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February 11, 2008

Being First IS The Business Plan

So you want to start an Internet business. You look around to see what kind of businesses are succeeding. You read in the WSJ about someone who had a unique and clever idea and is now turning down eight figure acquisition offers; he only has a small share of the potential market and you can do what he’s doing better: his site isn’t even that well designed.

You show your potential investors how quickly a business like this can grow. If you’re UNlucky, they DO invest. Then you fail even though your predecessor with the same business plan succeeded.


Because the important part of his business plan is that he was first, not the other specifics. craigslist is a huge success; if you try to start joeslist, you fail. Craig was first.

This isn’t an immutable rule. Google wasn’t the first search engine (remember Alta Vista?), but it had a better search algorithm AND quickly combined it with a better advertising model than anyone else had. Excel was hardly the first spreadsheet (remember VisiCalc, MultiPlan, and Lotus 1-2-3?). #1 can blow their lead through complacency and a lead can be overcome by a better mousetrap AND a big budget.

But nothing beats first mover advantage for starting on a shoestring and winning big. It was being #1 that got the hypothetical early mover you read about back in the first paragraph of this post into the WSJ. They’re not going to write about you being #2 (unless you’ve got a great publicist).

The first bloggers had a good shot at becoming famous bloggers – not because they started famous but because they were first. Then blogging, like most many-player phenomena, settled into a power curve, the notorious long tail; and it became very difficult to break into the rank of top bloggers unless you are already famous or well-connected to the top bloggers.

The Internet is no longer a small community – hardly! Getting attention in cyberspace is at least as hard as getting attention in the real world. Even first movers need to be well-connected, well-known, or well-represented (or very lucky) to get noticed.

It’s an oxymoron to use a first mover as a model for your me-too business because you’re missing the essential ingredient; you’re not first.

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