How a startup responds when a giant arrives | Hacker News Reader

How a startup responds when a giant arrives

runkeeper.com

235 pointsjjacobs2230 comments

I think people are too afraid of competition. There is no product without a lot of competition, and suprising as it seems, second best, 3rd best and so on are still making a hella lot of money.

Take microsoft word - it dominates the word processing market. But there are many people earning a lot of money selling OTHER word processors.

Competition is irrelevant, and in his particular case, he has a huge advantage over Nike. He has one product that he is working on, while Nike has a lot of other things to think about, and this is not important. He can add features immediately with no approval process. He can do anything he wants without paying attention to the damage it may have on other parts of the company.

This dude is at a clear advantage over Nike, so very frankly, I don't really think there is a problem.

Couldn't upvote you enough. This also applies to a startup vs. another startup. There have been a number of "Ask HN:" posts recently along the lines of "oh shoot, we just discovered there's another startup working on a similar idea! should we give up?"

If nothing else, seeing that other people are pursuing a similar idea is GREAT -- it's a confirmation that the market probably exists for it.

If nothing else, seeing that other people are pursuing a similar idea is GREAT -- it's a confirmation that the market probably exists for it.

Well I agree that the converse is true—no competitors is definitely a red flag. But having lots of competitors in the startup space doesn't necessarily mean there's a market for it, quite often it's just something cool that geeks are into but may be a small winner-take-all market that's already been won (eg. Twitter/Facebook clones).

This is right on the money. There will always be someone to compete with, and that competition does nothing but benefit the users in the long run. Even if you manage to best your old competition, someone new will eventually come along and challenge you to become better, or replace you because you couldn't.

Our main competitor landed a $5 million A round (we are bootstrapping and have no intention of raising money), but we still pull in $1500 a month in donations. It's not "a hell of a lot", but it's a lot when you consider the ratio of donors to purchasers. Yes, the smaller business can still do very well!

What a great post.

Software is used by people who want to solve a problem. Big, big companies can bring connections, brand recognition, money and other intimidating resources, sure.

In the end, though, people use the software, not the brand. No amount of money can replace the value of genuinely understanding and serving the needs of the people who use what you make.

In a software matchup between guys who live and die by their ability to make and sell software vs. guys who sell rubber and plastic sewn together in sweatshops, you can call the winner before you even see the fight. My hat is off to Jason for understanding the value of his company's position.

It is even better than that. Nike's core competence isn't shoes, it is marketing an image of sportsmen as an attractive lifestyle. If you make something for that lifestyle, their core competence is marketing you. That is why sales doubled: "serious sportsmen use software" blasted out of their megaphone makes sports software as a category instantly more valuable.

Entirely true! It's hard to argue with the validation of guys with money.

This is precisely why I enjoyed hearing our main competitor received $5 million in a series A. It instantly validated the market, and it will do nothing but create opportunities for us.

Since our software is fitness tracking, that same good news applies to RunKeeper as well! MapMyFitness, no matter how much money they get, won't be able to keepup with small, agile development teams like FitnessKeeper, ridewithgps, CycleMeter etc.

At least not in all niches.

Logistics is often forgotten when core competencies are listed.

I'm not sure about Nike, but generally in fashion/retail the key to success seems to be a combination of brand management and strict control of logistics chain. Obvious cases: H&M, Ikea.

The author makes a good assumption. Nokia did something similar recently with Nokia Sports Tracker. It was one of the most popular Symbian apps ever but was killed because it was never a priority to them. "After two and a half years of operation, the Nokia Sports Tracker beta service was closed on June 30, 2010" http://sportstracker.nokia.com/nts

The author shows insight. The key thing that he realized is that for Nike, etc, run-tracking apps seem to be treated as branding tools to help them sell more shoes. In essence, his company is getting free advertising via Nike's ads. As they sell more of their pedometer hardware, he gets new potential customers.

Likewise, this special circumstance makes it a bit difficult to extrapolate from his success to another situation. If the giant arrives and actually intends to wrest control of the segment from you and profit from it per se, the situation will play out differently.

I really appreciate the plucky nature of this post, but I'm really not holding my breath.

Right now the Nike app is $2.99 and number one in the Healthcare & Fitness section - Runkeeper is $9.99 and ranked 24th.

Yes - Nike really wants to sell shoes, but they really want to sell shoes this app can be a loss leader for them, they don't need to really show a profit - heck if it breaks even they're fine. You really don't want to compete with someone like Nike with an app where they don't need to make a profit. Heck he mentions that they're 14th (actually 13th now) and Addidas is 18th in the section, but thats the free apps section. Again Addidas doesn't need to make a profit with their product when they are really making their money on shoes.

