The Start Up downside of being first to market
Vital Germaine
Being first to market sounds like a big advantage, with most start ups claiming to have a unique value proposition (is anything really unique anymore?) First to market comes with some real downsides that can hurt companies if they’re not careful.
1. Education of customers
First movers often have to teach customers what the product even is and why they need it (think the onset of the internet, Uber and Airbnb). That means spending heavily on marketing, consumer awareness, and user onboarding—costs that later competitors don’t have to bear. This is where many Start Ups fail as they need to be preoccupied securing funding and proving a new concept.
2. Uncertain Demand
You’re entering an unproven market.
Customers don’t actually want the product (yet)
The timing isn’t right, but with patience and financial resources, timing becomes secondary.
The problem isn’t painful enough to solve (yet). You are potentially relying on the “need” for convenience alone (a valid and impactful paint point to solve. and a great driver of business success). But at first, consumers can’t know what they don’t know. The “addiction” to convenience happens further down the business ecosystem.
3. Technology May Not Be Ready
Being early can mean:
Infrastructure isn’t mature
Costs are higher
Performance is worse
Example: Early streaming services struggled with bandwidth limitations that later companies didn’t face. Once again, patience and financial resources to navigate this initial hurdle is crucial.
4. Fast Followers Can Copy and Improve
This is potentially the biggest hurdle to overcome, or competitive advantage to sustain. Competitors can:
Study your product
Avoid your mistakes
Launch a better, cheaper, or more user-friendly version
Think Airbnb, whose corporate market value peaked at roughly $104 billion in late 2021. It has since experienced a decline of roughly 21% from its all-time high. Today, it trades at a market capitalization of about $82 billion. This decline is also due to, in part, a disconnect to initial core value (which were probably never really established), the business why which all too often is profit rather than socio-preneurship (business with a commitment to the greater good: solving social/societal, cultural and environmental problems while making profit).
Sometimes the “second mover” wins (think Facebook vs early social networks… MySpace).
5. No Established Standards
You may have to:
Define the market
Build ecosystems from scratch
Deal with fragmentation
Establish effective SOP’s
Company values
Hiring the right talent to scale, the onboarding process, employee training,
If your standard doesn’t win, your early investment can become obsolete. This is a huge pitfall in Start Ups.
6. Customer Switching Is Easier Early On
Early adopters are often:
Experimental
Less loyal
If a better product comes along, they’ll switch quickly.
7. Scaling Challenges
You might grow too fast before:
Your operations are ready
Your product is stable
Your business model is proven
This can lead to burnout, poor user experience, or failure.
8. Regulatory & Legal Uncertainty
New markets often lack clear rules. Being first means:
You may face unexpected regulations
Governments may later impose restrictions that hurt your model (NAPSTER)
SUMMARY
Being first gives you visibility and potential brand leadership—but it also means higher risk, higher cost, and more uncertainty.
Roughly 70% to 90% of startups fail, with about 90% widely cited as the long-term failure rate for innovative tech ventures. For general small businesses, U.S. data shows about 20% fail in the first year and nearly 50% fail within five years.
CONCLUSION
In many cases, the winners aren’t the first—they’re the ones who learn fastest and execute best. It’s a solid combination of CREATIVITY (ideation, adaptation), and relentless commitment or follow through to navigate those initial growing paints of the first 2-5 years.
Learn more about enhancing creativity in your Start Up culture with our trainings.
Vital Germaine
President, ENGAGE Teams 360