Who Cares If It's Been Tried Before?
When Dropbox launched, there were at least half a dozen other "online storage" businesses in existence. The Apple iPod entered a market litered with crappy MP3 players. Google was famously the Nth Internet search engine. Stripe launched into a market crowded with Braintree and Paypal, and before that Authorize.net and others. Uber was not the first way you could order a taxi, although their spin on black cars was unique. Facebook was yet another social network in a market "saturated" by Myspace, Friendster, Orkut, Bebo, Hi5 and others.
Some good ideas have a lot of bad implementations before someone comes in and does it well enough to win big.
Every large market, and every good idea, will have half a dozen others who are digging around the edges of it. Many of these companies will be doing something similar to your own idea, or will provide a service that at a high level sounds similar. In some cases these companies will win if they have a superior product or an unfair advantage in distribution (think Microsoft bundling browsers with their OS). In a lot of other cases, the market is still wide open even if at a high level it seems crowded or busy.
A market that is perceived as crowded can actually be quite empty. No one is really providing a great product or service. These crappy competitors are getting some customer traction because the market needs a product similar to what they have. But they have not built anything good enough to defend against the next young Google or Facebook.
Remember, just because someone has tried it before doesn't mean you can't make it work. Just because someone else is doing it, doesn't mean you won't win. You need to ask yourself is the competitor led by great people who can fast follow? Is their product and brand really strong? Do they have unfair or proprietary distribution? If the answer to these questions is no, then you may want to ignore the naysayers and go for it.
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