
Ask HN: A Well Funded Competitor Has Launched Before Me What Should I do? - sadasdad324
Hey Guys,<p>Obviously using a throwaway account but, I'm a well respected member on here with a few thousand karma (just to give you abit of info who I am).<p>Anyway, I'm in the process of creating a startup however, a well funded competitor has recently launched - a few million in VC funding with a strong team<p>I am just wondering what I should do knowing this competition is now around. I am aware of other similar competitors (although this is a new niche/spin on it so they aren't outright competitors) but this one was right out of the blue.<p>What should I do?
======
lionhearted
It proves your idea has promise.

Read this -

[http://www.ribbonfarm.com/2010/08/03/down-with-innovation-
up...](http://www.ribbonfarm.com/2010/08/03/down-with-innovation-up-with-
imitation/)

Copy their best ideas, do the core things better, and kick their asses. Good
luck.

~~~
lallysingh
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?

Look at who's funding them, perhaps try to infer some of their movements by
the likely advisors they have. Ask around. Check out the founders' resumes.
It's easier to get intel about a larger group than the plans of a single man.
Check out what technology toolchain they're using, and find someone who's used
it before, and/or other public systems that use it now. It may provide a
useful source of likely avenues they'll take later (some APIs make some
approaches easier), you may be able to predict them before they've even
decided. With that in mind, choose your own toolchain and market focus
accordingly. Are they going to have any nasty chokepoints later, in terms of
necessary features that aren't supported by their toolchain, or performance
bottlenecks that'll squash their scalability/skyrocket their costs for a
while?

Also, if all else fails, you've got your brain just churning away at the
problem domain all day. If you want to play dirty, take out some patents on
some inevitabilities in that space. Hobble them early, force them into more
expensive routes (some stupid bastards will even think it's an advantage that
they can afford to!). In software, it's easy & tempting to go the safer O(N)
route when a riskier O(1) will do (in effort -- say writing all your entity
types by hand versus an automatic derivation mechanism). A patent threat can
certainly push people in different directions early. In terms of productivity,
that can be a 30+ scale factor. How many devs do they have?

Put out a blog & control the narrative. The more people they have, the more
mistakes they can make at a time, the more datapoints you can pick from to
form the narrative your way. The right narrative can help compensate for a
lack of a marketing team. Consider reading up on Guerrilla warfare.

Also, you don't have to win the market. You can just stay alive & appear
useful long enough to get bought by someone else who wants to compete against
your opponent.

Yeah, a good part of this is way over the top, but maybe something will be
useful to you :-)

~~~
TWSS
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?

~~~
jarin
I wouldn't go TOO crazy badmouthing competitors, as you may end up joining
forces later on (through acquisition or partnerships).

------
DanielBMarkham
This is great news. Somebody is spending huge amounts of money to help you
figure out how to make money. Now your problem is much reduced: instead of
doing all of it, you just need to figure out what they are doing and tweak the
good parts and ditch the bad parts.

So how is their sales pipeline working? That's the key question. Where are
leads coming from, how do they convert them, what are the major selling
points.

Seriously, this is great news -- assuming you can get inside their OODA loop
and wreak havoc. It's like having a big brother who made all the mistakes so
that you don't have to. Requires thinking a bit differently, but you should be
able to manage that. Good hunting.

~~~
dia80
Ahh, OODA. That kept me on top in 2 vs 1 games of AOE2 against my colleagues
for a long time. They started beating me when they got better and I just
couldn't think fast enough anymore.

For anyone in any kind of competition I would highly recommend checking out
the wikipedia article:

<http://en.wikipedia.org/wiki/OODA_loop>

------
aculver
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.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.

~~~
nicpottier
Went and checked out LimeLight, really nice, I think you are addressing a
market need that very much exists, so keep at it.

One little suggestion, you should have some example sites right from the
homepage. The video is good (thought edit out the publish bug!), but first and
foremost I wanted both validation that others are using it, and wanted to be
able to see it in action.

Good luck with it!

------
wisty
Every good niche has competition. Being first to market doesn't mean much
(remember GeoCities? Six Degrees? Friendster? MySpace? and these guys were in
a space where the first mover has an even bigger advantage.) You just don't
know who will win.

Killer features aren't usually obvious, except in retrospect. Google didn't
know that its algorithm would make it king of search, or they wouldn't have
tried to sell so soon, for so little. Facebook didn't know that real names and
a clean design would get your grandma to sign up. And you don't know which
subtle design edge will make the difference in your niche. Neither do your
competitors (those you know about, and those still working on launching), or
the VCs.

What you should be doing (launching and getting funding) hasn't changed one
bit. I don't know the secret recipe for success, but I can tell you lots of
ways you can fail. Not launching would be the easiest.

------
ema
Look at Duckduckgo they have a competitor who launched years earlier and has a
hell lot more funding.

