Or do you first go full steam ahead, create a prototype of the idea and then look at other websites to see how they have solved that problem?<p>With some ideas I feel that if you start with looking at competing websites, you will get discouraged that someone has already solved that problem. Also, after looking at other website, the mind tries to confine its creativity to what it has already seen.<p>Please let me know what is your methodology in this regard.
If you start without any sense of the competition, you're setting yourself up for failure. The last thing you want to do is find out after weeks/months of development that there is a well-funded competitor offering everything you've got for free. Or worse, there is NO competition, and there's no market at all.<p>Doing the customer-development first is (sorry to beat a dead horse here) the way to go. For a few hundred bucks spent on adwords traffic and an unbounce page, you can get a sense of what if anything you can do to beat the competition, and see if there is a demand at the same time.<p>For most developers, a few hundred dollars equals a few hours of billable time, and is worth the investment.