February 15, 2006
“the new way to launch your product or company”
I like this thought from Dan Dodge, particularly interesting as he works for Microsoft, dealing with venture captialists:
We now live in a meritocracy. Money, VCs, and the press no longer decide what will be successful. Great products/services with intuitive designs that solve a real problem win. Of course once the product catches on and other entrepreneurs take notice, then you need to scale up fast to cement your first mover advantage. That might be where VCs and money add their value in this new world.
I wonder what Rick Segal would say.
I hope he would say that first-mover advantage was largely mythical — the first dotcom goldrush having been only the latest example of the fallacy of this cliche.
I don’t think “first mover advantage” is a myth, John.
Myth is what happens when you confuse “first mover advantage” with “final victory”.
Having an advantage is good, but unless you TAKE advantage of it, it’s been wasted on you.
There are many first mover disadvanatges — that’s why first mover advantage is a mythical concept!
John, until the cheque clears the bank, it’s all myth
But as to living in a meritocracy I think that’s an ivory tower view point. The real world isn’t so black or white. Examples:
Yes it is easier now to get the right info and appreciate design when you’re first making a decision. That points toward a meritocracy.
But there is still the QWERTY syndrome that makes it hard to switch from what’s entrenched even when something clearly better comes along. This is a sub-set of the first mover advantage.
Then there is the second mover advantage. They say the early bird gets the worm but the second mouse gets the cheese. Many times the first mover is ahead of its time and serves only to pave the way for the second mover who can learn from #1’s mistakes or capitalize on a market that #1 softened up.
There are three stages to a start-up: innovation, commercialization, and scaling.
With respect to consumer-centric web services, tech gadgets, … I believe that traditional VCs may not have a say in “what becomes successful”, but innovative VCs who practice new services (discussed lately by Rick Segal, myself and others) can still influence what becomes successful — not by spending money to elevate products/services that suck, but by providing support and assistance to ensure that a product/service becomes a “great products/service with intuitive designs that solve a real problem”.
An innovative VC can add value and influence in the later phase of innovation, Phase II, and especially in the commercializing stage. In this stage validating the market segment, testing value propositions, finding the right foothold, among other tasks will help the product/service become “great”.
In any case, traditional VCs and innovative VCs can add definite value in the third stage of a start-up by providing the cash influx needed to bring the proven product to market.