A playbook for Generating Business Ideas

Second Mover Disadvantages
Being a second mover is not all roses. It’s certainly not a guarantor of success.
The biggest disadvantage of being a second mover is probably competition. The
following explains how competition can be harmful and why it may not be as
negative as the risk of building something no one wants.
Competition
Competition could limit your growth potential or profitability. Per basic
economics, when supply increases (and assuming demand stays equal), the price
lowers. When a company is not able to charge as much for its product, its
profitability decreases. In addition, if there are multiple companies competing
for the same customers, it’s possible that each company will only be able to
capture a smaller portion of the market and never be able to capture all, or a
significant portion, of the market.
The risk of competition is not as great as the risk of building something no one
wants. I would be more willing to tolerate the pain of a small amount of
competition than I would be willing to tolerate the risk of building something no
one wants.
There are two different kinds of competition: (1) companies that solve a similar
problem with a different solution, and (2) companies that solve the same
problem with the same solution. I would be much more concerned with the
second bucket than the first bucket.
If there aren’t examples of any companies solving a problem (and of customers
using that solution), I would be concerned. There is almost certainly some reason
why no one is solving it. Conversely, if there are existing solutions that
customers are paying for that are massively inferior to my solution, I would be
very excited. For example, WordPress competes with expensive developers who

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build websites from scratch. WordPress is a superior solution because it
drastically reduces the cost of building a website.

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