What about the first-mover disadvantage?

Posted by Ray Poynter, 28 June 2014 This week’s Economist has an interesting article about the founders of Napster (Shawn Fanning and Sean Parker) and the difficulty they have had in coming up with a successful second presence in the market. Towards the end of the article the Economist refers to one of my favourite terms in the area of new business, “First-mover disadvantage”. First-mover advantage? Whenever I meet start-ups, or people back from the latest hi-tech innovation fest, the talk is often about first-mover advantage. The idea is that a company gets in first and secures a long-term advantage. However, although there are examples of first-mover advantage (e.g. when a first mover can tie-up the market for scarce materials), it is much more common to see first-mover disadvantages. First-mover disadvantage Examples of first-mover disadvantage go back at least as far as the printing press, noting that in the 16 Century Gutenberg died bankrupt). The economist article quotes Motorola and the mobile phone along with Netscape and the browser. To this list we could add: Alta Vista had first mover status in search engines, but was overtaken by Yahoo! and then Google. When personal computers first appeared the early advantage […]