‘How to be first to market’ returns 3.8 billion results from Google. That’s a lot of advice, and some of it’s great advice. But what if it’s the right advice about how to do the wrong thing?
Being first to market isn’t always a good idea. Whole technologies, companies and products have come to market early — and failed early. Sometimes they vanish without a trace. Sometimes the space they created is occupied by latecomers who learned from the mistakes of the originators. Holding back can be a wiser strategy.
In this post, we’ll look at why companies want to be first to market, then talk about how that strategy has worked out in the past.
Why be first to market?
Received wisdom in the startup world is that it’s always best to be first to market. You bring your product to an unsuspecting world, and to customers who don’t realize they need it or never thought there would be a working solution to their problem until you appear on the scene. Then, you sign them all up. Growing fast, iterating rapidly and learning as you go, you improve your product, adding features and finesse until you dominate the marketplace — a marketplace you created, by addressing a need that was previously unmet or even unrealized.
Even if your company or product isn’t primarily regarded as disruptive — you’re in the better-mousetrap trade or the rocks-out-of-shoes business — there’s still an advantage to getting to market quickly. If you’re small, you can start making money and proving to customers, investors and your team that your product has legs and a future. If you’re large, the concerns are different, and sometimes include the risk of other businesses finding out your plans and executing on something similar before you’re out of the blocks.
In essence, the argument in favor of being first to market consists of what’s known as the ‘first mover advantage.’
The first mover advantage
The first mover advantage refers to the ability of the first market entrant to define the market and gain brand recognition, a customer base, and dominant market share before anyone else can begin offering significant competition.
That sounds like common sense. But in fact, as in other areas of life, that common-sense appearance can be misleading.
Markets don’t really work that way.
Markets aren’t static. They’re made up of people, essentially: that’s as true in B2B as it is in consumer-oriented businesses. Even if your product is worth tens of millions per unit and your sales cycle is 20 years long, you’re ultimately addressing the needs and interests of people, and their needs and interests are constantly changing.
This is a truism, but it bears being reminded of. A market isn’t a fallow field or a pile of money on the ground that you found first and can fill your boots with before anyone else catches on. Instead, markets evolve along with the businesses that serve them.
That interactivity is key to understanding what’s coming. We all know that the supporting technologies have to line up. That’s why Christiaan Huygens didn’t invent the internal combustion engine. There was no gasoline in 16th century Holland, so he tried to run it on pellets of gunpowder instead. But markets — other people — have to line up too. The process of gaining traction and market share isn’t about filling a bag quick, before someone else can. It’s a complex process that you and your market go through together.
The first-mover disadvantage
Being first to market can be an advantage. The first working automobile to be produced, after gasoline was available, was made by Benz. As in, Mercedes-Benz. But it’s not always a winning formula.
Companies that arrive first and seem to define the market they’re in don’t always keep that position. Some never acquire it and are forgotten. Others take it and are dethroned by competitors within a few years.
The world wasn’t ready
What about these first-to-market companies and products?
Each was a key player in its own industry. Some were truly technically innovative. Others were ‘Huygens’ — introducing ideas the existing technology couldn’t support. Others failed to manage product-market fit well. And each was the forerunner of massive franchises that now dominate spaces created by these now-forgotten names.
In the event that you don’t have an encyclopedic knowledge of technological failures, here’s what they’re (un)known for.
Saehan was the first widely-available MP3 player, in 1998. MP3 players are cheap to produce, so the company faced stiff competition from other tech companies and no-name devices that were disposable-level cheap. Then in 2001, the iPod came out, permanently changing the market. Under attack from super-cheap alternatives and an aspirational hegemon, Saehan disappeared.
Ultima Online was the first MMORPG, a huge open-world game that lets people play with others online. Launched in 1997, it’s still going, maintained by enthusiasts. UO was just a little too much like Dungeons and Dragons, and in 1997 too few people had the kind of computing power that would let them enjoy the game. UO is ‘a world in which you can live,’ requiring a level of self-directed immersion that tabletop roleplayers may be comfortable with, but few others are. When World of Warcraft came out in 2004, they trialed a similar approach: totally open-ended, with no requirements or instructions. Players, drawn from the ranks of gamers rather than D&D players, hated it and clamored for quests. Once those were introduced, WoW’s popularity exploded, dwarfing the user base of Ultima Online.
Elite was a game for the BBC Micro, a tiny, underpowered home computer from the 1980s. Few people had BBCs, and Elite was relatively difficult to play. At a time when most games were essentially shufflepuck, Elite offered eight whole galaxies to explore and trade in, yet the game fit on a single 5.25" floppy disk. The secret wasn’t just that Elite was written in assembly language to save space. It used an algorithm to create new locations on the fly instead of storing them readymade. The same technology is now used by the wildly successful No Man’s Sky, among many other similar games. Elite is free in your browser. While it’s popular among enthusiasts and frequently appears in lists of the best games ever made, it never achieved the kind of commercial success gained by later games that built on it.
