Competition can be scary. There’s no doubt about it. Many of us have probably had a holy crap moment upon discovering new competition. And just imagine if that competition is a behemoth … like Google.

James Siminoff isn’t worried about Google entering into his competitive landscape. In fact, he’s openly thanking Google for doing so. James recounts the story of VCs asking him the classic question, “But what happens if Google enters your space?” Here’s his response:

My answers has always remained the same, “It is not what you do IF Google enters your market it is what you do WHEN they do.” If you can not answer that, then you should not be putting time and money into a business that you are obviously incapable of making successful.

In fact, if you’re ever pitching VCs you should be prepared for that question on competition, especially with respect to competition from “the big boys.”

Truthfully, Google would worry me. So kudos to James for taking an aggressive stand against them, and doing so in a public manner. He does have a point, Google’s forays into businesses outside search and advertising haven’t been as hugely successful. Google Talk certainly didn’t kill Skype. And Jaiku doesn’t even register vs. Twitter.

Every industry has its behemoths. Some of those big boys are more competent than others, but oftentimes they’re not the most innovative or fast-moving. So the lean, mean startup holds a certain advantage in that department.

As well, entrants into your space help validate that market, especially if you’re ahead of the game trying to change things. When a big, sleeping giant suddenly wakes up and says, “We have to get into that space!” it serves as validation and can be leveraged to your advantage. Industries and markets always have multiple players, and even if a big giant takes a leadership role, there are opportunities for smaller players – to grow sizable businesses, get acquired (by the big guy’s competition), etc.

Market validation helps a market grow. It drives more customers – who are acting as followers vs. leaders – to make buying decisions. It creates buzz. It awakens the interest of investors. You don’t want to be in a market alone (at least until you’ve crushed all the competition and are steps away from world domination), because it’s simply put, not a real market with any sizable opportunity.

The economic downturn has created a ton of opportunity in many old-school industries. Those industries might have been slow moving in the past, but have no choice but to re-invent themselves in a huge way, or die off almost completely. It’s times like these when small, innovative companies suddenly see their ideas, goals and businesses take hold – enough to wake up everyone else who jumps onto the “innovation train” too slowly and too late. So take advantage of the tumultuous times; make sure you stay ahead of the “big players” that jump into direct competition with you. And be ready to take advantage of competition by leveraging the validation they create in the market.