Alicia McKenzie(00:00.078)

It's also hard to kill your first baby, right? Like your first product. It's hard to say, okay, I'm done with that. I'm gonna try to iterate something better, right? Just as a founder, you're wedded to what you created. It's hard to take the feedback that maybe it's not as good as you thought it was and move on to another version. Welcome to Mary to the Startup. I'm Alicia McKenzie, a wellness entrepreneur and digital creator. Alongside me is my amazing husband, George.

Yeah.

Alicia McKenzie(00:28.302)

the CEO who's always ready for a new challenge. We've been navigating marriage and running startups for over a decade. And we're here to share the real unfiltered journey with you. Join us for insights and candid conversations about integrating love, family, and entrepreneurship. This is Married to the Startup, where every day is a new adventure. Welcome to episode 60 of Married to the Startup. I am your host, Alicia McKenzie, and he's the other guy.

That's me, George McKinnon.

The CEO, the people's CEO.

people see. people see. Yeah, sure. Let's do it. Let's go with that. Let's go with that.

All right. Today we are talking about being first to market. And George and I have had this conversation a lot recently just talking about other companies and projects that we're working on and projects that we've done in the past and how being first to market is not necessarily a guarantee of success.

George McKenzie (01:26.688)

No, I think being first to market can be advantageous. Yes, but it can also be a disadvantage because if you're first to market, a lot of times you're creating the market. Yes. Right. The market doesn't exist. So it's much easier to come into a market that's already existing and you have a, you know, a pace horse out there that's kind of showing you the playbook. So you're like, okay, this is what they do.

This is how they sell and then I can mimic it and then one up it. Yes. So much easier to be second to market.

Founders are taught that they want to win the race, right? Even right now, you're hearing, want to beat AI, or we want to be the first to do AI, we want to win the AI race, and da-da-da-da-da. Right? You're always taught that being first is always the best. Media rewards being the pioneer. People reward innovation. Investors want to be original.

Yeah, I don't know about that. think a lot of investors want to play in a market that exists and they want to pick the winner. So oftentimes they'll invest in a handful in the same market to see in hopes that by investing five, one will win and one will have a 10 X return, which will more than make up for my investment.

Okay, so essentially you're first to market, you were creating the path. You're showing them what to do, what not to do. And then second to market is going to come in and they're going to watch closely and then execute. And you and I had this conversation a couple nights ago in the shower. Okay. Where. There is a product that was developed.

George McKenzie (03:12.856)

This is gonna get interesting.

Alicia McKenzie(03:20.076)

I would say it's probably been a couple of years, right? It's been a couple of years. It was a protein shot that both George and I use. And then it sold out. It kind of disappeared from the website for a little bit.

And by protein shot, it's like a drink.

Yeah, like, yeah. That's a protein shot and it disappeared. And then it reappeared on the market in January of twenty twenty six under new ownership saying that they have pioneered this new product. She's been working on it for a really long time. And. Boom, here it is.

Right. Did they say she's been working on it for a long time or the company's been working? She. OK, so she used those words. OK.

Yes, in the social media post. I have been working on this product for over a year.

George McKenzie (04:15.586)

Maybe she has.

But really. But they're second to market. Right. They're second to market. They took this product. I'm assuming that they bought majority interest. Nobody really knows what's going on inside the business. Right. Made it more Jen Pop friendly. Right. A little less gritty. And then they launched it.

Alright, so you took a company that was already functioning and you watched it and then you, don't know if you bought it or if you copied it or

Yeah, I mean, I don't know. I don't think this is a first mover, second mover conversation because obviously this company acquired the other company in some form or fashion because they use the exact same name, right? Pure genius. I'm pretty sure.

No, they changed the name.

Alicia McKenzie(05:06.739)

It to be genius. I don't want to die in the company.

