Think Twice About Being First to Market

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Interesting article about timing

 

 

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Think Twice About Being First to Market

via CRM Daily on 5/21/09

In 2004, David Cohen had an idea for a social network for mobile phones that would connect users in the real world. His Boulder [Colo.]-based company, called iContact, raised $600,000 from investors and the founders' contributions, launched a beta version, and seemed poised to tap the much hyped mobile software market. Cohen, then 36, had already founded a successful software company. But after 18 months, he was unable to get phone carriers to distribute his software, and he shuttered the company, returning 80 percent of his investors' money. "Everybody was saying mobile was coming, it was going to be open; GPS was coming, it was going to be great," says Cohen. "That didn't really happen for another four years."

Bets on mobile applications didn't begin to pay off until Apple's iPhone app store opened the market in 2008. Several companies that followed iContact's path later found more traction, including Loopt, Mig33, and Brightkite, a startup Cohen invested in which was acquired last month by competitor Limbo.

The Real Competitive Advantage

Conventional wisdom says being first to market creates a competitive advantage. Reality is more complicated. Market opportunities are constantly opening and closing, and a hit idea at one point could be a dud a year earlier or a yawning "me too" business a year later. It's tough -- likely impossible -- to pinpoint the best moment to enter a market, but common sense dictates new entrepreneurs can improve their odds if they weigh how much they stand to gain or lose by waiting.

New academic research suggests one way entrepreneurs can evaluate whether they should enter a market first or wait on the sidelines. The decision depends on how hostile the learning environment is; that is, how much entrepreneurs can learn by observing other players before they launch compared to what they learn from...

 

 

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