7. Practicing Ramen Profitability
Ramen Profitable—I first came across this term in an essay by YC founder Paul Graham. It’s the state I’m aiming to achieve in the short term, so I wanted to touch on it here.
Recently popular terms like Lifestyle Business share a similar concept.
What Is Ramen Profitable?
Ramen profitability is a business model focused on sustaining just enough income to cover basic living expenses while keeping operations running. Instead of chasing venture capital and hyper-growth, you focus on reaching a baseline profit level that sustains your life—simply put, being able to afford ramen. Once your business reaches this stage, you escape survival mode and gain far more freedom to build what you want.
(Paul noted in his essay that ramen is just a metaphor—eating instant ramen all the time when you’re broke isn’t healthy, and you might buy rice or beans instead.)
I’ve noticed that when many people hear the word entrepreneurship, their knee-jerk reaction is incorporating a company, raising a round of funding, and then kicking off their venture. But starting a business doesn’t require setting up a formal company right away, nor does it require burning tons of cash—especially in software development.
If you’re doing hardware, a brick-and-mortar business, or biotech (as Paul mentions in his essay), achieving ramen profitability is tough. Production, storefronts, equipment, and R&D costs are inevitable; initial outlays are simply too high to start for next to nothing. But software development is different.
Advances in the internet, technology, and compute power have made software development remarkably cheap. With just a laptop and an internet connection—plus the wave of recent AI tools dramatically lowering the barrier to entry—you can validate a market with minimal upfront cost.
The only downside is the sheer amount of noise online. Without any technical understanding, it’s easy to take detours or waste money unnecessarily.
Why Pursue Ramen Profitability?
Pursuing ramen profitability offers several perks. First, you don’t have to do things you dislike just to take an investor’s check. Paul Graham points out in his essay that fundraising dramatically tanks your productivity. Moreover, predatory investors can sense when your company is running on fumes and will exploit you when you need money the most.
Another less obvious benefit: proving that your company is ramen profitable demonstrates that people are actually willing to pay for your product, which happens to be something investors care deeply about anyway.
Paul Graham also cautioned that ramen-profitable businesses must be careful not to accidentally turn into consulting firms. Making $3,000 a month consulting is relatively easy, but consulting doesn’t scale easily. By definition, a startup must aim for profitability through scalable growth.
Calculating My Ramen Profitability
Right now, my biggest monthly expenses are my mortgage (140,000 yen), food (60,000 yen), utilities (about 15,000 yen), and gym membership (14,000 yen). That puts my bare-minimum baseline at roughly 230,000 yen. Therefore, my short-term target is to generate a monthly profit of 230,000 yen.
Ramen Profitability Is Just a Stage
In Japan, hitting 230,000 yen through freelancing (with a bit of patience in finding decent gigs) is actually quite achievable. But as Paul mentioned, that doesn’t really qualify as a startup.
Finally, Paul noted that early-stage startups often end up doing weird, unexpected things. A recent example that stood out to me was Airbnb: in the early days when business was struggling, the founders pivoted to selling custom cereal boxes, which ended up becoming a huge hit. And to fix their low booking rates, they personally flew out to hosts’ apartments to take professional photos. (Article link)
That final takeaway really inspired me:
What you’re working on right now might lead to a completely different outcome in the end.
It’s all part of the process. Don’t let perfectionism paralyze you from taking action.
Do you have your own experiences or thoughts on ramen profitability? Feel free to drop me an email at me@kalan.dev.
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