Overhype: First mover advantage

“Could you please Xerox this page?”

“Please switch on All-Out”

“Wash it with Surf”

“Stick it with Fevicol”

Many of the first mover brands have become so successful that we associate the product category need with them. Sadly this brand recall often does not translate into product sales and consumers are agnostic about which brand of Photocopying, liquid mosquito repellant, detergent powder, adhesive they use.

Couchsurfing has been in existence for a decade helping travelers to find economical safe accommodation. However it needed a late incumbent like AirBnB to come up with a commercially viable business plan that took care of the issues like billing, security, advertising & taxes.

Most first movers are unsure about how their product is going to be used and spend a lot of time & energy in promoting the technology. The pioneers are sometimes focused on so many use-cases and markets that their vision is clouded. The incumbent free rides on the market research and buyer education and is better poised to make a focused brand targeting the most compelling

The first mover often is saddled with high failure rate due to pricing, communication/promotions, operational jitters, poor commercialization or plain vanilla economic viability. Sometimes they don’t have enough resources to operate long enough to see success. Other times they are not able to scale up fast enough to fully capitalize on the demand. The incumbent not only faces lesser risks of product acceptance, but knows better what will work and where to invest to get quick returns.

It is easy to get an entrepreneur excited by giving him a story about being pioneers and giving them a unique proposition that is 5-10 years ahead of its time. However most people don’t realize that “Success is not achieved through cutting edge technology but by solving real life problems”. Rarely is the market two small for 2 players to thrive and second mover is not a bad strategy for an agile firm.