I find it hard to develop a new solution in a crowded market. I want to develop a product I am convinced of, but doubt often gets in the way, especially if the market is crowded.
I also wonder how these services get their first paying customers.
What we did to get out first few users was simple: we wanted to build cool software, and we had a few ideas. We took our favorite, built a cool landing page that spelled out the features with a demo, and then set it free on Twitter. We had 1500 early beta signups before we went into private beta. We now have over 100,000 users and we never spend money advertising.
In terms of getting our first paying customers: we just charged for it. People will pay for things that they think are valuable. However, pricing and the pricing "model" have been the #1 source of missed opportunities and optimization points for us (though we have fixed a lot of that), so they are really important to think about.
Please think of a case where this has happened to you as a customer.
As an example: I've been leasing servers for over a decade. The industry is mature, is worth billions each year, and has plenty of competitors. I've leased servers from many companies, big and small.. one even that had 2 people working there.
Sometimes I had requirements that only large companies met, and other I did not have such requirements, and considered smaller companies.
Customers are constantly leaving and signing up at all of the large services (for a variety of reasons -- customer service problems, fees, inability to meet a new requirement, etc, etc, etc). I challenge you to find a provider that does NOT have some unhappy customers. You'll get your chance when they leave and are looking for a new provider.
What often works well for people is to enter a market that already exists and to understand the problem the existing solutions don't address.
By focusing on these problem and solving these extremely well, you'll be able to attract a small subset of users who will want to pay for your service rather than your competitors.
You'll have plenty of opportunity to steal customer from your competitors (there's no way someone can address 100% of the market).
There are plenty of markets that are ripe for disprution.
His blog [0], book [1] and podcast [2] address the exact concerns any new software bootstrapper faces.
He also runs the Micropreneur Academy, but I don't have any direct experience of that.
He also organises Microconf, and I really recommend watching his talk from last year - http://www.microconf.com/videos-2012.html
The sheer number of products he has built, launched, acquired - both successes and failures - over the years gives all of his advice a lot of weight.
[0] http://www.softwarebyrob.com/
[1] http://www.startupbook.net/
[2] http://www.startupsfortherestofus.com/
PS I don't have any affiliation with Rob. I'm just really grateful for all his excellent work.
The community is scattered around the web on blogs, Twitter, Mixergy and here. I think that's a good thing - don't seek yet another place to shoot the breeze. Just get stuff done, and when you have a specific question, seek answers from experienced people in existing forums.
Most corporations spend a big part of their IT budget on "Support". Think about it for a bit and you will start to get a clear picture of what really matters.
Make sure that the market you're going into is growing and not shrinking. In a growing market, there will always be new customers.
People like choice. You don't have to compete feature to feature with your competitors. Stand out somehow. Identify how you truly differentiate and make sure that everybody knows this.
The good thing about an existing market is that people are already looking for what you're selling. All you have to do is be there, be different and be findable. The bad thing is that the competitors are mature and it takes a lot more effort to actually compete.
I used to think this aswell, and I was proven wrong. I think this assumption is almost always wrong. Unless you are building a facebook competitor, you will find customers, regardless how crowded the market is.
Really, though, it's not the first customers that are hard. It's maintaining and continuing to work on it and grow it during the time where growth isn't amazing and it isn't yet a full-time job.