"The more I find out, the less I know."

Friday - May 27, 2005 at 09:21 AM in

Stealth Mode Startup

If you've read my Cult of the NDA article (which, by the way, remains one of the most-read articles on this blog), then you know that I think good luck and good execution are far more important to success in a startup than a Really Big Idea. Ideas don't have a lot of value by themselves, they tend not to be unique, and by staying secret a startup gives up the chance to get valuable feedback from prospective customers and partners.
Let me add another reason to that list: it isn't always that hard to figure out what a stealth-mode startup is really doing. Let me give you a real-world example....

I'm at a tradeshow in Dallas this week, and we were visited by some very bright people from a stealth-mode startup. During the two days of the show, one of their programmers sat in on my speech about building better customer service automation; I had an hour-long chat with the CEO and another of the founders; and their PR manager stopped by our booth for a 15-minute briefing about what we do.

During this whole time we didn't learn anything about what they do. Nada. Bupkis. This was, in fact, one of the most secretive startups I've ever encountered (and I've known a few). They told us that the name on the business cards was a code name, and that the logo was deliberately misleading. They didn't even offer to sign an NDA.

Normally this kind of secrecy just makes me smirk a little and think "probably another online pet food company." But in this case, all the attention they were paying me made me want to know more--especially since they were asking were the kinds of questions you'd ask if you wanted to invest in or acquire a company. And I hate being at an information disadvantage.

So I sat down and did some research.

And here are the facts I turned up:

* They think their business is a huge opportunity, probably a billion-dollar plus market which nobody else is currently addressing (this last point could easily be naivete, which is common enough among entrepreneurs).

* The basic business model is a business-to-business service bureau (this from their website, and is consistent with what they told us in discussions).

* They want to build a big brand fast after they come out of stealth mode.

* One of the cofounders has been active on a mailing list for Asterisk, an open-source Linux-based PBX.

* They were at a tradeshow for speech recognition technology and IP-based call centers.

* The same team started another company which successfully sold services to the Fortune-1000.

* They are actively hiring Perl programmers. In fact, they are quite emphatic that they specifically want people who can write Perl and don't much care for any other skills.

This last point is intriguing since, as my VP of Development puts it, "Perl is the duct tape of programming languages." You use it for quick and dirty patches, stuff you don't need to be scalable or maintainable. In fact, Perl seems like a downright odd choice for a company planning to build a big service bureau, where scalability and maintainability are critical. This means that either (a) the person making the key architecture decisions is a moron (unlikely, but always a possibility, and there are some rabid Perl fans out there); or (b) there is some other consideration forcing them into Perl.

Coincidentally, the programming hooks into the Asterisk PBX are Perl-based.

So it seems very likely that they're building a service bureau based somehow around a PBX (using Asterisk as the core). Combine that with their presence at a call center show, and the fact that Perl seems well-suited for doing lots of little bits of customization around Asterisk--which is necessary for building a call center--and it seems most likely that they're building a company to provide IP-based call center infrastructure.

In other words, they'll use Voice-over-IP technology to provide all the technical infrastructure of a call center (automated self service, agent queueing, etc.) on a hosted basis. You just give the agents a PC with a web browser and a headset and this company will do everything else. Our intelligence assessment puts it at a 60% probability that this is their business plan (or something very similar). This, by the way, is a really cool idea and one which could easily be a billion-dollar business if it is properly executed. It isn't unique, though. I would guess that there are 3-4 venture-backed startups working on similar ideas.

Looking a little more broadly, we think there's an 85% chance that their business plan has something to do with providing advanced business telephony services through voice-over-IP. If not the call center business, then something like an IP Centrex (though even a casual Google search reveals dozens of companies already offering IP Centrex).

Now that I've told you what we think this company is doing, am I going to tell you who it is?

In a word, no. I respect this company's desire to remain in stealth mode, even if I don't think there's much point.

But if I'm right, you will have read it here first.

Posted at 09:21 AM | Permalink | | |

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