As far as I can tell runkeeper is just an app? eek.

Why compete via the bestseller list when you can compete with your previous sales records? They doubled sales! Who cares if Nike sold more? McDonalds sold more coffee yesterday than every Startup here put together has paying customers, but that doesn't make anyone less successful.

Did their "sales" double? or their users/downloads? The author likes to conflate downloads of their free app and their paid app. I went back and looked at the previous post - when their "numbers" doubled. Then they moved from 11 to 8 in the store, now they're at 13.

Now that Nike has a directly competing product at 1/3 the price I want to see the follow up post with revenue numbers after Nike's app has been in the store for more then a day.

I see no reason to believe their conversion rate would change. If it did that would be a nice disclosure, but why are you seemingly so offended by an optimistic entrepreneur? Is there any other way to win?

Wow. They practically just described exactly what happend to me in the last few days of the Ping launch (albeit on a smaller scale).

When Ping launched I had a 3-month long solo developed music app that NO ONE knew about. I thought surely, I'm screwed, especially since Ping was almost identical to my app (Like.fm) when it was announced.

Thankfully the hype and the underwhelming Ping launch got people to think about what such a service done right should look like. Next thing I know I've actually got users :).

And like Nike apple is just focused on boosting value to its store, and selling more songs. But I can integrate with everyone, not just iTunes, and deliver the product true to its purpose (and not some corporate ulterior motive).

Thanks Apple! I might even buy one of your Apple TVs to help you guys out too.

http://twitter.com/#search?q=ping%20like.fm

very recent mixergy interview with their founder: http://mixergy.com/runkeeper-jason-jacobs-interview/

HN: http://news.ycombinator.com/item?id=1641802

I am voting for runkeeper.com for the win. I have a Forerunner GPS thingy in a drawer and use Runkeeper exclusively. Why would I buy yet another electronic thingy from Adidas or Nike or anyone else?

And why would I use one of the big guys' apps? They have ulterior motives and designs on my wallet and I can smell it. I'll stay away.

Go Jason.

You should try using the forerunner with our site, http://ridewithgps.com - runkeeper, cyclemeter and the rest are definitely cool, but if you have a nice GPS watch you can avoid having to carry your phone. Though, if you like carrying your phone on runs then heck yeah, use runkeeper/cyclemeter/whatever app and sell the forerunner. Oh, and bug whatever mobile app to allow uploading to our service! There is lots of room for cooperation in the mobile fitness market, and I am excited to see how it all develops.

I say that

Great response. You can see how much Nike (and maybe Apple) cares by reading the web site for the Nike+. Their support forum goes seemingly unread, bugs and problems remain unfixed, their API cryptically changes, etc., leaving users to their own devices.

Nice post. I haven't used Runkeeper on iPhone, but on Android is "big and slow-moving" just as he says Nike is. Endomondo on the other hand is small and fast and seems to do all the same stuff. Interesting market segment to be in, I'm sure we haven't seen the last of the good ideas here.

Great to read the story and interesting lesson about competing with giants.I'm a bit puzzled about one part of the post

>>Then, in June 2009, Nike finally did show up, coming pre-installed on every iPhone & iPod Touch. Unfair advantage, right?

afaik the Nike app was not pre-installed (by Apple or AT&T) on any iPhone. Am I mistaken on the facts or did I misinterpret the post ?

[edit] Thanks Maxawaytoolong, this is interesting. I'm a little disappointed that Apple did the pre-installation. However, I'm assuming that the pre-installation didn't help Nike too much, because most people wouldn't have discovered the setting and Nike's ads would have equally effective without any pre-installation

It's there, but is hidden until enabled in Settings.

Something else that might not be considered when thinking about the pace of change at a company like nike is that it is possible if not likely that Nike is not developing their own apps, but is outsourcing this to a third party.

That means that it is likely that the app is developed and shipped, and then reviewed on a semi-annual or annual basis.

Runkeeper can keep churning out improvements and new features, while I doubt Nike or Adidas will keep up.

I really admire the way Jason and the team have taken on this problem space.

They react well to customer feedback and it has been a great experience to watch them grow as a user.

I look forward to the next innovations from the team.

Thank you for writing this - I'm facing a similar situation and I think you are absolutely right. Understand users needs, but also try and develop as quickly as possible.

Give 'em hell, Jason!

This is good for now, but, I wont be surprised if they start generating leads and doing affiliate marketing for shoes/apparel.

i've been using RK for a while.

RK pro is ranked #24 in healthcare category, which is impressive for a $9.99 app. nike+ gps is #3 top chart and #1 healthcare.

i think your "part 3" article will be very interesting :)

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