I get a lot of business plans sent by friends and acquaintances asking for my opinion and it almost seems like it is an unwritten rule of the business plan to list "first to market" as a competitive advantage. What a myth! Being first to market usually means that everyone else can copy your idea and improve on it, while you undertake all of the risk.
Alta Vista came before Google
Broadcast.com existed way before YouTube
Rio preceded the Ipod
Amazon wasn’t the first bookstore selling online
Friendster was first to MySpace’s second
These are just the examples that I can think of at the top of my head for the technology/internet space. There are hundreds of others. I would probably say that copy-cats have a better success rate than market innovators.
So where does that leave you and your brilliant innovative idea? Isn’t the internet supposed to erect natural monopolies because of a “network effect” and the centralization of information? How do you protect your business if being “first to market” is not enough?
Execution!!! Build out your idea in the best way possible, because even though being the first to market your idea isn’t enough, being the first to own your market is the real key.
The internet absolutely allows for very serious natural monopolies, but to enact them you need to own the market first. Meaning you need to be the top dog in your space, be the Google, YouTube and Ipod of your space. Because only by being number 1 can you enjoy the competitive advantages that come with the network effect.