I wrote last week that there are three categories to any market: the Innovator, the Imitator and the Idiot. This pattern happens over and over again. Once a product shows success, rational people follow with a 99% similar product, aka a “me too.” And while it may be rational, it is a stupid decision. The market always punishes the copycat.
HOWEVER, this post is NOT to suggesting that you can’t enter a market once there is an established leader. Suggesting so would be heretical from a multiple time entrepreneur like myself. The key to second mover advantage is to think differently.
What “Think Differently” Means
This is best explained with a case study.
A group of products were launched in 2011 under the theme “Instagram for Video.” SocialCam was the Innovator, Viddy was the Imitator and there were a lot of idiots. These companies found a loophole in Facebook’s OpenGraph, pirated video from YouTube and growth spiked at an astronomical rate. If you opened their app to do anything beside watch a video of cats, you saw an abundance of features. There were so many buttons it was hard for me to figure out what to do…and I build technology, so I’m not exactly a Normal. Once Facebook shut down that OpenGraph gimmick, all of these companies shrank just as dramatically. And the complex user experience of both products couldn’t engage users. Recognizing this house of cards, the Innovator (SocialCam) sold for $1 per user to a complete sucker, whom I am sure deeply regrets catching a falling knife. That asset is probably worth zero right now, or worse. The Imitator hasn’t been so lucky. The Founder/CEO of Viddy got fired and they had to distribute a huge chunk of cash to existing investors, which is not a good sign for a startup. Because it is video, they are probably burning cash at a extremely high rate. At the end of the day, employees will likely get zero for their efforts. This is a case study in what happens when you do NOT think differently. The key point here is video is different then pictures. Trying to “copy Instagram” larded up the product with features and a confusing user experience.
Vine is a mobile app that was founded in June 2012, acquired by Twitter in October 2012 and launched in January 2013. For this example, ignore the tragically bad corporate decision to sell the company prematurely. This case study is on product decisions, not M&A.
Once you opened Vine, you immediately noticed something different. Rather than add features, they removed features. The UI was so basic. All you could do is press a big red button to record. But the biggest change is that Vine only gave a user 6 seconds of recording time. Contrast that with Viddy and SocialCam where videos were often long. Vine didn’t offer all of the editing features of Viddy and SocialCam (or Instagram for that matter). It was just a basic app >> a simple screen to capture 6 seconds of video and a simple feed to play it back.
Growth spiked dramatically and hasn’t looked back. All of this growth was based on users loving the product, rather than a Facebook API gimmick. If Vine hadn’t sold out, it would be worth as much as Instagram was at the time of its purchase. And the buyer wouldn’t have buyer’s remorse.
Instagram Copies Vine
In June 2013, Instagram launched a video feature. Not surprisingly, Instagram’s video feature worked a lot more like Vine than like SocialCam/Viddy. They set the max video to 15 seconds long and had the typical Instagram filters, but otherwise, it was very much like Vine. And even with this stiff competition from the leader in pictures..Vine still flourishes. It is still growing very fast.
The Key Takeaway
Just to make it painfully obvious, the key point here is that Vine won by removing features and simplifying the product. In short, they did the exact opposite of all of the apps that tried to be “Instagram for video.” That’s how you win when you enter a market after there is an established leader…Do The Opposite!