Royal Electronics built handheld digital organizers in the 1980s. They were a step up from a Filofax, which probably explains why Rolodex was also a player in the same market. But without an internet to connect to, the appeal of mobile devices was limited. They were bulky, required new skills to use, and for many people, a notebook and a wallet full of business cards was easier to manage. This market was totally annihilated by the Blackberry, itself fated to be felled by the iPhone just a few years later.
Poma was a virtual reality headset, offering what we now call AR through a headset that made users look as if they’d been cast in a very low-budget science fiction film.
Every one of these companies is now obscure — we could have talked about BetaMax but these relative unknowns make the point better. Each pioneered an idea that had the potential to be successful. And each failed because their user base, wider market, or supporting technologies just weren’t ready.
When you launch a new product, it sucks. Generally speaking, the first iteration of everything from manned flight to sound recording have been poor, clumsy, expensive, and borne little relation to the future of the space. When you do it, you have to be ready to make, learn from, and correct a lot of mistakes, very fast.
The trouble is, you can be outcompeted by another company that watches you make those mistakes and starts developing its product without including them.
Social media provides us some good examples. Maybe you remember the first generation of social media sites, like Friendster. Launched in 2003, Friendster was the site that had it all: sharing content and media, dating, band, event and hobby pages, and more. It hit the market at the same time as immense numbers of people were getting online for the first time, and wanted an experience that wasn’t an AOL chatroom. In its first few months, Friendster gained three million users.
Sounds great, but while Friendster was a step up from AOL it had some problems of its own. The interface was clunky and Friendster was notoriously slow and unreliable. It struggled to scale.
It pioneered the friend request system, which is now used in nearly all social media sites. And it introduced several other innovations which were promptly, shall we say, used as inspiration by newcomers to the scene such as MySpace and Facebook. ‘I don't think there's anyone who has had their stuff copied more than me,’ founder Jonathan Abrams told the LA Times.
At the same time that newcomers were copying Friendster’s successes, they were neatly sidestepping the platform’s mistakes. On Friendster, users tried to create a culture but were stymied by the platform.
‘Games emerged. Games were squashed by the company. Surfing got super duper slow,’ explains danah boyd, whose name is meant to be uncapitalized. boyd is Partner Researcher at Microsoft Research, Distinguished Visiting Professor at Georgetown University and a Visiting Professor at New York University's Interactive Telecommunications Program; she’s also the author of It’s Complicated: The Social Lives of Networked Teens. ‘Friendster became less novel and more restrictive and, thus, more lame,’ she continued in a 2006 essay.
Meanwhile, in boyd’s analysis, ‘MySpace launched at a time when some of the game-minded were still enthusiastic and the enthusiastic surfers wanted to find more kitsch crap. They jumped on MySpace, created all sorts of culture and profiles complete with massive amounts of media, and helped figure out how to hack the system to make the profiles more expressive. MySpace didn't stop them.‘ (boyd’s emphasis.)
It was a lot easier for newcomers to the space because Friendster had already made a lot of the basic tools, and many of the basic mistakes. Thus, a blueprint for early success was lying around waiting to be picked up; looked at the right way, it was also a ready-made plan to eclipse Friendster. MySpace is a memory too now, but the most derivative and latest entry into that space, Facebook, has annual revenue of about $117 billion.
The market tells you who you are
Highly successful innovators create the markets that purchase their products, in the same way that great artists create the taste by which they are enjoyed. Think of the airline industry: in 1880, demand for international travel was pretty high and rising. Demand for air travel was low, because of the lack of airplanes. Two generations after the first powered flight, Neil Armstrong took a scrap of the Wright Flyer to the moon; perhaps more impressively, airline passenger numbers topped three million the same year. The air travel industry had created its own market, which would go on both to support it, and to determine its direction.
But it’s also true that many companies become successful at something other than their intended core business. Markets and their participants create each other. To take part in that process, it’s best to lose the mindset that you can treat a market — especially a market of intelligent, capable professionals — like a static resource or a territory to be conquered. The race to get to market fast can leave you exposed to careful, resourceful competitors who use your product as free research, build something better, and leave you in the dust. It can lead you to launch a product for which there is no suitable technical environment, or no market. Going to market fast can also mean going to market badly.
Working with AndPlus
At AndPlus, we’ve worked with numerous companies to plan and launch products. We’ve helped plenty of them get to market early — we didn’t write the book on it, but there’s a pretty good guide to getting a product to market in 100 days or less here. And we understand the business imperatives and technical choices that drive and facilitate those decisions.
But we’ve also been creating software (and improving existing solutions) for long enough to know that it’s not the right strategy for everyone. Holding off to improve the product is sometimes wiser. So is waiting for someone else to make the mistakes.
When you’re determining a go-to-market strategy, ‘get there quickly’ is an option, but it shouldn’t be your only option. We can help you determine the right way to approach the market, as well as helping create, iterate and refine your product to enhance your chances of success.
- Early isn’t always good. Latecomers to the market sometimes fare better.
- Sometimes the market or the supporting technologies aren’t ready, even for great ideas.
- Innovators create a playbook for their competitors as they learn their own lessons. Sometimes it’s smarter to watch and learn.
- Work with an experienced partner to create a go-to-market strategy that maximizes your chances of success.