An Obscure Competitor is Giving Away My Product

That said, if I were you I would launch a beta, even if its only a private beta, just to get the word out there, that way you can preempt his launch by getting the word out there. See every feature that its not completely necessary to the minimal viable product, cut those and launch.

Bests of luck!

At the same time, your business co-founder (presumably you're the one responsible for the technical side of the house while your partner is responsible for sales, marketing and biz dev) should seriously investigate if there is any merit to the competition's revenue model, and whether it's in your best interest to adopt a freemium model of your own (it may not be).

Given that you claim to have a working paywall model (something that I think many media companies and media brokers would kill for), your content must be a niche of some type.

Attack this problem from as many simultaneous angles as possible (technical/feature-parity, pricing and marketing). If you can learn faster than your competition (that doesn't necessarily mean release features faster -- "learn" is the keyword here) from your paying customers, then you should be in a much better position to stay ahead.

The fact that you said that the "[...] products will be functionally identical once both are deployed and out of beta" is a red-flag to me that you either haven't done enough analysis of the competition's feature set, or if you have, then you need to increase the tempo of customer feedback to incorporate into your product.

Perhaps you will say that as soon as you deploy new features based on your customer learnings, your competition will copy you. If that's the case, then (from a marketing angle) you will always be first to deliver features and should be able to please your customers faster, hopefully resulting in greater adoption (until you saturate your market).

I smell a lot of fear from your post. It may help to reframe your situation in a more positive light, since imitation is usually the highest form of flattery, while competition is sometimes used as a signalling mechanism (to yourself and others) that you picked a potentially profitable addressable market.

tl;dr

1) Congratulations! You're validating your business model and market with actual paying customers and (now) competition.

2) Figure out how long each of you can last if one of you gave the content away for free. Consider freemium for your own offering (teaser content?).

3) Increase, analyze and act on feedback from your customers faster.

4) Hire better technical talent.

Sorry I didn't answer your original question of "What do you do to push through it?" Hopefully the suggestions above will help to combat the dejection and loss of motivation.

I don't know if this helps, but for business users, paid, stable, reliable-support, above-board businesses are worth real money. Red Hat makes essentially all their money offering support on a product they themselves make available for free.

Also: your competitor is not copying your content, is he? Is he able to code-up the platform AND pay for content creation on a free product?

Work on other forms of stickiness. If historical data can be presented in a useful form, then people will less likely to leave because it means leaving their old data behind.

Another form of stickiness is friends or social aspects.

You have your users AND they are paying. How sustainable is a business where he absorbs all the costs and doesn't bring any revenue in? How much support can he continue provide to free users? Especially if they get into the large numbers.

You are treating it like a business, he is treating it like a project that he can drop at any time.

In my eyes, he is collecting your future customers for you. When he spends to the bottom of his pockets and folds, his customers will have to choose between your service or no service.

Hold on, keep focused on your lovely customers. Give them amazing service. Go above and beyond for them. Stir up a little press of your own (make your stake on first to market a little early)

Don't get caught up in looking over your shoulder.

I spent a while on the front-end so it feels more like a 'product'. That actually had a powerful emotional effect on me; now I look at it with pride. I know it's just a few lines of CSS and big pretty fonts, but it just 'feels' like its real now.

I got to watch a user see the site for the first time yesterday and watch him interact with it. It was a nice moment.

My hope is that, even if this guy launches a product before I do, that we'll steal the spotlight due to our size and existing customer base. We can also offer support and on-demand customization (for the biz customers).

Now I just have to hope that people will actually pay for this! They're paying for written content, so I can't imagine that they won't pay for this.