I came up with a great idea for a webapp, I've been creating design docs, project specs etc. Everything was going well until I decided to google my idea, which to my surprise came up with one result nearly matching my early startup. They are months ahead ad have a moderate following on their blog.
My question is, what's the best way to deal with these sort of things? What I thought was a huge advantage with my startup was that it was one of a kind, now it's seemingly not.
This is the same as with any product
Think of some... laundry washing... liquid... selling... product... mobile phone... Something! Or think of a car!
How many with seemingly same properties are there? Lots!
And do they sell? Hell yeah! Most of them do.
How come? They either target different customers with different income, age etc. Some may be selling due to their past success and brand recognition. Well some may be even selling because of competitor's brand recognition.
How do they differentiate advertising? When product has nothing particularly new or different to offer it's wise to advertise its positively good aspect of it. So you send out a message of positively good info that is validnote.
When is having competition definitely high risk? The larger the market the more competition it allows because each competitor can take a market share that'll provide its profits. If target market is small each share creates too small revenue to be profitable.
Note : Read this book that may help you with presenting your product on the competitive market. How to still make it viable for your product to compete against alternatives.What about you?
The same facts apply to your product. If you think you can differentiate it on any aspect or advertise its positively good quality that could attract customers, than do it. If you get 10% market share it may still mean you'll prosper.
And if you're more passionate about your product than your competition it is likely you will get better.
To add to the excellent answers above:
finding that you have competition is an amazing thing when you think about it in the right way. It means your market is real enough, that other people are excited about it to. You can even use your competition as a form of social proof to investors, the fact that you have competition validates your idea, and your market to an investor. When someone says "We have no competition. We're the only company out there doing this" The first thing that goes through my mind is "If it's such a great idea, why isn't anyone else doing it?.
Your competitor is laying the groundwork for you, and actually doing you the favor of testing out your product for you.
The best thing you can do is acknowledge your competition, and learn from their mistakes. Follow them closely as time goes by, and learn what works, and what doesn't. When you present to investors, make sure you not only bring up your competitor as a potential problem, but present your method for dealing with this problem. If you bring them up, but don't have a way to address them, then you're not going to be received well by investors, but if you don't bring them up at all, and the investors find out about them, you are screwed pretty bad for not doing your own due diligence.
I'm speaking from my own experience here as well. I got through my first funding round (Friends and family), and started my company, and got most of the way through development before I even search for competition, and imagine my surprise when I find six other companies doing the same thing. But it was a great thing I did find them. I was able to look at their strategy, and figure out why none of them were experiencing a high level of success at this point. I've integrated that knowledge into my business planning, and now we're already on track for exceeding all of our competitors in the first year.
An idea is always a starting-point to excel and it does not matter or should not disappoint you if you have a competitor before actually implementing it. Once you become a competitor, you too will receive attention from the market if your products are well build, easy to use, are found to be helpful for users and you promote them well. This basic plan ensures you to stand-out in the real saturated market. I will suggest you to be flexible and value the feedback given by the users/customers. Put simply, the more agile and customer-centric your product would be; the more chances are there that your product will be liked by the dedicated users.
If your focused on a different regional market sill go for it. Best you can do is learn from their mistakes or improve your business with ideas they don't have.
Insights I've gleaned from HackerNews: