Paul Graham can be hit or miss depending on your perspective, but his recent article on being Ramen Profitable is a big hit. What is being Ramen Profitable? “Ramen profitable means a startup makes just enough to pay the founders’ living expenses.”
Paul, as usual, is discussing the rarefied world of founder/coders; while I love these guys, it’s not actually that great a description of the customers we work with, who tend to be exceptionally savvy in areas that aren’t software. Still, the idea is the same: spend the absolute minimum to build a real, working product and get as quickly as possible to ’sustainable’.
Of course, the whole article (including recipes) is worth reading but here’s the section that resonated the most with me:
A startup that reaches ramen profitability may now be more likely to succeed than not. Which is pretty exciting, considering the bimodal distribution of outcomes in startups: you either fail or make a lot of money.
While I would love it to be true that 50% of ramen profitable companies will “succeed,” I do agree that if your company can achieve any kind of real cashflow profitability, you’ve passed a huge hurdle and your chances of success are hugely better than average…not only because the business is proven to be working, but because you’re now giving yourself several different types of success to choose from.
And isn’t freedom to choose one of the real reasons we’re in this entrepreneurial game, to begin with?