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You can also sit back a bit at their launch and observe their mistakes and do something a bit different.
Color, Cuil and others were all outrageously well funded, but failed entirely.
He was amazed at how many competitors he outlasted and simply had more interest and staying power than.
NOTE: A well-funded competitor has investors that want a big return on their investment, they don't want to stand around doing nothing. So that company is going to need to most fast and big, and if it doesn't hit, depending on the investment they have taken, will die away.
All that being said, if you are shaken by this, enough to have lost confidence in your idea or execution, you may want to move on.
If you are still completely confident in your idea and this hasn't shaken you at all, there is ALWAYS room in the market for multiple competitors, so dig in and go for it.
In the end, I can honestly say that having http://app.net/ launch before us was a blessing in many ways. Many of the ways have already been explained by others (e.g. validation of the idea, etc.) It also seriously motivated us to stop putting it off for another weekend. I buckled down that weekend and got the service as ready to launch as I could. I knew that if we waited too long it would seem like we were just copying their idea, when in fact we had been working on it for a couple months in our nights and weekends already.
We also had the benefit of seeing what features were being requested from people on HN. In many cases, these were features that we built into our initial release. In other cases, I knew that I could knock the feature out in a couple of hours. This allowed us to tune the marketing message that would accompany our release. Our service does many things, but knowing which ones people really wanted was invaluable.
In the end our launch went a lot better than expected. Few people made the connection between our service and the competitor that launched a few days earlier, and when they did we received a favorable comparison. More importantly, that "idea validation" that their launch provided translated into real subscribers as soon as we launched. We've actually exceeded our expectations in terms of paid subscribers up until this point and we haven't even started really marketing the service.
The exact same thing happened to me a little over a month ago. A few days before the launch of http://limelightapp.com/ , we saw http://app.net/ show up on the front page of HN. Initially, my heart sunk. (You've already felt this, I'm sure.) Thankfully I was sitting next to my wife on the couch, who had the good sense to say: "Go grab a beer." I took her advice. In the end, I can honestly say that having http://app.n…
Earlier quoted context omitted.
Also, you can take risks that they may be unwilling to take. You don't have group-think to worry about. You can use tools & languages that it's too hard to hire for. As this is a PG site, consider functional systems. I'm a huge haskell fan myself, and holy crap is it faster to develop in, especially early on. In terms of productivity, it can be 10-15x. It's proven as such in my own work. How many devs do they have? L…
This is great advice for me to hear, as I'm in a similar position right now. I've been considering obliquely slamming our competitor in a blog post, but I've held off because I don't want us to come off like dicks. Wouldn't I be better off focusing the messaging on how we're doing it right, rather than how they're doing it wrong?
Focus on your startup, keep an eye on theirs on sites like HN, Quora and any relevant blogs, but don't be afraid.
Them being funded or better funded is just something you're going to have to get used to, it doesn't mean anything at this point though - money doesn't buy traction, they have a great chance of failing and moving in a new direction or flat out dying.
What is your competitor weak in? Who are they ignoring? If they have millions in funding, in all likelihood they are targeting a large market, and probably ignoring many under-served ones.
Focus your product on a specific part of the market, both in features and how you market it. This also has the bonus that you may even be able to charge more for it (because it is specialised).
One of my products once faced a much more high-profile competitor, but we concentrated on enterprise (of what was thought to be a 'consumer'/mass-market app) and suspect we made even more profit than the competitor, who eventually changed what they were doing to copy us.
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.
Also, you can take risks that they may be unwilling to take. You don't have group-think to worry about. You can use tools & languages that it's too hard to hire for. As this is a PG site, consider functional systems. I'm a huge haskell fan myself, and holy crap is it faster to develop in, especially early on. In terms of productivity, it can be 10-15x. It's proven as such in my own work. How many devs do they have? L…
Any sources on this? Or is it primarily based on your own experience?
P.S. How did you get 1000s of karma points :) I can't seem to get much.
It's easy to read HN and TechCrunch everyday and become disheartened when closely related products launch, but the reality is that nobody outside Silicon Valley cares until one of their friends tells them about it.