First Mover Disadvantage

A lot gets said about the need for companies to innovate, but not much gets said about what happens when you innovate too early. Because big ideas have small time frames, innovating too early often leads to the same end as not innovating at all.

At my last job I setup a deal between my company and another startup called Lookery. Lookery was in the business of connecting publishers to advertisers by monetizing users' cookie profiles. From my end it seemed like Lookery had a compelling offering, and they did, but unfortunately Lookery was recently forced to close shop.

Scott Rafer, the CEO of Lookery, writes on his blog:

Once we sold the ad network, I fell into a bad old habit — persuading my team to build something before the market was ready for it.

If you keep an eye on the startup scene, especially in the tech sector, you'll see a large number of companies failing because the market isn't ready. It's simultaneously refreshing and sobering to see so many entrepreneurs trying to make their ideas work. Refreshing because they are trying, and sobering because they are failing. These companies serve as a warning sign: sometimes, speed isn't everything. The first mover advantage is, in fact, not always an advantage.

Written by Chris Allison on September 1, 2009


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Chris Allison