First Mover Advantage Quotes

There’s barely a product or service on the market today that customers can’t buy from someone else for about the same price, about the same quality, about the same level of service and about the same features. If you truly have a first-mover’s advantage, it’s probably lost in a matter of months. If you offer something truly novel, someone else will soon come up with something similar and maybe even better. But if you ask most businesses why their customers are their customers, most will tell you it’s because of superior quality, features, price or service. In other words, most companies have no clue why their customers are their customers. This is a fascinating realization.

You’ve probably heard about “first mover advantage”: if you’re the first entrant into a market, you can capture significant market share while competitors scramble to get started. But moving first is a tactic, not a goal. What really matters is generating cash flows in the future, so being the first mover doesn’t do you any good if someone else comes along and unseats you. It’s much better to be the last mover—that is, to make the last great development in a specific market and enjoy years or even decades of monopoly profits. The way to do that is to dominate a small niche and scale up from there, toward your ambitious long-term vision. In this one particular at least, business is like chess. Grandmaster José Raúl Capablanca put it well: to succeed, “you must study the endgame before everything else.

One of the obvious implications of a potential intelligence explosion is that there would be an overwhelming first-mover advantage. In other words, whoever gets there first will be effectively uncatchable.

Futurists are skilled at listening to and interpreting the signals talking. It’s a learnable skill, and a process anyone can master. Futurists look for early patterns—pre-trends, if you will—as the scattered points on the fringe converge and begin moving toward the mainstream. They know most patterns will come to nothing, and so they watch and wait and test the patterns to find those few that will evolve into genuine trends. Each trend is a looking glass into the future, a way to see over time’s horizon. The advantage of forecasting the future in this way is obvious. Organizations that can see trends early enough to take action have first-mover influence. But they can also help to inform and shape the broader context, conversing and collaborating with those in other fields to plan ahead.

the so-called first-mover advantage is usually not an advantage. Industry pioneers often end up with arrows in their backs—while the horsemen, arriving later (Facebook after Myspace, Apple after the first PC builders, Google after the early search engines, Amazon after the first online retailers), get to feed off the carcasses of their predecessors by learning from their mistakes, buying their assets, and taking their customers.

There’s barely a product or service on the market today that customers can’t buy from someone else for about the same price, about the same quality, about the same level of service and about the same features. If you truly have a first-mover’s advantage, it’s probably lost in a matter of months. If you offer something truly novel, someone else will soon come up with something similar and maybe even better. But if you ask most businesses why their customers are their customers, most will tell you it’s because of superior quality, features, price or service. In other words, most companies have no clue why their customers are their customers.

If pitches were weapons, the majority would be B-1 Lancers or Navy Seals. The B-1 pitch is up in the clouds. It features a lot of hand-waving, cool PowerPoint animations, and use of terms such as strategic, partnerships, alliances, first-mover advantage, and patented technology. Typically, it’s delivered by an MBA with a finance or consulting background.

A second problem is called “anchoring”. In a classic study Amos Tversky and Daniel Kahneman secretly fixed a roulette wheel to land on either 10 or 65. The researchers span the wheel before their subjects, who were then asked to guess the percentage of members of the United Nations that were in Africa. Participants were influenced by irrelevant information: the average guess after a spin of 10 was 25%; for a spin of 65, it was 45%. In meetings, anchoring leads to a first-mover advantage. Discussions will focus on the first suggestions (especially if early speakers benefit from a halo effect, too). Mr Kahneman recommends that to overcome this, every participant should write a brief summary of their position and circulate it prior to the discussion.

It’s important not to confuse critical mass with first-mover advantage. Being first to launch in a market might earn you congratulations on being a product visionary, but if you aren’t also the first to scale, you’ll end up as a footnote in a Wikipedia article about your competitor who did.

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In fact, there may be a first mover disadvantage. Netscape was the first popular web browser. It failed. Other first movers included Visicalc, Digital Research, Ampex, and Archie. Table 3 shows some first movers and the ultimate winners. Contrary to the myth, there does not seem to be a first-mover advantage because fast followers can often profit from the first movers’ mistakes. About 50 percent of first movers fail, and only 11 percent dominate their markets.1 Researchers Peter Golder and Gerard Tellis found that innovators got only 7 percent of the market. First movers need to spend time and money to educate customers, to convince them they have a need for the new product or service, and to get them to buy. This is not easy. The ultimate winners often learned from the first movers’ mistakes and shortcomings, used this information to improve their own product or strategy, and won.

It is in disruptive innovations, where we know least about the market, that there are such strong first-mover advantages. This is the innovator’s dilemma.

