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Entering in competition with a friend... your thoughts?

For a few years, I have been producing an application which complements a number of "IDE-style" tools in my domain. My application is useless without one of these tools.

I have made a handful of sales, got a few happy customers, and collected a half-decent mailing list, but as far as I can tell, my only options forward are:

1. Forget about this application and work on something else, or
2. Extend the product to a point where it can stand on its own and compete with established tools.

Option 2 would be a no-brainer, except that one of these "IDE-style tools" is produced by a friend of mine, and by extending my product, I would be entering in direct competition with him.

For a long while, I didn't think I could pull off Option 2 so it wasn't really an issue, but my programming skills have improved and while playing around, I developed a working prototype with the key feature set, so I know I can deliver a decent tool, and even produce a number of unique features I have been longing for as an user. In other words, I am ready to enter and compete on that market.

On the one hand, I don't want to damage my relationship with my friend, but on the other, this is the only way forward for that application and it has been a frustrating experience to earn peanuts for a fairly complex utility when other tools on the market generate sales in the 7-8 figures range.

What are your thoughts on the matter? As entrepreneurs, what would be your reaction if a friend of yours decided to enter your niche with a competing product?
Sylvain Galibert Send private email
Saturday, November 16, 2013
 
 
I am on friendly terms with several of my competitors.

Why not talk to him and let him know you are thinking of joining him in the marketplace and see what his reaction is.
Scott Send private email
Saturday, November 16, 2013
 
 
"what would be your reaction if a friend of yours decided to enter your niche with a competing product?"

I would be mad if they stole ideas I had for things that had not been released, but I was planning to release them, things that I had told them in confidence.

However, there have been ideas I had that were good but that didn't fit my product or weren't high on my priority which I have mentioned to one of my competitors and he has sometimes said, "That is an interesting idea, do you mind if I steal it?" One time I said, "Well, I am thinking of doing this so I would mind." and he didn't. Another time I said, "Yeah, go for it." and he implemented it, and I later copied it back.
Scott Send private email
Saturday, November 16, 2013
 
 
As Scott, said, talk to him.

Really only you know how good and valuable a friend this is.

One question to ask, what would HE do? Your deep, gut honest feeling?

I'd have thought with really close friends it would be some fun rivalry. Sounds like you're not that close?



AC
Reluctantlyregistered Send private email
Saturday, November 16, 2013
 
 
"I am on friendly terms with several of my competitors."

Sure, but isn't a friend moving in on your market to produce a competing product a bit different from just befriending existing competitors?

In a market with millions of players, a competitor is just a colleague, but in a market with half a dozen players, a new entrant isn't necessarily quite as welcome.

"I would be mad if they stole ideas I had for things that had not been released, but I was planning to release them, things that I had told them in confidence."

I have of course no intention to steal any confidential idea or use implementation details he has shared with me over the years, and my tool will certainly not be a clone of his.

That said, his software was one of the first introductions I have had to the domain and I have worked with it for over a decade, there is no helping the fact that my perspective on the subject is very much influenced by his.

"As Scott, said, talk to him."

Talking to him was the plan, but before I do, I would like to get a few different perspectives. 

Oftentimes it's not what you do, but how you present it and I don't want to come across as some kind of backstabber.
Sylvain Galibert Send private email
Monday, November 18, 2013
 
 
"Sure, but isn't a friend moving in on your market to produce a competing product a bit different from just befriending existing competitors?"

Sure.

I've had that happen too. Something about being successful just makes people you know want to do what you are doing. It's odd.

But also as a result of being in a market, you will tend to know people who are also interested in the market and over time some of them will naturally try their hand at it, whether or not they know you.

Let me think of personal examples. A guy I am really good friends with, who had NO experience programming, started writing apps in my segment and releasing them. They are really good apps! He also sends me lots of emails during his design process asking questions "Have you ever done anything like this?" and "Which layout do you like better." So he gets free consulting. But he also often tells me pretty interesting ideas, and we have talks about the market in general.

This guy I have no problem with.

I also have some more casual friends and former customers who decided to start writing competing products. Some of these guys are kind of shifty about the whole thing. That is annoying and when I notice it I start avoiding them. Another annoying thing is the ones that are just copying my features outright. I have a previously established competitor who copied a feature of mine and actually gave me credit in his user documentation as the inventor of the idea. That guy I have no problem with. Those who don't give credit don't bother me too much - but this one guy who copied me and then started telling people he invented the idea really annoyed me a lot, and we are now "enemies".
Scott Send private email
Tuesday, November 19, 2013
 
 
Glad you brought this up, counting right now, I think there are at least 5 different people I know who entered my market after they knew me and I talked to them about my work and discussed issues candidly - such as during their filing a bug report. That's kind of a lot. Only one is successful so far with his product being widely adopted. Another has a really nice product, but he is charging the same that I do and his product isn't as mature, so from what I understand he has sold less than 10 copies despite several years of work.

I very recently got an email from an old friend explicitly telling me he was releasing a commercial product in my market and asking me to release some of my top secret algorithms as an open source library for him to use in order to "help give back to the community". That one annoyed the f--- out of me and moved this guy from old friend I hadn't heard from in a couple years to presumptuous ass using BS about community to scam some codez.
Scott Send private email
Tuesday, November 19, 2013
 
 
Thanks. This is exactly the kind of feedback I was looking for.

If he feels the same way as you do, I should fine - I have no intention to rip him off or take advantage of any confidential idea of his (by which I mean nothing he hasn't already implemented a few years ago).  I plan to go in a somewhat different direction once the basic feature set is implemented, as part of my goal is to improve an area that has been neglected by other tools on account of early design decisions and technical limitations as well as implement new features that don't fit his vision of what the tool should do. He has implemented a bunch of features I have requested over the years, but we don't agree on the need for some features, so this is my chance to implement them.

"Another has a really nice product, but he is charging the same that I do and his product isn't as mature, so from what I understand he has sold less than 10 copies despite several years of work."

Good point. It makes sense, established software on the market have  10 to 20 years head start, I can't claim to the same prices as they do for my v1.0.
Sylvain Galibert Send private email
Wednesday, November 20, 2013
 
 
"I very recently got an email from an old friend explicitly telling me he was releasing a commercial product in my market and asking me to release some of my top secret algorithms as an open source library for him to use in order to "help give back to the community".

Wow, unbelievable! Some people are really cheeky.
Sylvain Galibert Send private email
Wednesday, November 20, 2013
 
 
Yeah - what Sylvian said about what Scott said!  Some people are incredibly obliviously obnoxious.

"give back to the community" ... STFU...

Back to the original question -- I think that if you explain it to him the way you did to us -- your product has matured due to X, Y, Z, and you're looking to advance your business, he will probably respect and accept that.

That doesn't mean that it might not change your relationship in some ways.  I may like some of my competitors just fine, but I am still more guarded with my ideas and knowledge around them.  Having had business flat out stolen from me in the past when I trustingly told my good news of a new big account to a competitor who immediately called up a friend at the company and underbid me since I'd also stupidly discussed rates with her (hers were usually the same as mine).  But I digress (I guess I am still bitter, ha).

Anyhow, I would not begrudge you for coming into my market, and if you are a friend I might even toss some business I don't want your  way.  But I would mentally file you in the "competitor" column and that would change some things.

With that said, I am a woman and not as comfortable with open competition as most men seem to be.  In my eyes, I have to dislike someone a little to want to best them competitively.
Emily Jones Send private email
Thursday, November 21, 2013
 
 

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