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The iPhone, Google search and Facebook were all latecomers to the game. None was first to market – but all of them are now the dominant players in their category.

In the business world, being a trend setter doesn’t guaranteed success. In fact, a great majority of those that blaze new paths fail. Yet entrepreneurs continue to chase – and be intimidated by – the mirage of first mover advantage.stopwatch

Some see the chance to introduce a new technology or new category as an advantage – and figure “what can it hurt to be first?”


The race to be first to market causes many startups to work under an imaginary stopwatch. They accelerate their plans and, in the process, make mistakes. The symptoms of companies who put too much stock into launching a category are pretty common:

  • Rushed products – This is a big one. Too often, companies feel pressure to get their product out under a self-imposed time constraint. As a result, either quality suffers or they come to market without understanding the critical customer needs, thus their product is missing key features.
  • Too much marketing spend – In a mad rush to build a first-to-market advantage, companies spend obscene amounts on brand awareness before the market is ready for their solution. This can come in the form of advertising (the dot coms in the late 1999s were poster children for this phenomenon) or huge promotions at trade shows.
  • Too much isolation – New startups can be very secretive. They spend months or even years developing their product – but sometimes fail to validate the market even exists. Accordingly, even the best product introduced with fanfare can fall flat and squander investment.

Even first-movers who find a modicum of success – or (the Holy Grail) an early rabid fan-base – are letting other companies learn from their mistakes. Look no further than Tivo – a company that arguably launched the DVR business, but whose position in the industry it created is fading fast.

So what can companies that aren’t first to move do to work themselves into a leadership position?

  • Simplify the product – This is often one of the best ways to come to market in a crowded field. As markets mature, there is often room for companies that take bloated and overcomplicated product lines and refine them to their key elements. A great example is 37signals. They have made a living off of building streamlined products in existing markets.
  • Address an existing market problem – There are many markets where customers just aren’t happy with their current options. New entrants can succeed if they identify the area (or areas) of customer dissatisfaction and fix it. This was Apple’s strategy with the iPhone. Prior to their entry into the market, mobile traffic on the data networks was miniscule because phones simply weren’t built to facilitate much more than checking e-mail and making calls. Apple revolutionized the mobile phone interface and now accounts for over 50 percent of all mobile data traffic globally – despite being an extremely late entrant to the market.
  • Specialize – In larger markets, there is often an opportunity to build a product for a segment of the market whose needs aren’t being met by existing offerings. In this case, success is usually determined by understanding a tight vertical market with specialized needs. If the specialized market is big enough (i.e. healthcare, education or manufacturing), then you can build a sizable successful business with products specially tailored for the needs of that community.
  • Leapfrog current market capabilities – Look for ways to leapfrog the competition’s abilities and use this to create a competitive advantage. Significant technology advancements can disrupt existing markets and change the dynamics of the leaders of those markets. Just ask the folks at Google.
  • Change the business succeeded in the mature personal finance software market by moving away from traditional packaged software and offering it online for free. Instead of relying on retail, the company made its money by finding better financial deals, then monetizing that switch. Ultimately they made upward of $30 per user, according to interviews with their CEO, without charging the user a penny.

The rush to be first is a fool’s race. And being scared away from an existing market just because there are already established players is even more foolish. Timing isn’t everything. Understanding the needs of your customers and having a product that meet those needs is.

Scott Olson is president of MindLink Marketing.

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