Ask YC: What to do when someone beats you to the punch?

You've come up with a good idea for a service and have done your homework. You believe there's a need for the product and can't find any company serving that need, so after a few months of planning you begin development. You can only develop after work, and you work late, but you're getting things done - albeit very slowly.

During the initial development phase, a company launches a similar service and beats you to the punch. The amount of press they receive is discouraging, but you shake it off and continue. A month later another service launches, but this time nearly identical to yours. Strangely, all of this occurs in the course of one summer.

In this particular case, you've completed maybe 50% of the total work necessary. You have a real concern that the service may be perceived as another drop in the bucket, the impact of a launch has been diminished, and the innovation you expected to leverage has been lost.

Now your choice is whether to keep going and see the project through OR stop and focus on a different project.

What's your advice?