Anyway, it's very similar in name and the other one disappeared. So either it was a patent lawsuit type thing or something like you don't know the inner working. So it could have been like, hey, we are formulas the same and we patented it. didn't. have it. You don't know. But I don't I think it's a little different when one of the companies exists and you kind of cannibalize the market because when I was searching for the shots that I was using,

This is the one that came up now versus the other one. So my guess is they just cannibalized. took that market. So either they bought it and reverted the domain or they took like, it seems like they took it. So my guess is that's just. However they acquired it. Now they are that company. So that company's backstory is now their back.

you don't think it's first mover, second mover.

No, I don't think so. think that one is you just consumed it. Right. That they consume that other company and then became that.

Alicia McKenzie(06:06.977)

Interesting.

Alicia McKenzie(06:12.962)

Okay. But what really spawned this conversation for us was Amazon. Right. You sent me an article about the Echo Show. Talking about it. Yeah. Well, no, you sent me the article recently.

Yeah, that was a long time ago. And how?

George McKenzie (06:26.328)

Yeah, but that article is from a long time ago. It's just interesting how we were talking about business ethic. Yes. Right. And then, you know, I can remember from college and, you know, ethics is a part of it. But I think when you look at a lot of the giant corporations out there, ethics are questionable. I don't know. I don't know if you can get to the size that they get to with being a good guy all the time. think, you know,

This

George McKenzie (06:54.006)

And I'm sure that's where the it's just business terms come from. It's never just but it's always fucking personal. But at some point you're trying to win. So yeah, do you

Let's run it back. Let's run it back. So there was a startup called Nucleus. Yes. Right. They built a touch screen video enabled home communication device. Yes. Essentially, it was Alexa with a screen.

Yeah, I think what they were trying to do, their unique strategy and what they were trying to do is, Hey, we want to replace the telecom like legacy. Remember when you, were buying older homes and you have these telecom that used to be, you remember like when we were looked at summer when they had the telecom. So it's a button you can hit and it like broadcast to speakers in other rooms or you can talk to your kids upstairs. It was like an in-home intercom. Okay. And they're

philosophy is, hey, we're going to take that legacy in home intercom system and we're going to make it digital. We're going to make it with screens so you can like video chat and talk to your kids or talk to people in other rooms or broadcast or play music and do all that in different rooms. And that was their like strategy. That's they wanted to build or what they were built. Yeah.

So they raised significant funding, including Amazon's own Alexa fund. So it was a corporate VC arm designed to grow the Alexa ecosystem. They raised funding from that. Right.

George McKenzie (08:17.952)

At that time Alexa was like the dot. It was the little talk to thing.

So after working with Amazon on integrating Alexa and participating in the roadmaps discussions, whatever, the founder publicly alleged that Amazon, their Echo Show product, was strikingly similar to what Nucleus was producing. Correct. Right. So the features, the form factor, all eerily similar to Nucleus' product.

And then Amazon denied the claims saying that they had been developing Echo Show independently while positioning the product as a part of the Amazon ecosystem and the device lineup.

So which one is true? You'll never know, but this is where you're kind of skating the lines of what's ethical and what's not in business.

I don't know if you'll ever know which one is.

George McKenzie (09:19.212)

Yeah, I think you always run that risk when you partner with another company, especially with another company.

as large as Amazon.

as large as amp, but one that has a product that you're trying to integrate into. like, even in like a software development world, say in cybersecurity, if you have a certain product and you're partnering with another software vendor that has a, a competing product, but a complimentary product that yours ties into, right. Eventually they're going to want to vertically integrate. either they're going to buy you or they buy a competitor or they build it. Like it just doesn't make sense for them to have.

Yeah, and you want to do like an add on.

George McKenzie (09:57.71)

Most times they don't have ecosystems of partners that have things that are integral to what they're building. They either want to build it in natively, acquire it or what have you. So I think there should have been some caution when he joined that ecosystem. But when you take the investment, that was the problem, his claims, right? Where he took the investment, they had NDAs and from his perspective, this was a part, a true partner. So.

When we did, they did roadmap discussions and R and D discussions. They were honest and truthful and they had technical discussions about what they were building and why they were building it and how they were building it. And then what he claims is then when he saw the Alexa show and the drop in feature was basically his product. And he said, yeah. And then I get it at that point, you're like, where's my spot in this partner ecosystem? If

what I do, you just built natively in the tool. So there is no spot for me. There is no integration. You've built it natively.

