When they are asked about the defensibility of their businesses, I regularly hear entrepreneurs cite “first-mover advantage” as the basis on which they will compete and defend their margins. It has come up several times recently, both in class discussions and at a recent MassChallenge panel I moderated on working with angels. Since everyone loves a good myth, I figured I would take a moment to examine this one.
Myth is actually a misnomer here because myths generally relate to the supernatural or nonexistent. First-mover advantage does occasionally happen in real life, just not very often. And not in the way entrepreneurs generally understand it.