Ramen Profitable
paulgraham.com
paulgraham.com
- Your biggest fear should not be flaming out spectacularly, but rather creating a zombie that neither truly lives nor dies. The downside of ramen profitability is that (by definition) it's easier to waste years rather than months on an idea that won't ultimately succeed.
- In fact, you may lose your window of opportunity to someone who figures out how to use cash to get further faster.
- Outside investment forces you to get your head out of the day-to-day firefighting every month or so to 1) think big picture 2) set long term goals 3) be accountable for your progress. The key is "outside"; otherwise it's easy to meander along and procrastinate on hard questions.
- The upside of ramen profitability is a culture of frugality. The downside is it's easy to waste time on things you could be paying others to do. For example, paying an accountant to do your company taxes might blow away the entire year's earnings -- does that mean you should learn the tax code and do it yourself? What about negotiating a contract, or even taking out the trash? (These are real examples of things we did ourselves at the ramen-profitable company.) Delegating is harder if it means losing your hard-earned badge of profitability.
Joel has a good post on this topic (Amazon vs. Ben & Jerry's): http://www.joelonsoftware.com/articles/fog0000000056.html
I think the pitfall you are alluding to is hitting ramen profitability and then spending all day fire fighting rather than creating new features. But that is the point to seek funding with specific goals for the money and new plans of attack ($x will allow me to hire y who will write z feature). And since you are ramen profitable, you can do so on your own time schedule with better terms! This then allows you to flame out spectacularly :)
I don't think that's what he's alluding to at all. He's talking about business success, not how you spend your time. There are plenty of people who create products for small markets and can't make the growth jump past that early small market into a larger one. This isn't always (or even OFTEN) a feature-creation problem.
Here's some cool math: If your acquisition is linear ("we sign up 3 paying customers every day") and your churn is percentage ("we lose 8% of our paying customers every month") you will eventually hit a point where your growth STOPS (unless you can fix one of those two stats). The zombie state Drew is talking about (I think) it where your revenue is largely not growing, you can feed yourself but no one is ever going to buy you, and you've run out of "move-the-needle" features/efforts that can improve acquisition or retention. "Walking Dead" is what investors call it.
Anyway, my favorite dal recipe is thus (six servings, keeps forever):
1 1/2 c. dried lentils/split peas/etc...
4 c. water
1 1/2 tsp salt
3 tbs butter/oil
1 tsp cumin seeds
1 tsp ground tumeric
a small stick of cinnamon (or 1/2 tsp ground cinnamon)
1/4 tsp cayenne pepper
1/4 tsp fresh/ground ginger
1/4 tsp mustard seeds
6 cloves
Cook the lentils. Cook some rice. Heat the butter in the pan and then fry all the spices until the cumin and mustard seeds begin to pop. Pour the spice mixture into the lentils and mix. Possible toppings include: plain yogurt with dill (dried or fresh) diced cucumber, any variety of chutney. I'd add a recipe for chutney, but the cooking and canning process is too long to put here.
This stuff is so filling and delicious (if you like Indian/Nepalese food), and it lasts forever in the fridge.
1 cup of fresh mint leaves, removed from the stalks.
1-2 green chilies/jalapenos (more or less depending on your heat tolerance)
A few coriander sprigs
Pulse chop the above ingredients in blender until a nice paste; You can ad a bit of water for consistency.
Mix the paste with yogurt - taste it along the way and ad more of the paste as you like.
Rice / Dal / Yogurt chutney combo got me through college :)
Part of success is learning to strike a balance that allows you to spend a lot of time on your product but also leave time for maintaining your personal health and sanity. You can't go full force, full time for very long without burning out. The pitfalls have been discussed here a lot.
Cooking can be excellent opportunity to take a break from your work to refresh and nourish your mind, and also learn a new and valuable skill in the process.
2) Everyone needs some downtime. TAKE A BREAK!!! You don't have to work all the time.
3) For some, cooking is relaxing. See (2) above.
Also boiled milk and made my own yogurt to add to the rice/lentils, which made it filling. Kept me well fed while prototyping.
At first I cooked spices in oil, then added that to make a makhani but... I got lazy and just ate the rice and dal.
