The First Penguin & The Last Shark

Understanding the first-mover and last-mover advantage

Erik Ralston
7 min readAug 17, 2020

“Blue Ocean” is a metaphor in business that describes places of new opportunity and strategizing around openings in the market. As opposed to a “red ocean”, the ideal Blue Ocean is devoid of true competition and ready for disruption. How can you learn the strategies for surviving in this ocean?

Start by studying penguins and sharks.

Why might you ask? Because these two animals are perfect metaphors for the two kinds of creatures: one for diving into uncertainty early and one for rushing into the feeding frenzy and coming out on top. Are you bold enough to be a penguin? Are you strong enough to be a shark? Let’s find out.

One of only a few animals with built-in Tuxedos

The Penguin

Penguins are aquatic flightless birds that, in many ways, represent business as usual. Evolution has crafted them to be perfect survivors, but terrible entrepreneurs.

The best-known species live in the Antarctic, show immense social solidarity by sticking together as a group for warmth — a formation called a “waddle” — and even trading off on who has to suffer the most bitter cold on the outside of the big huddle. By not sticking out, they ensure they’ll make it to the next winter despite the most biting storms. Sound like any career or company you know? It’s how I felt working for the US Government near the start of my work history; I could have decades of “success” just acting like your average penguin.

While not all penguins actually live in cold climates, there is one necessity all species face: food. Penguins can live off krill, but their most potent source of calories is fish. Since penguins are so social, deciding if one is hungry is always a group activity. The community travels to the edge of the water — in the case of the emperor penguin most often the females. Because icebergs rarely have beaches, this usually means finding a cliff where the only choice is jumping in to eat or staying up to starve.

Deciding if the water is inviting

The First Penguin

The problem? From their perspective, the penguins can’t tell if there are any fish in the water. Worse yet, they can’t tell if any predators are lurking in the depths. They’re just staring at the blue ocean, wondering if the opportunity outweighs the risk.

Like so many entrepreneurs considering where to start, startup communities urging their participants into action, or fledgling companies trying to go all-in on an idea, they’re looking for some sign that it’s safe without being the one to take the risk.

Who breaks the standstill? The First Penguin.

Eventually one of the penguins arrives at the correct conclusion: there is no way to know the hopes nor hazards of the situation without jumping in the water and finding out. The moment the other penguins see the water is still and blue after the first penguin, they rush in to fill their bellies.

Why risk being the first penguin? Because getting the first fish is a simple example of the “first-mover advantage” in business. The most often temporary monopoly of moving into a market before it’s even fully formed, enabling you to lead as it grows. Being the first to eat in this case does introduce the danger of being the first one eaten, but the good news is that failure is not permanent in capitalism.

In most cases, one must jump off more than one cliff to land in success. Every jump is different, but I know on the way down you conquer your fear and once you’re in the water you test your skills. At this point, I would argue that I’ve jumped more often than I’ve landed in my entrepreneurial career, but I’ve found a taller and taller each time, gaining experience in the blue ocean.

“Experience is what you get when you didn’t get what you wanted” — Randy Pausch, Professor at CMU and presenter of The Last Lecture

Don’t tell me you can’t hear some “dun-nah” right now

The Shark

Penguins — waddling tuxedo birds and plucky startups alike — fear the apex predators of the deep: sharks. Sharks are creatures evolved to cut through the water at speed with powerful fins, move through shadows unseen with stealth, and cut through their prey with gaping maws of jagged teeth.

In the world of business, these would be well-funded upstarts or — worse yet — established companies with resources to overpower current competition in the market on short notice. Attracted by the activity of something worth eating — like some happy penguins delighting on some early adopter customers — they hope to sweep a market as it hits an inflection point in growth. Preferably before the ocean turns so red you can’t see predator nor prey anymore.

Megalodons: Awe-inspiring creatures, but terrible cinema

The Last Shark

In the game of sharks, timing is still everything, but in this case, you often gain a “last-mover advantage” by hanging back. Why? Past a certain scale they can not only have their pick of little black and white morsels, but they can start cannibalizing the other sharks with only limited resistance. The only problem? You have to be an unstoppable megalodon compared to the competition to make it work.

Innovators admire penguins; Majorities only trust Sharks; Laggards don’t like swimming

This is happening right now most dramatically with Microsoft Teams, propelled by the light-speed digital disruption of COVID-19, soaring to 75+ million users with a 3-year-old product. Slack (who I might argue is not necessarily a Penguin, but that’s another post) has been going twice as long but has less than 1/3 the population. Why?

In the innovation adoption curve, Slack picked up some of the “Innovators” and “Early Adopters”, but Teams is targeting the early majority starting with the existing roster of customers Microsoft already has on their Office 365 platform. Microsoft will capture, if not a permanent monopoly, then more of the total curve to the right where most of the customers are and with more commitment from them into the future where most of the revenues are.

I don’t mean to ascribe a completely negative image to economic sharks. They’re an important member of the ecosystem and many times their entrance into a market is to give the most successful penguins a way to get successfully acquired. Literal penguins may get to feast from their fish, but cash-burning figurative penguins may in-fact be looking for a toothy sugar daddy to give them that big exit.

Majestic, but not a monopoly

Whales

I have had the pleasure more than once of working in a big company that is stuck owning a sizable piece of a slow-growth market— shall we call them whales? I was always there to join an effort in self-disruption to keep from sinking to the bottom of the ocean. Aspirationally, we could call this becoming “Killer Whales”.

In many ways, it’s the least enviable professional position. It’s some of the stress of being a penguin, but none of the equity-based incentives It’s some of the market potential of being a shark, but none of the stealth, speed, or strength.

Swimming in the Blue Ocean

I’ve been in companies where we’re the “first” or “only” (Penguin), but have yet to be in a position where we could ever claim to be the “last” (Shark). If you want to swim in the blue ocean, I would recommend sticking to these two playbooks given that — as Peter Thiel wrote in From Zero to One — capitalism is only profitable when it’s in a state of (even temporary) monopoly; otherwise, you’re trapped in commodity markets without the ability to grow.

Professionally, I do believe the default approach is to be an unassuming Penguin, but at least once in your life, be a First Penguin. Dive off the cliff into something with murky risk and uncertain reward and you’ll come back up with either achievement or experience from the Blue Ocean.

Erik Ralston is a certified SCUBA diver and an innovator with 18 years of education and experience, having spent the last five years in leadership at the fastest growing tech company in Australia. Erik is also co-founder of Fuse Accelerator in the emerging community of Tri-Cities, WA, where he works on connecting people and sharing knowledge to turn new ideas into growing startups. You can find him on LinkedIn, Twitter, or the next Fuse event.

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Erik Ralston
Erik Ralston

Written by Erik Ralston

Co-Founder & CTO at Soundbite.AI | Co-Founder & Educator at FuseSPC.Com Accelerator

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