~~~
pbhjpbhj
DDG may not be the best example depending on the field you're in - they use
their competitors to provide a lot of their service and get their competitors
to do it for free it seems. There aren't too many spaces where you can do
that.

There's an aphorism that says "the second mouse gets the cheese" which I think
means that coming second you can let the forerunner make the mistakes and
learn from what they get wrong. This has a lot of mileage IMO.

Anecdote: When my partner and I started in business in a very fine niche, a
largely new thing in our country, a competitor opened in our town within a km
of us between us securing premises and opening them. Thankfully they
determined for personal reasons they couldn't continue and left us with some
extra customers ... don't pin your hopes on your competitions CEO getting
pregnant though!

------
tptacek
You should launch anyways.

In 2004, I was going to do a startup with some friends that would ship a
product allowing enterprises to "firewall" the IM protocols, ensuring that
private inter-company messages stayed inside the company's 4 walls. We gave up
when 3 other companies launched products to do the same thing, including AOL,
all well-financed.

Companies launched _after_ we decided we were outgunned ended up doing better
than the companies that were there at the beginning. AOL dropped their product
entirely.

Every time a friend of mine has built a product in a space that seemed spoken
for, they've done well. Look at Marty Roesch with SourceFire; nobody would
have predicted green fields for SourceFire when they launched, but Marty and
his team IPO'd.

The single toughest part about getting a company off the ground is
product/market fit. It's finding the right group of people to talk to and
having the right conversations to figure out what the feature/function/benefit
should be, how the product should be packaged, and what it should cost. Think
of it this way: someone else did the hardest part of the problem for you.

------
jpdoctor
> What should I do?

Compete.

Every startup should expect a well-funded competitor to hit the space, both
before and after.

------
benologist
They're not your competitor. They're in the same space but you haven't even
begun to fight. In a year they might be your competitor.

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.

------
rkalla
The TechZing interview with the creator of Nozbe addresses your question
exactly, his answer: be persistent, stay positive and move forward.

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.

------
g-garron
Well, that is a really hard question. I think you should consider this:

\- Do you have any way to make your company different? \- Can you contact some
respected member of the niche your company is aiming at, and convince him to
start using your product, and endorse you?

Usually smaller companies can offer a better service, to a smaller niche of
users, so you can focus in a small sub-niche of the customers, and work with
them, that can work for you if you manage to stay small, bigger companies
can't afford working with small customers, as they can't break the even point
of revenue.

Try to stay out of any strategy that involves money, as your competitor has
more resources than you. Focus on personalized service, if you can afford
that.

Or, start looking for a funding partner.

------
peteforde
The Wright Brothers were up against all sorts of commercial and even military
competition. Everyone was throwing huge amounts of money and resources at the
problem. The Wrights were perceived as amateur-hour kooks playing with toys in
a field. The military was downright rude when describing how their success was
a forgone conclusion and that the Wrights weren't worth paying attention to.

The other point is that while orgs like Amazon, eBay, PayPal and Craigslist
ran with their first mover advantage, lots of other first-movers totally
dropped the ball. See Friendster/Facebook for my favourite example.
LiveJournal/WordPress/Tumblr is another set of hard lessons.

------
bane
Launch anyway. Being well funded doesn't necessarily mean successful.

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.

------
slee029
Similar to what people said don't worry the competitor validates your b-model
and focus on your product not your competitor

In addition, remember to treat your competitors as frenemies.
[http://www.bothsidesofthetable.com/2010/12/27/why-you-
should...](http://www.bothsidesofthetable.com/2010/12/27/why-you-should-make-
your-competitors-your-frenemies/) There's much more to learn about your space
than you probably think and they've already been in the trenches and might
have gone through some pain points you can skip.

