[muzani]

The best way to figure it out is to gauge how much competition you have. If there's a lot of low quality hacks that solve the problem, you're on to something.

Facebook's competitor wasn't just Myspace or Friendster; it was Yahoo Groups, AIM, IRC.

iPhone's competitors were Symbian, Java ME, whatever Microsoft planned for mobile.

Netflix's competitor was The Pirate Bay.

The competitor of some fancy Italian restaurant isn't some cheap Italian restaurant. It's fancy steakhouses, fancy Japanese restaurants, or theatres - the real value proposition is that it's a way to spend money on a good night.

It's a skill to find it, but it's also good homework - then you really know what people need and how to pitch it.