Many people will not have heard of Joost. Many of those unaware of Joost will, however, be aware of Hulu. Both sites set out with the same objective—to deliver television online—but Joost started first. So how come Hulu won?
Work on Joost started in 2006 and the site went live, to great acclaim, early in 2007. Hulu did not go live to the public until a year later, and had not even been announced by the time Joost was launched.
Let’s see what GigaOm’s Jason Chen had to say about Joost back in 2006, when it was called The Venice Project:
The guys who brought you KaZaA and Skype are at it again, and their upcoming Venice Project Peer to Peer streaming will show YouTube how video is really done. Just like KaZaA was a disruptive force in music sharing, and Skype was a disruptive force for phone calls, the Venice Project will kill current online video sharing and TV streaming sites. (Click here to read complete post.)
Contrast that statement with Om Malik’s more recent assessment, also posted to GigaOm: “When I read about all the planned changes at (Joost) earlier today, the first thought that crossed my mind was: Stick a fork in it; Joost is done.”
I guess that just proves that it’s tough to pick winners, online or off. No matter how good the pedigree is, it’s performance that really counts.
I am not going to go into the details of why Joost failed. The post by Om Malik details why the site should have succeeded and why it did not. All I will say is that some of the reasons for failure sound horribly familiar: lack of focus, too much hype, and failure to recognize the urgency of fixing its technology problems. Mmm…that reminds me of MBInteractive, which lost out to Dynamic Logic in spite of MBI’s first-mover advantage. What typically happens in any completely new category is that the first mover validates the concept. A fast follower then gets the technology, business model, and pricing right and makes a success of it. When Hulu launched in 2008, it ignored the downloadable peer-to-peer technology originally used by Joost and settled for a nice, easy-to-use web interface. With loads of content from its backers, Hulu was just a better mousetrap.
The amazing thing about the first-mover myth is its durability. Extensive research reported by Gerald Tellis (University of Southern California) and Peter Golder (New York University) in their book Will and Vision: How Latecomers Grow to Dominate Markets suggests that the truth is completely different. It is the “second movers” that are typically the most successful.
One reason this fact is overlooked, I think, is that the first-movers are often forgotten. The description of first mover advantage on Wikipedia cites Procter and Gamble as “an example of when technology leadership helped propel their product (disposable diapers) into the US market. They used a learning-based preemption to help invest in low-priced European synthetic fiber which helped create the diapers at a cheaper, more profitable price.” But Pampers were NOT the first disposable diaper. Chux, made by Johnson & Johnson, were on the market in 1932. P&G used technology to make the product affordable but they did not create the category.
“Ah ha!” You might cry, “But what about Apple’s iPod? That must be an example of first-mover advantage.” Not according to Eliot Van Buskirk. His post on CNet suggests the title of first mover goes to the Hango/Remote Solutions Personal Jukebox PJB-100, That product was produced by a Korean company but licensed from Compaq (later bought by HP). Eliot concludes,
“I know I’m reducing the situation, but it wouldn’t be too much of a stretch to assert that the entity now known as HP beat Apple in the race to make a high-capacity portable music player by three years–an eternity in the world of MP3 players–and still somehow lost.”
Being the first to market may offer the advantages suggested in the Wikipedia article but the leading edge all too often proves to be the bleeding edge. First movers lack one critical advantage. The ability to learn from someone else’s mistakes.
Can anyone suggest a company or brand which really did become successful by being the first to market? Please let us know.
(3 votes, average: 5 out of 5)
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July 9th, 2009 at 8:08 am
Ford - Model T was first mass market. Has fizzled now but was successful
Guinness - I’m Irish!
July 9th, 2009 at 9:39 am
[...] about Om Malik as of July 9, 2009 First-mover advantage? Joost’s demise proves that it’s a myth - mb-blog.com 07/09/2009 Many people will not have heard of Joost. Many of those unaware of Joost [...]
July 9th, 2009 at 10:29 am
Even before reading the first response, I thought of Ford. Even for examples that we might think are first, we would probably have to do some research to see if they actually were (was Coke the first soft drink?). I can’t think of any others of the top of my head, so agree with the posting - it’s not so much first, but first to do it well (with “well” being the loosely defined term)
July 9th, 2009 at 2:01 pm
I think the Model T actually helps the second mover point of this blog. There were plenty of automobiles available in the early 20th century but what Henry Ford did was apply a production system (again, not new - modeled after the Chicago slaughterhouses) that brought costs down, opening up a broader market.
