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First-Mover Advantage (wikipedia.org)
21 points by godelmachine on March 22, 2020 | hide | past | favorite | 12 comments


In the vast majority of cases, there is no first mover advantage. Most ideas are not new. There will be some kind of competition already out there. In the rare case a project is wildly successful, being known as an innovator could result in favorable coverage, but being the first does not necessarily help you.

For example, Lyft came before Uber, then Uber launched UberX in retaliation to Lyft and surpassed their traction quite considerably.

Another great example is YouTube. They were not first, they just hit at the right time. Bill Gross talks about this in his TedTalk, “The single biggest reasons startups succeed.” Other examples of success stories that were not first to market: Google, Facebook, Slack, Apple, etc. The list goes on and on.

Here is a good read about the subject:



As William Gibson once said “The future is already here. It’s just not evenly distributed”.

First mover advantages are less becoming of an advantage because of how fast information travels. The other obstacle with being first movers is the amount of effort needed to first educate the market on the new way of doing things. Traditionally, first movers had an advantage because followers couldn’t move as fast and wasn’t able to piggy back on learnings as easy as they can now.

AWS. Being the first in market not only has been their advantage but also the struggle of the later movers like Oracle and Google.

Was AWS really first?

> There will be some kind of competition already out there.

I remember LAMP providers and FTP'ing PHP files before AWS. I remember cPanel and phpMyAdmin. I remember Unix boxes that gave you free user accounts w/ open ports and everyone operated on the honor system.

While nobody could quite grasp the vast IT supply chain AWS would end up becoming, the writing had been on the wall for years. It only made sense to evolve from "here's a server" to "here's a server running a service" to "here's a service" to "here's a solution." I bet quite a few people had been dreaming of a platform like AWS by the time it came along, but of course they likely did not have the backing of a major tech company with superstar business leaders and tech experts (shoutout to Jeff Barr!).

The idea of renting time on someone else's computing equipment goes back at least to the 1930s.


Microsoft is in fact gaining a lot of traction in this space despite how late they were. They could actually surpass AWS.

Chrome dominates despite being late, though partly due to being rammed by Google/Android, though it was also clearly better performing than IE (and FireFox early on).

> Another great example is YouTube. They were not first, they just hit at the right time.

If you consider "bribe between rich people" to be "hit at the right time."

YouTube was hemorrhaging money on bandwidth and facing mounting legal challenges when the boardroom backscratch of Google buying it from Sequoia Capital occurred.

Google's subsequent subsidization of YouTube basically crippled the entire market segment of online video even to this day.

This is largely correct, but not sure if it was a backscratch or just inevitable.

I was in a streaming startup at the time and followed the Youtube saga.

The reported facts are:

1) Their VC partner would automatically just write a check when they ran out of storage to keep the growth going up and to the right. The founders also had very large credit card limits.

2) Bandwidth at the time was $1,000/Mbs at 95%. In other words, terrifyingly expensive for streaming. Rackmount servers were $5,000 and up, which is why Google was trying to use bare motherboards vertically. (Go to the Computer History Museum to see one of their early racks. The Fire Marshall banned them.)

3) It was just a matter of time before crushing lawsuits from the labels. Google ended up spending over $1 billion on legal fees alone after the purchase, and had to write their Content ID system. (That's what stopped me from even considering this.)

4) Google bought them because Youtube was way ahead on adoption and features compared to Google Video. The San Jose Mercury News had a 2-page(!) comparison of features. Youtube's page was full, and Google's was half full. It was stark.

5) The Youtube founders were in limbo for months after the purchase for Google to finalize it, even after joining Google. My guess is that is was related to understanding how bad the the looming lawsuits would be.

Hats off to the Youtube founders for giving employees at least $1 million each despite the quick exit for most of them.

Contrast that with Cobalt Networks, which sold to Sun for $2 billion and not a single IC made a dime.

I don't agree with this.

Twitch was sold for a billion dollars 8 years after Google bought Youtube. Netflix, Pornhub, there's other video websites that thrive just fine.

At the time, bandwidth, storage and rackmount servers were not affordable. See my post above for an idea.

Typically it's the fast followers who succeed, especially when the first mover has expended a lot of energy to establish the market.

"How can you tell which ones are the pioneers? They're the ones with the arrows in their backs."

First mover advantage is valuable when every user makes your service more valuable to other users. This makes it harder for other companies to enter the market after a dominant player appears.

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