

Ask YC: What to do when the competition surfaces? - wheels

I think everybody who's been through the startup game knows this point:  You've been quietly working on something you think is novel for months, planning to take over the world any day now.  And then there's the painful moment where you realize there are others doing something similar.<p>We just hit that.  There are two groups, both with unlaunched products.  They've got bigger teams.  They've got more money.<p>What do you do?  We were tentatively planning on a public beta for the first useful application about a week out.  Neither of their groups has that.  Should we focus on differentiation or try to build momentum for a head-on collision?<p>We've been keeping quiet about what we're doing because we're not ready to launch yet, but they've just started breaking radio silence.  Should we care?  Should we start making noise?<p>Looking forward to your answers.
======
epi0Bauqu
Don't be intimated by _potential_ competitors--that's exactly what they want.
Wait until you think what they are doing is going to _actually_ impact your
company before reacting. Continue as planned.

Additionally, the competition might not be all that bad for you. They may help
flesh out the market for you. You might be able to ride on their press and
their advertising dollars. You might get ideas from their products.

Finally, pretty much all good ideas will attract competition. That is the
nature of a free market. So it was going to happen sooner or later. The good
news is that there is usually room for multiple competitors in a market. And
in the low-cost startup world, I haven’t seen any great evidence that bigger
teams and bigger money win out on average after you control for the # of
startups in each category.

~~~
kyro
Waiting until you figure out exactly what potential competitors are doing and
then reacting might hurt more than it helps. Even if the impact a competitor
has on your company is small, slight shifts in product positioning can always
occur, and your end of the market could be encroached upon.

In the end, it's up to the users to decide. So launch quickly, listen to them,
and help them choose your product as the best.

~~~
epi0Bauqu
Well I didn't say wait until you figure out _exactly what potential
competitors are doing_ , but just until _you think what they are doing is
going to actually impact your company._

------
webwright
Launch first, be differentiated, listen to your users.

It's important to know that even in absence of competing companies, you ALWAYS
have competition. TONS of it. The first guy to try to sell a car heard, "What?
My horse works just fine."

------
OpenWebU
More funding does not mean they can execute. I learned that lesson at Oracle,
where a team 5x larger and in competition with mine claimed they could do
everything and the kitchen sink. But because they could not focus, their
developers got new directives every week their code was very buggy. My team's
code was focused but it worked and we had better credibility with the
salespeople and customers. If you make noise, you will need to respond to it,
and may get distracted. So, I'd stick to your original plan -- to launch in a
week - in the grand scheme of things I don't know if being a week later makes
a huge difference in winning the war (not the battle). If I remember
correctly, google was not the first search engine created. BTW, congrats on
being so close to public beta. :)

~~~
esessoms
I hate to be a ditto-head, but I couldn't agree more. If they have bigger
teams and more money, that almost always means _you_ have the advantage. The
only way you can lose is if you panic and make bad decisions. Plan your climb
and climb your plan.

------
thaumaturgy
Just concentrate on your product.

It's fine to keep an eye on what your competitors are doing, but you want to
use that as a source of ideas and inspiration, not as a way to defeat yourself
before you're even out of the gate. The competitors may not be able to release
as early or often. Everything might fall through for them. Or, maybe, they'll
be successful, and you'll be successful, because there's room in the market
for more than one company.

You shouldn't be afraid of competition, you should embrace it as an
opportunity to be challenged to produce an even better product than you would
have.

So, I say just focus on your product. Make it the best, most mold-shattering
product you can. If you can do that, and keep on doing that, then at the very
least your potential competitors are going to have to spend a lot of energy
just trying to keep up with you.

------
johnm
There are two kinds of companies:

The first defines themselves in terms of their (perceived) competition. A
great example of this has been Sun. McNealy spouted out incessantly against
Microsoft even though Sun's actual primary competitors were IBM and HP (while
the true threat was the systemic commodification brought on by PCs and F/OSS).

The second defines themselves by the value that they actually deliver to their
customers. Craigslist is a poster child for this in the online space.

In terms of the market perception, you should think a bit about who's going to
be perceived as the driver/leader of your market and who's going to be
perceived as the "me too" player.

In terms of market validation, it's almost always a good thing that you have
some competition. For Krugle, we nominally have a fair number of competitors
on the surface (including Google) but our actual product blows them away.

In terms of war chests (money), that's an open question. It depends on how
creative you can be, how stupid (or not) they are because they have money,
whether or not they can actually use the money to their advantage, etc.

------
kirubakaran
I couldn't find a link for you online but do you remember the story about how
the competitors of Feynman's plated pen company were intimidated? They thought
' _omg an american company would be having millions of dollars in funding and
army of PhDs in lab coats_ ' So they shut their company down. The company
Feynman worked for actually had like $15 in funding or something like that.

