Ask HN: A Well Funded Competitor Has Launched Before Me What Should I do?

Well, that is a really hard question. I think you should consider this:

- Do you have any way to make your company different? - Can you contact some respected member of the niche your company is aiming at, and convince him to start using your product, and endorse you?

Usually smaller companies can offer a better service, to a smaller niche of users, so you can focus in a small sub-niche of the customers, and work with them, that can work for you if you manage to stay small, bigger companies can't afford working with small customers, as they can't break the even point of revenue.

Try to stay out of any strategy that involves money, as your competitor has more resources than you. Focus on personalized service, if you can afford that.

Or, start looking for a funding partner.

Too many times I have stopped making something because well-heeled competitors showed up before I launched, only to see someone else come in later and eat their lunch. Maybe it could have been me eating their lunch, but now I will never know.

If they really are nailing the market then maybe you shouldn't bother, but usually you'll find they are doing an ok job but missing a LOT of things you might do better.

Hey there,

Firstly, don't be too concerned man. Watch the competitor to see how the market reacts to them. If they succeed, chances are better that you will too.

Keep in mind that lots of VC money does not necessarily mean a successful run.

First to market is a bit of a myth, you can do just fine if you don't get there first - just do it better than the rest.

Best of luck with your venture!

S

I stopped working on a startup as a similar thing happened to me, one year later they've had no traction and could have probably beaten them as I thought we had a much better solution. Don't think about anything other than is your solution better. They are still an early stage startup. Foursquare essentially beat Facebook places.

> What should I do?

Compete.

Every startup should expect a well-funded competitor to hit the space, both before and after.

If they are very successful and generate a lot of buzz, it may actually work in your favor to be the next alternative in line. If there's a lot of hype, their company can only be purchased once, but many may want to.

Of course, it's better to be #1 yourself, if you can manage that. But I don't know how much I would worry about competition.

Don't worry about competition. It's a good thing. It means you picked a good market. Focus on what makes you different and better.

Sounds like you may be a single founder. If so, find a friend or mentor who can help you work through the ups and downs. You're going to be discouraged a lot starting a business.

I went through a similar situation and solicited advice. Lots of people told me "know when to quit." I didn't, and I'm glad I stuck it out.

Hey,

Do you really know the competitor has the new product? Or is it just a press release. Many times, big companies do press releases of something or the other being released in the next quarter. That "next quarter" never arrives.

The important question is "more than the product do you have paying customers?" If so, don't worry. If no, worry!!!

Why not raise funding ? Given that your competitor has already raised funding, atleast you wouldnt have to convince investors about the viability of the concept.

If you were looking to bootstrap yourself and avoid dilution, perhaps it is time to rethink that strategy.

I think you should pitch your product to VCs (Explaining that it's a new market with really few competitors; BUT, still serious enough that there's already a team with million in funding.) Meanwhile, build your awesome team. Then, your competitor will come on HN saying: "Crap, I was first but a guy with a better product and an awesome team just got funded. What should I do?"

It proves your idea has promise.

Read this -

http://www.ribbonfarm.com/2010/08/03/down-with-innovation-up...

Copy their best ideas, do the core things better, and kick their asses. Good luck.

I would learn from them. I am sure they are going to make as many mistakes as they make great decisions. Having someone out there with funding figuring out the space can be a real advantage if you can learn from what they do and bring your own sense of the marketplace to bear. Look at Wesabe, who launched with funding a year before mint...

I have encountered a similar situation and here are my thoughts, just for your reference:

1. Is competition really bad? Not necessary. Some times competitions are good. As I was working on a product of a relatively new area. One of the problem was that people were not aware of the importance of the product. Our competitor had done a good marketing job, widely promoting the concept and got reported by several media. After that, we found it much easier for us to convince people of our product.

2. It's good to have a mirror. If you have got a competitor, watch closely what they are doing and try to learn from their experience. The two products might look similar at first but you might be able to differentiate from them after several iterations. If launching a startup is like trying out new clothes, it is much better to have a mirror.

