

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

We&#x27;ve spent 8 months building our B2B SaaS product in our spare time, doing bespoke work to fund it and working long hours. We have a few initial customers&#x2F;beta testers lined up and we&#x27;re starting to test our design in semi-production settings.<p>Our competitor used to have an awful Windows app that dominated the niche but today their glossy SaaS offering appeared - much to our horror.<p>In many ways our product is superior to theirs. It&#x27;s better thought our and has a superior UX.<p>However:<p>a) We&#x27;ve got a dev team of 1.5 persons (taking into account our day jobs). It looks like they&#x27;ve got a team of full-timers.<p>b) We&#x27;ve got no marketing budget to speak of (currently applying for loans)<p>c) We&#x27;ve got a fairly sizeable technical debt to pay off<p>If I&#x27;m being charitable we&#x27;re at beta but probably more like alpha. At least a month away from being production ready.<p>And they&#x27;re already out there, with an existing customer base from their desktop app to plunder, a known brand and a slick website.<p>There&#x27;s 4 of us working - working 60 hour weeks.<p>Our only chance of competing is to go big, quickly. Not just capital but capital and an experienced organisation to back it up.<p>Any advice?
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tptacek
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!

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harrybr
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.

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davismwfl
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.

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notahacker
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.

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spitfire
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.

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saluki
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.

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JSeymourATL
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.

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sharemywin
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.

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cjbenedikt
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?

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ironghost
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.