Location: If they're national, I'd focus on being local. Look at the way Yelp
did things in taking on Zagat, Citysearch, etc by focusing on a core market to
build that strong loyal set of powerusers that on average were way more
engaged (# of reviews per reviewer).

Lastly, I'd consider trying to figure out the competitors cost model. A lot of
times many startups that are well funded get that larger funding round because
they're looking to scale which means they're spending extra on marketing or
sales. Some startups as such are focused on ramping up a sales team. If that's
the case, you'll lose playing the game the way they're playing it (ie: groupon
vs a local copycat clone since it might work locally but u'll never scale).
Try to figure out different methods to do this, price model, sales model,
marketing model (guerilla marketing vs traditional marketing), or whatever
that will make you more unique and more cost-effective. Gluck

------
bdunn
A startup should be treated like any other business. Almost every business
imaginable has competition, and most manage to survive.

Building a product that appeals to 100% of a "target market" is impossible.
Carve your niche, target a particular _type_ of person, and start small.

Competition in your space is a really good thing: 1) as others have said, it
validates your ideas viability, and 2) you don't need to spend so much time
educating people about a new market and why they need your product.

------
throwaway1-1-2
Our main competitor started working on their product about at the same time as
us. They raised about 4x as much as we did (basically a series A) and have 4x
bigger team as well. They waited to launch. We launched earlier and with a far
less polished product.

There's something different happening though, and it primarily has to do with
execution. We do crazy shit to get traction, because we're scrappy as hell and
aren't going down without a firefight. We're extremely lean and we all code,
whereas their organization is far more bloated. The numbers belie the actual
fairness of the fight. And moreover, we don't currently need a massive amount
of money. Our burn rate is fairly low.

Here are a few things I've learned:

1\. More bodies isn't better. More money isn't always better. Traction and
happy customers should be your key metrics.

2\. You can always raise money later at a great valuation using the argument
"Hey, these guys raised money from X VCs and are blowing up."

3\. You need to launch. Stop waiting.

4\. In the big picture, everything here doesn't matter. Both us and our
competitors are going up against a bunch of old-guard corporations who are the
current incumbents. It doesn't matter if we have similar products if our
overall market share is .001%-- the other 99% is the true competition.

------
insraq
I have encountered a similar situation and here are my thoughts, just for your
reference:

1\. Is competition really bad? Not necessary. Some times competitions are
good. As I was working on a product of a relatively new area. One of the
problem was that people were not aware of the importance of the product. Our
competitor had done a good marketing job, widely promoting the concept and got
reported by several media. After that, we found it much easier for us to
convince people of our product.

2\. It's good to have a mirror. If you have got a competitor, watch closely
what they are doing and try to learn from their experience. The two products
might look similar at first but you might be able to differentiate from them
after several iterations. If launching a startup is like trying out new
clothes, it is much better to have a mirror.

3\. You have to share the market anyway. You cannot be the monopoly, or even
oligopoly. Sharing the market with your competitors is inevitable. Even if you
were the first to launch, there might be strong late-comers. So do not panic
when you see competitors coming.

4\. Learn to differentiate. Tell the difference between your product and your
competitors'. Trust me, there are no identical products in the world.
Highlight the (even the smallest) difference and tell people why they should
choose your product.

5\. Focus on what your competitor might ignore. You should try out your
competitor's product and record your experience in details. Then check the
flaws you have found to see whether the same can be seen your product. This is
an effective way to differentiate your product, especially your competitor is
large and strong. If you cannot have more functions, then optimize your user
experience.

6\. Do not pivot so early. I wouldn't recommend to pivot right away. Even if
you plan to pivot, please at least wait for a few months - after you have made
sure that you have no chance. After all your team have spent a lot of time on
your product. If you give up so easily, it is hard to cheer up your team for
your new product. Do not simply give up, face competition and you will never
regret your decision.

7\. Any chance to cooperate? If you can cooperate with your "competitor",
things would be easier. But this might not be a good choice since your
competitor is well funded and two teams might not get along with each other.
Also you might lose your control of your product.

------
jefft
Don't worry about competition. It's a good thing. It means you picked a good
market. Focus on what makes you different and better.

