Summary: “Moving first is a tactic, not a goal….It’s much better to be a last mover.” — Peter Thiel<br> On the surface this seems contrarian. When is being last better than being first?<br> Steve Jobs understood this. Apple didn’t make the 1st MP3 player or the 1st smartphone. Yet in consumer tech, Apple is synonymous with both.<br> <br> <br> <br> <br> <br> <br> That was no accident. This is Thiel’s theory in practice. Wealth accrues not to the first but to the monopoly, the company that captures the market, makes consumers forget all others and rides the waves as long as profits pour.<br> They are the last. There is no successor coming. That is where the money is made and that is where startups and businesses should strive to be.<br> Move slow and be boring?<br> <br> Not at all. That isn’t what Thiel’s talking about, that is horrible advice. Just look at the Windows phone or Kodak’s digital camera.<br> This isn’t about perfectionism either. Lean startup principles still apply. You want to move fast and probably will break things. But don’t sacrifice the “it” factor it takes to win.<br> The iPhone killed the Blackberry because it was 10x better. It wasn’t about rushing a competitor to market, it was about building the perfect enough product to crush the competition and with a innovative moat that got stronger and stronger over time — ie the App Store.<br> Steve Jobs succeeded where RIM failed because of his team. They convinced him a 3rd party app store would outperform Apple’s dev team. They were right.<br> Today, even against Android, Apple’s App Store keeps people coming back.<br> The flywheel moat<br> Apple’s first mover advantage, not in the smartphone space but in the 3rd party app store succeeded beyond their wildest imaginations. Developers raced to build apps and businesses around the iPhone and the customer experience got better and better. And with more users came more devs and more apps and a never ending cycle of value creation — the vast majority of which accrued in Apple’s oversea bank accounts.<br> This example illustrates what ALL startups should shoot for — an increasingly defensible business model.<br> The reason — competitive pressures and customer acquisition costs. Businesses without this defensibility almost always struggle with profit and unit economics. Look at Instacart or Uber, on the surface both great businesses. Dig deeper and you reveal weak foundations.<br> Let me explain.<br> Uber’s a bit like a house of cards<br> No, that isn’t a reference to their management, Kalanick, or the Benchmark lawsuit. It goes deeper.<br> Ride sharing is a local business. And with local businesses like this, the local network effects are incredibly strong. Uber spends a bunch to enter a city, onboards drivers, and pays to acquire customers. As more riders and drivers start using the system, it becomes more and more efficient and the unit economics start to make sense.<br> This is the reason Uber, Didi, Grab, Lyft and dozens of other ride sharing services raise so much money. It is a land grab and VCs are racing to control their fiefdoms.<br> <br> <br> <br> <br> <br> <br> But there is a big problem. Drivers and riders have NO LOYALTY. The reason I use Uber or Lyft or any one of a dozen services is a result of price, availability, and marketing. A better offer from ANY competitor and I’m gone.<br> The same is true of drivers. Most Uber and Lyft drivers use two phones and drive for both. Whichever company gets them more business is king (of the day).<br> Suddenly Uber’s moat doesn’t look quite so deep. It gets even worse.<br> Buying friends<br> Every city Uber enters they spend big bucks. But any other ride hailing app can do the same. How does Uber win? They enter cities sooner and outspend the competition. They buy riders and drivers.<br> But anyone else can do that too. China challenged Uber and won, forcing them to leave with their tail between th...
