Entering an old, mature market can be a daunting task for new entrepreneurs. It's easy to feel intimidated. After all, it looks like the established players are holding all the cards and you, as a newcomer, are holding none. But looks are deceptive. In reality, you actually have a massive advantage as a new player in a market. Here's why.
Perhaps you expect me to start talking about the cliché of 'looking at an industry with fresh eyes'. But no, I'm talking about an actual technological advantage you have over the established players; namely this: unlike them, you are not suffering from the handicap of the head start.
The law of the handicap of the head start explains how an initial head start in any given area can turn into a handicap later on. And this is especially the case in tech-heavy sectors.
This law builds on the theories of path dependency, which explain why we are so much more likely to continue on a path we've chosen to follow in the past, even when the circumstances that made us choose that path, initially, are no longer relevant.
It is not just that patterns become comfortable or that all of us have an innate bias towards the known and a fear of the unknown – although those things do play a role.
The main reason is that you become ever more invested in the path you've chosen. With every step you take, the costs of going back and starting from scratch will seem higher and the costs of just continuing on the path you're already on will seem lower.
"Isn't everyone already in the cloud?" a friend and mentor of mine recently asked in genuine surprise, when he found out that this billion dollar company he was looking at, was still running its critical systems on legacy infrastructure.
As a startup veteran, it was hard for him to believe that such a massive, established company would still run its core business on outdated and inferior technology; while the young startups he was working with, were all running their systems on state-of-the-art technology; despite being tiny in comparison.
This is a perfect example of the handicap of the head start.
An enterprise size company that's been built on Oracle databases will have a really, really hard time moving to the cloud. Oracle was the latest and greatest technology when this company went into business, but now that cloud technology is a thing, they're finding out that Oracle won't really run in the cloud – at least not in a scalable, cost-effective manner.
This means that a move to the cloud would automatically require a migration of critical data to different database management systems (e.g. Postgres); and usually also a redevelopment of infrastructure, requiring a complete unraveling of monolithic legacy applications; and transforming them into an infrastructure of cloud-ready, scalable micro-services.
This is precarious undertaking under any circumstances, but especially when your most senior software engineers are Oracle specialists, who would lose most of their 'edge' with a move to the cloud.
After all, the cloud is built on different technologies that require specialized knowledge; very different from the specialty of the engineers the company already has on the payroll.
Suddenly, the advantages of the cloud don't look so convincing. And this is how the handicap of the head start can cripple established businesses.
The handicap of the head start is great news for startups and anybody who's looking to disrupt an industry. Unlike the established players in the space, you have the opportunity to make decisions without bias.
You can look at the present-day market and present-day technologies; and decide how you're going to approach it, without your decision making process being tainted by how things have been done in the past.
You are not handicapped. You still have all the freedom.
Use it wisely.