I agree that if you set out to "beat Wufoo", then you are not going about it the right way, and you'll probably lose. What I worry about is that if you set out to "make the best product for your customers", and you don't believe Wufoo is it, then in some way, you have an implicit goal of "beating Wufoo", but one which I find acceptable.
I also entirely agree that a market which has a "good" product (both in terms of the product, and in terms of the intentions) might be the wrong market to enter (Google and search is also an example). However, I think we both agree that it is a market that you CAN enter, and you CAN win, even though it might be harder.
Hopefully that makes more sense.