Sounds like you may be a single founder. If so, find a friend or mentor who
can help you work through the ups and downs. You're going to be discouraged a
lot starting a business.

I went through a similar situation and solicited advice. Lots of people told
me "know when to quit." I didn't, and I'm glad I stuck it out.

------
jen_h
Put pedal to the metal and get it out there! Mirroring everyone else...well-
funded competition means:

1\. Your idea has legs. You have less to explain when people ask you about
your startup. This is a good thing and saves a lot of time.

2\. They've got more fingers in the pot, slower and more consensus-based
decision-making. They may hire fast, but all team members may not be as
invested in quality/creativity/efficiency as a small, bootstrapped team and
may in fact move slower - you may be able to out-execute, and faster.

3\. They can afford mainstream advertising and tech press that you may not be
able to - but these days, word-of-mouth and viral propagation can be far more
effective.

Our startup's in a different situation as our well-funded competitors hit the
market after we did, but it's essentially the same. I freaked out a little,
but the kick in the pants has been really useful in honing our strategy.

Keep your eye on 'em (and other competitors), follow your gut, and don't get
spooked! Good luck!

------
spxdcz
Focus your product and your market. Take a read of everything Steve Blank has
written about re-segmented markets.

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.

------
daveambrose
There's a ton of great examples out there, and as someone mentioned earlier,
take a look at Duckduckgo. Another great example of a lean company that has
now outpaced their well funded competitor is SeatGeek.

------
systemizer
Is this a social app? If so, you can win through the culture of the community
that uses your app. Today, social is not as much about the technology or
product, it is about the people that use it.

For example, I use hackernews not only because it is simple and easy to see
others' contributions, but because of the content that people produce and the
intelligent conversations the community creates on the site. That aspect of a
product is invaluable and more difficult than any technology problem you will
encounter.

------
brettvallis
VC money, a good team, or a great product won't guarantee success. One (or
two) factors alone won't ensure success. It's a sum-of-all-the-parts thing. I
think an important question to ask yourself is: how committed are you? Not so
much: then spent your time, money and energy elsewhere. Very: then do a
detailed (honest) analysis on your product and theirs and if it still makes
business sense, keep at it. Sometimes it how much pain you're prepared to
endure... or is that running? :)

------
inthewoods
All good points here - I would only add one thing: when I did my first startup
right out of college, we were constantly worried about what our "local"
competitors were doing - meaning companies targeting the same market and about
the same size. What we ignored, and hurt us, was the larger company entering
the space. Moral of the story: focus on your start-up vs. looking at local
competitors, but keep an eye on larger companies that have the potential to
come into the space.

------
viscanti
What was your competitive advantage before? If you didn't have a distinct
competitive advantage, you were bound to have a strong competitor eventually.
The benefit you have now is that you can learn from them. The primary goal of
a startup is to learn about your market. Having a well funded competitor can
help you see who the actual market is. They'll likely spend a lot of money to
do that. You'll have the benefit of seeing how they price, who they target,
etc.

------
dwc
Too many times I have stopped making something because well-heeled competitors
showed up before I launched, only to see someone _else_ come in later and eat
their lunch. Maybe it could have been me eating their lunch, but now I will
never know.

If they really are nailing the market then maybe you shouldn't bother, but
usually you'll find they are doing an ok job but missing a LOT of things you
might do better.

------
d0m
I think you should pitch your product to VCs (Explaining that it's a new
market with really few competitors; BUT, still serious enough that there's
already a team with million in funding.) Meanwhile, build your awesome team.
Then, your competitor will come on HN saying: "Crap, I was first but a guy
with a better product and an awesome team just got funded. What should I do?"

------
dkrich
If it is a brand-new startup, it's not worth worrying about them because you
are both still so far from reaching a point where everyday users know either
of you exist.

