Having gone down both the ramen-profitable and the traditional-VC roads, here are some pitfalls that deserve mention with the former. The two are not mutually exclusive, and the angel/VC road has its own well-known brambles, but anyway:
- 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.
"Your biggest fear should not be flaming out spectacularly, but rather creating a zombie that neither truly lives nor dies."
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 think the pitfall you are alluding to is hitting ramen profitability and then spending all day fire fighting rather than creating new features."
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.
That is certainly a scenario but if your startup has stopped growing and you don't have plans for new features to change that then you are walking dead. Then, as you pointed out, you know you have entered a market too small.
couldn't you theoretically attain ramen profitable with minimal fire fighting and NOT create new features - case in point - 37Signals - assuming they didn't have that big base to start with - they could just have been cruising at ramen profitable and not have added a new feature (which I think they've still refused to do so ...)
An awesome alternative to rice and beans, just to throw in some variety, is rice and dal (lentils or split peas). The dal requires several spices, so it's a good idea to invest in a good spice collection. Actually its always a good idea to invest in a spice collection.
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.
The point is to spend all your time working on PRODUCT and not cooking. Otherwise a pot does a better job of cooking rice than a rice cooker, and dried beans beet canned hands down. But those things take time. Were talking bare sustenance, to support that weak flabby life support system programmers call a body until the attached brain has finished making a product.
Sounds like a "recipe" for disaster (excuse the pun).
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.
Mmm, I loves me some dal. If you get tired of Asian-themed food, you can make similarly healthy and cheap fare using black beans and assorted Latin American spices (cumin, chile powder.)
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. :)
Proof of the pudding, what you say is true, startup #1 rice and lentil cooker: http://www.flickr.com/photos/29871022@N03/3753093177/ The yellow lentils would just mush down and it would all be one substance that I could suck down on my single plate with my single fork. Lentil profitable.
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.
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 tried your recipe today, it's not quite as good as the dal the Bangladeshi mother of a friend of mine makes, but it was quite scrumptious and amazingly inexpensive.
I substituted cardamom for cloves and Tapatio sauce for cayenne pepper, and it still turned out well.
What keeps people from starting startups is the fear of having so much responsibility.
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.
What keeps people from starting startups is the fear of having so much responsibility.
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.
We're talking about two difference senses of responsibility. You mean responsibility in the sense of prudence; e.g. "He made a responsible choice." I mean responsibility in the sense of something you have to worry about; e.g. "He was weighed down by responsibilities."
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).
Yes, they are related, but not in a way that makes your comment true.
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.
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.
By my little experience, both of you are right. I´m facing both problems right now, today, this morning. I got a lot of friends with a lot of skills and desire to win building theirs own business, but they are not going to do that ... For example, i have two friends that with me invest on Forex Market. We used to work like slaves, to get our objective, build a profitable forex system (odds of win here are even worse than in the startups world, it´s about 5%). Two straight years of work ... but ... one of my friends get a girlfriend. Now he have to take more responsability because she lives in another city and if he wants to stick with her, he must get a job (some girlfriends are expensive!). Indeed he get one ... but ... he had to quite our little venture, he made a choice of take responsability for his new life (a job and a girlfriend), he could not hold on with the responsability of running behind this "fancy" dream ...
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.
I haven't read the article as yet, but I experience the fear of being weighed down by responsibilities.
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.
It sounds like you need some co-founders to get your project off the ground, preferably at least one that has prior experience with a successful startup and exit.
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.
I think its the same sense of the word. You can only be irresponsible if you have a lot of responsibilities and aren't meeting them. People aren't afraid of that others will think them carefree with and without any troubles which is really more sans responsibilities rather than irresponsible.
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.
Moral weight of risk can get heavy. A recent rubric I came up with to decide if a startup is right for you:
1. You like to build things
2. You like to get rewarded for what you build
3. You can tolerate a high risk of getting no reward
Yeah watch out if your company doesn't have office space and you're working from home. There is this assumption that you just aren't doing anything all day so can run errands and do all sorts of crap for your friends and wife - in other words, you don't have a "real job."
This was my experience as well. People always assume you are available if you don't have a conventional job. This can make time management a challenge.