Did Amazon eventually acquire nucleus? No. No. Did they acquire?

I don't think so.

George McKenzie (11:04.782)

Why would they they already built it? Oh Yeah, so I mean, I think maybe they settled the lawsuit over my I don't even think there was a lawsuit Yeah, don't think nucleus filed anything and maybe it's just sour grapes on his part But the the story did get some run. I think it's very It'd be really hard as people to sit on the call as an engineer and listen to what nucleus is building and not take some of that You know

overtly or inadvertently and integrated into your product line in the development cycle. Right? Cause as you're sitting in and hearing about their intercom, telecom, video chat features of this device, and then you're looking at your device that you're building and you're like, wow, wouldn't it be cool if our device did drop in? yeah, it would be cool. Let's build that. And then you build it you're like, shit, we just consumed that other product. it.

It makes sense. Like Alexa would be useless if I had to use another third party app to do drop-ins and all that. Like, yeah, it'd have less utility.

So nucleus was first.

Nucleus supposedly was first with the idea. And I think a lot of times that's the case. The bigger company has deeper pockets and they win.

Alicia McKenzie(12:12.27)

but Amazon won.

Alicia McKenzie(12:19.918)

Absolutely. Could you imagine Nucleus trying to file a lawsuit?

Even if they did, what do win?

Yeah. What do you win? then just the cash outlay to fund a lawsuit. Lawsuits are expensive for both parties. Amazon had a longer runway. Yeah. So is the juice worth the squeeze? Right. Do you do you chalk it up to bad business practices and expensive mistakes?

Yeah.

George McKenzie (12:45.998)

Yeah. Well, you're thinking about that one, right? So if I'm running nucleus and yeah, my guess is they didn't have a ton of revenue. They took VC funding or they took private equity or, or they took funding from this, echo or Alexa Alexa venture fund. they obviously needed outside capital. They were probably burning cash. And then, okay, if I had to do a lawsuit, how am I going to fund the lawsuit? I can't raise another round of capital.

Alexa, venture.

George McKenzie (13:15.442)

on a lawsuit, right? And so how do you fight it?

Yeah. So this was hardware, right? This was a hardware, a hardware example, but also you have software examples in DoorDash.

And it's all part here.

George McKenzie (13:31.95)

That's a different, that's not thievery. That's more of, yeah, who's got a first mover advantage.

and Grubhub.

Grubhub was first to market and they hit the ground running right around the pandemic. Right. 2018, 1920 is when they really took off. They had a lion's share of the market. They really pioneered the thought behind food and you being able to order it from your phone from anywhere and get it to your house. Right. Which was it was novel back then. Right. When the pandemic happened, food delivery was not what it is today.

Yeah. And I think when Grubhub launched, it's not what you think of today, what Grubhub does today. think when they launched, what they were is basically a storefront to order from restaurants that didn't normally do carry out type order. So they were basically funding the ordering, processing it, and then allowing people to buy carry out, but do it remotely.

Yeah, so they proved they proved that people wanted to order their food online and then they went around and built relationships with restaurants. Yes, which during that time there wasn't a ton of restaurants that wanted to get into the food delivery business, right? But they taught users the behavior that we're now used to today.

George McKenzie (14:49.39)

It was too bad.

George McKenzie (14:58.51)

Yes. They taught us 50 % of it. No, I mean, their mark, their strategy was just what I said. So historically, let's say in the nineties or early two thousands, if you want it to take out, you would call, you'd place your order, then you drive over there and pick it up. Right. That's how it worked. And then grow hubs said, Hey, let's take that whole call crap out and let's make it easy. So you can go through the app, order your stuff and then go pick it up.

You think?

George McKenzie (15:28.204)

We'll sign up all kinds of new restaurants that didn't have that takeout feature because we'll do all the legwork. And for them, the chef will just, the cooks, line cooks, the orders will just come in and they'll see the order. They'll make the dish and then they just pack it and it goes. So from this, the restaurant or it's not a major change to how they do business. It's, it's just now I got this takeout window that maybe I didn't have before, or I've increased.

the amount of takeout I can do because I'm I'm not beholden on someone answering a call writing it down, which is normally like the person that's running the registry. Remember those days? Yeah, like, oh, I gotta take this call. The phone's always ringing.