By capitalizing on these assets, a company stands to gain customer success, brand strength, first-mover advantage,

The idea of network effects and their articulation through Metcalfe’s Law first became popular in the 1990s, as the Internet’s popularity was growing. Backed by a simplistic notion of how networks created value, the common view of network effects viewed competition between platforms as a simple matter of getting the biggest the fastest. This concept also was known as first-mover advantage.

In a more nuanced analysis of network effects, the importance of first-mover advantage largely disappears. Yes, growth is very important, especially when multiple platforms are battling for control. Because of competitive pressure, most platforms feel a strong pressure to amass users as quickly as possible. This urgency is appropriate. However, growth is not an end in itself. A large, incumbent network has an advantage over new entrants and smaller competitors, but that advantage matters only if it’s sustainable.

In the past, part of the problem was that this concept was applied to businesses that didn’t have any real network effects and very little sustainable advantage, even if they were to succeed. Pets.com and Kozmo.com are both examples from the dot-com era. But another problem with the emphasis on first-mover advantage is that it gives you the wrong ideas on how you should go about scaling a network. The growth-at-any-cost mind-set is a big reason why platforms that get initial traction often fail to reach scale. Both Friendster and Myspace got big fast. But they did so largely by ignoring the effect this growth had on the quality of their platforms.

If a networked product can begin to win over a series of networks faster than its competition, then it develops an accumulating advantage. These advantages, naturally, manifest as increasing network effects across customer acquisition, engagement, and monetization. Smaller networks might unravel and lose their users, who might switch over. Naturally, it becomes important for every player to figure out how to compete in this type of high-stakes environment. But how does the competitive playbook work in a world with network effects? First, I’ll tell you what it’s not: it’s certainly not a contest to see who can ship more features. In fact, sometimes the products seem roughly the same—just think about food-delivery or messaging apps—and if not, they often become undifferentiated since the features are relatively easy to copy. Instead, it’s often the dynamics of the underlying network that make all the difference. Although the apps for DoorDash and Uber Eats look similar, the former’s focus on high-value, low-competition areas like suburbs and college towns made all the difference—today, DoorDash’s market share is 2x that of Uber Eats. Facebook built highly dense and engaged networks starting with college campuses versus Google+’s scattered launch that built weak, disconnected networks. Rarely in network-effects-driven categories does a product win based on features—instead, it’s a combination of harnessing network effects and building a product experience that reinforces those advantages. It’s also not about whose network is bigger, a counterpoint to jargon like “first mover advantage.” In reality, you see examples of startups disrupting the big guys all the time. There’s been a slew of players who have “unbundled” parts of Craigslist, cherry-picking the best subcategories and making them apps unto themselves. Airbnb, Zillow, Thumbtack, Indeed, and many others fall into this category. Facebook won in a world where MySpace was already huge. And more recently, collaboration tools like Notion and Zoom are succeeding in a world where Google Suite, WebEx, and Skype already have significant traction. Instead, the quality of the networks matters a lot—which makes it important for new entrants to figure out which networks to cherry-pick to get started, which I’ll discuss in its own chapter.

First-mover advantages tend to prevail when patented technology is involved, or when there are strong network effects (the product or service becomes more valuable when there are a greater number of users, as with telephones or social media).

Timing and execution made all the difference. We earned most of our money on the first one hundred stations we bought—numbers 20 to 118. Why? Because after that the rest of the industry caught on, competition for stations increased, and prices went up. However, we continued to acquire even then, albeit at a slower rate, because of the economies of eliminating redundancies within a large portfolio in geographic concentrations and because our average price per station remained so low. But it was the first-mover advantage that made Jacor a lead dog—and a home run. Within three years, we went from 20 stations to 243. Jacor

Another potential advantage you might have is a first-mover advantage—obviously, if you are the first out of the gate, you will enjoy a head start over your rivals, especially if you can achieve a so-called network

Before 2020, I was naive. I thought that racism, intolerance, supremacism, and bigotry were isolated to the ideals of a tiny, narrow-minded group of people. I was wrong.

first-mover advantages can be especially strong in new markets where customers face high switching costs. The first mover in a new product category has a chance to acquire first-time buyers before any rivals enter the market. But this advantage disappears once the second entrant arrives; then, the race is on.

When we have an original idea to invent a product or start a company, we’re encouraged to be the first mover. There are, of course, clear advantages to speed: we can be sure to finish what we start and beat competitors to market. But surprisingly, as I’ve studied originals,

There is a powerful first-mover advantage in framing. Whenever possible, seek to control the frame of the negotiation at the start.