Should I continue with my idea (another startup is already doing it)?

Recently I had this idea about a website and I have a passion for it. After doing a lot of research, I know exactly what I need (design, developers, management, etc.) and I have had a few discussions with my developers of what exactly I want.

But I have just found out that a new startup company is already doing my idea. I didn't come across them during my research probably because they just barely started up.

They do a pretty good job on their website, but I can see a lot can be improved, and a lot more can be offered. With that said, they have a strong team with more experience and very good funding.

So should I proceed with it or should I discard the idea while its still early?

Yes and actually if you didn't have any other competitors I would have said it is because your idea wasn't good enough. It is OK to have more than one company offering the same type of service or product, it would be very bad if that wasn't the case.

What you need now is to find ways to differentiate from your competition and make sure your product and service are awesome so your customers keep coming back. Regarding them having a strong team and funding... well, that is a huge advantage, but it doesn't guarantee immediate success, I am a believer that consistency always wins!

Yes, try it or you'll regret it later.

I used to be in the car business, (auto dealership) and can tell you one thing about competition, it is great. In the car business, most dealerships want to be around each other, as a matter of fact right by each other.

Many first time entrepreneurs are turned off by the idea of competition. Its overwhelming striking out on your own to form a new venture. But this is how I approach it.

Assume you are living in a town with only one tanning salon, and they have 100% of the business. You are worried that opening a new tanning salon might be a bad idea, because the existing shop has all the business locked up. The opposite is true. If you open a business, that offers exactly the same then the only business that may (and that usually is not the case) lose is existing tanning salon. You mathematically would be entitled to 50% of the market share.

Bottom line, business is never a zero sum gain.
There is always room for competitors.

Plus, if it an internet application its tough for a first timer to really grasp the size of the market out there.

What i would do:
1. Continue with the project.
2. Take a long hard look at all of your competitors. Borrow ideas from them that work, and innovate upon them, making them better.
3. Sell service, reputation, support and customer satisfaction.
4. Provide a better user experience. Lets face it, the fact that many people use macs is only mainly because of the user experience (something the Linux folks did not figure out for a while).
5. Be competitive on pricing, but do it carefully. You dont want to start a price war and hurt yourself and competitors at the same time. Dont bring down the market. Try to offer promotions. Even price higher, if you offer a higher level of product.
6. Monitor your competitors growth.
7. Build a restful relationship with your competition, they are the best potential parters for your venture. Never bad mouth them, this is bad practice. If you compare yourself to their service make sure to do it with respect and its usually best not to do it by name.
8. Consider conversion pricing, where if your customer comes from the competitor they get a different level of pricing.

Last, never go to bed sober. This alone has been the key to my success.

I suggest you read through the responses to this question. It has some really good answers to all of your questions.

If you have a passion for it and you can see that you can improve on their product then you have a good chance. Especially if as you mentioned they are also a new startup.

Experience and funding is something that Microsoft also has, but Google was able to become king of search.

If you have passion and can see where something can be improved and... you are willing to stick it at for a few years you have a good chance of making it work.

I agree with xiaohouzi79, keep at it. If you would have said that there are already 10 other competitors in the field, I may have had a different answer. Before you move any further, perhaps you could do a SWOT analysis; evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in your project. If it looks like they may be heavy competition, you could always look at niche markets; start small, learn as you go and then expand.

For me, I would say the key is passion. If you do have a passion on what you are planning to do, do it, it will shine as long as you have passion on it. There is only 1 competitor out there and it is also new in the market.

Being small means you are agile. Being independent (not funded) means you don't have to rush for profit like your competitor. You have time to focus on core and do things right.

I suggest you to ready REWORK from 37signals.

My recommendations: Just do it... You will never know what will happen if you never try...

I am in the similar situation... I have the idea but there competition exists in the marketplace already.. But now I'm working hard to produce the product out... Although no income yet, but I feel as long as I willing to work for it... Someday my work hard will definitely be pay off... If I were to stuck at there thinking this idea has been done, that idea has been done, I don't think I will ever start my first step into the unknown world...

Did Facebook not bother because MySpace appeared first????

Actually, the fact that someone else entered the market validates your initial assumption - that people are looking for a solution. Take a close look at how they approached the market and learn from it - perhaps they have done some legwork that could removed an iteration / pivot or two.

Ideas you are passionate about are ALWAYS worth it.
You just have to try doing them. Otherwise, what are you living for?
Besides, that's how most startups have started.

Steve Jobs sells dreams, not products, and he's doing pretty good with it.

I have tried and failed with many of the things I've been passionate for. I've succeeded with a few and I've never regretted about anything. You can't be too young or too old for a dream. Just be yourself, be unique and work hard on it.

Find your dream job and you won't have to work for a single day afterwards.

Are they making money? Can you still make money? Is making money your goal? If you got three "Yes" -- go for it!

Hi you can continue doing it and i personally feel you need to make it :)

Actually i went through the same situation during my start up and we are going to launch it in this month but i missed another one which is also doing the same thing

You can take the example of myspace and facebook and other social media companies which sustained in the competition and went to that place.

Just differentiate with that present one and try to make sure that you market this properly :) and also make sure that you concentrate on things which they are not concentrating and also try to show this in your website so that it will be easy for users to differentiate with the existing one.