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.
I hope it helps.