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First Mover. Fast Follower. Smart Follower: What’s Best For You?

Following

While the current Entrepreneurial Ecosystem (EE) focuses on the idea and the pitch, the reality is that few billion-dollar entrepreneurs have used “ideas” as the foundation for their unicorns. Most used strategies and skills. Musk has proven the importance of entrepreneurial strategies and skills by taking an idea where large car makers failed and building a unicorn.

Unicorn-Entrepreneurs have used 5 key paths to build a unicorn.

#1. First Movers

First Movers seek to find a product or strategy that no one has used before. Shark Tank seems to be built on this concept. Examples of successes in this field include Xerox, Genentech, Medtronic, and eBay. But contrary to the hype about First Movers, only about 11% of them dominate. The reason is that most ideas can be imitated and improved either by indirect competitors who add the “first-mover” product to their arsenal, or by fast followers, like Sam Walton.

#2. Fast Followers

Fast Followers imitate a hot product, mainly on an emerging trend and often with a more capital-intensive strategy. When eBay was launched, there were others who used more capital to launch their fast-follower ventures. These fast-follower imitators forced eBay to seek venture capital and dominate online auctions. Lyft is another Fast Follower, but Uber was able to hold off the challenge since it had strong leadership and a capital base. The keys to success as a Fast Follower include:

· Speed of entry after the first mover’s launch and before the leader establishes a strong base to beat new entrants, and before the industry has taken off, which often makes it difficult to catch up.

· Lots of capital for an edge and the ability to use Capital-as-a-Weapon.

#3. Smart Followers

This is the strategy used by most billion-dollar entrepreneurs. Few were first movers. The key traits of Smart Followers include early entry before the industry has taken off, which makes entry more difficult, and a better understanding of the emerging trend to identify the best product-segment-competitor mix for a stronger competitive edge, and skills to launch and dominate. Examples include:

· Steve Jobs (Apple), who used a legal strategy to launch the iPod platform.

· Bill Gates (Microsoft), who focused on the guts of the PC industry.

· Jeff Bezos (Amazon.com), who focused on the right product and trend.

· Brian Chesky (Airbnb), who focused on helping landlords succeed.

· Travis Kalanick (Uber), who pivoted to a strategy that opened ridesharing for the masses.

#4. Price Cutters

Many price-cutters barely eke out a living especially if they do not have a competitive edge. A lower-price strategy is often the easiest to use but difficult to win. For skilled entrepreneurs, like Jeff Bezos, price cutting has worked when combined with the lower cost of an emerging industry like the Internet.

#5. Consolidators

Consolidators usually have access to capital, which is used to acquire a strong base company, often in a highly fragmented industry, and then to acquire other companies to build a big business. The private-equity industry and the Entrepreneurship-Through-Acquisition (ETA) industries prefer this strategy. To execute this strategy, entrepreneurs need access to capital. However, there are exceptions. Glen Taylor built one of the biggest companies in the wedding invitation industry by becoming a very strong operator, acquiring his first company by bootstrapping, increasing profitability with his skills, and using the higher profits to build a national giant (Glen Taylor in Bootstrap to Billions).

MY TAKE: Where is your edge? Emerging industries and trends are great if you have skills in those industries and trends, and the ability to find the unicorn-strategy and implement it. Entrepreneurs without the needed skills or strategies could get caught up in margin hell and no profits. Most unicorn-entrepreneurs used smart follower strategies. Then they used their unicorn-skills to get an edge and finance-smart strategies to dominate.

BloombergBloomberg


ForbesFirst-Movers Seldom Win, While First-Dominators Often Succeed And Achieve Staying-Power


ForbesFirst-Movers Seldom Win, While First-Dominators Often Succeed And Achieve Staying-Power


Manufacturingdigital7 reasons why Tesla has succeeded where others have failed


ForbesThe #1 Secret Of Billion-Dollar Entrepreneurs: 94% Took Off Without VC
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