Summary: "The cure for the First Mover Paranoia is to not view competitors as impassable roadblocks but as a verification that the idea actually works and has a market. That is in fact great news! Now the challenge becomes to find holes in the existing market (geographic, pricing, quality etc.) or to improve on what the competitor is doing."
Find a portion of the target market that is unserved, or poorly served by their app, and differentiate your app to appeal to them. If this means making it narrower, good.
The only sort of competition I'd strongly discourage is straight-up head to head competition. You have to differentiate yourself somehow, even if not on a technical dimension.
Although, if your disposition is such that you get discouraged from a press release, you should stop and assess if you really have the personality and disposition for such a marketplace. Rarely ever do you see a successful marketplace with only enough room for a single product/solution.
There is no free lunch, and an "overnight success" takes an average of 3 years to build. Along way will be many roadblocks, distractions and false alarms.
Good luck.
And consulting gigs are a great way to keep afloat while developing your next products :-)
Theoretically, it is possible to unseat a competitor like Google in search, or Facebook in social networking, but you really have to know what you are doing.
In your case, a better approach is to do some customer development first. Speak to potential users of your product. Find out if they are dissatisfied with your competitor's offering. What will it take to switch.
After that exercise, you should be in a better position to make an informed decision.
Why does he need anyone to switch? This competitor has just launched their product. That means they have very few users and almost no brand recognition. 99.9% of the world will have no idea who launched first and won't care.
You don't need to convince anyone to switch from your competitor's product. You just need to convince people to use your product, which is a problem you already had. In that sense, the launch of a competing product shouldn't affect your roadmap at all.
Longer term, you should be worried about the huge imbalance in resources. That's solvable, though: if you get any traction with your product you can raise funds and hire a team.
I don't know how friendly the platform is for that approach, either. Fast iteration works better when you don't have the bottleneck of app store reviewers.
Because if you spend months and release to the great app store silence, it will break you faster than a 5 ton pin would break a camels back.
On the lighter side, there is a chance that Apple might release some other gadget and people will go after it if you are going to take months to release an app for iphone ;)
Also - their large team and funding could actually limit them. You will have a lot more freedom to build what you want.
And they need to make a good amount of money to "feed" 20 people after they exhausted the funding. Think of it this way: you need at least 95% less sales to make the same profit per person (implied you sold your app for the same price).
If you don't believe the above, then don't bother. Go get a normal 9-5 job.
I disagree. You have to believe that your way is Good Enough.
Good Enough plus effective promotion equals sales. Best is a recipe for Duke Nukem Forever.
Why aim for mediocre?
With a large team and large funding, your competitor has set for itself a very high bar for success.
You, on the other hand, can declare victory by building something (some) people want (TM), even if it's not making you a lot of money (assuming you have other source of income).
Google was not the first search engine.
Did they give up?
I think the important thing is to keep evaluating based on user reactions and market size. You might find that there's a segment of users that want to do something slightly different. Even if you're the first mover, there will always be competition.
That said, I think Amazon knew that eCommerce was going to be a pretty big market, and the Google knew lots of people searched. Even if they didn't get most of the pie, some of the pie was still big enough. If he made an iPhone app to find recipes for star wars fans with allergies (or something with a niche market) without potential for enlarging of the market, it may be time to consider something else.
If you're talking about creating the next iTunes, something that requires tremendous resources, or bleeding edge tech like Google Wave then you're probably right - you just won't have the resources to compete. Those are the kinds of products that a well funded company will always have a clear and definite advantage in producing.
Somewhere in between the two extremes is a large grey area where with a little bit of luck and determination anything is possible..
I would stay the course unless the financial burden is too great.. It's often the case that when you keep working towards a project goal you find new and interesting ways to tweak your product offering so that it becomes something entirely different and unique in the marketplace..
As long as you think there will be real demand for your product then there is always a chance to spin the marketing in such a way that makes your solution stand out from the rest. Feedback is critical as well.. So don't be shy about asking friends and family.
Your first concern should always be product/market fit not potential competitors.
