On February 28, 2025, Microsoft announced its decision to discontinue Skype. Skype revolutionized computer-to-computer communication to the point where making a video call became synonymous with "skyping." In 2011, Microsoft acquired Skype for $8.5 billion to add to its product suite. Ironically, the surge in videoconferencing during the COVID-19 lockdowns—when one might have expected Skype to reach its peak—actually marked the beginning of its decline. Zoom dominated the business communications market during this period, as Skype proved inferior for large group meetings, which became more prevalent during the lockdowns. The final blow came when Microsoft decided to make Microsoft Teams, rather than Skype, its flagship communication platform. Skype's decline can be attributed to its failure to adapt to mobile and cloud-based communication trends, as well as its outdated interface, which could not compete with more modern platforms like Zoom.
While it often seems that every other seed capital pitch deck claims "first-to-market" potential, that is rarely the case. And, as Skype attests, being first is not always an advantage. As comedian Steven Wright observed, “The early bird might get the worm, but it’s the second mouse that gets the cheese.” Sometimes, being a "fast follower" is more beneficial. First-to-market companies must expend considerable resources on market entry to establish a foothold with the “innovators”—the 2.5% of the market made up of risk-takers who are the first to try new ideas and experiment with new products. Early followers, on the other hand, have many advantages. They can watch others invest in and prove the acceptance of new products and technologies. They can learn from the first mover’s mistakes and build an improved product or marketing strategy. Often, second movers have more organizational resources, better access to capital, and may even become acquirers.
VisiCalc, the first "killer app" for personal computers, introduced spreadsheet software when it was released in 1979 for the Apple II. It revolutionized the computing world by transforming the Apple II into a powerful business tool. However, VisiCalc's success was short-lived, as it was quickly eclipsed by the release of Lotus 1-2-3 in 1983, which was designed for IBM PCs, which had a much larger share of the business market. Lotus 1-2-3 combined spreadsheet calculations, database functionality, and graphical charting. Lotus 1-2-3 dominated the spreadsheet market throughout the 1980s and much of the 1990s, until the rise of Microsoft Excel in the 1990s led to its decline. Microsoft won the battle, not through product innovation, but by bundling Excel with its entire Windows office suite. As a standalone product, Lotus could not compete and was eventually acquired by Microsoft, which later discontinued the product. This was an example of the innovation food chain, where one fish swallowed the smaller fish, which was ultimately consumed by the whale.
BlackBerry provides a classic case study that illustrates the adage: the faster they rise, the harder they fall. In 1999, the company burst onto the scene and revolutionized mobile communication with its first wireless handheld device, which provided secure, encrypted email services for executives on the go. The QWERTY keyboard was well-received by users and enabled quick typing for those who mastered the skill of typing by thumb. Until the mid-2010s, BlackBerry was almost a status symbol, signifying that the user was a serious executive. However, the launch of Apple’s iPhone and the emergence of Android smartphones—both featuring touchscreens and many new features, such as computer-like screens—dramatically altered the competitive landscape, making the BlackBerry device obsolete almost overnight. Efforts by the company to release new products were unsuccessful. The company has made a successful pivot to being a software company focused on cybersecurity. However, BlackBerry, the company that established the market for mobile email for business applications, was dethroned by superior technology.
The rise and fall of MySpace is yet another story of rapid success followed by a precipitous decline. Launched in 2003, MySpace quickly became a favorite among young users, thanks to its customizable profiles and the ability to share music and photos. At its peak, MySpace was the largest social media platform in the world. However, its fate was sealed when Facebook (now Meta) came onto the scene with a more user-friendly design, a streamlined experience, and no advertising. MySpace struggled to keep up, leading to a dwindling user base and a loss of relevance. Despite being acquired by a series of companies intent on resuscitating the company and attempts to rebrand as a music-focused platform, MySpace has not been able to reclaim its former prominence.
The rise and fall of companies like Skype, VisiCalc, Lotus, BlackBerry, and MySpace serve as powerful reminders that success in the tech industry is never guaranteed, regardless of how groundbreaking a product may seem at its inception. The rapid pace of innovation, shifting consumer preferences, and evolving market dynamics can quickly make even the most popular platforms obsolete. These stories highlight the importance of adaptability, foresight, and continuous innovation in staying relevant. While being first to market can offer significant advantages, it is often the companies that learn from their competitors, embrace change, and evolve with the times that ultimately secure long-term success.
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