only for the competition but also to avoid the inevitable pressure and distraction that publicity may cause.
The problem is: how do you get funding if nobody knows about you? And you are not generating revenues yet? And you're so bootstrapping it that cannot afford to attend most events or trvel around to network?
Are we doomed?
dennisry

Ides are common and rarely unique. I agree with the “share early and often” concept. The differentiator lies with execution, team and flexibility in model.
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blake41

If there are two routes: acquire a solid user base using all the “hype/press” you can possibly garner and risk also gaining competition, or underhype and risk not ever getting a solid user base but not having any competition I'd vote for the former.

http://www.cdixon.org chris dixon

I think it depends how valuable the techies are for you as early
adopters.

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http://blog.botfu.com Kevin Marshall

I don't think it's underhype, I just think it's “properly focused”…they are building an actual business before they hype said business…as some others mentioned, this doesn't mean you don't advertise or go after press, you just make sure the stuff you initially go after is all about helping build the actual business and worry about getting 'branding press' later…
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http://www.miketatum.com Mike Tatum

We called it “hiding out in the open”. No one ever has their shit figured out early, so boxing yourself into a half baked idea can be problematic.
http://twitter.com/chriswaldron Chris Waldron

I think the point you are making is running with your head down. Focus on your customers, your product and your team not the coverage in TC or Business Insider. I'd rather under promote and over deliver.

What I find annoying is how many startups focus on what biz dev deals they are working on or who invested with them to define their self worth (or the startup idea).

Currently Groupon mentioned at a conference that there are 133 direct competitors that they know of.
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Saul_Lieberman

“stealth funding mode”? (which admittedly does not directly capture all of the aspects you mentioned but signals the rest)
http://www.itvale.com sfrocks

it's called puppy dog ploy / judo strategy
http://www.danonit.com Dan Harris

Did the guys at 37 Signals ever go stealth? They are not big, but they are well known for building applications that are simple with just enough functionality and doing it fast, monetizing it and making money – Then write a book and talk about it.
http://www.appwhirl.com Richard Jordan

I like this idea. We had to fight the pressure to respond as we saw companies in related spaces going out and telling their story and getting as much press as they could. It was hard as it's tempting to jump up and tell your story. We prefer the idea of staying disciplined and under the radar until we've nailed the product/market fit and can accelerate faster than anyone can catch up.
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Chris Dixon

Underhyping your startup