I've often pondered that effect before but never knew it had a name.
In my case I was thinking of AWS versus "newer" competitors like Google Cloud Platform and Azure. AWS has a lot of services and usually keeps them running and backwards compatible. Newer companies could avoid making the less successful services and copy or take inspiration from the most successful services.
Every bad decision my competitor made that I can identify ahead of time just narrows the gap.
This is why I favor execution excellence over cheap wins. If you can consistently introduce features quarter after quarter year after year, you can run down a competitor. And your sales guys can position the product with that story.
But it takes money and intestinal fortitude, and both are in short supply.
We grew our platform so fast that most of the core effort is about scalability, logging and reliability. Half the new stuff is bolted on by other teams and I can’t see this lasting.
Someday one of our competitors is going to have copied our best features without all of our baggage and then we are one bad PR incident away from losing customers.
Then we’ll spend a ton of our warchest on rewriting the whole thing and if the stars align the process will repeat. Assuming of course that nobody has spent it all on something stupid.