When It Comes To Business, It's Better To Be The Best Than It Is To Be The First

by Gurbaksh Chahal

So many entrepreneurs want to have first-mover advantage. You feel compelled to get your breakthrough product into the marketplace ahead of the competition. You want the bragging rights of being the first and, of course, you know that because you’re ahead of the pack, you will easily establish a dominant position. Right? Except, it’s not that easy.

Being a pioneer is not all that it's cracked up to be. Pioneers often are the ones who end up with arrows in their backs.

Here are a few examples to prove this point:

Google wasn’t the first search engine. Remember AltaVista, Looksmart and a bunch of others? Yet, we now use the word “Google” as a verb. We don’t search; we Google.

Facebook wasn’t the first social networking service. Between 2005 and early 2008, MySpace was the most visited social networking service in the world. Today, it’s a shadow of its former self, while Facebook is valued at around $170 billion.

Have you ever heard of That was the original online bookstore launched in 1992, two years before Amazon got off the ground. eventually achieved 500,000 monthly visitors; Amazon gets 1,000 times as many – 500,000,000.

Steve Jobs didn’t create the MP3 player. The first MP3 player was a funky little device sold by Creative Labs — and there were others in the marketplace, too. But when the iPod came out, wow!

People want to be wowed. Many people may be wowed seeing something for the first time — especially that percentage of the population that is early adopters. But a larger percentage is going to be wowed by new and improved versions. For a variety of reasons, first-movers often don’t get that message and are knocked off their perch, or, at the very least, they lose significant market share.

So being first is no guarantee of success — certainly not long-lasting success. Being first does offer an opportunity to enjoy an advantage, as long as you’re smart enough not to rest on your laurels and you can position yourself to speedily embrace change. To move from the short-term market leadership, you need to establish some long-term differentiators.

Someone is always going to create a better mousetrap. Being the first comes with all of the costs of innovation and the risks of making mistakes from which the competition can learn, and at very little expense. Plus, the followers can see what they need to improve (and can probably work out how to offer at a better price). There’s also the danger of becoming complacent and suffering from “incumbent inertia.”

The market is yours to lose, if you’re not careful. Creating the market, creating the demand is one thing; sustaining it is something else. If you’re the first, you need to keep out-innovating the competition, which is a tough challenge. And, if you want another rodent analogy, don’t forget that it’s often the second mouse that gets the cheese.

As a teenager, I discovered the world of Internet advertising. I was fascinated by DoubleClick’s business model. I was even more fascinated by the fact that it went public with an IPO, which valued the company at $300 million, later becoming valued at $15 billion. (In 2008, Google acquired it for $3.1 billion.)

This was obviously a huge market and huge opportunity and the short version of the story is that after doing some research, I created my first business called ClickAgents. I was all of 16 years old and a very, very small fish in a very big pond.

DoubleClick was the 800-pound gorilla, but there were a lot of other companies, too. However, I had my toe in the water. I hadn’t invented performance-based advertising, but I made a splash. I got attention because I lived up to my commitment to stand out from the others in terms of performance, delivery and professionalism. I wasn’t the first, but I knew I could be the best. It’s about the package: the business model, how you engage with customers, your product’s visual appeal, your team and, most importantly, how well you execute.

As I’ve continued my entrepreneurial journey, I’ve also kept in mind the need to come up with a different and better angle. That’s what we’re doing at RadiumOne, which is my greatest success so far. Advertising is ever-evolving and we’re solving problems in a unique way so that we stay a driving force in the industry.

The other thing I do somewhat differently from many Internet companies is that I take a very traditional approach to building a business. My model is based on revenue and profit — believe it or not. I look at some companies that aren’t making money and the headlines are all about the millions and millions of users they have. I say God bless them for their successes. But I’m not wired to lead that kind of company. My interest is in a company that has a bottom line: the P not the L in P&L.

In the Internet industry, we have seen kings that have become peasants. We have seen seemingly thriving companies disappear. You only have one life to live, so make yours counts. Take the risk. Keep the eye on, tiger. And fight like hell. It’s not about who made it first; it’s about who made it right.

Photo credit: Claudio Sepúlveda Geoffroy Flickr