Stealth startups

Back in 1999 when the Internet bubble was rapidly inflating, entrepreneurs protected their ideas by operating in "stealth mode" -- purposely hiding the details of their business models so the entrepreneur down the street would not steal the concept.

Six years later, stealth mode is back in vogue. I have stumbled across more than half a dozen of these covert businesses in the Seattle area in the past few months, the most recent a Redmond company called Muskoka Media that I wrote about in this story Saturday.

Muskoka Media founder Andrew Wright, a former RealNetworks Vice President who built the company's multi-million dollar games business, said it was "just not worth talking about at this point."

Other entrepreneurs who aren't saying much include the founders of Djinnisys, Second Act Partners, Webaroo and Zillow. I covered them in this previous column on the topic of stealth.

I must have hit on a trend because at the Pacific Northwest Venture Capital Symposium today several of the presenters stressed the importance of stealth.

"Venture capitalists are going to be very quiet about these early-stage deals, they aren't going to be running to VentureWire and telling their portfolio companies to put out a press release that they have gotten their first round," said Mark Heesen, president of the National Venture Capital Association. "They want to keep these things in stealth mode until they think the technology will actually move forward and they just want to be quiet about what is going on. I think that is also good news."

OVP Venture Partners Chad Waite -- whose firm is backing Djinnisys -- said he has been trying to confound the press about the business model of the company in order to buy time to develop the product.

"Why are we going to alert five other venture syndicates and five other smart scientists as to what we are trying to do. It makes no sense," said Waite. "We are back in the stage of the cycle where it is not important to hype what it is you are doing and to build a really good, clever story around it. We are in the part of the cycle where we build companies. The world has come back to building companies, rather than building stories."