Stop or continue really depends on two things (a) Who is your competitor ? (b) What market are you in ?
From your description your competitor albeit well funded is not established and therefore has exactly the same problem as you - getting customers, this is good. However, if your competitor is someone with deep "links" with Google or Apple or MS or one of the other companies with cash, quit now. Check the background of the founders of the competitor. What sort of track record do they have ? Are they ex-senior members of google, yahoo et all ?
What market you are in matters a lot, is it a market that provides opportunities for specialisation - Continue, are you already in a niche-area of a large market - Stop. Can the market be expanded ? Is there an already existing market with clear pain points or are you building a new one ?
Summary: Weigh your options carefully based on the competitor and the market. All the best.
It's ultimately up to how you feel with taking a risk, no one can tell you what to do. If you believe in the product, other people believe in it and you feel comfortable then go for it.
More resources on MVP:
http://www.startuplessonslearned.com/search/label/minimum%20... http://venturehacks.com/articles/minimum-viable-product-exam...
Or, of course you could give up and wish you would have tried harder when you look back a few years from now. I know which decision I'd regret more!
If not -- if they've really done everything you intended to do -- I'd drop it, and take up a different project. If they're not scratching your itch, or not doing it quite right, then there's room in the market, because somebody else probably also has that itch.
To put it another way, would you rather use the product you've been working on (when finished) or the one they just released? If you'd rather use theirs than yours, then they got it right and you're doomed. Quit. If yours would be noticeably better, there's room. Continue.
Decision making is a matter of binary logic, either you go for it, or you don't. From the theory of systems, for that kind of decision you must have one universal "efficiency" criterion, which is, inexorably, money.
(1) Write down all the comments in this thread; number them; (2) Write down all your own thoughts, along the above comments; (3) Assign weight factor to each of the above; bring them to a single dimension (e.g. money); (4) Count -- an you get your decision. (5) If still unsure, go to #2 (perhaps you failed to materialize an idea of yours in a formal way);
V.
I am in a similar situation. I thought of an idea about a year ago, 4 months ago someone else implemented it. Still going to finish and release...
Or, do you think you can execute the idea better than they can? There are plenty of apps on the the app store released by big companies that are garbage...if you can do it better, you'll take away some of their unsatisfied customers.
If you can't do either of those, then I'd either try to find another angle to beat them on, or recognize that I was going to be wasting time if I kept pouring time and money into the project and move on to my next idea.
Having competition just makes you work even smarter and harder than before. So go for it.
As a matter of fact, I'm in the same boat as yours, and I'm not giving up!
Sorry. But that's one of the main reasons why getting venture is a good idea: part-timers or self-funders can't possibly bring the same resources.
funding is not a guarantee of success. in fact, a funded team has a harder challenge than the non-funded team. as soon as you take funding, the window for liquidity shrinks dramatically. venture investors want their money to grow by 10-20x. if things don't ramp in the way expected, then the investors will walk away and the entrepreneur will be left with a business that can't sustain itself and has to shut down. the more money involved, the less risks that can be taken. chances are very good that this funded team will not exist in 2-3 years.
Does: a) Your app require a large user base to be functional ? b) The appeal increase with larger community ? c) Is useful on its own, regardless of other users ?
There is a reason there are few facebooks and lots of shoe stores. What are you ?
1. It works. 2. It's easy to use.
You can always one-up in those categories.
Don't worry about matching them feature for feature because they've got 20 people and you've got 2. Use your size and the fact that you don't have to pass ideas through a meeting to your advantage. Study their product. Find the weaknesses in their UI. Isolate the pain points. Make your product a breeze to use precisely where theirs is kludgy.
Ultimately, people will prefer the better experience to the more feature-rich one. If you can deliver the former, it doesn't matter how long they've been in the market.
You think gowalla said, oh crap, foursquare beat us to it, we better stop?
If there is not already a clear category winner, then that spot is still completely up for grabs.
Edit: the bright side is that you know iPhone inside-out and seeing an opportunity can start on something else pretty fast
