As others have commented - competition is good. Every time I find out about a new competitor to my niche software product I break out into a sweat, but my sales

As others have commented - competition is good. Every time I find out about a new competitor to my niche software product I break out into a sweat, but my sales never went down yet. I would be more worried if you had no competition (no competition usually means no market). Anyway, I'm guessing the competitor doesn't feel as invincible as you think they are. More staff = faster burn rate. Market buzz = greater expectations to fulfill. Better funded = more VCs breathing down their neck. Geographic advantage = more local companies to poach their staff. I would work out what you can do better (or just different) and focus on that. Maybe concentrate on a smaller market niche than them. But if you really, really, feel deep-down that you have lost already. Then you have. It is a self-fulfilling prophecy.