We talk to a lot of companies that have an unhealthy infatuation with being the first to market. There is a belief that if you’re not the first and biggest in a market right away, you won’t be successful. We hear too many companies say things like “this market is a land grab” or “we’re trying to get first mover advantage” so they run as fast as they can without any regard for cash efficiency, unit economics, or building a truly profitable, real business. If anything, history shows that the first mover always loses to the ‘first innovator’. Consider the following:
-Apple did not invent the cell phone, Motorola did in 1973. The iPhone didn’t come out until 2007.
-Facebook was not the first social media site, Six Degrees was in 1997. Facebook didn’t launch until 2004.
-Ebay was not the first online auction site. By the time they entered the market, there were over 150 online auction sites, the largest of which was public and backed by Kleiner Perkins.
-Google was not the first search engine, rather ‘Archie’ was in 1990. Google wasn’t formally incorporated until 1998.
The point of the list above is to highlight that the most dominant companies in a respective industry weren’t the first to the market, but rather they were the first to truly innovate an already existing, flawed product. Of course, the examples above are anecdotal and a counter argument could be a company like Uber, which was the first to market and is by far the most dominant, but keep in mind Uber has raised over $9bln in equity in 14 rounds from 53 investors according to Crunchbase. Unless you can get access to capital like that, focusing on being the most innovative company in the market, not the first and biggest company in the market, will improve your chances of success.