Ask HN: Today a well-funded competitor launched out of nowhere

If you all aren't in it full time, I would say why try? I tried bootstrapping a startup and doing part time with 3 others... it's too slow of a model.

This sounds like a tough situation.

I wonder how well you'll fare if you're looking for capital now, when all you've got is an alpha product, no customers, no growth, no 'functioning business' to speak of.

B2B SaaS products are often only 'pseudo saas', i.e. bigger customers pay for a customised version and personal service. Smaller customers buy the no-frills whitelabel.

Does it make sense for you to target some of the bigger customers with a great deal / customised version offering? It's possible that if sold right, the first customer(s) could effectively pay for you to take it from alpha to live product. Maybe.

The other option that springs to mind is to go do some really slick saleswork off the back of the alpha product demo, and get prospective customers to sign contracts with a really compelling introductory rate. Once they've signed the contract and committed with you (e.g. for a year) then they're off the market and your competitor will have to wait in the wings for a year. Perhaps this is a bit of a fantasy, it depends on your sales skills and the details of the offer you'd be making.

TLDR: you're in the business of selling software, not just writing it. Maybe you can catch a break by really pushing yourselves on the sales work right now rather than coding like crazy.

What do your initial customers think. If they are continuing to work with you than won't their be more you'll be able to find to work with? Seems if they are going to a web based offering too you only lose one of your selling points.

They've just validated your product. Congratulations!

You say they have a installed base of desktop users. Do they have a smooth transition path to their SaaS app? If not, then it's just as easy to move to your app as it is to stay with them.

How big is the market? How homogenous is the market? How likely is the market to automatically choose the competitor?

Don't underestimate the capability of an incumbent market leader to screw up a product relaunch and actually end up driving customers away from the service. Enforcing a potentially inconvenient switch to SaaS and/or putting the price up actually increases the temptation for an existing customer base to evaluate alternatives.

And even if the well funded competitor consolidates their domination of the space, many niches are big enough for limited products with limited marketing to consistently generate revenue for the small businesses that run them despite all the efforts of well funded, marketed and developed alternatives. Sometimes the smaller players are profitable because they only need to capture a small market share, and retain their customers because they're able to focus on pleasing a subset of the market all of the time rather than the whole market most of the time.

Take a deep breath. Now another one. Sit down. Remember what Maurice said in "Out of Sight": You know, in a situation like this, there's a high potentiality for the common motherfucker to bitch out.

Two things you need to remember:

(1) Having competitors, even when they're better than you, is good. Competitors validate your space. Especially in B2B products. Businesses want multiple choices. A better-funded competitor is going to blaze a trail through the market for you. Even if they're the only name most people know, businesses will find you just by seeking out alternatives to them --- a lot of times, even if they like your competitor, they'll look for alternatives because they're required to solicit bids. And on a purely tactical level, competitors are a product management gift that keeps on giving: just watch what they do, and each time they do something new, you can choose to match them, outflank them, or ignore them for now.

(2) You have an enormous advantage over a funded competitor, because you don't answer to a board. You can price your products and devise a go-to-market strategy that doesn't have to make sense to a room full of small-time investment bankers. You can trail them, even miles behind them in the market, and still be viable. Not only that, but in some cases you can end up being more attractive for being small: acquirers may see you as an easy to way to buy functionality without paying a premium for a client base which they may already have ready to plug into your offering. (Cisco did this to my last company, buying lame also-ran fast-followers, twice).

You don't have to change anything. Just keep making smart, near-term business decisions. What happens with the new competitor may influence those decisions, but if they determine the decisions, you're doing something wrong. And applying for loans and going all-out for capital merely in response to a new entrant sounds wrong.

If you're lucky, you get to have a dogfight now. Have fun with it!

Congrats on the validation . . . don't think about competing or going big, quickly . . . you can continue to grow your B2B app as planned . . . You can watch learn/innovate based on what they are doing . . . you can also make faster decisions being small . . . I would offer a concierge service to migrate their desktop users to your app . . . maybe create a tool so they can even do it themselves with a click or two . . . sounds like you have a good app idea . . . keep working and growing it as planned.

Remember Nokia when the iPhone came to market? Remember Lycos when Google came to market? Remember GM, Chrysler etc. when Tesla came to market? Any more answers?

If you believe in your path, product and market ignore the competitor. All they have done is validate you. But time is not on your side if you are all working full time jobs, not saying it is impossible but it makes it really hard to keep up.

Everyone has technical debt, likely in their new offering they put a shiny interface around a bunch of legacy code. That is what I have seen done over and over in established businesses. Part of it is because established businesses have a good revenue stream and nice margins as development has been paid back so they don't want to start over, instead they attempt to ease into the next version.

Someone else mentioned it too but when an existing business releases a new product sometimes the transition to that product is fairly painful for users. Even if they do an awesome job trying to make it a seamless transition for users, some users will have the attitude "If I have to learn something new I'd rather go somewhere else". So take advantage of it, go talk to some of their clients and market to the likely ones that may jump ship. You'll likely be able to find the pattern in the clients wanting to leave.

Mindset is important: Don't Underestimate Yourself And Overestimate Others. The Tech Frontier is littered with carcasses of well-funded early movers. Amp-up the focus on your customers, stay close to them. That's where you'll win.