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Ask HN: Dealing with pre-launch competitors
19 points by fossley on April 14, 2012 | hide | past | favorite | 33 comments
Our startup is in semi-stealthy feedback mode, getting some tricky technology right. We are/were about to go live. A short time ago we discovered the launch of a competitor (would-be competitor, until we are both public). The competitor is very well funded, has mass market buzz, is well executed, well connected and has a much larger team. While not 100% identical, they are still a huge kick in the groin. We are not well funded, at a geographic disadvantage and have a small team. After the initial blind panic, I have been thinking about the options, and thought I would reach out for wider opinion. I have boiled it down to:

(1) Keep going, attempt to compete being the obvious underdog with many operational and financial disadvantages (2) Pivot and focus down on carving a niche market with less mainstream appeal (get out of the way) using existing code, providing a niche with a better value proposition. (3) Rethink the vision to make use of existing work in a totally different way (4) Give up, move on (over my dead body!)

Any similar experience? How did you deal with it? Was the outcome successful? I'm leaning towards (2) Thanks, (long time lurker, first poster) Fossley.

As others have commented - competition is good. Every time I find out about a new competitor to my niche software product I break out into a sweat, but my sales never went down yet. I would be more worried if you had no competition (no competition usually means no market).

Anyway, I'm guessing the competitor doesn't feel as invincible as you think they are. More staff = faster burn rate. Market buzz = greater expectations to fulfill. Better funded = more VCs breathing down their neck. Geographic advantage = more local companies to poach their staff.

I would work out what you can do better (or just different) and focus on that. Maybe concentrate on a smaller market niche than them.

But if you really, really, feel deep-down that you have lost already. Then you have. It is a self-fulfilling prophecy.

Nope, I don't feel like we have lost! But it is a critical point in the road and easy to lose perspective. so trying to get as much input as possible. You make some really good points :)

I wrote this blog post, inspired by your question: http://successfulsoftware.net/2012/04/15/competition/

I hope it helps.

Good post! I very much enjoyed reading it. You are right in many ways. Also greetings from fellow UKers.

Don't worry about competition, especially un-launched competition. Most startups die due to suicide, not murder.

A major competitor of ours launched 3 weeks after we started our company, doing the exact same thing as us. They were a bunch of big-name executives from a huge successful internet company, raised 10x the funding we had, and were already live with the most prominent customers that we were going after. We were scared, until we talked with one of their customers -- turns out their technology wasn't accurate at all, and the customer hadn't even integrated it into production. We kept heads down for the next 6 months and built something that works, and now have no problem finding customers.

So ignore all the hype, and just focus on making your technology work and your users happy.

Why are you in stealth mode? Is there technology that is hard to duplicate, or too easy to duplicate? Building in a bubble is not a good sign whether you have competitors or not.

> Most startups die due to suicide, not murder.

This is true, and it could easily happen to you (the OP) too.

Launch and ignore them. Definitely don't let them shape your business, right now they're nobodies too.

i'm sure there is room for two, but with the competitive disadvantage we have ... surely it is wiser to differentiate to increase our chance of success? Also, they aren't quite nobodies ... they do their PR well and are reaping the benefits.

You're letting your imagination run wild. The reality is nobody is going to give a crap they exist and nobody is going to give a crap you exist. If you both manage to overcome that then you might be competitors.

Their PR ... unless it's just noise maybe you can learn from it. If it's stories on TC/HN/etc then it's probably just noise, they'll get traffic and not much else from it unless you're particularly aligned with those audiences.

I would second both the above posts. Don't do anything now but launch. There may be room for two companies and you'll do just fine. Go after the larger market first, you can always pivot later. Just getting your company launched takes a lot of energy; don't waste energy changing things now.

It's way too early to know whether you're really at a disadvantage. That's just your lizard brain freaking out.

Your biggest risk is failing to execute. Both you and your competitor have a thousand ways to screw up long before you have to worry about the impact of competition with each other.

It's like obsessing over the danger of shark attacks while failing to wear your seatbelt. Deal with the risks that are orders of magnitude more important.

You don't even know if they're going to pivot in response to some other real or imagined competitive threat or opportunity.

"That's just your lizard brain freaking out." True. All sounds like sane advice to me! This thread has been a much needed re-balancing of my freaking out on the whole!

Depends on your market. If this is a new and growing market don't worry about it. I've made the same mistake couple of times. I let a competing site get me change my plan. I became more focused on the competitor than on the market and how to let my service and product match the market needs.

If you believe in the service you are providing and the market is big enough, then double down. But keep your eye on beating the house and not the guy with the bigger stack of chips next to you.

And remember most first-time buyers of this service are not going to know who has more funding. So when the bigger guy starts to spend money on marketing, you just ride along on their wake.

Did the times when you didn't force a differentiation or change of direction due to competition turn out well for you?

We've been in the same boat: competition is GOOD. They help build the marketing buzz, and many people look for alternatives to see who is offering the best deal or solution for their problem. They can help explain the problem you are solving. If you can solve a niche problem, go for the niche that has money to spend - not the million-users-who-spend-$2 group. You'll get funding to keep going and from there see if you need to pivot to capture a larger section of the market.

This was what I was settling on. Although we are not a me-too currently this seems balanced when considering our overall differences.

If they're successful then it sounds like both of you have identified a real problem. Competition is good so their launch may have confirmed your business model.

Unless you are in a winner-take-all segment (which is rare) then it is good to have some competition.

This is true.

(In my mind, only markets tend to be winner-take all. are there other examples?)

Winner Takes All is more of a continuum than an absolute.

For example, most people say that a social network site is a winner take all market and that FaceBook has it.

While they have the majority, Linkedin also has some share, Google+ has some share, even MySpace still has some share. All the competitors still have huge valuations relative to anything most people will ever do.

Further, Facebook doesn't have anywhere close to a monopoly on internet advertising dollars let alone all advertising dollars. There are many companies that earn money through "eyeballs".

Basically the Winner Take All Markets concept is an oversimplification, but still a great way to think about competition.

I definitely agree. It's useful as a way to analyze a competitive space, not an absolute.

Social networks act like them sometimes. If you get everyone using your network, it becomes so valuable that its almost impossible for a competitor to break in.


(actually, of the four types of companies i look at as an angel, my two favorite are "markets" and "networks")

What are the other two?

"products" and "content"

In case people here didn't convince you yet with their spot-on answers here's the good source: http://cdixon.org/2010/06/26/competition-is-overrated/

I am very convinced, it is quite hard to ensure your approach is balanced when your "human" part is worried, your ego says fight and your gut says be smart. Great link btw!

Launch first, then use their launch as free publicity : on each news on their launch, comment : "hoo nice, but that's just like Xxx" (well, add more value, do not spam heartlessly)

The worry isn't so much the PR. It's an all-round "were going to get our arses kicked", due to their combination of talent, funding, execution etc, unless we find a unique angle over them. Their execution is ... impressive. Also might be a blunt point for raising further funding unless we are different enough.

Then launch NOW and iterate, iterate, iterate fast. You think that you can't match them ? And that there can't be competition ? Competition is good, it will keep you focused.

You said their service not 100% identical. Is there some way you can amplify the difference to provide a better service?

Yes, this is what we are thinking of focusing on ... also trying to take advantage of trouble we expect they will face being mass-market. The trouble comes because the mass market we know. Most of us instinctively do. The potential niche/specialist markets are quite unknown quantities at this stage ...

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