Both these are way better for you than ramen, which is basically just bleached flour and MSG. If you're making just enough to afford Ramen you need to work a little harder, because that is not a sustainable diet. :)
3 cloves garlic, minced
1 onion, julienned
oil for sauteeing
2 cups green or red lentils, rinsed
6 cups boiling water
2 vegetable stock cubes
1 1/2 tbsp garam masala
salt and pepper to taste
In a large pot, sautee the onions and garlic until translucent. In a separate bowl, stir the vegetable stock into the boiling water and then add to the pot. Mix in the garam masala.
Now add the lentils and boil softly until cooked thoroughly - the lentlis should be nice and soft. (At this point you can partially puree the lentils if that grabs you. I prefer to leave them whole.)
Optional: add finely chopped carrots and celery just after sauteeing.
I substituted cardamom for cloves and Tapatio sauce for cayenne pepper, and it still turned out well.
Thanks for posting this!
I may have to change that.
I'm not convinced about this. I think if anything it's the exact opposite -- many people avoid starting startups because they're afraid of seeming irresponsible.
I'm sure I'm not the only person here who has been asked the question "when are you going to get a real job?" -- as PG's essay points out a paragraph earlier, a company which isn't making any money yet tends to feel rather theoretical. At an age where the perception of being responsible is largely tied to making the transition from education to employment, it can be difficult to explain working at a not-yet-profitable startup to people -- especially in computing, where the default expectation is often that students will graduate and walk into high-paying jobs with Google/Facebook/Amazon/Microsoft/Cisco/etc.
I'd use Occam to narrow that statement down even further: "What keeps people from starting startups is fear".
I think Paul might have a bit of a selection bias because of Y Combinator. He spends a lot of time with founders that are weighed down with all the responsibility of running the company. And, after you start, that's a big problem, but you don't realize how big of a problem the sense of responsibility is until you've already jumped off the cliff of founding a startup.
I spend a lot of time at Hackers and Founders meetups, talking with people who are very nervous about jumping off the corporate bandwagon and founding a startup. One of the biggest reasons that they don't is fear. Fear of being irresponsible. Fear of seeming irresponsible to people around you. Fear of going broke. Fear of failure. Fear of being inadequate to the task. Fear of not having the support of your spouse (which is generally the spouses version of fear of being broke, I suppose).
But, in all our Hackers and Founders meetups, I've never heard anyone say, "I want to start a startup, but I'm scared of having so much responsibility".
We're arguing a very small point of the essay at large. Over all, it was a great piece of work. Keep em coming, Paul.
For anyone who cares, the reason both concepts have the same name is that they share the property that you have to be able to respond to someone. The difference is that in the first case you're responding to people who are judging or depending on your choice (e.g. your parents, friends, or dependents) and in the second to people you've undertaken to do something for (e.g. customers, employees, or investors).
Well, yes. But they're closely related -- people with lots of responsibilities have to be responsible, or else bad things will happen.
When your parents think you're being irresponsible by starting a startup instead of getting a job, they're thinking about the affect on your own career, not the amount of work you're undertaking to do for other people.
I'm not convinced that is generally true. Note that I'm talking about perceptions, not reality. I don't think many people avoid startups because they're afraid of being irresponsible -- I think they avoid startups because they're afraid of seeming irresponsible -- and I think a lot of this is based on the perception that a startup which hasn't reached profitability yet (especially if it doesn't have any paying customers yet) isn't a real company.
In another way, my parents wants me to quit from my dreams (build an forex system and a web based software startup) until my 18. They want me working for the government. Here at Brazil, work for Microsoft and Google are similar to work for the Government. Their point is that i have to be like everybody from my age, get a safe job, be independent, earn my own money and leave home (22 years old now). This kind of responsability is far more hard for me to take than the other. I can quite a (expensive)girlfriend and the status quo of having a job, but i cant ignore what my parents say and stay focused ! I wake up and sleep with this in my mind every day ! It´s like if a man must take a job to be a man, if not, you are just a kiddo. And being a kiddo on your 22 is being a loser. Being a loser is very hard to take.
