First mover advantage is a myth.
Some disagree. They're wrong. Or if they aren't wrong, perhaps we could rephrase my point this way: it is exceedingly difficult for a first mover to keep their advantage.
Either way, this is a key secret to success: never be overawed by the status quo.
Many attribute our success at PayPal to our having been the first mover. But we weren't the first. We were just the first to do it right.
Leif Erikson is said to have beaten Columbus to America by 500 years. John Cabot made it to North America during the rule of Henry VII, before the Spanish and 110 years before Jamestown.
Far more interesting is China's Admiral Zheng He. In the early years of the Ming Dynasty, from 1405 to 1433, "The Great Navigator" led daring voyages of exploration throughout the East Indies, along the coast of India, all the way to the Arabian Peninsula and as far as Mombasa and possibly Zanzibar. He commanded 317 ships and 28,000 crewmen. Columbus' entire fleet--in 1492--would have easily fit inside the Admiral's flagship. He forced nations across half the world to pay tribute to his Emperor, and his treasure ships carried immense wealth back to China.
Many believe that, had he continued, within another decade or two, China would have "discovered" Europe and, with its then-vastly superior wealth, might, and manpower, colonized it.
But they didn't.
China's leaders violated that other key principle of success: keep doing what made you successful in the first place. Threatened by foreign influences and ideas, the Chinese court terminated Zheng He's voyages, dismantled his ships, and struck virtually all mention of his exploits from the official records. Within a few decades, China's coast was harried by pirates, a pathetic reversal which continued for centuries in the absence of any meaningful Chinese navy.
I recently visited the Zheng He exhibit in China's National Museum on Tiananmen Square. Today's China does not feel about Zheng He as the Ming did, and knows well that a race to settle space is just beginning, against lethargic first movers (America and Russia) it means to beat.
But China's failure in the 1430s continues to cost them 600 years later. The next 500 years saw the tiny, divided warring states of Europe become great nations, colonize or conquer most of the world, attain vast wealth and knowledge that propelled them far beyond the technological advantage China held in 1430, and ultimately dominate China itself. The past 40 years have seen China rise dramatically. But even now it has a billion people far poorer than the poorest alive in Portugal, Spain, France or England.
It could easily have been the other way around. But like everyone else, first movers make mistakes. And that spells opportunity.
Indeed, first movers do not have to fail so spectacularly, or even fail at all, for others to beat them. Second and third and tenth movers benefit from the examples first movers provide, frequently in ways the first movers themselves cannot. Success sometimes anesthetizes: when things are going well, you don't take careful stock of what you might be doing wrong, or at least, what you might be leaving on the table.
Others do, carefully. This is why football teams watch hours of video of their opponents.
The Wright Brothers were first, but when did you last fly on a Wright jetliner? Never. Glenn Curtiss built a better airplane and, in 1929, bought their company. Curtiss, and later Curtiss-Wright, was the top aircraft manufacturer for over twenty years, but even it failed to make the transition to jets.
Another man's company transitioned just fine. He didn't invent the airplane: in fact, he bought his first airplane and, frustrated with its manufacturer's service after the sale, famously told a friend "We could build a better plane ourselves, and build it faster."
So he did. His name? William Edward Boeing.
McDonald's was not the first hamburger stand, and Burger King and In-N-Out have great businesses. Google was not the first mover in search: in fact, its founders were repeatedly told that "search has been done," and that there was no room in that industry for another competitor. The iPod was a late entrant to the mp3 market: many smart people in Silicon Valley scoffed at it. Both Friendster and MySpace beat Facebook to market. Where are they today?
The first mover has some advantages, but he also has a great handicap. Everyone is looking at him. Everyone is trying to figure out how to beat him. He can't possibly be as smart or as nimble as all of them. The competition may make him better, or it may kill him. But no matter how big he is, no matter how long he maintains his position, there will be competition.
Why shouldn't it be you?
Rod D. Martin, founder and CEO of The Martin Organization, is a technology entrepreneur, futurist, fund manager, and visiting professor. Fox Business News has called him a "tech guru", Britain's Guardian labeled him a "philosopher-capitalist", and Gawker once described him as a "brilliant nonconformist." He was a member of PayPal's pre-IPO startup team and is a member of the Board of Governors of the Council for National Policy.
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