But OK, the first mover - Daimler - is still around although many contemporaries aren’t.
July 9th, 2009 at 4:02 pm
I’m not sure that Joost’s failure is proof that first-mover status is not an advantage. Certainly, being first can be an advantage for many reasons, while it can also be a disadvantage. It depends on the circustances. In the case of Chester Carlson, first-mover status helped lead Xerox to market dominance for many years. In the case of Clickable, my startup, our second-mover status resulted in our optimal timing of capital deployment and innovation to the latest (versus prehistoric) Web standards and APIs, resulting in huge advantage for us.
But there’s a more interesting angle to this story. Marc Andreesen and Ben Horowitz just started a venture capital firm focused on investing in companies that are close-seconds, but happen to be the market peers that were not acquired first. Their rationale is that first-mover innovators dramatically slow down innovation once they’re acquired by a big company. In essence, big companies swallowing small first-mover innovators experience a culture shift which hampers progress, making strong industry peers more poised for success. Sustained innovation is more of an advantage versus first-mover innovation. Most interesting to me, though, is that this is an investment strategy, a bet on advantage, based on culture.
If you dig my riff, you can read more here.
July 10th, 2009 at 5:13 am
Nigel I don’t agree with your suggestion that First Mover Advantage is a myth. FMA comes to those who are able gain, grow and retain customers by virtue of achieving
1. distribution advantage
2. customer advantage - innovation leaders/trend setters
3. economy of scale advantage - cheaper(cost/price), better, faster (usually interlinked with technology)
or locking up some critical strategic resource
those are larger hurdles when physical products are involved as real barriers can be created - but less so when virtual/digital is involved.
Which brings to mind the saying that the future is already here…its just not equally distributed. All sorts of companies are innovating and when they succeed - we revise history to say their success was due to “Factor X” or “mind space” whereas those that failed..
FMA could/should probably be better characterized as critical mass advantage, end game success comes not by being first but by growing (first).
Cheers
July 10th, 2009 at 12:08 pm
Hmmm. I hate to sound like a dinosaur, but could it have been Hulu’s traditional, mainstream advertising pushing millions to their web site?
July 11th, 2009 at 10:16 am
the value of my media metrix stock options from NPD proves this is true! Tellis and Golder make a very convincing case, as does GfK’s Arbor unit that built a database off of the new product museum. Even something like Red Bull, you could argue was preceeded by Jolt (remember that?) In research LTM came first, then ASSESSOR, THEN came BASES. Ironically, Millward-Brown ATP might be the only counter-example I can think of!
July 12th, 2009 at 1:11 pm
How about Visicalc? The quintessential “killer ap”. Or Lotus 123. Pretty much replaced by third mover, Microsoft Excel. And Apple II preceded IBM’s PC. I think first mover can only be a true advantage when the marketer strives to anticipate the competition and innovate vigorously.
July 13th, 2009 at 11:01 pm
Thanks for the comments everyone. I think we need to clearly need to distinguish between the first mover - the company or brand which truly pioneered the category - and the first successful mover, the one that everyone comes to associate with the category. Even in the case of Millward Brown’s approach to tracking there were other companies which used continuous tracking before MB. It was the visualization of trends versus marketing spend which made the new offer so compelling.
July 15th, 2009 at 9:39 am
Post-it - First and foremost REPOSITIONABLE note for communication. Was a piece of scratch paper with SCOTCH tape possibly first mover prototype? The lore of the Art Fry story was trying to keep his bookmarks in place in his choir hymnal, so not even intended as a communication device at all. Post-it clearly owns it category and there weren’t any major first movers and no real “second movers” except by Avery who was going to “take over” Post-it’s, yet bailed after less than a year.
July 20th, 2009 at 2:52 pm
Now that’s an interesting one Shawn, thanks.
So we do have some companies/brands that got it right and became a mass market success first time. However, I doubt we can think of enough to prove that there is a consistent first mover advantage. Many big successful brands got that way because they had the advantage of learning from someone else’s mistakes.