The First-mover advantage myth
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In May 2015, I resigned from my full-time job as marketing manager for Australia’s leading coworking space at the time. I had no idea what would come next.
Then I saw a 7-day startup challenge kicking off in a FB group hosted by Dan Norris – author of The 7 Day Startup – You Don’t Learn Until You Launch. The whole point of the challenge was to follow Dan’s 7 steps to test a business idea within one week. You knew you were onto something if you could find paying customers during that period.
Having been immersed in the small business and coworking world for multiple years, I sensed that many startups and small businesses struggled with getting results from their blog posts. Their blog wasn’t doing too well because their posts weren’t optimized to be found in Google, or they weren’t promoting their content enough.
So I decided – why not offer a productized service that addressed these challenges?
Following Dan’s process, I created a simple 1-page website (landing page) and offered a Launch Special: “Be 1 of our first 5 clients and save 50% on the monthly rate!”
Here’s what the landing page looked like:
I shared it on social media.
Don’t have the time, strategy, or knowledge on how or where to best promote your blog? I can help! bloggermates.strikingly.com#7daystartup
— Anfernee Chansamooth (@anferneec)
Jan 19, 2016
I also shared it in Dan’s FB group and asked for feedback from other 7-day challenge participants.
Three people responded within 48 hours to say they wanted to take me up on my launch offer and give my service a go.
“Blogger Mates” was born! (cringe name, I know 😂)
Eventually, I changed the name to “Simple Creative Marketing,” and this idea turned into a legit business over time supporting multiple clients.
My wife Cindy came on board part-time to help with finances and operations, and at its peak, we had a contractor team consisting of VA, five writers, and two editors.
I share this story to point out that the idea for this business was not new.
We certainly weren’t the first digital marketing or content agency out there. Nor were we the only productized service that focused on content optimization.
When I think about all of the clients we served over the years, some have gone on to be quite successful – generating six figures or more annually, winning industry awards, and lasting five years or more.
None of them were first movers, either.
What is first mover advantage, and why is it often considered a valuable asset in business
Have you ever heard the saying “first come, first serve”? Well, in business, that saying takes on a whole new meaning.
First-mover advantage refers to being the first company to enter a market and establish a strong customer base before competitors have the chance.
This can give a business a major leg up and make it harder for other companies to catch up.
Numerous well-known companies have allegedly benefited from being first-movers, including the following:
Amazon – The first online bookstore that made a significant impact.Tesla – The first company to successfully introduce and produce electric vehicles.eBay – The first online auction website that people truly took notice of.Coca-cola – The first soft drink company to achieve global branding and recognition.
However, being the first mover doesn’t guarantee long-term success.
That’s a myth and I’m about to show you why.
One study revealed that 47% of first-movers failed, but only 8% of late-movers failed.
Peter Golder and Gerard Tellis researched businesses that fell into one of two categories- pioneers or settlers.
The pioneers were the innovators who created new markets (the “first movers”), and the settlers followed their lead by entering these established markets (the “later movers”).
Golder and Tellis found that there was a significant difference in failure rates among the hundreds of brands they analyzed in numerous product categories.
47% of pioneers failed, but only 8% of settlers failed.
Did the settlers gain more in terms of market share?
Nope! Even when the pioneers survived, they only secured a measly 10% market share in comparison to 28% for settlers.
Examples of successful companies that did not have first mover advantage
It’s often said that being the first to enter a market gives a company the upper hand, but some of the most successful companies in recent history were not first movers:
Gilette – wasn’t the first company to sell razors, but they perfected the design and became the dominant player in the market. Facebook – even though other social media platforms existed before it, Facebook’s unique features allowed it to stand out and become one of the most popular websites in the world. Southwest Airlines – was another latecomer in an already crowded airline industry, but its unique business model allowed them to have huge success. Ben & Jerry’s – came years after ice cream shops were already established but managed to carve out a niche for themselves based on their unique flavors and branding. Starbucks – definitely wasn’t the first store to serve coffee but it changed the way people think about and consume coffee.Stripe – a relatively new player in online payments, has gained massive success thanks to its user-friendly design and advanced security measures.
As I was having dinner last night with my wife, I pulled up YouTube, and the algorithm put this video clip from a Shark Tank episode in front of me. It featured a company (Curie) with a new twist on body deodorants, and its founder Sarah Moret pitched her business for investment from the Sharks.
Sarah actually got a deal with one of the Sharks, and she commented under the video months later to let viewers know that Curie has 4x’ed since Shark Tank, and her company is still growing.
Another interesting thing she wrote was this:
The moral of the story? Being first doesn’t guarantee success – it’s all about finding your niche and offering something superior to customers.
The benefits of being a late entrant into a market
Sure, being a “first mover” in a market can provide you with a certain level of credibility and name recognition. But you know what they say about the early bird…it may get the worm, but the late entrant gets to watch and learn from the bird’s mistakes.
As a late entrant, you can:
Study the successes and failures of companies that came before you, avoid costly mistakes, and tailor your product or service accordingly.Avoid spending valuable time and resources on educating consumers about your offering; by the time you enter the market, it’s already been established, and Focus on innovating and setting yourself apart from competitors.
So don’t be afraid to enter a crowded market – being a late entrant has its advantages.
Three steps to capitalize on late entrant advantages for your business
Getting in late to the game might not seem like an advantage, but studying your competitors and finding a way to position yourself clearly and differently can be a huge advantage.
Here are my three steps for how to capitalize on late-entrant advantages for your business.
Study your competitors and figure out what sets them apart from each other and you. Use this information to create a clear positioning for your brand that differentiates you from others in the market and highlights your unique strengths. Execute better than your competitors by offering top-notch products or services and constantly improving upon them.
Taking these steps can turn being a late entrant into a major advantage for your business.
I don’t want you to think I’m discouraging you from being a pioneer in your field. If that’s the road that you want to take, then heck, go for it. The world definitely has a place for pioneers.
However, if you’re holding back from trying something new because “someone else has already done it,” I want to encourage you to reconsider. As the saying goes, there’s always room for improvement.
So don’t be afraid of competition, embrace it. Use it to study what’s worked and hasn’t, and then use that information to your advantage. Build deliberately and sustainably. As I shared above, being a late entrant can be a huge advantage if you do it right.
So get out there and create something amazing.
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What’s new this week
1/ I did my first podcast interview in months, joining Ericka Bates on her Talk Virtual show to chat about How to use live streaming to grow your blog.
It felt awesome to be back on the mic again. So if you know anyone looking for podcast guests let me know!
2/ Published two new articles
3/ I recently met Lydia Lee from Screw The Cubicle here in Danang! Lydia was passing through with friends, so we arranged a fun coffee meetup together. We’ve chatted online for a few years now so always good to meet an online friend in person.