Congratulations! Your competitor just validated your idea for you. Now you know the idea is worth pursuing.
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.
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.