insights from our NYC trip as non-American founders

One month ago, we, two non-American founders, went to NYC to test our startup idea. Now, we're back with lessons from our customer interviews, setbacks, and new pivots.

Why NYC? It’s a blend of cultures and big ideas. We wanted to feel small in a world where big things happened. With very little savings and a new idea in mind, we went to conquer NYC with our (seemingly) brilliant idea.

The Idea

Our idea was straightforward: the food delivery model is inefficient. Restaurants are facing financial pressure due to the fees from delivery apps. These apps aren’t performing as well as anticipated either. They’ve subsidized orders with shareholder money to gain market share, assuming they’d profit more once they established dominance and achieved economies of scale. However, the market remains too fragmented for that to happen. Customers pay more, and delivery workers earn limited wages without the typical employment benefits. Although restaurants receive more orders via these apps, the commissions diminish their profit margins.

Observing this, we strived to innovate. We studied the industry, the existing market models, and their financial reports. We aimed to develop an app that would showcase local restaurants through short-form video content, believing it would be superior to static menus, and facilitate food orders. Essentially, a blend of TikTok and Uber Eats. To mitigate delivery costs, we thought of introducing constraints to simplify the problem.

NYC was an educational experience in many ways. Our app concept wasn’t validated. Many restaurant owners didn’t care about their margins and didn’t have a proper notion of marketing, and were fatigued by all the ‘Uber but better’ app ideas. Competing with giants like UberEats was impossible without venture funding, regardless of other factors. There were simply too many players in the market. More than 10 food delivery companies. Each interaction became less about innovation and more about understanding what we did wrong.

After three weeks of visiting people, observing, studying, learning, talking to developers and entrepreneurs, attending YC startups conferences, here are our main insights:

1. Not all Startups are Bootstrapable

Here’s a hard lesson: Not all startups can be bootstrapped. Our first idea required more funding than we anticipated. The startup world is crowded. There are a lot of founders, all trying to figure out what people want. Without a unique angle or insight, bootstrapping is tough, especially for certain industries in the US. If everyone’s seeking funding, and you’re the lone player in your field attempting to bootstrap, you’re at a disadvantage.

Today’s tech tools promise a lot. With no-code platforms, you’d think launching any startup would be easy. But even with these tools, some ideas are just too ambitious in terms of execution. Developing a product is easier than ever, but that probably means that everybody else is doing the same.

If your startup is not bootstrapable, pare down your idea. Make it as simple as possible, something you can handle and that people will pay for, even before you officially launch. This approach gives you both money and user insights, letting you pivot if needed.

Starting small and proving demand is the way to go. It lets you bootstrap with purpose, rather than getting swallowed by the need for venture capital. We’ll dive deeper into this in a future article.

2. Beware of Tarpit Ideas

When starting out, every founder believes their idea is great. We did too. But we also discovered that not every attractive idea is precious; some can be treacherous. Take our venture into the delivery industry. Yes, there’s a genuine problem. But being the first to spot it doesn’t mean that somebody else in the past hasn’t tried to solve it. Or that it’s solvable right now.

Some examples include:

Consumer Ideas

• Attractive due to potential for larger outcomes and visibility.
• Examples include widely-used platforms like Google, Instagram, Apple.
• Success heavily dependent on timing, e.g., growth phases of broadband, mobile phones.
• Extremely high standards: top products must stand out without relying on marketing or branding.

Apps to Discover New Things

• Many discovery issues aren’t genuine problems.
• Sometimes, the supply isn’t there (limited restaurant options).
• Alternatively, the demand might not be there (preference for popular music or eateries).

Many founders converge on the same “novel” ideas. It’s because many ideas are traps: they seem so obviously lucrative, with no big names dominating, with obvious problems. The issue is that a lot of these are in the consumer domain, which is a seductive but challenging space. Sure, everyone loves hearing about the next big thing that’ll touch daily lives, and everyone thinks of regular people as consumers. But in reality, you’re now competing at the level of giants like Facebook or Google, not just to do something slightly better, but to redefine the paradigm.

Consider Google, Uber, and Facebook’s early trajectories. They didn’t explode because of clever marketing campaigns but because they offered products people couldn’t resist, their users were tirelessly evangelizing their product. That’s the standard for consumer products. If you think that Facebook sucks, you should not think about creating a social network slightly better in aspects X, Y, or Z; you should think about reshaping the very concept of social networking.

However, when you think of fields like healthcare, real estate, or other unsexy niches, the challenges are big, but so is potential. These sectors may not have the glitter of consumer tech, but they’re riddled with inefficiencies and crying out for solutions.

The lesson we learned? Don’t just chase the trending sectors. Seek out where you can make the most meaningful change. Sometimes, the most transformative opportunities are hiding in plain sight, in industries you’d never initially consider.

