Ask HN: Found a smart competitor with a 3y headstart. What to do?
I just started building an MVP for a piece of software with a co-founder. We have a couple of clients who will pay, including one who is actively involved in sharing insights on the problems she faces and why she would need this software. We're looking to have the beta into our customers' hands in about a month. It will have taken 6w to build on nights and weekends. I'm starting marketing efforts in earnest, and ranking highly for key keywords is doable.
The software is for self-employed people who do a certain type of work (let's call it A), but it can be used by self-employed ppl who do other types of work too (B-Z).
There is a market for this software for organizations that employ many of these individuals under a larger brand (let's call them BigOrgs). The problem is that this software is overly complicated for self-employed people like my initial customers. So, we're aiming for simple and focused on the self-employed market. Also, most of the offerings in this space are visually complex and don't leverage the things many of us take for granted (social media marketing, APIs, Ajax, widgetization, clean interface, etc. Not that these make for a good product, mind you, but when used in the right doses they can make for a much better experience than one built in the late 90s, which is when many competing products were built).
Me and my co-founder are not trying to build a multi-million dollar biz. A biz with $500k of sustainable annual revenue (it's a high margin biz) would put us in a great position to build more products without taking on outside capital.
Now, the issue:
Just found a competitor who knows what they're doing. They're funded (a small round) by the who's who of SV angels. They're aiming at the BigOrgs, but their software appeals to the self-employed folks I'm building for too.
They're ranked highly for valuable keywords and have been around for three years. Their marketing strategy basically emulates mine, and they've gotten press amongst the usual SV blog suspects, along with sites like the NY Times. Articles claim they have 10s of thousands of users.
Their site looks pretty but isn't as easy to use as ours.
My analysis:
I'm not worried about the funding - we're happily bootstrapping off of a long term, flexible consulting contract. It also means they are required to go big (growth uber alles) and land big clients, which excites me - we're not interested in the BigOrgs market. The self-employed one is the underserved one in my analysis.
Their high keyword rankings are worrisome, as are their press mentions and 3 years of learnings.
My question:
Do we continue on as planned, nichify (market our products for self-employed people who do A, B, and C even though D-Z can use it, and then grow after we have a stable base?), or pivot (there are a bunch of other lucrative products for the same market that we can build, but aren't related to the core product we're building right now).
Thanks for your help!