MySpace: Time to Retire "First Mover" Myth?

Last Updated Jun 30, 2011 7:56 AM EDT

As News Corp. contemplates its losses in selling MySpace, it's a good moment to question the shibboleth around first mover advantage.

Every entrepreneur and VC I know is in a hurry. Whether it's a new technology or product or marketing concept, they're sure that being first will prove decisive. Not for the first time, I'm stunned and bemused by how little sense of history business people seem to have. Most business orthodoxies should be challenged regularly and often -- and this one is no exception.

Remember Alta Vista?
One of the first ever search engines - and, for a time, one of the best. But Yahoo had more brand cachet and then along came Google. Being first didn't mean a thing for Alta Vista, except that it was stuck with old-fashioned search algorithms no one wanted any more.

Remember Netscape?
I guess some people still use it. For a time, everyone delighted in sneering at Microsoft's late contender, Internet Explorer. It took all of a year before that changed and Netscape's market share slowly but surely declined.

Remember the Rio Player?
I still have one! Bought around 1999, it looked strangely like a Sony Walkman but it played MP3 files. There weren't many around and until broadband penetration in the U.S. exceeded 50% there wasn't all that much music available.

Remember Real Audio? and the iPhone?

- oops, they're still out there. When iTunes launched, famously pugnacious CEO Rob Glaser pontificated "Apple has their core market of 3 percent to 5 percent of computer users," crowed Rob Glaser, CEO of Real Networks. "I guess we'll settle for the other 95 percent." Today, he should be so lucky....

Meanwhile, the iPhone's marketshare has recently been surpassed by the latecomer Android while the earlier Blackberry is struggling. That battle isn't over yet - but it isn't at all clear that coming first hasn't secured the iPhone's dominance.

In 2000, I launched a company called iCAST. It allowed users to post audio and video while also running all kinds of online music and film contests. It was a precursor to YouTube and there was much about it (including the name) that was, frankly, better. But it was 5 years too early. Coming first is glorious because it proves you are innovative and courageous. That's great for the ego - but it may not be terrific for your longevity. To the first mover fall all the costs of creating a new market - which then is open to business for latecomers who may have deeper pockets.

Perhaps more telling is whether, once your product is out, anyone bothers to compete. If they don't, it could be because you're perfect. But it might be because there's no real market there in the first place. After all: where's the competitor to Twitter?

Photo Courtesy of Public Domain Photos
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    Margaret Heffernan has been CEO of five businesses in the United States and United Kingdom. A speaker and writer, her most recent book Willful Blindness was shortlisted for the Financial Times Best Business Book 2011. Visit her on www.MHeffernan.com.