Well, it's still like that in South Carolina.

Yeah, well, I'm just so they they kind of solve that part of the market and solve the problems that, I'm going to solve this problem, which was great. But I think of what we look at in today's world of how we order food, that's like 50 percent of it.

Yes. When you think of food delivery. Yeah. What is the first company that comes to mind? Right. DoorDash is a verb. Yeah. I'm going to door dash something. Right. Michaela is going to. Can you door dash me Starbucks? Yeah. Right. Like there's door dash has completely eaten that market. Yeah. You hear about Uber eats a little bit, but not really. Right. Uber still synonymous with vehicles, not really food. DoorDash has completely cannibalized that market.

George McKenzie (16:33.678)

Yeah, Dorda.

George McKenzie (16:38.478)

Yeah, I adore that.

George McKenzie (16:56.59)

Yeah. And I think, well, I think what DoorDash did is their strategy was just their strategy is what we think of today. Yes. That was their strategy. Aldegate. was. I'm going to enable you to order on your phone and then the food comes to you. And the food comes to you where Grubhub was like, hey, you're going to order the food, then you have to go get it. But I've created an online portal that makes it easier for you to order from any of the restaurants you want. Yeah. Where DoorDash said, no, I'm take it all the way.

But you can order anything.

George McKenzie (17:25.838)

Yeah. Right. Not just solve 50 % of the problem. I'm solving 100 % of the problem where you can just order on your phone and it shows up. Cause back in those days, it was like Chinese food or pizza. Those are the only two things you could do that way. Yeah. And those only worked because they had delivery in house. Yeah. And then what, you know, girl, DoorDash that is, Hey, I want to take that model and just apply it to everywhere. Yeah.

So DoorDash and UberEats, built in the logistics.

Right. think Uber Eats was later. They're like, hey, we have all these drivers already signed up and we can deliver anything. And then I think they like maybe Uber Eats still does that where it used to be like, you know, your Uber driver can pick up stuff from CVS for you or pick up like. So they were kind of going that way.

But a perfect example, we had a girl, our daughter in what it what state was she in? Was she in Boston? She was just outside of Boston for a volleyball tournament. she's with my mom because I couldn't I couldn't make the trip up. So I'm watching her. I'm watching her compete. I'm watching her play volleyball. And all of a sudden she goes down really hard on the court, sprains her ankle really badly, needs crutches. I was able to Uber Eats crutches to her hotel room.

for her to pick up, right? It's the logistical part, but the addition of stores that allows you to order anything from anywhere. And Grubhub ain't doing that.

George McKenzie (18:52.662)

And I think that was, then, now everyone is pivoted to DoorDash's model. And so, Grubhub had first mover advantage into this new online ordering delivery restaurant.

Does Grebhub deliver now, though, too? Yeah.

I think they all do now. Yeah. Yeah, so they've all just pivoted to the the full market with door dash has so Sometimes you know

I mean, they evolved because they had to or else.

I mean, door dash just ate everything because they realized the whole problem, right? Not solving 50 % of the problem. said, Hey, the whole problem is I want to order and have it show up. And it used to be you Friday night pizzas. And that's the only way you could do it. It like a working family or whatever. And you want it to have eat out and it's hard to, or you didn't want to cook. You had very limited options now like, Hey, now you have every option available to you and you order it and it comes to your house, which I think was just.

George McKenzie (19:46.027)

Grubhub maybe just didn't didn't look big enough. They didn't see the problem big enough

Would you consider those three companies to be a monopoly?

No, Monopoly would be one.

I mean

If you look at it, the diamond industry, there's like three main companies. Right. It's very monopolistic.

George McKenzie (20:02.542)

Right, so it's not a monopoly. I just think there's a big barrier.

If somebody wanted to come in and create another company.