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.

~~~
dkrich
Also, I think when you are building a startup, it is best to largely ignore
tech news sites anyway. You can drive yourself crazy reading about others
successes and competing products. It helps you keep your product stay original
and not easily become distracted when a new feature idea presents itself that
makes you go in a totally different direction before your first idea has had a
chance to succeed.

------
seanMeverett
Like when TiVo launched and spent millions trying to educate the market on why
someone would want to record live TV (i.e., just use a VCR, silly), the main
benefit you could get from them entering the space is they spend a lot of
their funding on education and you spend your money on customer acquisition. A
bit different, granted, but an analogy nonetheless.

------
michael_dorfman
Take it as confirmation that your market is there, and make sure you have a
clear idea of what your differentiator is going to be.

------
adamrneary
I would learn from them. I am sure they are going to make as many mistakes as
they make great decisions. Having someone out there with funding figuring out
the space can be a real advantage if you can learn from what they do and bring
your own sense of the marketplace to bear. Look at Wesabe, who launched with
funding a year before mint...

------
brackin
I stopped working on a startup as a similar thing happened to me, one year
later they've had no traction and could have probably beaten them as I thought
we had a much better solution. Don't think about anything other than is your
solution better. They are still an early stage startup. Foursquare essentially
beat Facebook places.

------
Terhorst
If they are very successful and generate a lot of buzz, it may actually work
in your favor to be the next alternative in line. If there's a lot of hype,
their company can only be purchased once, but many may want to.

Of course, it's better to be #1 yourself, if you can manage that. But I don't
know how much I would worry about competition.

------
ramiyer21a
Hey,

Do you really know the competitor has the new product? Or is it just a press
release. Many times, big companies do press releases of something or the other
being released in the next quarter. That "next quarter" never arrives.

The important question is "more than the product do you have paying
customers?" If so, don't worry. If no, worry!!!

------
suhail
Eric Ries once told us the following: "Just fucking ignore them."

That was the best advice someone could have given me for a situation like
that. I'd advise it.

My ancillary advice would be: Use it as fuel to absolutely destroy them in a
race of producing incredible product value to your customers.

Our startup competitors have existed 1-2 years before we did.

------
SeanNieuwoudt
Hey there,

Firstly, don't be too concerned man. Watch the competitor to see how the
market reacts to them. If they succeed, chances are better that you will too.

Keep in mind that lots of VC money does not necessarily mean a successful run.

First to market is a bit of a myth, you can do just fine if you don't get
there first - just do it better than the rest.

Best of luck with your venture!

S

------
jonkelly
If you believe in it still, it's great news. A story that may help... I had a
very well-funded dot com in the 90's. A guy went around the valley pitching
"this is a big idea because [our investors] invested in it." He got funding
and his company, Esurance, recently sold for a billion dollars.

------
andywerner
Other companies doing the same thing as you basically shows the market your
niche is solid. Go for it!

------
sandGorgon
Why not raise funding ? Given that your competitor has already raised funding,
atleast you wouldnt have to convince investors about the _viability_ of the
concept.

If you were looking to bootstrap yourself and avoid dilution, perhaps it is
time to rethink that strategy.

------
desireco42
I think this is good sign that your idea is worth pursuing. Try to see why you
wanted to do that and what is your unique strength, which can be if nothing
else, eagerness to succeed. Good luck.

P.S. How did you get 1000s of karma points :) I can't seem to get much.

------
DomainNoob
How awesome is their domain name? Could yours sound like the more
authoritative player in the space, easier to remember, spell? Or will you come
in with an afterthought domain that leads people to assume you're a knock-off?

------
kentbrew
This sort of thing can have a chilling effect, but keep in mind that if
they're "well-funded" they will need to have a profitable business model much
sooner than you will. Hang in there!

------
jorangreef
Re: "What should I do?"

Read Henry Ford's autobiography: <http://www.gutenberg.org/ebooks/7213>

------
thomasmckay
Stop stealth'ing and start building awareness. Ride their we-were-funded
marketing with your own I-am-here-too blitz.

------
ashleyreddy
Good for you! Well funded means they will have to pay for rent and employees
and stuff. Go and do less, better.

------
ww520
Keep your cost low. A "strong" team implies it's top heavy now. A few millions
can be gone very fast.

------
sament
Hi,I think u should leapfrog. U can study them to learn the extra values u
need to add to yours.

------
ajhai
Continue working and launch anyway.

------
ct
Don't sweat it and focus strongly on your strong points and their weaknesses.

------
donnaware
So that means your idea is good. If good enough another company may look
around for something to compete with your competitor, that might be you. There
are worse things in the world than being aquired by a big company (Google,
Amazon etc.)

