These startups that willingly stay under the radar

Posted on 2 Dec. 2022 at 8:30 am

“Today is an exciting day for me. After months in ‘stealth mode’ it’s time to reveal what I’m working on. This message was posted by Fabrice Valay, former leader of the healthcare industry, a few days ago on LinkedIn. In a few lines he says he joined 3C Industry, a start-up in the dental area that will “revolutionize the way of treating dental misalignments”. But he is careful not to elaborate.

This strategy, known in the jargon as stealth mode, is all about avoiding media and public attention. A different choice than some start-ups who like to communicate regularly about almost anything… and sometimes anything. “’Stealth mode’ is very fashionable in the US. It is spreading more and more in Europe,” says Alexis du Peloux, partner at venture capital fund XAnge.

do not get detected

The best-known example to date is CloudKitchens, a company created in 2016 by Travis Kalanick, founder of Uber. Positioned in the niche of dark kitchens, it left the joinery three years after its creation. Since then, the leader has continued to keep a low profile while quietly developing around the world. “It has a lot to do with his personal history. He got a lot of media coverage on Uber, he got a lot of ‘bad buzz’. No wonder he prefers his new box to be hidden”, analyzes Alexandre Berriche, business angel and founder of Fleet, a start-up specialized in computer equipment rental.

3C Industry, for its part, has opted to develop submarines pending regulatory approval for its new system, but also for competitive reasons. “Our potential partners are also potential and powerful competitors. The leader in the dental alignment market is valued at $15 billion. I don’t want him to detect us”, says Fabrice Valay.

For other startups, discretion rhymes with operational efficiency. “It allowed us to iterate on our corner with customers. There is such a requirement in the software world, as the entry barriers are low, that you have to make sure you have the right value proposition when officially announcing the product launch”, explains Théo Rouer, co-founder of Elba, a cybersecurity start-up that has been in stealth mode for a year.

Same philosophy on the side of Kwalead, a shopping social network. “It’s better to arrive with a product that resists before communicating. But when you’re done, everyone has to see you,” advises Maurice Ayed, head of youth footage.

beautify your situation

Being away from the spotlight also helps not to disperse. “We stay focused on our project and avoid all events,” adds Maurice Ayed. “You have no distractions. I love the media, but sometimes they don’t help you. On the other hand, when you’re not exposed, you grow less quickly”, underlines the former employee of a startup in stealth mode.

Some leaders choose this strategy to embellish reality a bit. “You can cheat the actual release date of your box, which will give you a sense of speed that VCs really like. [fonds de capital-risque, NDLR]🇧🇷 For example, you can say that it has recorded so much revenue since its launch six months ago, when in fact it has done so in two years,” observes Alexis du Peloux.

On the recruiting side, stealth mode can be a double-edged sword. Startups that communicate a lot and announce their fundraising with great fanfare tend to attract a lot of applicants. But some profiles are looking above all for a challenge. “In cybersecurity, for example, a CTO doesn’t care if you’re LinkedIn Company of the Year,” said Alexandre Berriche, who will opt for stealth mode if he’s launching a new company.

How long is it better to stay hidden? According to the interviewees, there is no ideal period, but exceeding two years is quite risky. “You could be on the wrong path because you are far from reality, so you will make decisions that are far from the market”, underlines Théo Rouer. Some continue to maintain this reserved character after coming out of the closet. When contacted, insurtech Evy, for example, declined to comment on the matter.

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