Great post, Aaron, and solid advice to overcome a potentially devastating adversity. From a similar experience, I can tell you that in my book, there are only 2 rules to fight such a Goliath:

1) Rule number 1 - DON’T PANIC

2) Rule number 2 - NEVER forget rule number 1

30 years ago, my AI company, International Neural Machine, developed a neural network OCR (Optical Character Recognition) software. It was very fast and extremely accurate at converting scanned pages of text into a Word file. And our “NeoroTalker” s/w was especially good at processing low-resolution fax pages.

Of course, we had a few established competitors such as OmniPage or TextBridge from Xerox. But since we didn’t use a bloated rule-based approach to character recognition – our code was small and compact.

Soon enough, our s/w boxes were carried by giant distributors such as Tech Data - but we had even more ambitious distribution plans in mind. So, we approached Microsoft.

We offered to bundle our floppy disks with their Office boxes – for mere pennies a pop. The plan was to make a killing by the sheer volume of Office packages being shipped.

I still remember our bewildered looks at Microsoft’s “official” response to our offer. They said: we like your s/w and will gladly distribute it with the Office. However, we will CHARGE YOU $1 for every copy we ship…

On the one hand, in some way, we were flattered by Microsoft’s arrogance. On the other hand, our cash reserves were non-existent at the time. And the VC industry was not as generous and as forgiving 30 years ago - as it is today…

So, we passed, but a few weeks later, Microsoft announced that they will offer free OCR s/w with their Office. And to add insult to injury, their s/w was coming from our sworn competitor…

And this is where my 2 rules for fighting the Goliaths came in handy. We decided to port our compact s/w on embedded devices instead of PCs – because we could, and our bloated competitors couldn’t.

Soon afterward, our OCR was successfully running on a simple ARM processor, and we licensed it to a Swedish company, C Technologies, that was selling “CPen” devices across Europe. It was a pen-like, battery-operated scanner, allowing you to scan the business card and populate your favorite Contact Manager with the scanned data. A few years later, C Technologies even received the Product of the Year award from the EU…