Ask YC: What to do when the competition surfaces?

https://news.ycombinator.com/item?id=170572

by wheels • 18 years ago

18 31 18 years ago

news.ycombinator.com

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.

We just hit that. There are two groups, both with unlaunched products. They've got bigger teams. They've got more money.

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?

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?

Looking forward to your answers.

epi0Bauqu2• 18 years ago

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.

kyro2• 18 years ago

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.

epi0Bauqu2• 18 years ago

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.

cmm324• 18 years ago

You could run for a bomb shelter and cower in the corner...

or...

Launch early... update often. IF you launch first you get credit for that. Also, learn what your competitors core values and visions are. Compare those to your own, and find a way to differentiate if yours are the same as theirs. Let your core values and shared vision drive you and you will most likely improve your chances for success.

But if you do choose the bomb shelter option, let us know how to contact you in case the competition goes defunct!

Good luck,

Christopher Mancini

http://www.propertystampede.com

dangoldin• 18 years ago

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.

V12-Bill• 18 years ago

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!

meredydd• 18 years ago

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...

kyro2• 18 years ago

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.

cperciva• 18 years ago

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.

ejs• 18 years ago

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.

jk4930• 18 years ago

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).

astrec• 18 years ago

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.

dkokelley• 18 years ago

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.

tom_rath• 18 years ago

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...

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.

mattmaroon• 18 years ago

Launch, iterate, and be better.

redorb• 18 years ago

Eat their lunch ;) by following the above ^

johnrob• 18 years ago

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.

webwright• 18 years ago

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• 18 years ago

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• 18 years ago

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.

axod• 18 years ago

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

huhtenberg• 18 years ago

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.

brlewis• 18 years ago

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.

thaumaturgy• 18 years ago

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• 18 years ago

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.

kirubakaran2• 18 years ago

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• 18 years ago

http://www.scribd.com/doc/20232/-surely-youre-joking-Mr-feyn...

on page 22. Surprisingly relevant to this discussion.

kirubakaran2• 18 years ago

Thanks!

radley• 18 years ago

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.

adammichaelc• 18 years ago

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.

parker• 18 years ago

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...

Ask YC: What to do when the competition surfaces?

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