Second Mover Wins

Before Google, there was AltaVista. Before AltaVista, there was Lycos. Before Lycos, there was WebCrawler. Before WebCrawler, there was Archie, which launched in 1990, eight years before Google existed.

Google was not the first search engine. It wasn't the second. It wasn't the fifth. Depending on how you count, it was somewhere between the tenth and the twentieth.

Facebook was not the first social network. Before Facebook there was Myspace. Before Myspace there was Friendster. Before Friendster there was SixDegrees.com, which launched in 1997, seven years before Facebook.

The iPhone was not the first smartphone. Before the iPhone there was the BlackBerry. Before the BlackBerry there was the Palm Treo. Before the Treo there was the Nokia Communicator, which launched in 1996, eleven years before the iPhone.

First-mover advantage is one of the most repeated ideas in business. It is also one of the most wrong.

The standard rebuttal to first-mover advantage is that the first mover has to educate the market. They spend money teaching consumers what the product category is, and then a later entrant shows up with a better version and captures the demand. The first mover did the hard work. The second mover got the harvest. This is true, but I think it understates what's actually happening. The second mover doesn't just make a better product. They make a product that becomes synonymous with the category. And that's a much more interesting phenomenon.

Ask someone to name a search engine and they'll say Google. Ask someone to name a social network and they'll say Facebook (or maybe Instagram, which Facebook owns). Ask someone to name a smartphone and they'll say iPhone. These companies didn't just win their markets. They became their markets. The category and the brand fused in the public mind so completely that most people have no idea there were predecessors at all.

This is the real advantage of the second mover: not that they're second, but that they get to be perceived as first. Google didn't just build a better search engine. Google became what people think of when they think of search. The word "google" is a verb. Nobody ever said "let me altavista that." Nobody ever said "I'll lycos it." These earlier engines had millions of users. AltaVista was handling 25 million queries a day in 1997. But they didn't fuse with the concept. Google did.

I think this happens because of something specific about how human memory works. We don't remember the first version of something. We remember the version that first made an impression on us. The distinction sounds subtle but the implications are enormous. AltaVista was the first search engine that many early internet users tried. But for most people, the internet didn't become a daily part of life until the early 2000s. And by the time the average person started using the internet daily, Google was already the dominant search experience. So for the vast majority of consumers, Google was their first search engine, even though it objectively wasn't.

The same thing happened with Facebook. Myspace had 100 million users before Facebook surpassed it. But Myspace's user base was concentrated among a specific demographic (musicians, teenagers, early internet culture). When social networking went mainstream, when your mom and your boss and your dentist joined a social network for the first time, the network they joined was Facebook. Facebook became "first" not chronologically, but experientially. It was the first social network that most people used. And experiential firstness is the only kind that matters.

The iPhone followed the same pattern. BlackBerry dominated the smartphone market for years before the iPhone launched. But BlackBerry's market was business professionals. When the average consumer bought their first smartphone, it was usually an iPhone or an Android device. The iPhone became most people's first smartphone even though smartphones had existed for over a decade.

There's a timing element here that I think is underappreciated. The second mover doesn't win by being slightly better. They win by arriving at the moment when the market is ready to go mainstream. AltaVista arrived when the internet was for early adopters. Google arrived when the internet was becoming infrastructure. Myspace arrived when social networking was for kids with band pages. Facebook arrived when social networking was becoming how adults communicated. BlackBerry arrived when smartphones were for executives. The iPhone arrived when smartphones were becoming consumer electronics.

In each case, the first mover built the product for the early market. The second mover built the product for the mass market. And the mass market is where category ownership happens, because that's where most people form their first impression.

This suggests something counterintuitive about when to enter a market. The conventional wisdom is that you want to get in early, before the competition, and establish yourself. But the historical evidence suggests that being too early is at least as dangerous as being too late. If you arrive before the mass market is ready, you end up spending all your energy educating early adopters and building infrastructure for a category that someone else will eventually own.

AltaVista was, by the standards of the mid-1990s, an extraordinary product. It was the first search engine to index a significant fraction of the web. It processed 300,000 queries on its first day with no marketing. By 1997 it was one of the top three websites on the internet. It had every advantage the first-mover theory says should matter. But it didn't matter, because when the mass market showed up, the mass market chose Google.

What did Google actually do differently? The product differences were real but relatively simple. Google's interface was clean when everyone else's was cluttered. Google's results were more relevant because of PageRank. Google was faster. But these weren't revolutionary innovations. They were refinements. Google didn't invent search. They refined it at exactly the moment when a much larger audience was ready to use it.

I think this is the part that makes founders uncomfortable. Because the implication is that product quality, while necessary, is not the primary driver of category ownership. Timing is. The best product in the world, launched five years too early, will be a footnote. A good-enough product, launched at the moment the mass market arrives, will become the category.

This doesn't mean you should deliberately wait. You can't time markets with precision. But I think it does mean that founders should be less worried about being first and more worried about being definitive. The question isn't "are we the first one building this?" The question is "when the mass market shows up, will we be the one they remember?"

Because that's the real first-mover advantage. Not being the first company to build the thing. Being the first company that consumers remember as having built the thing. These are entirely different, and confusing them is one of the most expensive mistakes in business.

AltaVista did everything right except the one thing that mattered most. They were early. Google did the one thing that mattered most. They were on time.

There were at least eighteen search engines before Google. Nobody remembers any of them. Not because they were bad. Because they were early. And in business, early and first are not the same thing.