If you do it from home and have a family (unlike a couple of startup roomates working towards ramen mode), you absolutely need a separate room with a door that means "i am at work" and everyone needs to understand that.
My answer to always being available is that in a startup, i work all the time, and you are probably distracting me.
"many people avoid starting startups because they're afraid of seeming irresponsible."
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... :-)
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.
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".
There're a bunch of counterexamples to that, eg. Blogger (Evan Williams was 28), ViaWeb (Paul Graham was 31), Zenter (founders were in their early 30s), RescueTime (founders are in their 30s), Flickr (founders were about 10 years out of college), Del.icio.us (Joshua Schacter was 29), etc.
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.
Having a kid makes life more regimented (good for startups), a bit less flexible if you're on a "managers schedule", and more expensive.
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.
Sadly true. I'm (almost) 42 and am trying to build a startup. Unfortunately it's still far from being profitable, and I live in a place with no angel investors or VCs available, so I need to keep a day job while coding my app late at night when everyone else (wife and two kids) fall asleep.
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.
Yea, joining a real company may seem to be responsible to the outside world, but starting a startup entails more responsibility than joining an already successful company. And PG here is talking about the actual responsibility which comes with starting a startup which discourages people from starting one, rather than the perceived responsibility of the society.
The problem is that a well-mowed lawn and a flag in front of a house is 'responsible', but the overgrown lawn of a teacher who volunteers her free time is 'irresponsible'.
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.
I've always been so oddball and beyond the norm that I basically decided to embrace it, so the fear of seeming abnormal or irresponsible hasn't ever factored into it, at least for me.
The most successful startups are disruptive. How can someone be disruptive when they're worried about keeping up appearances? To my mind, worrying about what others think of you starting a company might just mean you shouldn't do it at all.
Obviously there's a big difference between whether you are perceived as responsible and whether you really are.
I realise this is probably the least relevant comment this essay is going to get... but you can make good rice in the microwave - the only advantage a rice cooker has is that it will keep your rice warm for hours.
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.
...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...
Are you thinking of the superheating effect? Reasonably pure water in a smooth cup doesn't boil in a microwave. It becomes superheated, and then when moved nucleation sites form causing some of it to flash evaporate into steam and blow up out of the cup, taking lots of very hot water with it. This burns some people making tea or instant coffee.
This almost certainly would never happen in this case as the rice would provide ample nucleation sites.
No, I'm not talking about superheating -- I'm talking about boiling in a sealed container. People do this deliberately with pressure cookers, where the pressure typically reaches double atmospheric pressure; but it can happen to a lower yet still dangerous pressure by accident.
Someone please tell me how a microwave or rice cooker are better than just using a normal old covered pot with a clear lid. I seem to be able to make decent rice if I just very closely follow the correct rice/water/heat/time ratios.
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?
If you cook rice more than once per week, and you're doing it with a pot, you're a masochist. A rice cooker makes the process dramatically less error prone, and the resulting rice is better: fluffier, more consistently cooked, etc. A girlfriend bought me a fuzzy logic rice cooker (about $150, I think) a few years back. Best kitchen device ever. It cooks brown rice, oatmeal, etc. in addition to white rice, and it gets it right every single time. The pan also has measurement marks inside so I don't even have to measure the water.
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).
A girlfriend bought me a fuzzy logic rice cooker (about $150, I think) a few years back. Best kitchen device ever.
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.
Single-use kitchen products are silly, not to mention space-inefficient.
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).
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.
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.
As I mentioned, there are several rice cookers around $25 (my first rice cooker was about $15 at K-Mart). They work very well. I don't know how poor folks the world over cook rice, as I've never had occasion to be really poor (I grew up "poor" by US standards, at least until my teenage years, but not by world standards of poverty). But, I'm not speaking to the world's poor. I strongly suspect that no one reading my post is too poor to afford a $25 rice cooker in order to be able to make cheap meals quickly.
I'm a good cook, but can get distracted when I'm working on something. I have burned up more pots than I like to think about. Now I only cook on a stove top when I'm actually going to be in the kitchen. Microwaves and slow cookers are the greatest inventions ever for someone who lives alone and actually tries to get other things done. Also, cooking a couple of pounds at a time of dry beans in a slow cooker is even cheaper than buying beans in big cans, and many supermarkets have a better selection of dry than canned beans.
