Pretty wild how much "just execute better" posts there are, one wonders if its the common response to a situation like this, from this community, and what that says about trustworthiness in general of YC "founder" types!
Being copied sucks, and I agree that it should be looked down upon culturally, but I think "just execute better" really is the right answer. It's better for consumers and ultimately better for entrepreneurs too.
I've also had a funded competitor copy our business model and attempt to compete.
I sued the first one, the other one we outcompeted in spite of a 30:1 funding discrepancy. Regardless, these things are distractions and some funded bunch of cowboys destroying the market for you when you've spent a long time to get established can be a real problem. Even if they go under they'll do a lot of damage, not just to you, but also to their customers and possibly the whole field as a consequence of their activities. For instance: to offer the product for free because they're burning investor cash.
If you're just saying that an API or a website is copyrighted and can't be ripped off verbatim, that sounds more reasonable to me. But still, it's trivial to copy but then make minor cosmetic changes (especially with AI). Then we're back to a very troublesome gray area.
The fact that they infiltrated the OPs comms channels certainly doesn't make them look good.
You may have a board seat. And if you don't like what the company is doing your most powerful move is resign from the board. Another option is to force a shareholder vote, but if the founders still hold the majority (as they should, at this phase) that will be overruled.
I'm freshly amazed by the lack of basic corporate law knowledge in the context of HN, this is really something that should be known if you partake of conversations like these.
I agree they should respond appropriately, but depending on what happened that response may not satisfy you.