Ask HN: Irrational Fear of Competition

I do some work for a [very] small web development company. A few years ago, this company built a custom web application for a local business in a small niche market (estimated 600 US and Canadian companies in the industry). Since then, we have converted it into a subscription-based product to sell to the rest of the companies in this small market. Many businesses hate the existing solutions (there are only a couple) and are looking for something better.

So far so good, but I think they're doing something wrong.

If a company wants to try out this software, they have to call our sales guy. Mr. Salesman will get their account set up and hand them the login info.

There is no product website. There is no signup form. They market this application from a Twitter account, Facebook, and a blog. There are also no plans down the line to build a website or signup form either.

When I asked why, in this day and age, we don't have these web app basics in place, and why they aren't even a priority, the reasoning I got was something along the lines of...

"If we offer frictionless trial accounts, our competitor (who presumably has more money than we do) will undoubtedly see what we have and steal our features. We'll lose our edge. We would rather screen our customers to prevent that from happening."

They've been on this route for a little more than a year, and you can count the number of paying customers they have today on one 3-fingered hand.

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So perhaps I speak from the position of a young know-it-all, but this sounds to me like an irrational fear of competition. I'm aware that new startups frequently launch in stealth mode, but this isn't exactly cutting edge technology we're talking about.

In my opinion, they have added friction to the process in the hopes that they can keep whatever edge they think they have, meanwhile missing out on easy signups and potentially more paying customers. It just doesn't make sense to me.

Then again, maybe they're right. Maybe that's the only way to survive in an industry this small and I just haven't figured that out yet.