Also regarding the recipe: I quibble with the suggestion not to drain the beans. Canned beans tend to be accompanied by a funky smelling bean sludge, IME; if, like me, you find that unappealing, rinse the beans in a colander.
"I quibble with the suggestion not to drain the beans"
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 :-)
I don't rinse the beans from the can; the "bean sludge" you refer to is what makes the juice thick and hearty. Also, in beans (as in rice and other plants) a lot of the trace vitamins and etc are in the hull, and if you are on a rice and beans diet you don't want to be avoiding that.
The introduction of polished rice into asian countries caused a rise in a disease called beriberi among poor people:
Washing removes sodium. It's good for health but not taste. But canning soaks them longer, which is better for digestion. I doubt startups want to spend the time to soak manually. There's a tradeoff.
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?
Who wants to spend the time preparing quality food when you could be rushing back to work to build a company to earn enough money that you can break out of the ordinary working life and spend time really enjoying your life.
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.
FYI there's some concern regarding microwaves heating food so quickly that they destroy much more of the nutritional value compared to conventional cooking.
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.
What interesting timing as just this morning I was listening to a little news bit on NPR where they talked about research into the nutritional impact of various cooking methods (and of _not_ cooking food a la raw food enthusiasts.) The research has shown that you must cook your food to get the full nutritional value of beta carotenoids, lycopenes and a couple of other important nutrients. The cooking method which preserves all nutrients best is the microwave. It is equivalent to or better than other cooking methods for every nutrient they tested does not have any impact on the water-soluable nutrients.
Speed has nothing to do with it. Cooking destroys some heat sensitive vitamins, but the method is neither here nor there, and anyway you are not going to eat raw rice as an alternative.
I don't think it matters here because rice doesn't really have 'nutritional value'. :p
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?
This may be a new concept for men, but I think women have long gone for "ramen profitable". They very often bootstrap their businesses. They usually can't get the same level of credit a man can get. They are often doing it because they are moms who want to be home with the kids, so their first responsibility is to their family, not their business. This means they can't put sufficient time and energy into the business to launch something on a more traditional male model of success (which means they often have no goal to expand from their home office to a more traditional setting). They tend to be more risk-averse than men, in part because they just don't have as much capacity to recover from a big financial mistake as men tend to have. (If women make on average 2/3 what men make, then men are making 1 1/2 times what women make.)
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.
I've read a lot about it over the years, some of it a very long time ago. So no specific titles come to mind. But, in my experience, articles aimed at would-be women entrepreneurs tend to take the bootstrap approach. It's probably an excellent approach during a recession.
Sorry PG, but I have to nitpick the recipe in the footnotes. In general this is a healthful meal. I was particularly pleased to see you recommended keeping the heat low when sauteing, as heating oils beyond their tolerance is a common mistake.
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.
Has anyone considered taking a day job that essentially involves loads of free time and no intellectual property constraints? Perhaps some sort of support or attendant role where your primary duty is to monitor and occasionally deal with incidents.
Assuming such a job existed (I have to believe it does), would this have most of the benefits of ramen profitability?
In high school I worked as a library clerk. Our library was small with only a handful of patrons at a time. I spent the first couple hours of each shift shelving books and doing other data entry tasks, then the rest of the time I pretty much worked on whatever I wanted. The other lady that normally worked with me liked to spend her time reading books.
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.
I had a friend who did this, with a goal not of starting a business, but of reading a ton of literature and philosophy. He ended up just being tired all the time.
It probably really depends on the person...I'm a natural night owl, so once I adjusted to the schedule, it wasn't a big deal. I got a ton of reading and school done during the six months I had that assignment.
During my co-op term, I had a job in a Canadian federal government department (Statistics Canada). I worked maybe one hour a day, and that was enough to get all my projects finished on time.
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 :-)
This strategy clearly lacks some of the benefits of ramen profitability, most obviously the demonstrated ability to get someone to pay for your product. However, I wonder if this approach could serve as a less risky way to pursue ramen profitability. Once you have enough customers, you quit the job.
A great job for this is hotel night auditor, where you look after the front desk, and do some accounting overnight, but have a lot of free time too. Not bad pay either generally.
