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Startups selling to other startups is always a waste of everyone's time.

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It always happens. You meet a potentially interested investor and the first thing the do is have you talk to some other startup. They typically do it for a couple of reasons. They might understand what you are telling them, but they have no gauge how important it is, so they need validation. Second, at some vague level, they might see that the other startup and your startup might overlap in some trivial way, i.e. you both use a cloud database or you mentioned the same problem (but have wildly different approaches and markets).

I see this time and time again, startups trying to convince other startups why they should be using each other's technology, connections, or customers. The thought is anyone using their technology is seen as traction, but it's not. Companies typically end up chasing praise instead of the shortest path to tractionably-appropriate revenue. The answer's really simple: just don't do it.

On the other hand, many an open-source project got its legitimacy because a startup had a need. :)

This needs serious qualifications. If you went to Twilio early on and said "talking to startups is a waste of your time" they would have rightly told you that you were nuts and didn't understand their business at all.

Twilio got it's start building "upsells" around an open source product. I think you'd have to be very careful not to confuse adoption-pull and sales-push.

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