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The Last Mover Advantage

Most readers might have watched “The Social Network”’, a 2010 American biographical drama film adapted from Ben Mezrich’s 2009 book “The Accidental Billionaires”. The film portrays the founding of social networking website Facebook and the resulting lawsuits. Since its release, The Social Network has been cited as inspiring involvement in start-ups and social media. It has also helped fuel an emerging perception that “techies have become the new rock stars”. In terms of the plot, Mark Zuckerberg is dumped by his girlfriend Erica Albright. Returning to his dorm, he writes an insulting post about Albright on his LiveJournal blog. This then leads to the creation of Thefacebook, a social networking website which grows in popularity and extends from Havard to Yale, Columbia and then Stanford University.

The story takes a turn when Zuckerberg meets Napster co-founder Sean Parker, who presents a “billion-dollar” vision for the company. He also suggests renaming the site Facebook. In real life, Sean Parker is an American entrepreneur, most notable for co-founding the file-sharing computer service Napster and serving as the first president of Facebook. He also co-founded Plaxo, Causes,, and Brigade, an online platform for civic engagement. As president, Parker brought on Peter Thiel as Facebook’s first investor. In the initial round of funding, he negotiated for Zuckerberg to retain three of Facebook’s five board seats, which gave Zuckerberg control of the company and allowed Facebook the freedom to remain a private company. Additionally, Parker is said to have championed Facebook’s clean user interface and developed its photo-sharing function. Zuckerberg notes that “Sean was pivotal in helping Facebook transform from a college project into a real company”.  That said, the film also portrays an important business concept about the last mover advantage.

According to Peter Thiel, “First mover isn’t what’s important — it’s the last mover. Like Microsoft was the last operating system and so was Google the last search engine.”  It is basically the advantage that a company has when it is the last to introduce a new product, service, or technology, because it can learn from developments that have taken place, or from what others have done. The thinking is that the last entrant to the market benefits from mistakes made by earlier entrants. In the technology space, first mover dominant leaders included the likes of Napster, Mxit, Myspace and Skype.  It should be noted that MySpace would have become the largest social network but instead was beaten by the late starter Facebook. While first movers may have enough resources and scale to win, their demise comes in when they fail to follow customer trends.

The corporate space in Zimbabwe is also littered with case-studies relating to the last mover advantage. For example, in the life assurance business, a relatively new entrant; Nyaradzo has taken the market by storm. Nyaradzo is a group of companies that provides financial, insurance, risk and event management solutions. Its website shows that it covers over 3.0 million lives and the latest IPEC Report indicates that it commands a market share of 35.38% by Gross Premium Written (GPW). Philip Mataranyika is the co-founder and CEO of the Nyaradzo Group of Companies which was formed in March 2001 as Nyaradzo Funeral Services. Since 2001, the company has evolved resulting in the creation of a combined Nyaradzo Group which encompasses Nyaradzo Funeral Assurance Company, Nyaradzo Funeral Services and Eureka Insurance Brokers. Philip has demonstrated a high level of business acumen and wizardry but the big question will always be; What is his next move? Taking a cue from the Facebook story, Mark Zuckerberg took on WhatsApp and Instagram and the social networking empire has continued to grow. Piggy believes there is scope for M&A or transactional activity in the financial services sector. The National Social Security Authority (NSSA) Pension Fund has been on a re-organisation drive and has indicated that it is looking to dispose its stake in First Mutual Holdings Limited (FMHL).  A foothold in FMHL could open the regional expansion door for Philip. All in all, Piggy remains optimistic about FMHL’s value-creation efforts in the region (Botswana). The stock is a steal at current levels of cZWL20 and value-scavengers should be taking positions here!

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