Why do you build a new service when XYZ is already well established in the same space?
Because a big market is already proven to be there and you can make a difference when you build a better solution for customers.
Just a few quick examples: Pulley (vs Carta) and Beehiiv (vs Substack).
Pulley is a better solution for some startups because it’s cheaper and more geared towards early stage startups. If the Pulley founders thought Carta has already got the cap table management market and gave up, the world (e.g. many of the YC companies) wouldn’t have seen Pulley.
Beehiiv is a better newsletter solution for some users because it allows better customization; you can create your own newsletter powered by Beehiiv, rather than becoming one of many users under the Substack brand. It’s like the difference between creating a self-hosted website vs. having a Medium page.
The list goes on; Brex vs. Ramp, or Sequoia vs. Rippling, and so on.
You can definitely create a successful competitor in a proven market with a strong incumbent. But to do so, you must know the ins and outs of the target market. For instance, the Beehiiv founder helped create Morning Brew, so he and his team definitely lived and breathed the newsletter business.