

Ask HN: When do you scrap a startup due to a well-entrenched player/competitor? - callmeed

So, here's the deal. I'm juggling a couple different startup ideas at the moment (Our main biz is running well, so they are all side projects right now).<p>One of the projects has a fairly well-entrenched (and well-funded) player. They have a big user-base and good growth. On the other hand, they're not perfect and there are some things I think we could do better. But, at what point does their size make that irrelevant?<p>A good analogy would be eBay. There are ways you could have an auction site that does things better/cheaper than eBay. But they are big and they've already overcome the chicken/egg issue. Maybe I'm wrong, but I don't see a general online auction site as a good startup idea because of this.<p>So, my question is ... at what point does this occur (if ever)? When do say "don't enter this space because X already owns it"?<p>TIA
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jacobscott
A couple of things that might be relevant:

* How many people who want to do X but haven't yet would choose your site over established-X-player?

* Would you expect people using established-X-player to switch to using your site? Why or why not?

* Does X involve substantial lock-in or network effects that established-X-player can take advantage of?

I've been seeing lots of articles (recent calacanis death spiral email, for
one) saying that this economic climate will not be friendly to smaller clones
(don't mean to imply that your idea is a clone).

~~~
callmeed
_1 I have no idea, but since they are growing fairly rapidly there's clearly a
good, untapped market

_ 2 Yes, I think some people could/would switch ... especially if we offered
slightly lower fees and a few missing–but key–features. Also, there's no
reason a person couldn't use both services.

*3 Definitely not a substantial lock-in (see above)

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tjic
> When do you scrap a startup due to a well-entrenched player/competitor?

When you decide that you can't win.

Or, better: when your opportunity cost is such that you should really be doing
THAT project and not this one.

> When do say "don't enter this space because X already owns it"?

That's a slightly different question. In the first scenario, you've already
accomplished some things. In the second scenario, you're just starting. I'd
saying NEVER in the second scenario. Not if you're truly going head-to-head.
If you've got a niche that the big player can't go after (as, for example, my
<a href="<http://SmartFlix.com>">SmartFlix</a> not really competing per-se
with Netflix.).

~~~
callmeed
I wouldn't say we're just starting–mainly because we already have a platform
built and we'd just be tweaking the code-base to launch it for this new
purpose/industry.

So I guess we're in the middle somewhere.

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aristus
If you identify a structural weakness that can be exploited without huge gobs
of cash, go for it. The only thing big guys can consistently do is outspend
you.

Good weaknesses include new technology you can use faster than they, or a
country/culture you understand better. If your competitor has good growth and
features consider a fast-follow: matching them feature-for-feature but
cheaper. Worst case you distract them and start a price war. Then you shift
gears and start offering better features. If you don't think you can out-
feature them, you are in the wrong business.

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pedalpete
In someways I think this could depend on the network effect. If you are going
against a Facebook/eBay/etc., you have to consider how you can grow a
significant userbase overcoming the barriers to entry (notice I strangely used
Facebook instead of MySpace? - Facebook had to have had the same thoughts you
had at one point).

If you are going after a google(search) or Amazon, there is very little
network effect (people would argue that Amazon network is built on the
reviews, but reviews are available on the web).

Just my two sense.

