I think a first mover has a great chance to win the race, because (1) they have the roadmap, while others may not, (2) they have the opportunity to throw rakes out of their windows to slow their pursuers, and (3) they typically control the pace of adoption by the marketplace.

I keep thinking of companies like NetFlix, who started a new race in movie rental during a time when there were monster incumbents naysaying their outlook on the startup. NetFlix redefined the race all together as a home delivery service as opposed to a rental store model, and as leaders of this new category, were able to set the standard for consumers on how it was to be done, and those chasing them had to keep second guessing as to where they would go next, all while not getting the revenues associated with the new market.

The reason that so many first movers end up succumbing their lead is that they either fail to read the roadmap or forget to throw those rakes out of the windows.

First mover advantage was a phrase that was thrown around a lot during the dot com frenzy, but I think most people who used it didn’t really know what it meant. In game theory, it refers to a condition where only a limited number of players can participate. Let’s say you’re trying to open an upscale Borders / B&N style bookstore in a city w/ 200,000 people located somewhere like Ohio. A place that size can only support 1 bookstore, so whoever opens a store second will have to take big losses to compete, which in turn gives the first player the “first mover advantage”.