Early Adopter – A page from the playbook of some of the biggest and the best?
It’s one thing to copy or borrow (some might say steal) someone else’s IP. in fact, many “creators” would argue that generative AI does exactly that (see Sarah Silverman sues Meta, OpenAI for copyright infringement | Reuters). However, it’s a whole other ball game to successfully execute a business strategy and dominate a market.
Back when I was an investment banker, we used to marvel at how Goldman rarely generated the initial insights but almost always ended up dominating new products, categories, and M&As — quickly pouncing to exploit their relationships to land at the top of the league tables.
Were we jealous? Of course, we were!
Apple is the same – since the iPhone first debuted in 2007, they have largely been second to move on a new idea – taking their competitors innovations and doing it better, leveraging their massive ecosystem and design and supply chain advantages. The success has been nothing but historical – the first $3 trillion market capitalization, (to name just one that is a pretty good overall measure).
These are the Early Adopters, a category of company-specific inflection that drives our research efforts in the search for accelerating growth. Let someone else do the heavy lifting – establishing a market, creating a new product, etc. — then adopt their product/model, improve upon it, and move with blinding speed and overwhelming resources to monetize the opportunity.
Meta did it with Stories and Reels, clones of Snapchat and Tik Tok, respectively. Now two of the most important ad platforms and growth engines for Meta. Can they do the same thing with Threads? Who knows? But it looked likely when they surprised the market with an accelerated launch that garnered 100 million downloads in the first five days (compared to Twitter’s 354 million users) sending the stock soaring 10.5% in the first two weeks after the launch, in part, on the extrapolation of the TAM (total addressable market) implied by this growth trajectory.
This week it was reported by The Messenger that Threads had seen a 50% drop off in traffic in the two weeks since its launch, down to 23.6 million users. Don’t get us wrong — that’s still a lot. But maybe not the immediate needle mover anticipated by the market as reflected in the stock price. For its part, Meta remains unphased. Here’s what Mark Zuckerburg said over Threads on Monday,
“I’m very optimistic about how the Threads community is coming together….[It’s] way ahead of what we expected…. We’ve run this playbook many times (FB, IG, Stories, Reels, etc.) and I’m confident Threads is on a good path too.”
We’ve said it before and we’ll say it again. Execution is hard and no outcome is ordained, no matter how insurmountable the built-in advantage, capital base, technological lead, or historical track record (or the hubris of the teams trying to capitalize on them, for that matter).
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