Ask YC: What to do when the competition surfaces?

Additionally, the competition might not be all that bad for you. They may help flesh out the market for you. You might be able to ride on their press and their advertising dollars. You might get ideas from their products.

Finally, pretty much all good ideas will attract competition. That is the nature of a free market. So it was going to happen sooner or later. The good news is that there is usually room for multiple competitors in a market. And in the low-cost startup world, I haven’t seen any great evidence that bigger teams and bigger money win out on average after you control for the # of startups in each category.

The way I see is as a validation of my concepts and a way to add features/improve our offering.

It may also give you some ideas on how to differentiate yourself.

For my tuppence (although I haven't been in this position yet), launch on time, and make noise. Even if they're making noises, a genuine usable product will speak louder. And even if they launch in turn soon afterwards, as the established service you could well ride the PR coat-tails. Of course, the longer you're established before they launch, the more likely you are to be cited as their main competition when they do launch.

Kiko described this effect wrt Google Calendar here (which is a different take on the story than some I've heard): http://www.height1percent.com/articles/2006/08/18/actual-les...

With competition on the horizon, launching something less than perfect might be in your best interest, because you'll not only get the first jab at the market, you'll have the ability to iterate based on user feedback so that your product will be more tuned towards users' actual needs by the time your competitors start trying to gain momentum. Differentiation will come as you begin to mold to your users. It's a matter of agility.

Sometimes bigger also means much slower.

We were tentatively planning on a public beta for the first useful application about a week out.

Go for it -- your key advantage is that you're faster and more adaptable than the competition, so get your work out in front of users and start adapting based on the feedback you get.

We've been keeping quiet about what we're doing because we're not ready to launch yet, but they've just started breaking radio silence. Should we care? Should we start making noise?

You'll probably get differing opinions here; but personally I've never been very interested in vapour. Don't talk up a product which doesn't exist; instead, put a product in front of users, and let THEM start talking about it.

I was in a similar situation, I was just plugging away at a site and about 1-2 months before I planned on launching a competitor (with an inferior service) launched. I decided to work as hard as possible and launch about 2 weeks after that.

What a mistake, the competitor always has an inferior site, but I never caught up. I would have been much better off had I just launched and not tried to make things perfect. The users were perfectly content with the competition.

My advice would be to launch first if you can and get the users to market for you.

When their business model and techniques are inferior to yours, customers won't get stuck to them. You will win them later. So be silent and have no fear.

When their model and techniques are better than yours, customers will stuck to them and you won't get them switch over to you. So make noise and let potential customers know they should wait for a maybe better alternative (that is you).

From here, speed is of the essence. Focus your intent and make sure to delight your customers.

Like was already said, when they send out press releases or spend marketing dollars, make sure you get to catch some of that. You rarely see MySpace in the news without a mention of Facebook. I'm not saying aim for the #2 spot, but use the fact that you're similar to benefit from what they do.

You will always have competition (if you don't, you probably don't have a market) and if you're the best one to satisfy your customers you will succeed in your niche.

Joel Spolsky's "Fire and Motion" essays touch on this. The original is here: http://www.joelonsoftware.com/articles/fog0000000339.html

With an updated take on it here: http://www.inc.com/magazine/20080401/how-hard-could-it-be-fi...

Every moment you spend worrying about your competition is one you're not spending focused on your product. Stick to your plan and deliver it.

It's important to know that even in absence of competing companies, you ALWAYS have competition. TONS of it. The first guy to try to sell a car heard, "What? My horse works just fine."

If you come out with a half-baked product, you will have an honour of making an initial splash. However the majority of your potential user base will not bite, they will make a note to themselves to come back when there's a better version. So all your competition will need to do is produce that version - better looking, more stable, with more features, etc - and you can kiss you chances of grabbing a decent market share goodbye.

In short - never launch things that are not ready. Not to the general public. This greatly diminishes your chances riding a "viral propagation" wave made by a launch announcement. It also tags you as a developer that's OK with releasing (essentially) crap rather than a polished product. If you want to gather a feedback, do closed beta.

Focus on the core of what makes you valuable. Get users ASAP so you can understand your value better.

It's fine to keep an eye on what your competitors are doing, but you want to use that as a source of ideas and inspiration, not as a way to defeat yourself before you're even out of the gate. The competitors may not be able to release as early or often. Everything might fall through for them. Or, maybe, they'll be successful, and you'll be successful, because there's room in the market for more than one company.

You shouldn't be afraid of competition, you should embrace it as an opportunity to be challenged to produce an even better product than you would have.

So, I say just focus on your product. Make it the best, most mold-shattering product you can. If you can do that, and keep on doing that, then at the very least your potential competitors are going to have to spend a lot of energy just trying to keep up with you.

The first defines themselves in terms of their (perceived) competition. A great example of this has been Sun. McNealy spouted out incessantly against Microsoft even though Sun's actual primary competitors were IBM and HP (while the true threat was the systemic commodification brought on by PCs and F/OSS).

The second defines themselves by the value that they actually deliver to their customers. Craigslist is a poster child for this in the online space.

In terms of the market perception, you should think a bit about who's going to be perceived as the driver/leader of your market and who's going to be perceived as the "me too" player.

In terms of market validation, it's almost always a good thing that you have some competition. For Krugle, we nominally have a fair number of competitors on the surface (including Google) but our actual product blows them away.

In terms of war chests (money), that's an open question. It depends on how creative you can be, how stupid (or not) they are because they have money, whether or not they can actually use the money to their advantage, etc.

You're also smaller and more nimble - teams mean meetings which KILLS productivity. So don't fret. Just iterate.

That being said, if your idea depends on a network effect (like Amazon), then you've got a bunch of other problems and you should read this: http://www.changethis.com/8.StrategyLetter.

If you're building a company where you charge a price and bring in revenues directly from your customers, and you don't have the need of a network effect, then you will have competition throughout your life. But don't worry, they will just keep you on your toes and help you to produce the best thing possible.

His approach shot on 18 landed in almost the exact same spot as his playing partner's. The guy he was playing with gamely took his putt first, allowing Phil to see how the putt would roll (which direction it would take, how hard to hit it, etc).

After having seen this guy try almost the exact same shot, and miss, Phil was able to learn from his partner's mistakes, and hole his putt.

My point is that there's something to be said for watching someone else make the initial blunders and capitalize with a better product. There are plenty of market share leaders that weren't first to market, but perhaps came slightly afterwards...