Thanks both of you for pointing this types of responsability. And sorry for my bad english.
The "students [expected to] graduate and walk into high-paying jobs with Google/Facebook/Amazon/Microsoft/Cisco/etc".
I'm starting something. I don't care if I look responsible to others or if people think I'm a responsible person or not.
However, my biggest fear is that I get a bunch of customers and then somehow my product fails them. I would be responsible, and that would be bad.
I believe my creativity would propel me to success. But the process that creates my creativity also often leaves me intellectually flighty.
And should I take on staff, customers and debt I'd worry that such flightiness (if I were unable to turn it off) would leave me unable to continue with the project--failing my staff, customers and my ability to repay the debt.
And if I failed them I'd feel awful.
I believe the solution to my problem is to either find someone who can keep me on the straight and narrow, or to develop enough self-control and motivation to stop such flightiness when innappropriate.
Founders are worried about the responsibility of having to create something of worth from nothing. The people who surround them are afraid they won't succeed and so are they.
My answer to always being available is that in a startup, i work all the time, and you are probably distracting me.
That's a great point and I think supports another one. Getting older is generally incompatible with founding a startup. Not always, mind you.
Point #1: Ramen profitability is a higher number the older you get. People generally accumulate obligations faster than they can get rid of them (loans, kids, wives, elder parents, houses, etc)
Point #2: Yours. It doesn't look irresponsible for most 20 year olds to punt normal life and build something crazy. "It's a phase, he'll learn a lot, and then grow out of it". A 40 year old will get a lot more flak for setting aside a cushy $200k/yr job for some wild idea.
Of course, older folk who manage to live lean and don't give a crap about what people think/say will do just fine... :-)
I agree, but I'd s/40/25/. This is probably why so many successful startups were founded by college dropouts -- if you haven't graduated yet, people are likely to see whatever you do as a learning experience, but as soon as you graduate, there is an expectation that you will "start being responsible".
I'd say the real cutoff is whenever you have kids. Even that's not a hard cutoff (one of the Zenters had a kid right before they were accepted to YC), but it makes it a lot harder.
Risk tolerance is much lower with kids. That's probably the biggest reason more people don't start companies. In those cases, I'd recommend becoming ramen profitable in a side project to a real job, and then swapping them out.
In my case, to be "ramen profitable" means that the monthly profit is equal to my monthly salary, which is currently at about 4000 USD.
A pizza profitable startup founder can manage nine employees, but that doesn't mean anything for 'responsibility'. A BigBoxCo manager can manage eight employees and be 'responsible'; if he weren't responsible, why would BigBoxCo pay him a salary?
The trouble is that few people "measure" responsibility, they just look at the signals that have become associated with responsibility.
Obviously there's a big difference between whether you are perceived as responsible and whether you really are.
Get a deep microwave-safe covered dish (your grandmother probably has some old corningware lying around, also easy to find in garage sales), put 2 cups of water for every cup of rice (but don't fill more than half the dish), a bit of salt, a bit of olive oil, cover and microwave. Some microwaves have a rice setting, otherwise microwave on high for about 10 minutes and then let stand for at least 10 minutes.
If you are making white rice, it will turn out nicer if you rinse it before you start (that washes away the starch); a trick for doing this is using a sieve and a bowl. In some cultures it is traditional to rinse the rice 7 times - I find 6 is less symbolic but equally adequate.
I now return you to your normal programming.
...and be careful that the cover isn't on too tightly. We all know that water expands explosively when it boils, but every year some people get severely injured by microwaving water inside sealed containers...
Make sure you have some sponges and soap handy.
This almost certainly would never happen in this case as the rice would provide ample nucleation sites.
I figure the microwave is faster, but I don't think the rice cooker would be. I guess if you constantly eat rice, not having to pay attention is a plus?
The big problem with a pot is that you'll often get the temperature wrong, and end up baking the lower layer of rice onto the pot bottom, or not quite cooking it fast enough and end up with mushy rice. I only get great rice from a pot about 75% of the time. It's 100% of the time with a rice cooker.
