When It Comes to Market Leadership, Be the Gorilla

TL;DR: Andy Rachleff, co-founder of Benchmark Capital and Executive Chairman of Wealthfront, shares insights on achieving market leadership in technology. He challenges the common belief that being first to market leads to dominance, citing examples like Intuit (37th personal finance tool), Google (10th search engine), and Apples iPod (late entrant to MP3 players) as companies that won by being first to product-market fit, not first to market. The article explains the virtuous cycles that market leaders enjoy: exponentially higher margins enable faster reinvestment, larger megaphones to set customer expectations, preferred corporate partnerships, recruiting advantages, and easier/cheaper fundraising. Once product-market fit is achieved, it becomes extremely difficult to dislodge the leader even with better or cheaper products as demonstrated by Dropbox maintaining leadership despite Googles price drops. For challengers, Rachleff prescribes tacking like sailors taking a different path rather than competing on the same wind. Google succeeded not by building better search but by focusing on self-service text ads instead of display ads requiring sales teams. Facebook beat MySpace by being the first social network with privacy options, starting with college students as a beachhead. Nintendo escaped the graphics war with Sony and Microsoft by creating the fundamentally different Wii. The article concludes with Geoffrey Moores primate framework: Gorillas (market leaders) promote their approach to grow the market, Chimps promote different approaches to the same customers with limited success, and Monkeys clone the Gorillas approach at lower prices with exaggerated claims. The key insight is that focusing on competition distracts from delighting customers.