In the Institutional Investor world, I have frequently consulted start-ups and been interviewed by Institutional Investor on the subject due to my experience and expertise. The mistake people repeatedly make is a major design flaw. Bringing to market another "me to" product is a great idea. It's never a bad idea to replicate the first to market. However, if those start-ups had done more due diligence with a critical eye and evaluated how to improve upon it they would have created a better product.
Someone else creates a killer application right? Utilize the Medici Effect to enhance the product. Let me give you a great example. In my industry, the COO of a $120 billion dollar institutional fund struck out on his own. His business model was to offer back office operations for hedge funds, for which he would receive 40-50% of their revenues. Not a novel approach. He had a VC back him up. Ten years prior my firm was doing lift-outs of portfolio management teams for institutional asset management firms that offered a similar business model. Institutional Investor interviewed me, and I predicted failure. Sure enough, two years later the VC withdrew funding and he was out of business.
You DO NOT have to be the first to market. In the first company I owned, I was not first to market. I was third to market. What I did do, was create new services, new protocols, new paradigms, new delivery methods. I dominated the markets I was in and sold the company five years later to the industry giant. Think differently. Discover what can be done better, look for what they aren't doing. Uncover their weaknesses before you charge in and do a me too product. You don't have to be radically different, you just have to be better and offer something the competition doesn't.
First to market usually is not the organization to dominate in the end. It's the killer application. Generally, it is second or third of fourth to market that dominates. Why? Because someone was smart enough to look at what the competition did not do well. Evaluate, investigate, initiate, interview customers, get input before you implement. Good luck on become the best there is!
Copyright Ev Nucci 2007