No, so what I'm saying is there's there's industries all over the world like that where there's market consolidation, right? Because the market can't support a thousand of them. Yeah, like no one wants 50 apps on your phone and like, oh, this store only works with this one. This one only. So the market won't support that. So eventually there's a consolidation around any any marketplace has that. If you look at, know, who are the big computer manufacturers for personal usage? It's Dell, Apple.

Microsoft.

And yeah, I guess Microsoft still. Right. Yeah. So my products, but there's not many. And there used to be 100. So I think in micron, I'm still there still likes fringe ones used to be gateway.

Alicia McKenzie(20:49.63)

I just don't think there's any chance for anybody to ever come into one of these three and disrupt.

Really hard. Unless someone has something that's incredibly novel that that leapfrogs these guys or they become, you know, cash cows and they stop innovating. Maybe that becomes like, well, hey, know, Waymo or these autonomous or Tesla becomes the robot taxis. And they're like, we have a humanoid now that will go pick it up. Yeah. Or yeah. Or like, think door dash or one of them has the little robot.

Maybe Waymo.

George McKenzie (21:22.318)

Yeah. Well, you just put it in and takes off. Mm Like I could see that with like a Tesla, like the Tesla just shows up to the pickup of the Starbucks and the guy just puts it in the backseat and Tesla drives off.

What airport lounge were we in where there was a robot going through just picking up plates? Was it? I think that would make sense. Yeah, it's very on brand.

think it's San Francisco. Yeah, I think it was in San Francisco. Right. But yeah, you could see someone like that disrupting it because they're able to get in. But markets normally consolidate. And then you have the winners and everyone else's losers. And those winners dominate the marketplace. And then it becomes OK of the market who has the lion's share. And right now, the lion's share is door. Has the lion's share of that market unless. Yeah.

someone else comes in to disrupt. And that's kind how the cycle works, right?

OK, one other product I wanted to talk about, and only because we've had friends that use it, but I don't think they've really latched on is the virtual reality glasses. Yeah. Right. Like the meta meta had glasses. I think Ray Bans tried it. They built the Oculus. They built the headsets. They created the metaverse. But I don't feel like this product is latching on. I don't know if the market is there.

George McKenzie (22:23.523)

George McKenzie (22:40.632)

think there's a lot of time packing that. There's two different products and market spaces. So like there's VR, which is virtual reality, which is like the meta quest. in that environment, and even I would say Apple's vision is a part of that one. Apple's vision straddles both, not really. So it does the VR side.

And I think in the virtual reality side, it's caught on and people use it a lot. It's just, it's not as mainstream as everything else. And I don't know why, maybe it's just a bear. People don't like to use it. Your eyes do get a little desensitized to it over if you do it too long. But I've had friends that use the AR and they like use, well, they use the VR. I'll go to VR in a second. But the AR and you can do like, used to be able to do meetings and it integrates with teams and you can kind of like have virtual meetings.

see everybody and it's good for gaming. Like I think that that part is taken off and like it's, kind of cool. It's still, I don't think it solves a problem today. The VR stuff. It'll probably get better and people will use it more. And the price point's really low. Like a vision quest is not expensive. The meta quest is not expensive. So then there's the AR, which is more augmented reality. So that's more like your Ray bang glasses. Remember when snap.

chat had their glasses and that's more of, I can't something wearable or something that is used to augment my reality. So the Ray bands with Metta, you know, you can record, you can talk to the AI to get answers to things. You can listen to music. It's all through the AR glasses. And then Apple's is similar where you can have the whole virtual experience where it kind of blacks out everything and you see.

Or can have it augmented where you can see through and see reality and you just have stuff pop up.

Alicia McKenzie(24:39.822)

Okay, but these products, when they were first being developed, there was a lot of narrative that consumers wanted this consumers would latch on. Ready Player One was really big in the media then. There was a lot of people were very excited about this product. And yet I feel like I have not seen it matriculate into anything.

One, let's say the Apple, the price point's too high. It still has a battery problem. The Apple vision. Okay. Like that's the only thing they make in.

Which apple?

What is it? I think that's like five thousand dollars.

