And if USCo has 10,000 paying customers, you know the market is big. Big enough that you can make a nice living there even if you aren't the dominant player.

The question is, can you become a significant player in Europe before USCo gets there? Local knowledge is a big edge for you; sometimes US companies find it difficult crossing cultures. That gives you time to get established, at least in your own country, and maybe in all of Europe.

To me, it sounds like you need outside money to scale quickly. If you can get it, definitely double down. If you can't, though... sooner or later USCo is going to show up in force. If you haven't grown by then, it's going to be difficult to get any more customers, and you'll probably slowly lose the customers you have, and your company will die. So if you can't get the funding to scale (or can't do it self-funded), then I'd consider refocusing.

How have you been building something for months and only recently discovered an identical competitor with millions in funding and 10k in paying customers?

Surely you did research before starting and after starting have been keeping an eye on developments in the industry? Or no? Without understanding how you operate, it is hard to understand whether to recommend a double down or pivot. Thanks.

The existence of the US company reduces your market risk. If you have a handle on technical execution, then technical risk is also low. That leaves sales and scaling. If you can grow quickly in the European market, you could even be acquired by the US company for customers rather than technology. Or vice-versa. VC funding is no guarantee of long-term success or healthy management teams.

I now really do think this will be a "sell fast and scale fast" play on our end, tech execution should not be an issue.

Another example is that there are dozens of customer service software products across all price ranges and target business sizes.

With that said, consider this: your product is not the sole basis for competition in the market. Your product is also not (hopefully) static and unchanging. And also, "the market" for your product can most likely be segmented in many ways, some of which would likely allow you to avoid head to head competition with this other company.

My recommendation is that you read the book The Discipline of Market Leaders which does a good job of explaining the ideas behind different vectors of competition: product, price, operational efficiency, customer intimacy, etc.

Is it even possible to focus on Europe whilst the US company (hopefully) focuses on the US (for now)?

Absolutely. In fact, if the other company focuses on the US to exclusion, you could focus on Europe, Asia, Africa, South America, etc. and "encircle" them. One of the big Japanese heavy equipment manufacturers famously did something like that to Caterpillar. For more on that, see:

https://www.google.com/search?num=30&q=komatsu+encircle+cate...

How do you know if you are breaking copyright or patent law? How do you figure out the jungle of patents? or patents that are too general and thus similar?

If the competitor is using PHP, and I use Python is that a different product in the view of the "patent"?

Well, copyright law is easy... if you haven't seen or copied the code of your competitor's product, there's no way you could be violating your copyright. Presumably you know if you've done that or not.

Patent is different, and I don't know that there's any easy answer to that one. But realistically speaking, anything you do has the potential to be a violation of someone's existing patent, so if you try for 100% upfront assurance that you're not violating any patents, you'd have to constrain yourself from ever building anything.

If you're really interested, you can search the various patent databases for patents owned by known competitors, but a lot of people avoid doing this because of the rules that make damages for "knowing patent infringement" stiffer than the ones for "accidental" (not a legal term, but you get the idea) patent infringement.

If the competitor is using PHP, and I use Python is that a different product in the view of the "patent"?

IANAL, but as I understand it, the answer is "not necessarily". I think if possible patent violations are a big concern, you have to just bite the bullet, hire patent attorneys, have them research the existing body of patents, and give you an opinion. I've never done it, but I'm guessing that doing that is not cheap. :-(

In my, admittedly limited, experience, when a project carries on regardless, usually it means the project managers can use weaknesses of the new competitor to further improve their product.

In my one experience where they canned the project as someone had already beaten them, I remember noticing some time after that the competition were no longer operating.

On a side note, I'm working on some smaller scale SaaS side project pieces, I have no idea if I have any skills that could be of use but let me know if some assistance could help you out.

First, forget about being "branded", "labeled", "be seen as", etc. These things are totally irrelevant for your business success.

Now, I would keep building on your current product, without radical pivots. But would not keep building the exact same product. A company with 10,000 paying customers and millions in financing will most certainly alienate some segment of their customers. While this might be rational for them from a cost/benefit point of view, it might be rational for you to target that exact segment they are alienating and build a successful and very profitable bootstrapped business.

If you need some help figuring out what segments they are alienating and would be a better target for you, email me (email on my profile). I have good experience in this kind of strategic analysis.

Good luck!

I wouldn't care about "copycat" criticism either. Is Sainsbury's a copycat of Tesco (or vice versa)? Is Toyota a copycat of BMW?

Of course not. There are virtually limitless angles for differentiation, one of which is geographic. Do you know why there are so-called "European copycats" of US startups? Because those US startups can't focus on every market at once and focussing on the home market at first totally makes sense. Just as it then makes sense for other companies in these regional markets to try and fill that gap.

Furthermore, if you have something they don't have in terms of feature set or can demonstrate an ability to innovate they could make a job for you. Perhaps, 'Head of EU xxx'.

The problem with VC-funded competitors is that they can afford to lose money on every customer and live off investor money (for a while, anyway). You can't afford that.

Doesn't mean you shouldn't do it, especially if you can do it in market they're not actually doing anything about. Just something to keep in mind.