3. You have to share the market anyway. You cannot be the monopoly, or even oligopoly. Sharing the market with your competitors is inevitable. Even if you were the first to launch, there might be strong late-comers. So do not panic when you see competitors coming.

4. Learn to differentiate. Tell the difference between your product and your competitors'. Trust me, there are no identical products in the world. Highlight the (even the smallest) difference and tell people why they should choose your product.

5. Focus on what your competitor might ignore. You should try out your competitor's product and record your experience in details. Then check the flaws you have found to see whether the same can be seen your product. This is an effective way to differentiate your product, especially your competitor is large and strong. If you cannot have more functions, then optimize your user experience.

6. Do not pivot so early. I wouldn't recommend to pivot right away. Even if you plan to pivot, please at least wait for a few months - after you have made sure that you have no chance. After all your team have spent a lot of time on your product. If you give up so easily, it is hard to cheer up your team for your new product. Do not simply give up, face competition and you will never regret your decision.

7. Any chance to cooperate? If you can cooperate with your "competitor", things would be easier. But this might not be a good choice since your competitor is well funded and two teams might not get along with each other. Also you might lose your control of your product.

Take it as confirmation that your market is there, and make sure you have a clear idea of what your differentiator is going to be.

Is this a social app? If so, you can win through the culture of the community that uses your app. Today, social is not as much about the technology or product, it is about the people that use it.

For example, I use hackernews not only because it is simple and easy to see others' contributions, but because of the content that people produce and the intelligent conversations the community creates on the site. That aspect of a product is invaluable and more difficult than any technology problem you will encounter.

Every good niche has competition. Being first to market doesn't mean much (remember GeoCities? Six Degrees? Friendster? MySpace? and these guys were in a space where the first mover has an even bigger advantage.) You just don't know who will win.

Killer features aren't usually obvious, except in retrospect. Google didn't know that its algorithm would make it king of search, or they wouldn't have tried to sell so soon, for so little. Facebook didn't know that real names and a clean design would get your grandma to sign up. And you don't know which subtle design edge will make the difference in your niche. Neither do your competitors (those you know about, and those still working on launching), or the VCs.

What you should be doing (launching and getting funding) hasn't changed one bit. I don't know the secret recipe for success, but I can tell you lots of ways you can fail. Not launching would be the easiest.

Look at Duckduckgo they have a competitor who launched years earlier and has a hell lot more funding.

VC money, a good team, or a great product won't guarantee success. One (or two) factors alone won't ensure success. It's a sum-of-all-the-parts thing. I think an important question to ask yourself is: how committed are you? Not so much: then spent your time, money and energy elsewhere. Very: then do a detailed (honest) analysis on your product and theirs and if it still makes business sense, keep at it. Sometimes it how much pain you're prepared to endure... or is that running? :)

Congratulations! The cash they raised is your free market research budget. Their VC is paying for many of the mistakes you will not have to make.

Stop stealth'ing and start building awareness. Ride their we-were-funded marketing with your own I-am-here-too blitz.

Give up now.

I know I'm going to sound like a dick, but if your immediate reaction wasn't a strong feeling to out-smart and out-maneuver your competitor you're probably in the wrong place right now. Starting and running a company takes passion.

This is great news. Somebody is spending huge amounts of money to help you figure out how to make money. Now your problem is much reduced: instead of doing all of it, you just need to figure out what they are doing and tweak the good parts and ditch the bad parts.

So how is their sales pipeline working? That's the key question. Where are leads coming from, how do they convert them, what are the major selling points.

Seriously, this is great news -- assuming you can get inside their OODA loop and wreak havoc. It's like having a big brother who made all the mistakes so that you don't have to. Requires thinking a bit differently, but you should be able to manage that. Good hunting.

This sort of thing can have a chilling effect, but keep in mind that if they're "well-funded" they will need to have a profitable business model much sooner than you will. Hang in there!

Stay your course, wait for them to make a mistake, pray that they do.