3. B2B is Sexy

The startup world is full of ideas, all aiming to make a big change. Even though selling directly to customers might seem exciting, it’s not always easy. For us, understanding the potential of selling to businesses was the real game-changer. Here’s why.

The conventional structure of large, international businesses doing everything in-house is fading. Tech has lowered barriers, making it feasible for startups to address specialized problems, freeing these corporates to focus on their core.But here’s a more profound insight: the decision makers in B2B are the closest approximation of homo economicus. If your product increases their profit, it’s in. Most founders instinctively aim for consumer-focused ideas, spurred by stories of consumer-tech successes. But the competition in consumer tech is intense. Even if your product is free to use, you’re competing with the time and the attention of your users — from catchy Instagram videos to daily chores, hobbies, and family time. There is just an overwhelming array of products that demand our attention.

Contrast this with the B2B landscape. The business problems waiting for innovative solutions are vast. And while these might seem boring compared to the allure of consumer tech, they can be lucrative. Many industries, overlooked by the startup world, could benefit a lot from a layer of tech. Think of a hotel wanting to cut laundry costs or enhance the guest experience. If you can solve such problems, you’re not just another startup; you’re a crucial business partner.

There’s a simpler pragmatism in B2B. With a good solution, your sales aren’t just probable; they’re almost certain. Rather than fighting for attention in a crowded B2C market, you can focus on perfecting a solution for specific business needs.

Of course, there’s a place for B2C. The idea of crafting a globally recognized brand is tantalizing. But the successes here, the true ‘unicorns’, are rare. They’re up against titans with established customer bases and deep pockets.

Investors, too, have caught onto this. The flashy world of B2C startups might make headlines, but the steady, predictable returns of B2B are increasingly attractive.

So, for first-time entrepreneurs, our advice is this: Don’t get starry-eyed about disrupting the consumer market. Look at B2B. Find those unsolved problems, the niches overlooked by big corporates, and address them. It’s there, in those intricate details, that massive opportunities — and successes — lie.

4. Intros Actually Matter: Business isn’t just about what you know, but also who you know. Introductions can be game-changers.

Performance drives success. However, when performance can’t be measured, our networks fill the void. Think about bets. Every decision in business is essentially a bet. The riskier the venture, the higher the stakes. Every experienced player will try to de-risk as much as possible. Now, when an investor or advisor is looking at a sea of startups, they’re calculating which is the best bet. Performance and traction are important, but in the early stages, they’re often intangible. Here’s where the power of introductions comes into play.

Consider a startup founder setting out on the complicated journey of fundraising. If performance metrics and KPIs were the sole arbiters of success, many startups would never see the light of day. Often, in the early stages, you’re selling potential, not performance. And this is where introductions step in.An introduction from a trusted source to an investor, advisor, or potential partner can be a game-changer. Now, you can think less about selling yourself and focus on doing the things that matter. When you have the backing of a reputable institution, an Ivy League degree, or a recommendation from a respected figure, fundraising becomes less daunting. Trust becomes the currency of business.

Having a “pedigree,” signifies that someone took a chance on you in the past, whether it’s Harvard or an influential individual. It makes the decision easier for the next person or entity considering a bet on you; they’re not starting from scratch but building on established trust.

Very few will look beyond credentials to judge your potential. Those who do, often stand out as visionaries in their fields. They possess the unique ability to think independently and see clarity where others don’t.

If you lack credentials, it’s crucial to build your network. Offer value, and don’t be afraid to seek advice from those you admire. Sometimes, they’ll reply.

5. Community vs. Product-Led Growth: the future of great startups

In the beginning, there was marketing-led growth and sales-led growth. This was followed by product-led growth. Now, it’s all about community-led growth. In previous years, people primarily used Google and blogs for information. Now, most of the content you encounter seems designed to make you pay. Many are attempting to manipulate algorithms with AI and SEO to capture your attention and money. The modern landscape is saturated: too much information, too many products, and an overabundance of new startups.

How does one distinguish themselves in such a bustling environment?

The best solution to this issue is to build a valuable community. We believe that building communities will be the primary method for understanding customer needs in the future. In places like NYC, there are many startup communities where individuals pay to connect with specific people who align with their interests. In this age dominated by AI, people are seeking real human connections and authentic experiences. Many are wary of content that seems artificially generated. As technology continues to advance, a lot of online content might be produced by artificial intelligence, which could lack genuine insight. If you can provide unique insights, skills, or experiences and create a community of people from the same niche or interested in the same topics, there’s potential to earn from it. High-quality information will always be in demand. And with a strong community as your foundation, you can create excellent products. I think we will see new trillion-dollar companies built on top of niche communities.

If you found these insights valuable and are passionate about building something meaningful for both you and potential users, consider joining like-minded founders at foundersproject.io.