‘First movers,’ or companies that chase early growth in a particular market, don’t always have an advantage over firms that enter later. In fact, entering a market before its value has been demonstrated can be quite risky. Take Groupon, for instance, the app that offers retail discounts to consumers. When it launched an initial public offering in 2011, Groupon was worth about $18bn. The company expanded quickly, and recruited thousands of merchants and attracted millions of users. Then merchants began to notice that the app wasn’t creating repeat customers, so they started doing business with Groupon’s smaller competitors. Today, Groupon is worth significantly less — about $2bn.

(Harvard Business Review)

Published in Dawn, Business & Finance weekly, July 25th, 2016