Don't be intimated by potential competitors--that's exactly what they want. Wait until you think what they are doing is going to actually impact your company before reacting. Continue as planned.

Additionally, the competition might not be all that bad for you. They may help flesh out the market for you. You might be able to ride on their press and their advertising dollars. You might get ideas from their products.

Finally, pretty much all good ideas will attract competition. That is the nature of a free market. So it was going to happen sooner or later. The good news is that there is usually room for multiple competitors in a market. And in the low-cost startup world, I haven’t seen any great evidence that bigger teams and bigger money win out on average after you control for the # of startups in each category.