Brian Sommer could have easily had his company written about in
high-profile publications, lured world-class employees and set up
meetings with deep-pocketed investors. Instead, the CEO of IQ4hire
Inc. in Chicago flatly refused to answer reporters' questions
for months, kept his job openings quiet and rebuffed venture
capitalists who wanted to know what he was up to.
"Loose lips sink ships," Sommer says, explaining why
he chose to operate his 40-person company in stealth mode for
nearly six months. Specifically, Sommer feared that if word got out
about his project to build an employment database to help large
corporations find IT service providers, eager competitors would
swarm in before sales got off the ground. Sommer also wanted to
wait until he had the envisioned product perfected and
patented.
Stealth mode is an increasingly popular operating style for
companies that are incubating promising products or services. It
often combines a genuine attempt at top secrecy with a paradoxical
effort to generate buzz by appearing mysterious. "It's
basically turning your company into a teaser campaign,"
explains Kevin Jones, an analyst and expert on B2B e-commerce
companies at technology research firm Jupiter Communications.
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Among the best-known recent cases of successful stealth is
Transmeta Corp., a Santa Clara, California, company that kept its
plans secret for five years, despite intense scrutiny, before
unveiling its low-power computer processing chip in January 2000.
Four months after its hotly anticipated announcement, Transmeta had
raised $88 million from a list of blue-chip technology corporations
and went public in a $273 million offering seven months after
that—not bad for a company reporting 1999 sales of just $5.1
million.
Clearly, stealth can be an effective way to attract investor
attention. It's even more important for getting a jump on
imitators. "If you can get enough of your product built and
keep a lid of secrecy on it," says Sommer, "you can build
and bring to market a powerful image that no one else can compare
to."
Originally published in the April 2001 issue of Entrepreneur Magazine
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