In essence, a business is an idea for how to meet a need.
My favourite types of businesses are those that make me think “WOW, that is extraordinary”. Over time I discovered the businesses that created this response in me had two factors in common – they were the first to do something new and being the first was instrumental in their success. When a business gains an edge that helps them thrive because they acted first, this is known as a first-mover advantage.
A concept known as the Adjacent Possible posits that with each new innovation, many more new innovations become possible. For example, Instagram could not have existed without the Internet existing first. When the new possibility is created those that arrive early work out new ways of meeting needs that are now conceivable. Remember how businesses are in essence an idea for meeting a need? The businesses that meet new needs first, or meet existing needs in new ways first, are far more successful than those who jump on the bandwagon later. The first-mover advantage is the name of the strategy that differentiates these two types of businesses. By teaching you about the first-mover advantage I want to show you that this success is something you can claim for yourself, but you must act early.
So what is Clubhouse? Imagine going to a conference that had talks about every topic under the sun, and you could not only drop in and out of the rooms, you could ask and be invited to speak with the thought leaders like you were having a cup of coffee together. An audio-only social network, it is everything Twitter wanted to be, and LinkedIn wished it was. After all, who needs to hear your elevator pitch when they can listen directly to your brain?
Clubhouse is not only a new social platform that has created a new way of connecting, it is also creating an opportunity for all those that join to pioneer how that new way will be used for business. When I first heard about it, my interest was piqued because here was a business doing something new. For me, discovering and creating businesses that do something new is my daily work, so my interest at this stage was casual. The second I entered the platform I realised that Clubhouse represented something much more exciting, because it has the exact mix of new possibilities that lead first-movers to thrive, meaning that it opens many and significant new doors for those that recognise this opportunity.
I have long been wishing and looking for an opportunity where I could have a social media “do over” – understanding everything I know about strategy, search and social today... but as though I’d travelled back in time and could use it when the algorithms were basic and the landscape largely untouched. The second I jumped on Clubhouse I realised this is that opportunity. I am getting the new client conversion rate that I only get when I speak at seminars normally, except I can do it while pottering around my house. Also my conversion rate from Clubhouse to Instagram is even higher than my speaking would often be because the user base is largely tech early adopters at the moment. It’s extremely rare that I can say 100% of new followers on a social platform are leads, and on Clubhouse I can.
The opportunity here is enormous for service providers whose business models are set up around thought leadership and can cater to a global audience, such as through digital products or services that cater for international audiences. For this group, if they wait too long to take the opportunity seriously, the advantage is missed and the following can happen:
- The platform will be saturated with competition that did move first, making growth considerably slower.
- The customer base will shift from early adopters to early majority where they will move more slowly down funnels.
- As the artificial intelligence behind the algorithm gets more advanced to cope with a surging user base, new players will be shown to lower value eyes to match their lower follower count.
- If you’re a generic business concept not a niche, wait too long and all the competition floods in, making each slice of the market share pie much smaller.
- If you’re not a geographic bound / hyperlocal offering the ability to have leadership on topics and spaces of high value to you will be taken by those that moved into those spaces first.
- A social media do-over.
- The chance to learn, make mistakes and develop your strategy and expertise before the majority are on the platform.
- An opportunity to make a strong brand impression and nurture an engaged following before others give the platform the time of day, enabling a stronghold over a larger segment of your target market.
- Grow a large and high converting follower base in an environment that has a basic algorithm (this is early days of Instagram huge). This is an additional competitive advantage known as an economy of scale.
- By the time the platform and its user base enter a later stage of product maturity, you will have a larger following and thus have bypassed the growth hurdles that only later entrants experience.
- As the algorithm becomes more advanced, you are in an attractive position relative to newcomers.
- Enjoying the sweet high conversion that only comes from an audience of early adopters.
- The potential for mainstream media press opportunities because you’re doing novel things in novel spaces.
- If you are a niche or even a generic concept you can own and grow your space before you get noticed (if niche) or before the competition flood in (if generic).
- If you are geographic bound / hyperlocal, create and own the spaces (i.e. location based clubs) that are yet to exist. Think LMBDW (Like Minded Bitches Drinking Wine) or Melbourne Creative Network... but it’s yours. Part of a first-mover advantage is the opportunity to control or even monopolise resources, and being the first to introduce new verticals or capture competitive names is one way to do so.
Over time, all these new possibilities get discovered, the hot new thing reaches maturity, the growth slows and the potential to have this advantage is lost. However, there are some first-mover disadvantages worth understanding, so you can account for them before you dive in the deep end.
Volatility: With fast growth opportunities come fast change, and not all of these changes will benefit you. This volatility requires that you commit proper time to keeping up-to-date with changes and making space to respond by evolving your own strategy.
Unknown Unknowns: New things always have unexpected consequences that can’t be foreseen, these can be amazing but they can also be challenging. Expect the unexpected and build strategies that work well in uncertain contexts.
Free-riding: Later entrants get to enjoy the cost and simplicity benefits of copying all the learnings you had to discover for yourself. Prioritising experiments that have growth payoffs mean the free-riders are less likely to copy these strategies as their later entry comes with more difficult growth.