As an entrepreneur or executive, being first to a new market seems attractive. You get to set the rules, control perceptions, and claim the most territory, right? Not so fast. Being a pioneering first mover comes with huge disadvantages and risks. Let me tell you the benefits of entering second with patience and vision.
The Bloody Trail BLAZED by First Movers
First movers blaze the trail in uncharted territory. It‘s up to them to educate customers, create demand, establish infrastruture, and construct business models in an unknown market. This trail blazing often involves many costly mistakes.
As a first mover, you have to experiment extensively to figure out what resonates. Is this the right pricing model? How do we distribute to customers? What exactly do they want? Without market feedback, you end up wasting substantial time and money learning the hard way.
For example, the first companies trying to sell personal computers like Apple Lisa and Commodore PET in the 1970s had to create a market from scratch. They invested heavily in R&D, manufacturing, marketing and distribution to convince consumers why they absolutely needed a PC in their home, and how to use it.
Many of their efforts like overly advanced features and premium pricing were misguided, as later entrants like Apple II and IBM PC learned. The early trail blazers invested millions into consumer education and trial-and-error – costs that followers avoided.
According to a study published in the Strategic Management Journal, first movers have a failure rate of 47%, compared to only 8% for fast followers entering the same markets. Pioneering the unknown is risky business.
Entering a More Fertile Market
Part of the challenge for pioneers is that market conditions are raw. Industry infrastructure, related technologies, regulations, and supply chains are underdeveloped. Consumer demand and tastes are uncertain. Distribution and marketing channels are undefined.
As a second mover, you enter a more fertile environment. Infrastructure has been established, systems proven, kinks worked out. You ultimately spend less time and money figuring things out for yourself and overcoming limitations.
Take biotech as an example. Genentech pioneered the use of recombinant DNA which enabled new genetically engineered drugs. But later entrants benefited from improved biotech equipment, a trained workforce, receptive regulators and physicians, established business models, and investor familiarity – advantages Genentech lacked.
The same dynamics apply across industries. Dropbox was a second mover cloud storage service entering a market primed by first movers. They rode the wave and rapidly dominated thanks to built-out broadband networks, faster download speeds, better compression tech, and consumers already comfortable storing data remotely.
Leveraging Existing Demand
First movers help generate initial product interest and consumer education. But they often fail to meet evolving needs as their vision locks onto an early view of the market.
As a second mover, you can identify organic demand that pioneers fail to capitalize on. Then you can leverage existing consumer familiarity while catering directly to these unsatisfied customers.
For example, Red Bull reformulated an existing Asian drink to create a new beverage category gaining share in the US soft drink market. They recognized that traditional soda brands weren‘t servicing emerging consumer demand for energy/performance drinks.
Meanwhile, Appleslowly corrected course after its failed Apple Lisa PC. They observed the new market realities and consumer expectations shaped by early machines. With the Apple II in 1977, they delivered a less sophisticated, cheaper, and more user-friendly product that finally gained adoption. They seized the opening first movers created.
Improving on Version 1.0
Early product versions often have flaws and limitations that are difficult to recognize beforehand. First movers develop minimum viable products and get stuck on v1.0 as they try educating the market.
As a second mover, you gain the huge advantage of entering later with better technology, more features, superior designs, and overall more polish. You see how customers interact with early products, learn what they wish it could do, and improve the offering.
Friendster (2002) defined the modern social media concept and validted demand. It had clunky functionality, slow speeds, and tech limitations. Then MySpace (2003) came along with a better designed, more feature-rich version that snatched market leadership away. But even MySpace had scaling challenges and a cluttered user experience which Facebook (2004) later perfected.
Each iteration was able to improve significantly on earlier versions. Timing it right allows second movers to leapfrog pioneers and gain advantage.
Exploiting the Soft Spots
First movers make many missteps across business model experimentation, strategic partnerships, operational scaling, and marketing. Their initial moves also anchor them to a particular trajectory that becomes hard to change.
As a second mover, you can observe where the pioneers stumble and position yourself differently to capitalize on those soft spots. You aren‘t tied to any legacy approaches giving you greater strategic flexibility.
For example, Friendster passed on early buyout offers from Google and Viacom while trying to figure out their business model. MySpace, entering second, accepted an early $580 million offer from News Corp which funded their growth. They exploited Friendster‘s strategic hesitancy.
Meanwhile, Internet Explorer displaced early browser leader Netscape by being free to users rather than selling for $49. They exploited an economic soft spot, recognizing that browser revenue models were untenable.
Identifying and attacking points of weakness is key to second mover success.
Using Web Scraping to Spy on Pioneers
So when entering a market second, how do you spot first mover mistakes and market opportunities? Competitive intelligence. With web scraping and data extraction tools, you can closely monitor early mover activities, direction, and performance data.
Web scrapers imitate human website interactions to automatically collect content. This lets you gather product announcements, pricing changes, web traffic estimates, online sentiment, reviews, and more to benchmark competitors. You gain tremendous visibility to base decisions on.
With the right tools, second movers can legally "spy" on pioneers to capitalize on weaknesses while leveraging strengths. You enter the game with eyes wide open.
Choosing the Right Moment
Second mover timing is crucial. Enter too early and the market may still be underdeveloped with high instability. Too late and the first mover likely has strong network effects and brand authority.
Ideally, you want to time entry based on factors like:
- Infrastructure maturation – cloud services, payment platforms, logistics networks, etc. should be established
- Mainstream customer adoption – beyond early adopters and innovators
- Data on market segmentation – to identify unmet needs
- Visibility into leader mistakes – from web scraping competitive intelligence
- Commoditization signs – opportunities to capture share through lower pricing
- Technology changeover – when innovations significantly improve on incumbents
- Value chain maturation – with established supplier relationships
The exact right moment depends on reading the unique market conditions. But generally, entering when demand is accelerating and pioneers are anxiously scaling up offers the most disruption potential. Use web data flows to detect demand inflection points.
Avoiding Potential Traps
Entering second comes with traps to avoid. Here are some I‘ve observed:
Imitating too closely – You may just look like a copycat without differentiation. Ensure you adapt and enhance the model.
Misreading demand – Certain early success factors often aren‘t sustainable. Don‘t assume all progress translates.
Lacking patience – First mover markets often rollercoaster. Resist short-term pressures.
Overthinking timing – Analysis paralysis can delay you too long. Move before consensus is clear.
Neglecting brand – Don‘t assume customers will automatically switch – build brand equity.
Stumbling on scaling – Pioneers make execution mistakes you must avoid when growing.
With the right strategic balance, second movers can seize advantages with less cost and risk. But it requires patience, vision, competitive intelligence, and fortitude at the right time. Are you willing to trade the #1 badge for #1 market position? The most perceptive second movers are poised to outrun those who rush ahead.
