Willie Nelson is generally credited with one of my favorite sayings: “The early bird catches the worm, but the second mouse gets the cheese.” The point, of course, is that while there can be advantages to being first, that’s not always the case. Ideal market timing is more about coming to market when the market is actually ready, rather than rushing to launch first at all costs. Why is it sometimes worth your while to be second? Read on!
1. Being first costs more
Consider Apple’s iPhone. It’s absolutely ubiquitous. We’ve got iWatches to pair with them, and they’re in every teenager’s pocket, as well as in the suit pocket of nearly every business person. Sure there are competitors, but iPhone dominates the category. Apple didn’t invent the mobile phone, though. In fact, I have no idea who did. But I do know that Apple’s technology stands on the shoulders of all the companies who paid for expensive research and development. Apple entered a mature market. They succeeded not because they were first, but because they were markedly different and better.
2. The first has to create the market
I can’t think of a single instance in which there’s been huge, established demand for a product before it’s even been released (with the possible exception of an anti-whining switch for children.) In most cases, what happens is that a new product comes out, and the producer has to spend gobs of time and money promoting it – creating the niche. But once that niche is established, then look out! Think about the carbonated beverage category (whether you call it coke, pop, or soda.) It’s huge! So big that little companies like Jones Soda can come into the established market and make boatloads of money without even touching Coca Cola’s profits. There are benefits to entering an established niche.
3. The second to market can fly under the radar
When Uber turned the transportation model on its head, it ruffled a lot of feathers. There were lawsuits and taxi union protests that ended up sucking up a fair amount of Uber’s resources. But when Lyft came on the scene, they simply stepped into the market with none of the complications that Uber had. Uber was the target for folks who didn’t want transportation to change. Uber had a big bullseye on its back, and Lyft started taking part of the pie without even causing a ripple.
4. The second can learn from the first’s mistakes
The reason there are updates to phone and computer apps is that problems arise and producers have to fix them. If you’re second on the scene, then you have a chance to not only remedy problems but also to respond to demands in the marketplace for additional functionality. Sometimes being second lets you get it right.
While timing isn’t necessarily everything, it’s certainly important when you’re entering a new market. Ensuring that you already have established potential customers and that you’re addressing those customers’ concerns gives you an advantage over the company that had to blaze the trail.
Mike Michalowicz (pronounced mi-KAL-o-wits) started his first business at the age of 24, moving his young family to the only safe place he could afford – a retirement building. With no experience, no contacts and no savings he systematically bootstrapped a multi-million dollar business. Then he did it again. And again. Now he is doing it for other entrepreneurs. Mike is the CEO of Provendus Group, a consulting firm that ignites explosive growth in companies that have plateaued; is a former small business columnist for The Wall Street Journal; is MSNBC’s business make-over expert; is a keynote speaker on entrepreneurship; and is the author of the cult classic book, The Toilet Paper Entrepreneur. His newest book, The Pumpkin Plan has already been called “the next E-myth!”