So, yes, not having to pay attention to the rice while I work on other parts of the meal is a huge bonus. If you only need white rice, you can get a basic rice cooker that will work very well for about $25 (I've heard brown rice is possible with the lower priced devices by giving it a bit more water, and leaving it to "warm" for a few extra minutes, but I've never tried it).
Single-use kitchen products are silly, not to mention space-inefficient. Even if it makes oatmeal and rice, that's basically just a bunch of starch. Might as well just eat Ramen.
One can find a nice set of sturdy department-store quality cookware (with lids!) at a discount retailer (like Ross or Marshalls). They'll go much further in ensuring consumption of the variety of nutritional foods. Basics one can get for about $60 for all three: a boiling water pot for the stuff to be cooked in bulk, a saucepan (cause bland rice is boring) and wok-shaped skillet. They fit neatly inside each other space-wise, as well.
My secret to rice cooking: add a wee bit of vegetable or other oil (I also like to add a bit of cayenne pepper to the oil sometimes) in the skillet, and let it warm, but not over super hot temp. Then add the rice, and kind of "sautee" it for a little while, but keep the rice moving to make sure it doesn't burn. You really just need coat it a little little bit, to prevent it from going mushy and therefore cannot coat the bottom of the pan with the black mush that happens when the rice is added to the water. After adding the water and bringing it up to a boil, you can turn it down to the lowest temp on your stove, cover it, and let it cook for the rest of the time on the package.
I guess the one prevailing great thing about the fancier rice cookers it that they beep when they're done. So I guess if you use my method, don't forget to set a timer.
I agree, which is why I called it out as one of the few instances where it is worthwhile. And speaking of pots and pans, Cuisinart makes a great set of pots and pans, covering everything you need, that sells for $149 from Amazon. That, and a good knife, and a few other bits and pieces, are most of what you need to have a nice cooking kitchen for dinner for a group of up to about four (and the two small ones are good for single and double meals).
To put things into perspective, I don't even own a microwave. But, I consider a rice cooker absolutely mandatory if you eat rice regularly. If you don't eat rice regularly, then obviously a rice cooker is not a useful expenditure or use of space. I consider it a good investment of both, because my most common meals are various kinds of Chinese, Indian, and Mediterranean foods that include rice as a base.
Even if it makes oatmeal and rice, that's basically just a bunch of starch. Might as well just eat Ramen.
I'm not a believer in the Atkins anti-carbs crusade, nor do I accept that all grains are created equal. Oatmeal and brown rice are both quite reasonable "slow" carbs, when combined with proteins and vegetables. Ramen is not a slow carb by any stretch of the imagination, and is actually "just a bunch of starch" (it also has way too much sodium, if prepared as directed).
Rice cookers are also great for steaming vegetables. Growing up, the rice cooker was our most commonly used cooking appliance, even when we didn't have rice.
I can't remember the last time I came close to burning rice: it's about the easiest thing to cook that there is.
Turn heat down to 3.
Add one cub of rice.
Stir once and then cover.
Turn heat down to 1-2 when it starts boiling again.
Wait 10 minutes, maybe turn it down again if you are in the kitchen.
Turn heat off and wait 5 to 10 minutes before opening lid.
Fluff and eat.
I was a bit taken aback by that too, I always rinse heavily for the reason you mention, but I wasn't sure what the rationale for not rinsing is. I prefer frozen beans anyway - cheaper when you buy in bulk, and saves having to look for the can opener :-)
The introduction of polished rice into asian countries caused a rise in a disease called beriberi among poor people:
http://en.wikipedia.org/wiki/Beriberi
I also endorse frozen or dried beans. Frozen ones are about as fast to cook as canned.
Can sludge is nasty. And other bad stuff probably seeps into canned food. The FDA says canning is fine but I doubt it's totally healthful. But who wants to spend the time?
I guess what I'm pointing out is that you could skip all the work and enjoy your life right now by spending some time preparing some great food.
;)
I left that out because I don't want to get into a "narrative war" on diet again. But I can discuss it later.
s/hours/days/
And even after a week, the outside layer makes perfect crunchy rice duck blood & vegetable soup!
