But Google had an idea that was different to what Yahoo, et al., were doing that's how they broke in. They were well differentiated and were effectively offering a new product, low spam SERPs drawn from a wider crawl of the 'net.

If Yahoo had already been offering a comparable product to Google then Google wouldn't have done so well at all IMO.

That said, when we started our pottery painting business we were pipped to the post by another very similar business (ie pottery painting) in the same area, we'd already been concerned that the area might not support us alone. We'd started the business, rented a building and refurbed it, quit jobs, bought stock, etc.. Still we're going 5 years later and they lasted 6months before closing (due to family issues).

The point being you can still succeed you're just going to have to try a lot harder. They may fail, even if they're better. You can still win even if they're better (betamax, hddvd, etc.).