When being “first” is not a competitive advantage

“WE STARTED THE TREND”

“Wherever you hear companies talking about Managed WordPress Hosting, they are following our lead.”

This is how one of our competitors attempts to differentiate and compete with us at WP Engine. Is it effective?

Most startups insist they’re “first” at something. As they should — what’s the point of a new company that adds nothing new to the world? But is it a good thing? Does it make you better than your competition?

On the surface being “first” sounds impressive, implying innovation and leadership. But upon reflection, it’s not.

Google wasn’t the first search engine, the iPod wasn’t the first mp3 player, and DropBox wasn’t the first shared filesystem. Yet they are the market leaders. Indeed, their market’s greatest innovators.

Being first does imply innovation, but also faults and weakness. The first electric car, while impressively innovative, was pretty bad by most standards — short-range, sluggish, unattractive, and constantly in the repair shop.

So too with software — “v1.0″ might imply novelty, but it also implies “buggy” and “incomplete.” Who wants their business to depend on a v1.0 product?

Even if you consider WP Engine to be nothing more than an imitator of this competitor (we’re not, but that’s a story for another time), the electric car analogy is apt, because in fact we’re an improvement in almost every way.

This competitor had 40 minutes of downtime last month; we had 0 (according to Pingdom, an unaffiliated 3rd-party). We’re 30% faster at delivering HTML (also Pingdom). Our security service is better — we guarantee cleanup of any hacks while this competitor simply claims they’ve never been hacked (though we’ve found malware in customers of theirs who switched to us). Our support is more responsive and knowledgable because we employ more WordPress experts per 1000 customers than anyone.

Those are tangible competitive advantages; being “first” isn’t.

In fact, being first is a shackle because you’re stuck with legacy support — features you thought were important but aren’t now, grandfathered customers who are no longer profitable, and a reputation that’s hard to revamp even if your company has in fact changed.

Worse, being first means you make all the mistakes in public, for all to see. New competitors get to swoop in afterwards with the hindsight that you created — in pricing, positioning, marketing, features, design, … anything. They get the running start without all your baggage.

Now there are situations where being first is indeed a massive advantage. This exception arises when you’re not only first, but able to expand fast and continue innovate. Early mp3 players didn’t do this — they didn’t get huge traction and weren’t creative in hardware or design, which meant Apple had the space to innovate in design while the market was still largely available.

But McDonalds and Ford were first and kept their leads, because they never stopped innovating in process and product, constantly driving down costs while adding new desirable features, using their lead to fund even stronger growth.

Amazon is the quintessential example in the hosting industry. They didn’t just put “cloud computing” on the map, they’ve never stopped lowering prices while expanding both depth and breadth of service. If they keep it up — and there’s currently no reason to think they won’t — it’s hard to see how anyone could overtake them. And so far no one has come close, though at least two multi-billion-dollar companies are trying.

So yes it can work, and a well-funded startup combined with a stellar team and bit of good fortune can occasionally pull it off. But most little companies aren’t in that position, and it’s often not the best risk/reward position anyway.

What this means is that being “first” isn’t an end in itself — it’s not an advantage, not a feature, not a benefit the customer can experience. It’s a means to one of those ends — it can be levered into market dominance or it can be a manicle that locks your company in a box you can’t get out of.

It’s OK to be proud of being “first” at something, and you should be. But like being “disruptive,” being “first” isn’t necessarily desirable.

In any event, it’s not a competitive advantage. It’s just history.

Let’s continue in the comments — when is “first” a benefit or a drawback?