7. Practicing Ramen Profitable

Ramen Profitable, a term I discovered from YC founder Paul Graham’s article, is the state I want to reach in the short term, so I’d like to mention it briefly here.

A recently popular term like Lifestyle Business is a similar concept.

What Is Ramen Profitable

Ramen Profitable is a business model focused on maintaining an income sufficient to live on and keeping operations going. It does not pursue venture capital or rapid growth, but instead focuses on reaching a level of profitability that can sustain your livelihood. Simply put, it means you can afford to eat ramen. Once your business reaches this state, you can step out of survival mode and have more freedom to do things.

(Paul mentioned in the article that ramen is just a metaphor; eating ramen all the time when you’re poor is unhealthy, so you can buy rice or beans instead.)

I’ve found that when many people hear the word entrepreneurship, their immediate thought is starting a company, raising a round of funding, and then building their own business. But starting a business does not necessarily mean forming a company, and it does not necessarily mean spending a lot of money—especially in software development.

If it’s hardware development, a physical business, or something like the biotech example Paul mentioned in the article, then it’s hard to go the Ramen Profitable route. After all, the costs of production, opening a store, equipment, and research are all there. The initial costs are simply that high, and it’s almost impossible to start for free. But software development is different.

The development of the internet, technology, and computing power has made software development a fairly low-cost activity. With just a computer and an internet connection, plus the recent surge of AI tools that have greatly lowered the barrier to entry, software development can validate a market at relatively low cost.

The only downside is that there is a lot of noise on the internet. If you know nothing about technology at all, you may take a wrong turn or waste money unnecessarily.

Why Pursue Ramen Profitable

There are several benefits to pursuing Ramen Profitable. First, you don’t have to do things you dislike just to get investors’ money. Paul Graham mentions in the article that when you go looking for investors, you should expect your productivity to drop significantly. Some investors may also know your company is short on cash and use that to pressure you when you need money the most.

Some other, less obvious benefits are that if you prove your company can become Ramen Profitable, that also means people are willing to pay you, which is something investors care about as well.

Paul Graham also points out that a Ramen Profitable company needs to watch out for accidentally turning into a consulting company. Making $3,000 a month as a consulting company is relatively easy, but consulting is not easy to scale. The definition of a startup must involve profit and growth as its goals.

Calculating My Ramen Profitable Number

At the moment, my biggest expenses are the mortgage (140,000 yen), food (60,000 yen), utilities (about 15,000 yen), and gym membership (14,000 yen), so my minimum standard is about 230,000 yen. Therefore, my short-term goal is to achieve 230,000 yen in monthly profit.

Ramen Profitable Is Only a Stage

In Japan, 230,000 yen is actually a fairly easy number to reach through contract work (if you patiently look for good projects). However, Paul also mentioned that this kind of thing doesn’t really count as a startup.

Finally, Paul also mentioned that an early-stage startup will do all kinds of strange things. A recent example I saw was that Airbnb’s founders were struggling in the beginning, so they started selling cereal halfway through—and it sold extremely well. To improve occupancy rates, they even went to hosts’ homes and hired professional photographers to take pictures. (article link)

That last part gave me some inspiration.

What you’re doing now may be completely different from what you eventually end up building

Everything is a process, so don’t let perfectionism keep you from taking action.

Do you have any Ramen Profitable insights you’d like to share with me? Feel free to email me at me@kalan.dev