- The Faux First Mover Advantage
The Faux First Mover Advantage
Being first isn't as good as people thinking you were first
The Fallacy of the First Mover Advantage
It’s commonly believed that being the first to do something is beneficial. Even notwithstanding regulatory protections (like patents and trademarks), young entrepreneurs often feel that one of the biggest competitive advantages available to them is that of the First Mover.
If only they could think of an idea no one has thought of before. Or develop it in a way that no one has ever seen. Or position it in a way that’s entirely novel. If only!
Truly, ideas mean little. Execution is all that matters. And moreover, successful execution is all that matters. At the end of the day, customers care little for what industry developments led them to use a particular product. There are no customers of ideas; only customers of goods and services.
I’m reminded of my favorite line from The Social Network. During his deposition exploring whether Facebook was “stolen” from The Winklevoss Twins’ The Harvard Connection, (the fictional) Mark Zuckerberg tells his accusers: “If you guys were the inventors of Facebook, you’d have invented Facebook.”
There is much danger in being the first mover:
Consider the speed with which the second wave of LLM competitors (in particular Google) leveraged the significant upfront investments of OpenAI to jumpstart their entry into the market. The same can be said of Adobe on the backs of diffusion model developers (including, once again, OpenAI).
Consider the EV market race, where years of not only development but also market positioning and education by Tesla have now been used to the advantage of every major car company launching their own electric cars in record time.
Consider Xerox’s work in graphical user interfaces (leveraged by Apple). Or the many iterations of smartphones tackled by IBM, Nokia, and BlackBerry (again leveraged by Apple). Or the moderate attempts by Microsoft and others to bring tablets to market (once more… Apple). Or the countless companies that made smart watches (before… Apple). Need I mention bluetooth headphones (……🍎), voice assistants (………🍎), and smart TVs (……….🍎). Plus the upcoming AR/VR race (…….🍎).
The smartest companies let other companies figure things out first. Then they double down when the risk is much lower.
Faux First Movers
In retrospect, given enough time, the market rarely remembers who came first. In many cases, the advantages of being the first to do something are far outweighed by the many disadvantages cited above. Yet the same cannot be said of the first to successfully and broadly convert the market.
I call this The Faux First Mover Advantage. Simply put: Being first isn’t as good as people thinking you were first. The greatest tactical move is often allowing a competitor to clear the path of development and then reaching their target market before they do. This is precisely what has happened in myriad technological races before a victor was apparent, including the ongoing LLM and EV races.
It’s called the Faux First Mover Advantage because, as I stated above, consumers care little about the developments that led to their use of a particular product. Therefore, it’s the perception of being first that matters, not whether or not you actually were.
In my own startup days, we spent years at Anchor trying to go from zero to one, to launch new innovations, to bring fresh new ideas to antiquated industries. And while I wouldn’t say any of these experiments were a waste (for mistakes and false starts are critical to reach success), it wasn’t until we embraced an industry that was already well charted (podcasting) that we truly hit an inflection point. Put differently, our biggest growth driver came from looking at an industry where, while we were far from the first, we were confident we could be the best.
The consequence? More than 80% of new podcasts are created on Anchor (now called Spotify for Podcasters). That means that, for the millions of podcasters whose conversion to successful content creation happened on our platform, Anchor became synonymous with podcast creation, hosting, distribution, and monetization.
Fail… Slightly Less
One of the common pieces of advice I give new founders goes something like this: “Make assumptions, use them to move fast, but be prepared to be wrong. Nine times out of ten, you will be wrong. Nine times out of ten, everyone will be wrong, including your competitors. Your job is to find ways to make that nine out of ten into eight out of ten.”
There are a number of ways to do that. Doing things that don’t scale is one. Hiring for the right reasons is another. And here, we’ve found a third method: Learn from what your competitors have done right and wrong. Don’t race to be the first. Learn from the first, do it better, and reach the next available customer before they do.
In the grand scheme of things, “History is written by the victors.” The great irony? This quote, which most people attribute to Winston Churchill, was almost certainly said by many other people before him. But he’s the one who gets the credit for saying it. Now that’s a Faux First Mover.
P.S. Next week I’ll be sharing some of the best content (books, movies, etc.) I’ve discovered in 2023. I’d love to hear your recommendations too! Reply to this email and let me know about your favorites from the last year, and I’ll include them in my upcoming post.
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