Are you trying too hard to be first when you should be trying to be last?
Peter Thiel, Facebook’s first outside investor, calls this the “Last Mover Advantage.”
As he explained in one of his Stanford startup lectures, “People often talk about ‘first mover advantage.’ But focusing on that may be problematic; you might move first then fade away.”
“More important than being the first mover is the last mover. You have to be durable. Chess Grandmaster Jose Raul Capablanca put it very well: to succeed ‘you must study the endgame before anything else.’”
Peter is also a Chess Grandmaster and likens business to chess. In Chess, the winner isn’t the first to move. The winner is always the last to move.
Here’s some famous entrepreneurial examples of how the first to move are forgotten while the last to move remain:
Jerry Yang & David Filo were one of the first to create a global search engine for the Internet in 1994, Yahoo! Larry Page & Sergey Brin started Google two years later, and found a better way to organize search than Yahoo! – through algorithms instead of manually.
It took longer to get going, but Google eventually overtook Yahoo! as the leading search engine and this year Google became worth $550 billion while the Yahoo! website (which was once valued at over $100 billion) sold to Verizon for $4.8 billion (less than 1% of Google’s value).
Similarly, in 2003 Tom Anderson and a group of employees from Friendster launched MySpace as one of the first globally recognized social networks. A year later Mark Zuckerberg looked for ways to improve on MySpace’s concept and launched Facebook.
Despite MySpace becoming the most visited site in the US in 2006 and the leading social network in the world from 2005 to 2009, it eventually fell to Facebook’s more popular interface and sold to Justin Timberlake and a group of investors for just $35 million in 2011. Meanwhile, Facebook has gone on to grow to $330 billion in value.
Kodak invented the digital camera in 1975, but did nothing with the idea. In 2010, Kevin Systrom saw digital photos as the future and launched Instagram. Two years later, in 2012, he sold Instagram to Facebook for $1 billion – in the same year Kodak went bankrupt.
And a fourth example: Tesla. Founded by Martin Eberhard and Marc Tarpenning in 2003 to build electric cars, the company burned through money from the beginning. The pair brought on Elon Musk as an investor, and despite being the ones with the initial idea, few have heard of either of them today.
Martin got fired as CEO from the Board in 2007, and Elon Musk took over in 2008. Because it isn’t the idea that counts as much as the execution. Today, after a series of crises and near-bankruptcies Tesla’s share price has grown in the last 5 years from 22c per share to $213 per share, and is worth $35 billion today.
How can you think like a last mover instead of a first mover? Last movers think of the execution more than the ideas, they think of the future more than the past, and they think of the market more than the product.
How do you do this? In his book, Zero to One, Peter boils it down to asking one simple question – the “Durability Question”:
“Will your market position be defensible in 10 and 20 years into the future?”
“Every entrepreneur should plan to be the last mover in her particular market. That starts with asking yourself: what will the world look like 10 and 20 years from now, and how will my business fit in?”
As we reach the end of 2016, every move you make is one of the last moves. But the end game of 2016 sets up the new game in 2017. So play well.
“Every new beginning comes from some other beginning’s end.” ~ Seneca