It has limited apps. It's really expensive and the battery is still a problem. And the form factor on all these are a problem. So like the meta quest is super light, but it's still coming. Somebody got to put over your head. Where, you know, the RayBans, which are just AR, like I think their form factor is perfect. Now, can we get to a point where the technology matches what we want, which is, hey, I think where it would cross that line.

George McKenzie (25:45.046)

in utility is if I had the Ray-Ban glasses and the lens was thin enough and the power was good, it could last a whole day like a smartphone. And I could do almost everything I can do on my smartphone through my glass. And I just see it in front of me versus holding up my phone. Yeah. Right. And I think that's where everyone's trying to go and we'll get there. And technology keeps. think they will be once it's there. Like if you could, you know, instead of having your phone, it pops up and you see.

I just don't think consumers are ready.

George McKenzie (26:13.59)

I see you on this top corner says, Alicia is calling. And you're like, I answer it. Hey, babe. And then I'm FaceTiming you. You see me. I see you. And it's all in front of me and I can still do whatever I'm doing. My daily tasks or. I don't know. Probably five years. Right. But then if you think of like heads up displays driving. Right. Yeah. It's much easier to do that when you're driving and see the speed limit and see which turns I'm going to then having to look down at the map.

Far away are we from that.

George McKenzie (26:42.638)

Right. So I think that's where people go. But, you know, kind of the ready player one will become. There's so much so much real estate on the screen, and then eventually we're going to start selling parts of that real estate to ads. Right. So now as you're walking down the street, you're to have tons of ads from every store you walk by. And you're like, oh, shit, how do I pay five dollars to not have that?

Yeah, right. Or I'll just take the glasses off. Yeah. Right.

Yeah, couldn't be. That's kind of a dystopian future.

So my prediction is that consumers aren't ready, consumers don't want it. And as AI is becoming more and more of a topic, people are going to swing hard in the opposite direction.

I think there could be some nostalgia stuff, but

Alicia McKenzie(27:27.122)

Right. Like you have to think of a landline. Our son has been asking for a landline for the last like three months. Why? Because parents are not allowing cell phones at eight at before eighth grade now. Right. Right. And our friend group there, nobody has a cell phone. Right. Nobody has Apple watches. You can't communicate. They want landlines. I think those simple, dumber products are going to be more commonplace. Yeah.

It could be, I mean, could be a prediction for 26. I think that's. It's true, like there's the style from, hey, I want to keep my kids off of these social media stuff. That's less nostalgia. It's more like that's more. I want a simple dumb phone. Yeah. And then there's people our age, my age, your age, maybe that like the nostalgia of not being bombarded all the time, not being. But you look at.

safety, mental health.

George McKenzie (28:22.432)

Our kids generate, let's say Maddox and Maverick and these younger, they're not going to care about that. AR VR is just going to be what they know. It's like you, a smartphone is all, know, like if you went back to a flip phone, you'd be, you'd hate life, right? But there's people my age or older that use flip phones and they're fine. Yeah. Because that's what they're used to. And I think if, you know, our kids will be used to augmented reality, virtual, they'll be used to AI. They're used to Alexa today.

They have conversations with it. They, they are not intimidated or worried about it or worried about the privacy risks. Like all that'll go away. You won't care. And that's, think that's more like it. But to your point about the why was there so much hype? And I think it's around any investment cycle. You want to validate or justify your valuation. So you hype, hype, hype. And that's what we talked about before with like Elon Musk and the robotics and then the same with AI.

That is terrifying as a parent.

George McKenzie (29:19.406)

It's you got to keep the hype train going so you can keep the money coming in. So you can keep the valuation going. So you can keep building toward the destiny. It's like the self-driving. Elon talked about self-driving 10 years ago.

I do think Tesla, Tesla was first to market in the self-driving, and I do not think another company has surpassed Tesla's capabilities are far, far more advanced than any car we've driven.

No, no, they're

George McKenzie (29:46.99)

Yeah, as a as a. Car that you own and drive like Waymo is better, think, but it's also.

as a self-driving vehicle.

