How do you compete when others have more resources than you?

Your instinct is spot-on. The "someone bigger could build this" argument could apply to almost any startup. While resource advantages exist (especially in AI), startups succeed through:

Speed and focus that larger companies lack Better understanding of specific user needs Superior execution and user experience First-mover advantages in building relationships

Many successful companies faced similar concerns early on. In AI specifically, some resource considerations are valid, but numerous startups have found ways to compete effectively despite this. Consider asking your friend more specific questions about the exact advantages that would prevent you from competing, and explore ways to position your product or form partnerships that address these concerns.

Have you considered that he was just being nice to you, as he was your friend?

I think he was trying to tell you that what you did lacked any ability to differentiate yourself with and grow. Which just means that your project was a guaranteed failure as a startup.

    > because others have more resources and could build this in no time

You are getting bad advice.

Lots of things that other big corps can build because they have more resources. But guess what? They don't. Because big companies have their blind spots, they have their roadmaps, they have their product teams that are focused on the things that generate revenue, they're slow to move and slow to innovate.

Lots of small startups end up getting acquired by larger entities because the small startup can pivot faster, adapt more quickly to shifting tech, and simply move faster. As a small startup, though, you need to be able to do at least one thing 100x better than the rest of the field.

Startup I'm at right now started with a calendar scheduling web app -- anyone would argue that space is oversaturated. Yet it did one thing that was absolutely unique and is thriving.

Keep at it and figure out what it is that you can do 100x better. It just needs to be one killer feature that solves a real pain point. Don't worry about larger corps and competitors; they won't care about your feature until you're far enough along that they're feeling churn.

In my case, I built a product specifically designed for a niche audience, an area that larger competitors overlooked. As they scaled up for the masses, I focused on solving a specific problem and engaged directly with users.

What I’ve learned is that small teams with fewer resources can win by moving fast, being hyper-focused, and offering something personalized.

It's not always about having the most resources; it's about using what you have in an efficient and creative manner to carve out your own space.