Lower end microwaves are especially bad -- when you set them to half power (or defrost, etc), they modulate between full power and no power, rather than actually using less power.
I mean, the claim isn't about the speed of microwave cooking, but the method. When you heat something normally, heat hits the outside surface by radiation and convection of the surrounding gas, and the heat is conducted deeper into the item at a fairly slow rate.
When you microwave an item, microwaves travel straight through it from outside to inside, and as they do so they cause resonance in water molecules, which are taken from room temp to boiling or even superheated in moments when the surrounding matter is still cold and hasn't enough time to expand. This (is claimed) to be much more violent heating and consequently much more damaging than ordinary cooking.
Also, cooking does more than destroy heat sensitive vitamins - otherwise there wouldn't be any point in doing it if that was all it did. It changes enzymes and proteins and chemical bonds and all sorts. Of course there are people claiming much of this is less than healthy - and no you aren't going to eat raw rice as an alternative, so why would you eat cooked rice? Why not eat something you can eat raw instead?
It seems to me business articles aimed at women might be a useful resource for anyone wanting to start a "ramen profitable" business.
When I was trying to learn basic accounting / bookkeeping, one of the best guides I found was some State's "Women in Small Business" or something similar commission, that had a very short down-to-earth guide to doing enough bookkeeping to keep you out of tax court.
This also reminds me of the buzzword "lifestyle business" that was going aroudn a while back.
However I must take issue with the recommendation of Knorr beef bullion. Ingredients: Salt, Monosodium Glutamate, Beef Fat, Partially Hydrogenated Cottonseed Oil, Yeast Extract, Caramel Color, Dehydrated Beef Stock, Dehydrated Vegetables (Onion, Carrots, Parsley), Turmeric, Disodium Inosinate and Guanylate, Spices.
Monosodium glutamate should be avoided if you care about your nervous system. Partially hydrogenated anything is no good. "Yeast extract" is just a food industry trick for including more monosodium glutamate.
http://en.wikipedia.org/wiki/Excitotoxicity
There are healthful choices for beef bullion, so pick one of the alternatives.
Otherwise, bon appetit. :)
Assuming such a job existed (I have to believe it does), would this have most of the benefits of ramen profitability?
Working on stuff at the library can have other advantages too. It's a quiet workspace mostly free of distractions, and you have easy access to lots of reference material.
EDIT: I haven't done this, though I did a lot of standing guard in the middle of the night overseas in the Navy, and you've got lots of time and solitude.
There were many jobs there that had loads of free time.
The rest of the time was spent surfing, working on little programming projects, and learning new languages. If only I could tell my younger self to direct all my free time and energy into a startup.
Of course, I had to sign away any intellectual property rights to belong to the government... but how enforceable is that? And no one would ever find out if you didn't mention anything anyways :-)
At the risk of going against the tide, I say there is nothing wrong with consulting on the side, perhaps customizing your product for a big-enough client and making some fuck-off money on the side. Let's think of it, many startups could actually benefit from brushing against a more established business at a B2B level, they might even find a better market, not to mention a better product idea, than their current social web-app that still lacks the necessary "network effect" to pay for itself.
We much prefer to soak dry beans, which seem to be much less expensive per unit of protein. Black eye peas have a particularly good nutritional profile, although they usually need added ingredients to have an appealing taste.
If you have a gas stove or a decently powerful electric, you can just dump the dry beans in the pot and start boiling. Cover the pot and boil for about an hour, and then uncover the pot and continue boiling for about another hour to let thicken (YMMV).
I believe that dry beans have to soak a long time cold because you want them to actually start to sprout. (I know from experimenting that dry beans are still alive and can be planted.) I think, like malt grain in beer making, they need to start to activate so they make the enzymes that are going to turn all the starch to sugar; then when you slow cook it, those enzymes work and break everything down a lot more.
Also, I think if you cook on a wood stove you will find that too hot is more of a problem. Keeping an even simmering temperature requires constant attention.
Also cooking time varies by types of beans. Roman beans are probably the quickest. Limas, great northerns, black beans, and pintos in between. Kidney beans never seem to really get done, which is why they are often used in chili, you can simmer the chili for hours without kidney beans cooking apart.