Alicia McKenzie(29:54.796)

The full blown consumer product like end to end.

No, Tesla's they've got it. And the actual self-driving is finally, think where. Elon said it was 10 years ago. And I think that's part of what we all have to realize that he's going to say sensational things as does Sam Ullman. Everybody does. Cause they got to keep the investment money coming in. They got to justify the valuations. They got to keep that money pouring in so that they can build the product to where they want it to be. Like if, if Elon came out with the Tesla in 10 years ago in 2016 and said, Hey, we're going to have full self-driving in 10 years.

But buy it now. Yeah. No one's going to buy it. Yes. Right. So because if you bought we bought the first S 10 years ago, more than 10 years ago and had had some self-driving capability was great. It was was. But it was way better than anything that existed at that time. Absolutely.

And we just bought a new electric car, I would say a lot last month. Yeah. And the technology within that car is nowhere near as advanced as Tesla's technology. It's terrible. Like its ability to hook to your phone, the app that it provides. It's just slow and just seems a little dumb.

Yeah, it's like Apple compared to using anything else for me.

Alicia McKenzie(31:03.63)

But we've actually never used anything else, so we can't make that fair comparison.

Not in a while not in a long time. Yeah, you did at one point you grew a wild hair and you're Android Yeah, this was years ago and we were in Lorton you bought an Android. I think it lasted It didn't last. Yeah. I don't think it last a week or two and then you're like all this screen is so slow

I didn't buy an Android.

Alicia McKenzie(31:21.537)

Must not have registered.

Alicia McKenzie(31:26.52)

Are you sure? Yes. Are you sure it wasn't like my Kindle?

No, I think you bought...

I don't think that to be true ever. Yeah. Okay. Okay. So then if you're a founder first to market, how do you caution them?

Anyway.

George McKenzie (31:44.962)

Well...

Right. Let's say somebody comes to you. I'm first to market. I have this product. I think it's going to be amazing. Right. But I'm stuck. I can't scale.

Well, everyone talks about, can't scale. And I think that's often a misused term. And people say I can't scale when what they mean is I can't sell. And scaling is more about, you know, delivery and increasing gross margin and doing things bigger, but you got to at least, you got to have that fire before you fan it. you have to, you know, if you're first to market, the hard part is

How do I generate? How do I do lead gen? How do I generate sales? How do I generate momentum of my product? Because the market doesn't exist. It's not a market I'm jumping into. So you say like the Grubhub DoorDash, like the market's there. People want to buy food and have it delivered to their house. That market exists. So now if you want to enter that market, it'd be like, okay, how do I get in front of those people? How do I get them to choose me over DoorDash? How do I get them to choose me over Grubhub? Whereas I've got a new product.

how do I get the consumer to know what my product is and want to use it to solve a need they didn't know they had? Right, so.

Alicia McKenzie(33:01.464)

Do you think innovation is a problem? Right? You have this great idea, you're first to market, you know there's a problem, but you're so stuck on the original idea that you can't see the forest or the tree.

Exactly. That becomes a problem. Because if you're first to market, right? If you're, that means you're creating a market, the market doesn't exist. So it's really hard. So you're not in a market, you're making one. It's hard. you've got to educate every, every sale is an education process. You're educating the, the purchaser on why they need your product to begin with. And what they, you know, what, what the problem is and how you're solving that problem. didn't know they had to educate them and

You're teaching them their buying.

George McKenzie (33:43.692)

you become wedded to that because that's your sales cycle. And then as the market coalesces and becomes something, you sometimes you get stuck and then I'm still educating everybody and I'm trying to solve the problem. And the guy coming behind you has a easier chain easier because he's not creating, he's not educating the market on the problem. You already did that for him. Thank you. And now I'm telling you how I can solve that problem better than him. Yes. And then here are the things that I've done to improve upon the way.

He's iterating while you're still educating.

Yeah. And you're coming in saying you get to see all the problems with his or her product and then you can just leapfrog.

So he's coming in with V2 and V3 and V4 while you're still stuck in V1.

