Getting to something first has tremendous advantages, but it also comes with a bunch of challenges.
I was thinking about this yesterday as I was setting up a couple iPads to be used around our house as smart home controllers.
The Apple identity management and app store systems feel like they were built for a different era. Because they were.
Comparing those experiences to Google, which is not a new company either, is eye-opening.
You can also see this in crypto. Companies that were built in the age of one crypto-asset (Bitcoin) have to retool their software to make it work well in an age of multiple crypto-assets. Companies that were started in the age of multiple crypto-assets have the benefit of starting day one with a different perspective.
If I had to pick first mover or second mover, I would still pick first mover because I think it is easier to attain a dominant market position when you don't have any competitors. Once the market opportunity has been identified, and there are multiple companies competing for market leadership, it becomes more difficult to win.
But if you are the first mover, you need to understand a few things:
- Life gets harder, not easier, when you have established yourself as the market leader.
- You need to invest in top-notch product and engineering teams, because product execution and technical debt will become significant challenges.
- You need to use your market leadership to build a balance sheet and a team that can allow you to manage the transition from first mover to market leader.
- Many of the best ideas will come from your emerging competitors. Look at their product execution for inspiration (Facebook has done an excellent job at this).
It is not a given that fast followers will beat a first mover, but that has certainly happened time and time again in the world of technology, internet, and mobile over the past 30 years. I think bad management and weak leadership of the first movers has as much to do with that as anything.
First movers can and often do maintain their market leadership. But doing so is a lot harder than people think.