One of the projects has a fairly well-entrenched (and well-funded) player. They have a big user-base and good growth. On the other hand, they're not perfect and there are some things I think we could do better. But, at what point does their size make that irrelevant?

A good analogy would be eBay. There are ways you could have an auction site that does things better/cheaper than eBay. But they are big and they've already overcome the chicken/egg issue. Maybe I'm wrong, but I don't see a general online auction site as a good startup idea because of this.

So, my question is ... at what point does this occur (if ever)? When do say "don't enter this space because X already owns it"?

TIA