You're so educated because you're spending most of your time, and energy in educating the customer and selling versus the other guys spending more time in R &D and innovation. Yeah. Because it's hard to do both at the same time.

Alicia McKenzie(34:41.207)

But it's also hard to kill your first baby, right? Like your first product. It's hard to say, OK, I'm done with that. I'm going to try to iterate something better, right? Just as a founder, you're wedded to what you created. Yeah, it's hard to take the feedback that maybe it's not as good as you thought it was and move on to another version.

Or you get stuck in the legacy, all your software, or you get stuck in the legacy, right? Where I've got this code base and I can iterate on it, but it's got fundamental flaws. It's got problems. the guy that came in behind me recognized those problems and he addressed them in his core operating system or the core code base. now I've got to redo my entire code base at some point to get to this newer model. And then

How do I make it backwards compatible so I don't screw up whatever the last thing was? So it's a harder road to hoe versus, and we did it like when I used to work at DHS. DHS had problems because we inherited a lot of legacy networks and computers and everything else where like TSA was a brand new agency and they were able to leapfrog everybody because they wrote everything was new. You could architect it the way you want it. You could build it.

using modern networking technologies. You didn't have token ring and this other bullshit laying around, right? Or all these mainframes sitting over here. You could come in and do, you know, go to cloud faster than anybody else because you didn't have any of these legacy things you were holding onto that you had to migrate.

So as a founder, I think it's safe to say that as you're creating your product, be fully prepared for somebody to come in and disrupt it. Because I think you try to create and you assume that nobody else is behind you. That's not the case ever.

George McKenzie (36:35.0)

So I think if you're, if you're first to market, it's hard, but you need to figure out, okay, how do I, and be honest with yourself, what's the moat that I'm putting around my company and my product and my customers? Like, what is the barrier to entry? Is the barrier to entry gigantic? And is it, are you honest with yourself with what that barrier to entry is? And do you have a defensible position? How do you defend against the next guy coming in that's going to copycat you? Yeah. Because they will.

And, you know, having other people on the market is good for you though. So I would look at it as a positive when the next guy comes in the market, that makes your job a little easier. Cause now there's two people out there validating this market exists out there, educating the customers, telling them why they need your product. So now you should start to focus on how is my product better? How can I defend the customers I've already got? And how do I defend against this person when I win my next customer?

Absolutely. And I think of it as like a race, right? Like if you're first out the gate, it's great. You're going to be ahead of the game, but eventually somebody is going to catch you. So you have to kind of work in that strategy that keeps you in the race.

Yeah. And if someone passes you, how do you get back in front? Yeah. And I think, yeah, that's a, that's the hardest one. I think is being first to market and then building a moat and then protecting it. And if you look at like open AI, whether they were first to market from a technological perspective, but they were first to market the public of, Hey, when you thought of AI two years ago, it was chat, GBT, it was open AI. That was it. And they were better than everybody else by a lot.

I mean, from the public's perspective.

George McKenzie (38:14.326)

And then you had some of these startups come in and, know, they were okay, but not great. And then it was easy to find easy for chat. GBT to dominate. And I think it still has the lion share of the market. if you look at, you know, Google Gemini, Anthropic, all these other guys have popped up and they are better. Right. And, know, their models, you know, they realized how to improve it and how to make it.

They're doing it better.

George McKenzie (38:43.778)

give it more data, how to train it faster and it's gotten better and they've all caught up if not past. So what's the moat that OpenAI had around its customer base? was mainly consumer driven, right? But you're paying $20 a month and now Google comes out and says, we'll just get to you for free. How about that? ours is better and it's free.

And it's free. So. First to market's not a guarantee. But you get a legacy. Maybe people will coin chat GPT with creating the AI race, starting it out the door.

No, it's not a guarantee to be the winner.

Alicia McKenzie(39:21.944)

Thank you for tuning in to Mary to the Startup. We hope you enjoyed today's episode. If you did, please take a moment to like, rate and subscribe to our podcast. Your support helps us reach more people and keeps the conversation going. If you have any questions or topics you'd like us to cover, drop me a message. I love hearing from you guys. Until next time.