I get a lot of business plans sent by friends and acquaintances asking for my opinion and it almost seems like it is an unwritten rule of the business plan to list “first to market” as a competitive advantage. What a myth! Being first to market usually means that everyone else can copy your idea and improve on it, while you undertake all of the risk.
Alta Vista came before Google
Broadcast.com existed way before YouTube
Rio preceded the Ipod
Amazon wasn’t the first bookstore selling online
Friendster was first to MySpace’s second
These are just the examples that I can think of at the top of my head for the technology/internet space. There are hundreds of others. I would probably say that copy-cats have a better success rate than market innovators.
So where does that leave you and your brilliant innovative idea? Isn’t the internet supposed to erect natural monopolies because of a “network effect” and the centralization of information? How do you protect your business if being “first to market” is not enough?
Execution!!! Build out your idea in the best way possible, because even though being the first to market your idea isn’t enough, being the first to own your market is the real key.
The internet absolutely allows for very serious natural monopolies, but to enact them you need to own the market first. Meaning you need to be the top dog in your space, be the Google, YouTube and Ipod of your space. Because only by being number 1 can you enjoy the competitive advantages that come with the network effect.
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March 7th, 2007 at 4:08 pm
Well put, usually the first to market gets avalanched by business clones. The one with the strongest image and advertising campaign usually is the one left standing.
Microsoft Windows is a great example of this. Mac OS was on the market with a windows manager before Microsoft Windows, yet Microsoft Windows now dominates the Windows Manage market by 100 to 1.
March 7th, 2007 at 6:14 pm
Hi Christopher,
Thank you for reading, and thank you for your comment.
Though branding is a critical component of what I am referring to, it is more than just advertising and carving out a brand.
What I mean by owning the market, is that because of the dynamics of the Internet, there are generally only 1 or 2 players in each space who can survive long term. Being there first is just not as important as being the best.
Regards,
Eli
April 18th, 2007 at 8:43 pm
Perhaps my comment is late, however I couldn’t resist after reading this post. I think your statement about being first is not as important as features is wrong. I think strategy (and positioning) far outweigh the features of any product. Concentrating on features, process or people involved is missleading and can lead to false conclusions. From the examples you list all of them failed because of their strategy not because they were first to market. I’d be hard pressed to find actual market leaders because they had the best product. Even that in itself is subjective.
Your reasoning is that “copy-cats” can improve on features. This is easy to defeat since you are first to market you can release further feature rich products that better compete with the “copy-cats”. Being first lets you attain revenue before others and allows you to quickly copy or better any products released.
It’s a quick rebuttal but I would like to hear your thoughts.
Thanks,
Andrew
April 19th, 2007 at 1:17 am
Andrew,
Thank you for your post. The discussion I was presenting is not one of features vs. time, it was more about explaining why rushing out a product doesnt make sense. Founders should take the time to get their product done right, put in place the right distribution strategies, and worry less about rushing a half-backed product out just to be the 1st.
Eli
April 19th, 2007 at 5:55 pm
I agree. Crappy products make for crappy results. I think a solid product is step 1 in a good strategy. The product / service has to have value and has to be different. With so many bad products out there I cannot imagine how much money has gone down the drain promoting them and trying to be sucessful.
Andrew