Far too many times I see company barely past the idea stage claim “First Mover Advantage” as a justification (or at least a major one) for their proposed pre investment valuation.
More likely, this should go on the other side of the evaluation equation – it’s a disadvantage.
- “Google? Not the first search engine.
- Facebook? Not the first social network.
- Groupon? Not the first deal site.
- Even in the mists of software industry time: MS-DOS – not the first operating system.
It’s not about having the idea first – it’s about having the best execution of the idea. Who can quickly and effectively engage with a profit paying customer base. It all comes back to the effectiveness and skill of the management team. So when doing due diligence look for real evidence that this management team have the experience, and skills and focus needed to rapidly engage with a critical mass of paying customers.