Being too late to the market

I have seen quite a lot of tweets about being too late to podcasting, e-commerce, crypto etc.

But being late has its advantages. The companies that eventually win online are not always the ones that are first to market. Being too early also has its problems.

Here's an approximation of what being late often means:

  • The opportunity gap closes for new players (people already choose their music player, so cost of switching becomes higher)
  • The innovation has dried out - the market is already satisfied with the existing solution.

But not everything is negative about being late.

  • Being a late player means you are joining a market that already has a benchmark for what is good and bad. There's a higher chance that if you show them a better solution they will know what they are looking at.
  • The spending habits are already developed. (being the first company to try and make someone buy something online probably took some convincing)
  • There is a big enough mass of users to be able to build a business in a niched subject

But let's look at the other side, being too early:

  • The market does not know what they want (a lot of cost sunk into R&D)
  • The monetisation strategy is not clear (there are early internet companies with huge masses of users never managed to monetise enough to build a sustainable business)
  • The opportunity gap is bigger for who can spend time to explore / get lucky (Being early in crypto often means 1) being aware of the potential of the technology and purposefully getting some bitcoin 2) buying it as a joke. Your ROI for the latter is exponentially lower now than in 2010)

Here's the downside:

  • You can build a good product in a market that is not ready for it. Your work therefore splits between building the product and teaching people what it is and how to use it.
  • You can be conceptually there (think the first people who wanted to make the "portable computer") but still have to wait for the technology to catch-up.

What does "just at the right time" look like?

  • The market is moving en-masse towards it (companies experience hyper-growth - ex: people rapidly switching from film to digital cameras)
  • There is a "scramble" to gain market share with at least a leading company that proved the business model
  • Technology and concept are aligned: the hardware can keep up with the new POV about the world
  • There is not an obvious moat that cannot be disrupted: playing against network effects too late has an insane cost per user and high-risk of never working out

Companies with venture funding need a big ROI and can sink capital, so they are more inclined towards "too early", hoping to be in a good position when the market is "just in time".

As to starting a company "just in time", the biggest challenge fighting against the momentum of the companies that started executing when it was "too early".

Bootstrapped businesses can benefit a lot from transitioning between "just in time" to "too late". There is already a proven market, but not ancient enough to be disrupted.

Safe to say the split between stages is more of an attempt for us to organise the world rather than a line in the sand that clearly defines every stage.

The fluctuating nature of these steps and the disagreement between people about what stage we are in, as well as the execution of the company against the stage can give birth to all sort of outliers that disapprove the model above. Fun times.

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