First Movers Face 10 Critical Hurdles, SaaStr Founder Jason Lemkin Highlights

San Francisco, CA – Jason Lemkin, the influential founder of SaaStr, recently offered a candid, albeit ironic, perspective on the "advantages" of being a first mover in a market. In a social media post, Lemkin outlined ten significant challenges faced by pioneering companies, suggesting that the perceived benefits often mask substantial difficulties. His commentary provides a counter-narrative to the widely held belief in an inherent first-mover advantage.

Lemkin's tweet, which quickly gained traction, listed points such as "No roadmap," "Tiny market," "Customers aren’t sure," and "Limited legitimacy." He further noted that "VCs don’t get it" and "Many VPs don’t get it," emphasizing the internal and external skepticism faced by truly novel ventures. The list also included "Never budgeted," "Tiny TAM at first," "Seems minor to many," and the fundamental question, "Why wasn’t it already done if it’s so important."

Industry analysis often supports Lemkin's view, indicating that the "first-mover advantage" can be a "half-truth." While early market entry can establish brand recognition and customer loyalty, pioneers frequently bear the high costs of research, development, and market education. This often leaves them vulnerable to "fast followers" who learn from initial mistakes, refine products, and enter a more educated market with lower risk. Companies like Google (following AltaVista) and Facebook (following MySpace) exemplify how second movers can ultimately dominate.

Ventura capitalists, typically seeking large Total Addressable Markets (TAMs) of $5 billion or more for significant returns, often find it challenging to evaluate nascent markets. This aligns with Lemkin's observation that "VCs don't get it" when a market initially appears "tiny." However, founders of novel ventures can attract investment by demonstrating a clear path to scaling, showing early traction in product expansion, or illustrating how their solution can eventually serve a much larger market, even if the immediate TAM is limited.

The strategic landscape for startups is therefore nuanced. While being first can offer the opportunity to set industry standards or secure key resources, the inherent uncertainties and high costs can be prohibitive. Lemkin's insights, stemming from his extensive experience in the SaaS ecosystem through SaaStr, underscore the critical need for resilience, adaptability, and a realistic understanding of the arduous journey faced by true innovators. The "greatness" of being a first mover, as Lemkin ironically concludes, lies in overcoming these formidable obstacles.