In startup land the only competition you should worry about is a guy named Maslow. He has a pyramid that will fight against you pretty strongly when you work 16 hour days under your desk in social isolation without result.
You compete, but not in the pure sense of against another company. You compete more strongly against forces that may not face others, like sociological needs, acceptance of short-term poverty, and etc.
A friend of mine supplies all of the sand for making cement in his area, thanks to perfect storm of regulation shutting down his competitors. With a grin he is fond of saying "A monopoly is a terrible thing...not to have". I think every business person harbors this fantasy sometimes.
But for innovative products, competition is validation. For you, your customers and your investors. The reason is that innovation brings some risk to the customer associated with adoption or integration. To the investor and innovator this looks like risk of acceptance. Competition eliminates this particular hurdle.
That sounds like a really interesting story. What kind of regulation shuts down sand producers? Is sand environmentally hazardous? Does warning workers about silicosis with sand MSDSes cost a lot?
Agreed on the quote. It's so easy to get wrapped up in your competitors. But if competitors have bad products, that leads to focusing on doing a bad thing just a little bit better, which doesn't lead to a great product.
That's why talking to your customers and focusing on indifference, awareness and understanding are so critical.
It's interesting to note in light of the Garry Tan quote at the top that Posterous recently started a campaign targeted directly at its competition[1]. I think it's a great quote, just trying to emphasize that it's applicable to the early stages but not necessarily the later ones.
Aren't there some areas where this is more true than others? There are dozens of good ideas in online selling/auctions/etc. that have failed mostly because they weren't able to overcome the entrenched incumbent, eBay, but may quite possibly have done well if eBay didn't exist. A similar hurdle faces anyone trying to take on PayPal, or at this point, Twitter (e.g. StatusNet's #1 barrier to acceptance is Twitter's dominance). I would imagine the Gmail juggernaut totally changes the playing field for anyone who was once contemplating a freemium webmail startup as well.
It seems that's a big part of the indifference equation also. If you say "I'm doing X", and everyone replies with "well doesn't [Big Player] already do X?", you have an extra hurdle to get over there: not just convince them it's a cool idea, but convince them you do it better or differently enough than the competition.
Though if he means only the more narrow: don't worry about competitors who haven't actually succeeded (yet), then I agree.
I was at a rock show and before the singer started she said make sure to go out back and get a burger. The placement of the back button in the title allowed me to skip this post. It would have made a heavier impact at the end of the story, "Now hit the back button."
You compete, but not in the pure sense of against another company. You compete more strongly against forces that may not face others, like sociological needs, acceptance of short-term poverty, and etc.