~~~
antiismist
[http://www.scribd.com/doc/20232/-surely-youre-joking-Mr-
feyn...](http://www.scribd.com/doc/20232/-surely-youre-joking-Mr-feynman)

on page 22. Surprisingly relevant to this discussion.

~~~
kirubakaran
Thanks!

------
huhtenberg
Just to counter all the "launch now" posts - rushing the launch can actually
kill your project.

If you come out with a half-baked product, you _will_ have an honour of making
an initial splash. However the majority of your potential user base will not
bite, they will make a note to themselves to come back when there's a better
version. So all your competition will need to do is produce that version -
better looking, more stable, with more features, etc - and you can kiss you
chances of grabbing a decent market share goodbye.

In short - never launch things that are not ready. Not to the general public.
This greatly diminishes your chances riding a "viral propagation" wave made by
a launch announcement. It also tags you as a developer that's OK with
releasing (essentially) crap rather than a polished product. If you want to
gather a feedback, do closed beta.

------
cperciva
_There are two groups, both with unlaunched products. They've got bigger
teams._

Sometimes bigger also means much slower.

 _We were tentatively planning on a public beta for the first useful
application about a week out._

Go for it -- your key advantage is that you're faster and more adaptable than
the competition, so get your work out in front of users and start adapting
based on the feedback you get.

 _We've been keeping quiet about what we're doing because we're not ready to
launch yet, but they've just started breaking radio silence. Should we care?
Should we start making noise?_

You'll probably get differing opinions here; but personally I've never been
very interested in vapour. Don't talk up a product which doesn't exist;
instead, put a product in front of users, and let THEM start talking about it.

------
dkokelley
This is a great opportunity for you. Now you have another team with more
funding to use as a guinea pig. Their manpower and money can be used by you if
you know what to look for. See what they do differently and note is it better
or worse than what you have. See what they're doing identically and see if you
can improve what you have.

Like was already said, when they send out press releases or spend marketing
dollars, make sure you get to catch some of that. You rarely see MySpace in
the news without a mention of Facebook. I'm not saying aim for the #2 spot,
but use the fact that you're similar to benefit from what they do.

------
meredydd
The rumour mill is a good thing - if possible, it's nice to get a feel for
what they're doing, and specifically what they're doing _differently_. Not, I
note, for check-box copying, but to see how your products are going to stack
up, and see if you're lacking big-time in one harea.

For my tuppence (although I haven't been in this position yet), launch on
time, and make noise. Even if they're making noises, a genuine usable product
will speak louder. And even if they launch in turn soon afterwards, as the
established service you could well ride the PR coat-tails. Of course, the
longer you're established before they launch, the more likely you are to be
cited as their main competition when they do launch.

Kiko described this effect wrt Google Calendar here (which is a different take
on the story than some I've heard):
[http://www.height1percent.com/articles/2006/08/18/actual-
les...](http://www.height1percent.com/articles/2006/08/18/actual-lessons-from-
kiko)

------
mattmaroon
Launch, iterate, and be better.

~~~
redorb
Eat their lunch ;) by following the above ^

------
tom_rath
Ignore them. Focus on your customers, not your competition.

You will always have competition (if you don't, you probably don't have a
market) and if you're the best one to satisfy your customers you will succeed
in your niche.

Joel Spolsky's "Fire and Motion" essays touch on this. The original is here:
<http://www.joelonsoftware.com/articles/fog0000000339.html>

With an updated take on it here: [http://www.inc.com/magazine/20080401/how-
hard-could-it-be-fi...](http://www.inc.com/magazine/20080401/how-hard-could-
it-be-fire-and-motion.html?partner=fogcreek)

Every moment you spend worrying about your competition is one you're not
spending focused on your product. Stick to your plan and deliver it.

