2nd Place (The Financial Athlete #124)

In sports everyone wants to be in 1st Place. 2nd Place is not good enough. To the fans the 2nd Place person or team is nothing more than the loser who came closest to being the winner.

Investors think highly of new 1st Place Winners, too. These are companies that have created and penetrated a market for a new product or service. They are praised for actually executing the vision. Supposedly, these pioneering companies are blessed with “first-mover advantage”. More often than not, within a few years their dominant market share erodes. Another company comes along with superior technology, savvy marketing, greater financial resources, and professional management, or some combination thereof, and takes over the market. Here are some examples of 2nd Place Winners (2nd to market) usurping the 1st Place Winner (1st to market):

1st Place…………2nd Place

MySpace…………Facebook
Circuit City………Best Buy
Rio………………..iPod (Apple)
books.com……….Amazon
Netscape………..MicroSoft
Atari………………Nintendo

So much for the overrated, first-mover advantage. After developing wide awareness of a new product solution, these companies become thanklessly forgotten. Instead of investing in “exciting companies” with a pioneering strategy, wait for the stronger follower, the 2nd Place Winner with 2nd-mover advantage.

“Show me a good loser, and I’ll show you a loser.” – Vince Lombardi

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