If your biggest competition is an un- or under-funded, not yet widely known or used startup, you've got bigger problems than that startup. I find it amazing that startups will consider other startups their main competition, when the reality is both startups need to focus on the larger untapped market rather than think that each other is stealing each other's non-existent business.

Another way to put it: If the market is really that small that one small startup can take away business from another small startup, then you don't have much of a market at all, and you should find a larger market.

Anyone who goes to such extents to snipe a startup really doesn't understand what it takes to gain market traction.

But it sounds like in this case, one startup wasn't really looking to snipe another startup, but rather capitalize on the press that would (potentially) be generated from that startup's launch. This happens all the time in other industries. Whenever Apple launches a product a myriad of other companies piggy-back on the press Apple generates. It's smart marketing.

It would only be underhanded if the startup was making false or disparaging claims about the other company in public. And that's borderline libel / slander anyways.

> Another way to put it: If the market is really that small that one small startup can take away business from another small startup, then you don't have much of a market at all, and you should find a larger market.

This is true but not the entire picture.

It is extremely common for the VC community to de facto agree on a leader of a space. Markets are frequently interpreted as winner takes all, despite the reality that almost none are. Once a winner has been agreed to it can be extremely difficult to raise funding in the same space.

Really? There's equally valid conventional wisdom that's just the opposite - that it's easier to get funding if you do a slightly-improved knockoff of an existing popular startup (consider all the Groupon knockoffs).

Name five...

Your argument implies the startups are competing for customers: from the description they are competing for investors; in fact, in such a scenario, your biggest competitor is pretty much always "an un- or under-funded, not yet widely known or used startup". Investors are a group of people who are difficult to market to, and can also be difficult to cold call, so it seems like this technique of "sniping" a pitch at a semi-closed venue seems like it would be uniquely effective. (Even the ads they were supposedly running: end users would not be looking up stuff related to 500 Startups; the ads are almost certainly trying to catch the eye of potential investors looking for interesting companies.)

Lets boil this down. The only thing this competitor did was;

The competitor then bought ads online for anything related to 500 Startups, to leverage the increased press surrounding Demo Day and the latest 500 Startups batch of companies.

This is marketing 101. Go where the action is. I find nothing dirty or underhanded about this and its a far cry from what Uber was doing which was directly impacting their competitors.

It's definitely underhanded and classless. It would be like a MSFT infiltrating an Apple demo and trying to upstage Tim Cook.

But, at this point, we're arguing values and philosophy, and nothing's going to come of it :)

No, it's not like that. The only thing the OP indicates happens is the infiltration part, not the upstaging part. I'm pretty sure MSFT sends people to Apple demos whenever possible.

I agree with you and the GP: It is Marketing 101. And that, unfortunately, is often underhanded and classless.

This move is unethical for a very clear and straight forward reason. Demo Day at 500 Startups is "invite only". The YC company was not invited. People are invited for very targeted and strategic reasons. Information will get out, intentionally via press and investor conversations, but the timing is a critical factor.

The group is larger, but the logic is parallel to pretending to be an investor to hear a competitive startup pitch for capital, or sneaking into an internal team meeting at the competition.

It is a move without class.

This is the right answer. Right now it's quite far down the page, so I hope OP sees it.

Think of it this way, OP: if there was nothing wrong with it, then the person doing it wouldn't mind being outed, right? So, out him or her and see what happens.

> "Founder's tactics crossing the line?"

No. Demo days are where you share semi-publicly your product with investors, other startups, and hopefully media. What is to stop an investor, or other startup, from sharing your demo with anyone? This might even be considered good form, for someone to give the YC alum a heads up, that "Hey, XYZ, is going after your market".

In terms of keyword marketing, I think this is a well known and understood tactic. If your idea/startup is so fragile that someone can market a couple keywords and kill your company -- you have much BIGGER things to worry about!

eh... doubt it had much impact on anything other than just annoying everyone who spotted it. The companies will shake out as they execute.

The bigger question is the DBA (don't be an asshole) philosophy. If you're a fan of mercenary mantra with no rules of engagement, so be it... but you're a jerk. If you win, you get to be a rich jerk. Otherwise, just a jerk.