------
kyro
I'd say launch as soon as you can. Post your product here, digg, etc., and try
to get it blogged, and hopefully TechCrunched. Watch Mike Arrington's video at
startup school on tips to get your site blogged. Have someone leak a twitter
message to Mike about your startup. Good marketing can be done effectively
without any money.

With competition on the horizon, launching something less than perfect might
be in your best interest, because you'll not only get the first jab at the
market, you'll have the ability to iterate based on user feedback so that your
product will be more tuned towards users' actual needs by the time your
competitors start trying to gain momentum. Differentiation will come as you
begin to mold to your users. It's a matter of agility.

------
parker
I remember in the Masters Tournament a few years ago when Mickelson won it
all, he birdied the final hole to win.

His approach shot on 18 landed in almost the exact same spot as his playing
partner's. The guy he was playing with gamely took his putt first, allowing
Phil to see how the putt would roll (which direction it would take, how hard
to hit it, etc).

After having seen this guy try almost the exact same shot, and miss, Phil was
able to learn from his partner's mistakes, and hole his putt.

My point is that there's something to be said for watching someone else make
the initial blunders and capitalize with a better product. There are plenty of
market share leaders that weren't first to market, but perhaps came slightly
afterwards...

------
jk4930
Look at what problems they claim to solve, how and why. Try to assess whether
they are conceptually and technically better than you. They have more money
than you, what I consider an advantage over a bigger team in terms of
marketing (i.e. grow fast). So they will create the market. But now it
depends:

When their business model and techniques are inferior to yours, customers
won't get stuck to them. You will win them later. So be silent and have no
fear.

When their model and techniques are better than yours, customers will stuck to
them and you won't get them switch over to you. So make noise and let
potential customers know they should wait for a maybe better alternative (that
is you).

------
adammichaelc
Who cares? That's my first thought. If you don't have competitors, then your
idea probably wasn't that good.

That being said, if your idea depends on a network effect (like Amazon), then
you've got a bunch of other problems and you should read this:
<http://www.changethis.com/8.StrategyLetter>.

If you're building a company where you charge a price and bring in revenues
directly from your customers, and you don't have the need of a network effect,
then you will have competition throughout your life. But don't worry, they
will just keep you on your toes and help you to produce the best thing
possible.

------
dangoldin
Good question - I'm encountering something similar with what I'm doing.

The way I see is as a validation of my concepts and a way to add
features/improve our offering.

It may also give you some ideas on how to differentiate yourself.

------
ejs
I would say launch NOW.

I was in a similar situation, I was just plugging away at a site and about 1-2
months before I planned on launching a competitor (with an inferior service)
launched. I decided to work as hard as possible and launch about 2 weeks after
that.

What a mistake, the competitor always has an inferior site, but I never caught
up. I would have been much better off had I just launched and not tried to
make things perfect. The users were perfectly content with the competition.

My advice would be to launch first if you can and get the users to market for
you.

------
V12-Bill
A proper answer would take a whole book :) You need to find _your_ central
idea about what you are best at, what you value, and what you care about.
Focus on that. Not! the competition. The competition is largely not relevant,
early on. Do what you do best. Don't react to them. Do your own thing! Let the
competition find the potholes in the road. You may then avoid the problems
that they were bogged down solving. If you have solved the right problems,
your value will be apparent. If not, adjust, and repeat :) Don't let the
competition define you!

------
johnrob
Sometimes I think this is the IDEAL situation. You and your competitors, in a
way, are validating each other. Also, nobody has the first mover advantage so
(hopefully) none of the companies will bail. If all of you launch at the same
time, the impact on the press will be greater for all of you because
competitors usually get mentions as well. Finally, your industry might start
be considered 'hot' because of all the activity.

------
radley
Do what you can to launch ASAP. Then when your competitors launch, there's a
greater chance that any write-ups on them will be bound to include your
product - which gives you more publicity.

You're also smaller and more nimble - teams mean meetings which KILLS
productivity. So don't fret. Just iterate.

------
brlewis
If what you're doing is truly novel, those groups are not your competition.
Your competition is the way things are done now.

Focus on the core of what makes you valuable. Get users ASAP so you can
understand your value better.

------
astrec
This isn't necessarily a bad thing: your novel idea just increased its
potential for market acceptance.

From here, speed is of the essence. Focus your intent and make sure to delight
your customers.

------
axod
Launch it now, speed up development, start listening to users. Get the word
out.