My solution after experiencing something like this was to turn to consulting. Which, as pg says, is a blessing and a curse - it removes the distraction of the shortening runway, but it adds the distraction of getting paid good money for something other than your startup.
I've seen this happen a few times to friends of mine, it even happened to my first startup. We had a great idea, we developed the service, but we never got around to selling it properly, after having invested so much time and effort into it, and having fixed costs that we had to pay for (office, internet, etc), we started doing custom software development for some clients and ended up doing only that in the end. I finally quit the company. The company still exists and it does pretty well, although there's only one of the original founders left, it is a software consulting company, and it will never be what we set out to do in the first place.
Anyone even considering working on shrink-wrap software, especially in a small company, should read this book. (Anyone considering consultingware should especially read the last chapter; it will convince you not to, unless you are a masochist.)
The chapter mentioned is available at http://www.joelonsoftware.com/articles/SetYourPriorities.htm...
But there's one point in here I'm not sure is factual:
"He believes it's a good form of discipline to get people to pay you from the beginning. I think that's too constraining. Facebook didn't, and they've done better than most startups."
I got into Facebook relatively late in the college-students-only era, but even then they were playing with alternate revenue models that didn't work out. In particular, they sold "fliers"--you could write up a little ad flier for your university and pay Facebook some small fee to show it on your university's Facebook for awhile. Now they've gone to traditional old boring web advertising to a greater degree than ever before.
You just have to improvise a little, blending recipes & substituting for expensive ingredients.
As it is, there's a hell of a lot of books that presume you want to make something fancy.
I'd like to shake the sense that having a wife and kids and a mortgage precludes participation in a minimal profitability trajectory.
Being single and without financial obligations is an optimal situation, but not the only survivable situation. As you can see from some of my ideas though, being single also gives you the latitude to make crazy lifestyle changes without anyone else having to be happy with it :)
As others have mentioned, it just increases costs.
The biggest failing of this essay is the soon to be anachronism of "$3000".
It you replace it with $X,000, the whole essay still makes sense, and will apply to a wife/kids/house.
This is one of the best and for many startups non-obvious parts from this essay. The business model is the business, the product is almost secondary. If you have a stellar business model and execution you can have mediocre product and still succeed.
The very best product without a viable business model could easily crash.
Especially when you're going ad supported or freemium the business model will need as many iterations and bug fixes as your product. And you need a backup plan in case things do not go the way you planned for in your most negative projections.
It's really meant to be cared for, treated much like a risotto.
The Ingredients
1 1/4 Cup Long Grain White Basmati Rice
1/2 Cup Vermicelli Noodle, Chopped (No yolk Kluski European Noodles)
2 1/2 Cup Chicken Stock
2 Tablespoon Clarified Butter
4 Tablespoon Cubed Butter
Salt & Pepper
The How-To
Add 2 Tbsp. clarified butter and the 1/2 cup Vermacelli Noodle to a medium saucepan and put on medium heat.
Continually mix with a wooden spoon until the noodles are a nice brown (a little past golden) - about 5 minutes.
Add the 1 1/4 cup rice and cook and mix for 6 minutes.
Add the 2 1/2 cup chicken broth, 4 Tbsp. butter and 1 tspn. salt.
Mix for about a minute.
Cover and simmer for 15 minutes until broth has been absorbed/evaporated.
Taste.
Not done? Add more broth, 1/4 cup at a time until so.
thanks!
"Now that the term "[vague term co-opted by people who don't know what it means]" has become widespread, I ought to explain precisely what the idea entails."
"You may even be able to avoid having the the round occupy your thoughts, if you don't care whether it closes."
Fear due to lack of knowledge about how to start a business. Last I checked, this isn't something they teach in school. MIT and Stanford should have (undergrad) courses on founding startups that covers all the major steps. Students can make rational choices once they have the facts.
I can see scenarios where the start up is making profit, say $100, but needs a lot of investment to move forward, or of course it can go slowly and take 10 years.
I guess what I am trying to say is that from the essay you get the impression that you should not think about raising money at all before it hits the $3k target, when sometimes perhaps you should.