I recently met the CEO/Founder of Stripe - he was awesome, crushing it, and talked at length about doing the right thing by his people, the world, etc. He's a rich guy that won by kicking ass - not by screwing with other people.

So if you like to be a jerk, create animosity, and contribute to the general consensus that the Valley is about F'ing with each other... then rock on. Otherwise, why not follow the DBA rule and focus on winning investors and customers the old fashion way - being awesome.

I'd consider it extremely underhanded, but it's definitely legal. Actually, you should be thankful that you saw this now -- you know what your competitor's values are, and what they may do in the future. I've been at a few startups across a few industries. In some, the competitors didn't care about each other, and everyone played by themselves. In others, we saw tactics similar to what OP describes.

You now know which bucket you're in. Plan accordingly. Don't put on your tinfoil hat, but keep this in mind going forward.

I'd also recommend bringing this to 500startups. I wouldn't consider them at fault here, but they should know that this happened to one of their companies. They should see if there's anything they could do in the future to curtail this. "Demo day" startups are at the most vulnerable point of their lifecycle, and something like this adds unnecessary complication.

It happened to the 500 company - they didn't do it :) And it wasn't YC... just a YC Alum (they should know better)

Unless they were lying about their competitors or spreading malicious rumors I would say this is fine. Welcome to business, people are going to claw their way to the top with whatever legal means they can. I would think that, if anything, 500 startups should do more diligence on the people attending their pitch day to prevent this from happening.

Doesn't sound too dirty and not that similar to the Uber matter. By "sneak in" you mean "got invited"? And advertising against "500 Startups" doesn't sound very effective.

500 Startups Demo Day is hardly invite only - I attended once and had the option to buy a ticket to attend demo days. The slides are publicly available anyways. Unless they were impersonating you when talking to investors this is irrelevant.

Buying Adwords on things related to 500 is definitely aggressive, but well within the lines of fair play. If this is actually hurting your startup then both companies need to reconsider the size of the market they are in.

Seems like a vague story. Nothing is obviously underhanded even if true. Moreover, it's not actionable in any sense.

It's too early for customer impressions to shaped by bad press, not important enough to put off early hires and not relevant to investors.

More importantly it sounds like just a he said / she said type of thing.

My guess is this will get killed. The owners of the site don't want it to devolve into complaints for or against existing companies when there are other forums to do that. (If it were allowed, that's all people would talk about, and it's not a customer service or investor relations site)

If it had been worded something like "Startup A is an alum of Incubator A and they sneaked into Incubator B's Demo Day in an attempt to snipe Startup B's investors... yada yada yada..." it would be only slightly more vague than it is now. I don't see why naming "YC" and "500 Startups" makes it much different. The actual companies were not named. My guess is this thread lives.

No - it will only get killed is someone identifies or guesses the YC company or founder.

Sorry, I accidentally downvoted you

Perhaps the recommended action is to write a blog post, perhaps with some more substantive evidence, and then to link to it.

Well, one of YC's guidelines is "don't worry about your competitors". This is a guideline for practical rather than moral reasons. Worrying about your competitors wastes your time and energy.

So (dodging the moral and legal questions), this behavior may be counterproductive.

I'm a big fan of the "don't worry about your competitor" mantra. But at the same time, it'd be silly not to pay attention and to learn from your competitors failures/successes. Doing so, IMO is quite productive.

You can pay attention but not worry. The two are closely related but not the same thing :-)

Totally agree. I think we're saying the same thing (that was my intent anyways :|

Sorry, I thought you was conflating worrying with paying attention. My bad!

Completely agree. If this is true, I'd never want to invest in the bunch of muppets who were wasting time on this.

Conversely, it's probably now RAISED the profile of the competitor, made them look like more a threat than they really were.

Maybe I've just nailed it, and it it's secretly the 500 Startups company who're behind it. If they are, that's pretty clever.

Bad for the company - good for the investors though - it's probably a wash.

No one here is going to call this crossing any lines. Ask Airbnb, Uber, etc.

Will he make more money? Lets see what happens..

Money earned is not a measure of morality.

It's a hack when a YC company does it, but it's a dirty tactic when anyone else uses it to the detriment of a YC company.

This is, after all, a site sponsored by YC.

That being said, I'm surprised this conversation wasn't junked