The smart and hard working mover advantage

Many people believe in the idea of a first mover advantage in business. Basically, the theory says that those companies who are first to start executing on a new idea have a higher chance of winning their market than later entrants.

While the concept sounds appealing in theory, I don’t believe that it’s correct. We’ve invested in many companies that are market leaders who weren’t first movers as well as many companies who were first movers but aren’t market leaders.

Beyond the fact that the progress demonstrated by the companies in our portfolio doesn’t support the existence of a first mover advantage, the concept also doesn’t stand up to rational argument.

A first mover is, by definition, the first to begin executing on a new idea. However, market winners are determined by how well they execute, not the fact that they start executing first. Building a company is a marathon, not a sprint, and a runner that starts running a few minutes later can more than make up for the initial lost distance by running at a faster pace (that is, being smarter) and spending more time running (that is, spending more time working).

So rather than the first mover, I prefer to back the smart mover who spends the most time working. They have the smart and hard working mover advantage and that’s an advantage which stands up to actual results.

Also published on Medium.