How First Mover Advantage Can Kill Your Business | Ep. #674

In episode #674, Eric and Neil discuss the First Mover Advantage. Tune in to hear why being first may not make you the best.


  • [00:27] Today’s Topic:  How First Mover Advantage Can Kill Your Business
  • [00:50] Coca-Cola is the beverage king. They are the first mover.
  • [01:11] The first mover advantage helped Coke become the dominant brand.
  • [01:26] Peter Thiel has a concept that says whoever the first to market is, gets a huge advantage. However, you also end up with a lot of high costs and inefficiency.
  • [02:17] Last mover advantage is taking what has been done and improving upon it.
  • [02:31] Being the last in is a huge advantage.
  • [03:23] Moz was the first marketing tool out there, but other brands that came after have overtaken them.
  • [03:35] SEMRush and AHREFS are go-to’s and improved upon what Moz does.
  • [03:58] YouTube did really well at first, because they didn’t have to deal with the lawsuits other sites did.
  • [04:30] Napster was a great service, but they had to deal with lawsuits and they got destroyed.
  • [05:18] As tech evolves, it also gets cheaper.
  • [05:30] When Moz released their financial info, it was found that they spent hundreds of thousands on server costs.
  • [05:40] This is something you can spend a lot less on now.
  • [06:09] That’s it for today!
  • [06:13] Go to for a special marketing tool giveaway!

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The post How First Mover Advantage Can Kill Your Business | Ep. #674 appeared first on Marketing School Podcast.

Full Transcript of The Episode

Announcer: Get ready for your daily dose of marketing strategies and tactics from entrepreneurs with the guile and experience to help you find success in any marketing capacity. You're listening to Marketing School with your instructors, Neil Patel and Eric Siu.

Eric Siu: Welcome to another episode of Marketing School. I'm Eric Siu.

Neil Patel: And I'm Neil Patel.

Eric Siu: And today, we're going to talk about how the first-mover advantage can kill your business. So, first and foremost, what is the first-mover advantage? Oh, look at the date right here, today's actually my birthday for this recording. Happy birthday to me.

Neil Patel: Happy birthday. How old are you now?

Eric Siu: I guess, on this date, I'm going to be 32.

Neil Patel: That's not bad.

Eric Siu: Yeah, I'm getting older here. Anyway, first-mover advantage what is it in the first place? The easiest way to look at this is Coca-Cola. When you think of beverage, who is the beverage king out there? It is Coca-Cola. They were the first ones out there. If you read the book, The 22 Immutable Laws of Marketing, it does say in there that the first-mover advantage can kill, not can kill you, but can help you a lot. You have Coca-Cola, then who thinks of number two? Number two is usually Pepsi. In this case, the first-mover advantage did definitely help them.
Now, the first-mover advantage can actually kill you sometimes if, perhaps, you're a little too early. Now, Neil, what are your thoughts around this, in general, before I go on?

Neil Patel: Peter Thiel has this whole concept saying if you look at the biggest operating system, which is Microsoft, they weren't the first. If you look at the biggest search engine, which is Google, they weren't the first. And the list keeps continuing on and on. Facebook wasn't the first social network, but they're the largest. What Peter Thiel says is, "When you're the first to market, yes, you have a huge advantage because you get that brand recognition, but you have a lot of technical debt when you're the first-mover advantage, or a lot of things going against you." I know many of you guys are in the tech industry. It doesn't matter if you're in tech or non-tech, but, for example, if you're in the first-mover advantage and you're the first player in the space, your costs are probably higher. There's probably new ways to make things more efficient. There's probably new ways to innovate and make the product, or service, better.
But when you're a last-mover advantage, especially when the market is fragmented and there's no clear winner, you can take the best pieces of each of the competition, combine it in one solution, and it gives you a huge leg up, because you've already seen how the market reacts, what they like, what they don't like. And now, you can just skip to pretty much the end and be like, "Here's everything that you guys want. Boom, here it is." And people are like, "Wow, this is a better experience. This is a better price. It's more usable. Let me just pay for this."

Eric Siu: Yeah. There is a video from Bill Gross who was a well-known startup guy. He did a presentation, I believe it was a TEDx Talk on the number one reason for startup failure. Now, you have a couple options here. You have could it be the team? Is it the technology? What is it exactly? Well, believe it or not, the first thing that causes startup failure is actually timing. To Neil's point, if you're too early sometimes, yes, you do get the brand recognition, but maybe the timing is a little off, and maybe you're going to accrue too much technical debt.
Now, here's another example. Moz was the first to ... Well, they were the first in the SEO space. They've got this big brand, but the other tools out there did have time to just overtake them. You look at the SEMrushs out there. You look at the Ahrefs out there. Those are the tools that Neil and I are often talking about. Now, Moz is a good tool don't get me wrong, but sometimes when you're first and maybe you're a little too early, well, you give people another chance to come in and really iterate on the issues that you've had. And because you've grown so big, you can't move as quickly as you did when you were in startup mode.

Neil Patel: Yeah. You can also have a lot of legal issues too. For example, YouTube did really well. I think what Google, or someone, was saying and the annals were saying it's worth $30-plus billion. Most popular television channel, beats out any other network out there. When you look at YouTube, the first players in the video space and there's a lot more, they got their butts sued. They had to deal with so many legal issues. Once they resolved all of them, it paved the way for YouTube to just go in and dominate the market, because they didn't have to deal with any of that.

Eric Siu: Yeah. I'll give you another example. I mean, let's look at this. I mean, when I was in eighth grade, or maybe seventh grade, I was using Napster. A lot of people were using Napster to sample music, for example. People started using Torrentz, as well. What are we all using now today? We're using Spotify. We're using iTunes Music. We're doing it the legal way. But, to Neil's point, Napster got destroyed. They got sued by the RIAA and then, eventually, they're out of business. That guy did well. What's his name, Sean Parker?

Neil Patel: Yeah, Sean Parker.

Eric Siu: Yeah, ended up going to Facebook. He did well for himself.

Neil Patel: Yeah, I think he pocketed, at least, a few billion.

Eric Siu: Yeah, just a couple billion, not bad, but that's the point. Sometimes you have to concern maybe the space that you're in. You might get sued. I think there's a lot of ramifications around it. Neil, is there anything else to add to this?

Neil Patel: Yeah. The last from my end is as technology evolves, things get so much cheaper. We talked a little bit about tech debt, but just to give you guys a example of this. When Moz first started, they would release their financials, technically, they still do. When Moz releases their financials, if you look years back, it was showing that they're spending hundreds and thousands on server cost. Nowadays, you can do things way cheaper on Amazon, which allows new competitors to go and release product and do it for a lot cheaper. The problem is if your company is old and you're one of the first-movers, it's hard to move off your old infrastructure, and redo everything, and stop servicing your existing clients. That gives a huge advantage to the late comers into any marketplace.

Eric Siu: There you go. So you got timing, that's one thing. Then the other thing is the time it takes to actually have to undo all the issues that you came up with in the first place. So a lot of it comes down to time. Anyway, that's it for today. If you enjoy this, go to to check out marketing tools that can grow your business and we'll see you tomorrow.

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