Our startup is in semi-stealthy feedback mode, getting some tricky technology right. We are/were about to go live. A short time ago we discovered the launch of a competitor (would-be competitor, until we are both public). The competitor is very well funded, has mass market buzz, is well executed, well connected and has a much larger team. While not 100% identical, they are still a huge kick in the groin. We are not well funded, at a geographic disadvantage and have a small team. After the initial blind panic, I have been thinking about the options, and thought I would reach out for wider opinion. I have boiled it down to:<p>(1) Keep going, attempt to compete being the obvious underdog with many operational and financial disadvantages
(2) Pivot and focus down on carving a niche market with less mainstream appeal (get out of the way) using existing code, providing a niche with a better value proposition.
(3) Rethink the vision to make use of existing work in a totally different way
(4) Give up, move on (over my dead body!)<p>Any similar experience? How did you deal with it? Was the outcome successful?
I'm leaning towards (2)
Thanks, (long time lurker, first poster) Fossley.
As others have commented - competition is good. Every time I find out about a new competitor to my niche software product I break out into a sweat, but my sales never went down yet. I would be more worried if you had no competition (no competition usually means no market).<p>Anyway, I'm guessing the competitor doesn't feel as invincible as you think they are. More staff = faster burn rate. Market buzz = greater expectations to fulfill. Better funded = more VCs breathing down their neck. Geographic advantage = more local companies to poach their staff.<p>I would work out what you can do better (or just different) and focus on that. Maybe concentrate on a smaller market niche than them.<p>But if you really, really, feel deep-down that you have lost already. Then you have. It is a self-fulfilling prophecy.
Don't worry about competition, especially un-launched competition. Most startups die due to suicide, not murder.<p>A major competitor of ours launched 3 weeks after we started our company, doing the exact same thing as us. They were a bunch of big-name executives from a huge successful internet company, raised 10x the funding we had, and were already live with the most prominent customers that we were going after. We were scared, until we talked with one of their customers -- turns out their technology wasn't accurate at all, and the customer hadn't even integrated it into production. We kept heads down for the next 6 months and built something that works, and now have no problem finding customers.<p>So ignore all the hype, and just focus on making your technology work and your users happy.
Depends on your market. If this is a new and growing market don't worry about it. I've made the same mistake couple of times. I let a competing site get me change my plan. I became more focused on the competitor than on the market and how to let my service and product match the market needs.<p>If you believe in the service you are providing and the market is big enough, then double down. But keep your eye on beating the house and not the guy with the bigger stack of chips next to you.<p>And remember most first-time buyers of this service are not going to know who has more funding. So when the bigger guy starts to spend money on marketing, you just ride along on their wake.
We've been in the same boat: competition is GOOD. They help build the marketing buzz, and many people look for alternatives to see who is offering the best deal or solution for their problem. They can help explain the problem you are solving. If you can solve a niche problem, go for the niche that has money to spend - not the million-users-who-spend-$2 group. You'll get funding to keep going and from there see if you need to pivot to capture a larger section of the market.
If they're successful then it sounds like both of you have identified a real problem. Competition is good so their launch may have confirmed your business model.
In case people here didn't convince you yet with their spot-on answers here's the good source: <a href="http://cdixon.org/2010/06/26/competition-is-overrated/" rel="nofollow">http://cdixon.org/2010/06/26/competition-is-overrated/</a>
Launch first, then use their launch as free publicity : on each news on their launch, comment : "hoo nice, but that's just like Xxx" (well, add more value, do not spam heartlessly)