Friday, Jun 5th 2020

Last-mover advantage


Back in 2013, Stewart Butterfield and his team set out to replace email. A daunting task. 

"It is almost inevitable that centralized internal communication systems will gradually replace email for most organizations over the next 10-20 years and we should do what we can to own it." 

The product they built, Slack, would quickly transform work communication. Email versus Slack was like comparing a horse-pulled carriage to a Tesla. It was that good.   

The company then had an Instagram moment - their biggest competitor tried to buy them. The interested suitor was Microsoft. Though unlike Instagram which said "yes" to being swallowed by Facebook, Slack said no and decided to brave the waters themselves.

When you're up against the House that Bill Gates built, you can expect some of the fiercest competition in the land. Naturally, Microsoft built their own version of Slack called Teams and have been able to leverage their existing relationships with large businesses to grow much faster than Slack could. 

To put this in perspective, Slack revealed it had 12 million daily active users as of October 2019. Microsoft Teams now has 75 million, six times that amount.

Even amongst the big tech companies, Microsoft remains one of the most under-appreciated, in our view. They've long since entered the trillion-dollar market cap club, but are noticeably absent from the "FANG" acronym. Amazon had a 5+ year head start in cloud computing but now Microsoft is hot on their tail (Amazon has 33% market share, Microsoft 20%).

While being first to a market is great, sometimes being last is even better. You get to observe the playbook, learn from the mistakes of others, then come in with full force. Last-mover advantage.

The search engine you use, Google, was last. Remember the ones before?

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