Other startup got there before me. Stop or continue?

For the past few months I've been hard at work implementing this great iPhone app idea my wife and I thought of. This morning, while reading through my usual tech news, I found an article about another startup that has already implemented the same idea and has just received significant funding. Needless to say, I was pretty disappointed and frustrated. They created a really great app with all the features I was working on. At this point I think I need to make a decision, either drop this project or push on. They are a 20 person team with a few million in funding and I'm a one man shop without. What's your opinion?

It may be a lost cause, or not. See if they mess up. Regardless, forget features-at-large and focus on the best features, which are:

1. It works. 2. It's easy to use.

You can always one-up in those categories.

Few months isn't that hard to sacrifice, remember sunk-costs and don't get burnt out.

Edit: the bright side is that you know iPhone inside-out and seeing an opportunity can start on something else pretty fast

Can you launch before they do? It doesn't matter if they have more people or better funding if you can.

Or, do you think you can execute the idea better than they can? There are plenty of apps on the the app store released by big companies that are garbage...if you can do it better, you'll take away some of their unsatisfied customers.

If you can't do either of those, then I'd either try to find another angle to beat them on, or recognize that I was going to be wasting time if I kept pouring time and money into the project and move on to my next idea.

Its not the idea of the product that counts, its what your vision is for how you want to solve the problem in your own unique way. If you're tapping into a real market, there will be tons of products that promise to solve the problem; you have to believe that your way is the best way to solve the problem.

If you don't believe the above, then don't bother. Go get a normal 9-5 job.