It's interesting to see highly skilled people with enough business-sense to launch a startup, gathered around here embracing poverty.
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.
"If you want to save money, buy beans in giant cans from discount stores."
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.
Hmm, yes. I was never able to do this consistently, even at my poorest. I think the reason is that it requires you to decide in advance what you're going to eat.
Needing to soak the beans is an artifact of cooking on wood burning stoves. The water breaks down the beans before you cook, which is advantageous if your stove isn't that hot, or you're burning something expensive, like wood.
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).
For any kind of regular sized bean, such as pinto or red kidney, you can't just dump them in and start boiling. A lot of people have told me that you can, but those people's beans have hard centers that don't digest well and give you a tummy ache. There are also people who claim it helps to dump them into boiling water, then turn the heat off, and they can then soak for much less; this also fails in my experiments.
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.
Why would you need a "decently powerful electric"? It's not getting hotter than the boiling point no matter how many BTUs you throw at it. You're right that an increased cooking time is a bigger concern if you have to chop down the wood, but you should be able to do it just fine on anything that can bring a sufficient quantity of water to a boil.
I soak them then cook them in a slow cooker. Because its easier in large batches (I use 2# of beans at a time), I divide any I don't use immediately into quart containers and keep them in the fridge, or even freeze them. That way I have it readily available, usually in a fair selection, when I want them. I have been thinking about beans and rice a lot lately since I got laid off a few weeks ago.
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.
There's another beneficial aspect to not smelling of desperation beyond avoiding being taken advantage of: projecting an "I don't need you" aura is actually attractive -- occasionally maddeningly so. This also applies in dating and job hunting.
Another reason why ramen profitability is important: when you're working on investment, and your revenues don't meet your expenses, you slowly (or quickly) watch your bank account progress to $0. That is really distracting, and occupies your attention when you should be paying attention to your product.
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.
Is there a downside to ramen profitability? Probably the biggest danger is that it might turn you into a consulting firm.
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.)
There's not much new here, aside from pg's (secret?) rice-and-beans recipe and a few corrected misunderstandings from earlier essays. Of course, when you say something once and concisely, everyone misunderstands you and you need to repeat yourself, so don't take this comment as criticism or blame. I just think a careful reading of some of pg's earlier essays yields most of the same information.
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.
I was definitely surprised to see so many comments on here about recipes, when the recipe was a pretty tiny portion of the article! Maybe it reveals a latent demand for recipes specifically aimed at being as cheap as possible.
Well it all depends on the wife/husband. If s/he is earning, and agrees to give you a runway (say 3 years of you not having to pull your financial weight), you essentially get 3 years in which to get to a higher level of profitability. Of course, this all depends on your spouse's career and willingness to enter this, but I know of many marriages that have gone through intertemporal sharing of financial responsibilities.
A minimal profitability trajectory seems to imply minimized costs. A family and mortgage means added costs, so I imagine you'd have to offset that with added revenues. Wives are capable of earning an income, for instance, while mortgages are usually tied to property ownership, which in itself has income opportunities (renting unused bedrooms, or in extreme cases, moving to a place where you're paying less rent than you're collecting from the house) and, once the mortgage is paid off, the potential to reduce recurring housing costs.
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 :)
"Another thing ramen profitability doesn't imply is Joe Kraus's idea that you should put your business model in beta when you put your product in beta. He believes it's a good form of discipline to get people to pay you from the beginning. I think that's too constraining."
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.
Couldn't help throwing my family's Armenian rice pilaf recipe into the mix. Any spiced meat/chickpea/falafel atop is fantastic! Lived on it in college.
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.
"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."
This is a great article that highlights one of the key changes of our times : every day it becomes easier for a new software business to survive and surviving changes the game. I think about the surfing metaphor I have heard VCs use and imagine the ramen profitable company as a surfer who can paddle out to more big waves or the poker player grinding out small pots waiting for an opportunity at a big win. I think information technology is spurring a fundamental cultural change and that just being able to survive with a good infrastructure will lay so many opportunities in front of us in the years to come.
"What keeps people from starting startups is fear".
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.
Yeah I see that and I agree with much of what pg had to say. Sometimes however it might be better to just shoot str8 for 1 million. He used the facebook example and I do not think that was profitable at all before it gained traction.
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.
- 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