I’ve done a complete 180 on how I think about building in private (AKA stealth) vs. building in public. I used to think the idea of building in stealth was silly, and believed there was no downside to building in public (my first startup’s supporter updates were posted publicly on Medium). Today, if I were starting a startup, I would build in private as long as possible and remain cagey with any information I share externally.
I still believe that being in stealth to prevent someone stealing your idea is silly. However, I now understand that building privately helps you (1) remain more agile and make better, faster decisions, and (2) use information as leverage to build relationships and fundraise.
I’ll break these two down, and share some tips on how you can start to build more privately.
Remaining more agile
In the early days of startups, nothing really matters until you find some semblance of product-market fit. The process of finding product-market fit requires rapid experimentation and fast decision-making. You also need to be able to make reversible decisions in case a hypothesis you have about your product or market doesn’t pan out.
If you’re building publicly by having online presence or keeping many passive supporters updated about your progress, you’re putting undue pressure on yourself to make your current direction work (even if it’s the wrong direction). The prospect of pivoting or reversing decisions that you’ve made previously will feel harder to do, as you’ll feel like you’re giving the public and your supporters whiplash. You’ll feel pressure to continue forward, or you’ll take on the burden of explaining all of your decision making to try to keep people in the loop. This is something I experienced with my first startup, and feeling like I had to answer to hundreds of people made me a worse decision-maker.
I’d suggest keeping a low profile, so that you don’t have to constantly relaunch your website, revise messaging, or explain why you are completely changing your target market to the broader public.
This also applies to supporter updates (monthly emails you send to investors/supporters). While supporter updates are a really helpful mechanism to force you to reflect on your progress and hold yourself accountable as a founder, they can also make you a worse decision maker in the early stages. Until you have significant validation of product market fit (meaning you’d likely be able to raise a seed round), I’d recommend being forthright in any supporter updates about the fact that you’re in early stage experimentation mode, and avoid trying to show clear, month-over-month forward progress in KPIs, as these will make it harder for you to go backwards (which is often necessary).
I’d also recommend you only share that supporter update with people who you have close relationships with, which brings me to my next point.
Information is leverage (and it isn’t free)
Access to your investor/supporter updates is not a privilege. If a prospective investor wants to see your monthly reporting, the going rate for that is at least a $25K check (or a significant time investment to provide material value). Too many founders give away all of their information via supporter updates for free. It’s true that investors like to invest in lines, not dots. But if the only way you’re managing a prospective investor relationship is through a mass email, then you’re not really building the relationship at all.
Any relationship building that you’re doing with investors BEFORE fundraising (which by the way is the best time to build investor relationships) should be on a 1-on-1 basis. Rather then sending a prospective investor an mass, impersonal email each month, instead try sending them a personally forwarded version of one supporter update with a personalized message and ask if they can help with a specific relevant challenge.
If an prospective investor wants to get added to your supporter update, you should feel free telling them that it’s only for supporters and advisors, and if they want to start scheduling time for a monthly call to check in and discuss the business then you’d be happy to add them to the list. Whether its a supporter update or any information about your startup, information isn’t something you should give away for free – it’s bait that you can use to get really helpful folks more engaged with your company.
This goes for any information about your company at any stage. Especially when fundraising, you want to be selective with the information you share. For example, if you’re ever in a room pitching a room full of investors (like a demo day), you should avoid talking about valuation. Valuation discussions are for investors who have moved you to a certain point in their decision making process and are serious about writing a check. Another example: When you’re trying to get a first meeting with an investor, you shouldn’t tell them everything about the company, but rather the minimum amount to get them to want to take a meeting (which could be just a few sentences in an email).
As a founder, keeping information private will make you a better, faster decision maker and will allow you to get more value from the people out there who can be helping you. If you’re already managing a supporter update and you feel like it’s slowing down your decision making or giving folks too much information, then purge it! If someone hasn’t responded to an email or helped you, then take them off of your list. Even if there are high quality people that you end up removing who you’d like to invest in the future, remember that you can always reach out to them individually with select supporter updates.