Startups: What is your First Mover Advantage?

Monday October 17, 2011 , 5 min Read

This is a guest column by Amrutash Misra, the co-founder at Life Online which runs a Chennai based online library. Before that, he worked at Hindustan Unilever. And before that, he was a student at IIT Madras. For Amrut, the glass is never half empty. It’s always half full of opportunity.We started work on iloveread.in in January, 2009. We started the right way: market research followed by competitor research. Then we started work on branding and backend software. We wanted to build software that could handle 20K members and 500K books.

We were on-track to be the first online library in Chennai with only two major national competitors.

THEN. In May, 2009, on a Sunday evening, we got the news that a group of enterprising book-lovers are launching the “first online library in Chennai” the very next day. I went into absolute panic-mode. My partner and I were based in Pune and we worked furiously for the next couple of hours to reduce as many features as possible to launch before daybreak: these things are actually possible. We wanted to be the pioneers in the online library space in Chennai.

Here’s a list of dominant brands that make up my daily life:

FABIndiacurtains
Colgate Sensitive Toothpaste
My HTC Desire phone and its Android (<3) OS.
My Tupperware lunch box
My trusted ASUS laptop
My pair of Crocs footwear
The bottle of VAT69 that’s on display (almost always full)
The workhorses of our house: The Samsung fridge, The IFB washing machine, LG air-conditioner
My Yamaha Bike and my wife’s Chevrolet Spark
Facebook.com, Gmail.com, Yourstory.in, etc...

Take 60 seconds and make a quick list for yourself. This is how to do it: Try to remember the brands that you use daily. But if you took more than 5 seconds to recall the name or had to look and check, then strike it out. List down only the ones you remember at the drop of a hat.

NOW, here’s part 2 of the exercise. Mark an “x” in front of those brands which are not the pioneering companies in the product line. Like, for instance, ASUS is not the first Laptop maker. Mark another “x” if you don’t know which brand / company was the pioneering (“first”) brand in that product line.

If you are like me, then you should have marked out a double-x in front of all the items on your list. And there is good reason for this. When we go to the market to buy something, being the pioneer brand is not on top of my list of reasons to buy. Our buying decisions are mostly irrational and based on things we’ve heard and read. They are largely influenced by the world around us, especially by salesmen and marketers. But one thing is common to everyone: we hardly ever buy the “first” of a product line.

Amrutash — This morning, I was telling my wife about how I was generally upset with every website saying, “Welcome to the **FIRST** online blah-de-blah in blo-de-blo” (like in the picture). She said something that I thought was very insightful: that she won’t buy if it’s the “first”; she’ll wait to see if it’s still around after a while (“maybe two months”). In fact, using the first year data for iloveread.in, I can tell you that the average delay between a customer hearing about us and actually joining was 6 months. Today it’s down to almost negligible.

As first-generation entrepreneurs, we tend to want to be a “first”. This is our ego talking. That’s all. The first-mover advantage is not really about being the “first”, but about either a) taking a huge technology leadership position (maybe in patents) or b) reserving a lion’s share of a limited resource for oneself or c) taking over a dominant market share and ensuring that the cost of getting a customer to switch products is very high. In either of these cases, the customer doesn’t care. The disadvantage of being the first mover is that you are taking ALL the risk.

On that summer night in Pune, we made a few calls to find out what is the best marketing strategy that we can cook up in 6 hours. Luckily for us, one of the marketers I spoke to gave me a very sound piece of advice: a competitor launching before you in a virgin market (pioneer) is the best thing that could have happened to us. We sat back and kept checking to see how they were doing. We planned better, made our software even better and launched after 6 full months. By then we were the third. Today there are more than 5 in Chennai and more than 15 all overIndia. But to my customers, it doesn’t matter.

So, what are your thoughts on this article by Amrutash? Write to us at [email protected]

We recommend that you read Amrutash’s earlier articles on YourStory.in

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