Infinite Games

Less is More.

Ramen Profitable

Ramen Profitable 拉面(方便面)盈利的大意是有饭吃就行,指公司处于一种盈利覆盖支出的状态,便永远不会死。

Now that the term “ramen profitable” has become widespread, I ought to explain precisely what the idea entails.
Ramen profitable means a startup makes just enough to pay the founders’ living expenses. This is a different form of profitability than startups have traditionally aimed for. Traditional profitability means a big bet is finally paying off, whereas the main importance of ramen profitability is that it buys you time. [1]
In the past, a startup would usually become profitable only after raising and spending quite a lot of money. A company making computer hardware might not become profitable for 5 years, during which they spent $50 million. But when they did they might have revenues of $50 million a year. This kind of profitability means the startup has succeeded.
在过去,创业公司通常只有在筹集并投入大量资金后才能实现盈利。一家生产电脑硬件的公司在 5 年内可能无法盈利,在此期间他们花费了 5000 万美元。但当他们这么做的时候,他们可能每年有 5000 万美元的收入。这种盈利能力意味着创业公司已经成功了。
Ramen profitability is the other extreme: a startup that becomes profitable after 2 months, even though its revenues are only $3000 a month, because the only employees are a couple 25 year old founders who can live on practically nothing. Revenues of $3000 a month do not mean the company has succeeded. But it does share something with the one that’s profitable in the traditional way: they don’t need to raise money to survive.
Ramen profitability is an unfamiliar idea to most people because it only recently became feasible. It’s still not feasible for a lot of startups; it would not be for most biotech startups, for example; but it is for many software startups because they’re now so cheap. For many, the only real cost is the founders’ living expenses.
The main significance of this type of profitability is that you’re no longer at the mercy of investors. If you’re still losing money, then eventually you’ll either have to raise more or shut down. Once you’re ramen profitable this painful choice goes away. You can still raise money, but you don’t have to do it now.


The most obvious advantage of not needing money is that you can get better terms. If investors know you need money, they’ll sometimes take advantage of you. Some may even deliberately stall, because they know that as you run out of money you’ll become increasingly pliable.
But there are also three less obvious advantages of ramen profitability. One is that it makes you more attractive to investors. If you’re already profitable, on however small a scale, it shows that (a) you can get at least someone to pay you, (b) you’re serious about building things people want, and © you’re disciplined enough to keep expenses low.
This is reassuring to investors, because you’ve addressed three of their biggest worries. It’s common for them to fund companies that have smart founders and a big market, and yet still fail. When these companies fail, it’s usually because (a) people wouldn’t pay for what they made, e.g. because it was too hard to sell to them, or the market wasn’t ready yet, (b) the founders solved the wrong problem, instead of paying attention to what users needed, or © the company spent too much and burned through their funding before they started to make money. If you’re ramen profitable, you’re already avoiding these mistakes.
Another advantage of ramen profitability is that it’s good for morale. A company tends to feel rather theoretical when you first start it. It’s legally a company, but you feel like you’re lying when you call it one. When people start to pay you significant amounts, the company starts to feel real. And your own living expenses are the milestone you feel most, because at that point the future flips state. Now survival is the default, instead of dying.

A morale boost on that scale is very valuable in a startup, because the moral weight of running a startup is what makes it hard. Startups are still very rare. Why don’t more people do it? The financial risk? Plenty of 25 year olds save nothing anyway. The long hours? Plenty of people work just as long hours in regular jobs. What keeps people from starting startups is the fear of having so much responsibility. And this is not an irrational fear: it really is hard to bear.

Anything that takes some of that weight off you will greatly increase your chances of surviving.



A startup that reaches ramen profitability may 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.
The fourth advantage of ramen profitability is the least obvious but may be the most important. If you don’t need to raise money, you don’t have to interrupt working on the company to do it.
Raising money is terribly distracting. You’re lucky if your productivity is a third of what it was before. And it can last for months.
I didn’t understand (or rather, remember) precisely why raising money was so distracting till earlier this year. I’d noticed that startups we funded would usually grind to a halt when they switched to raising money, but I didn’t remember exactly why till YC raised money itself. We had a comparatively easy time of it; the first people I asked said yes; but it took months to work out the details, and during that time I got hardly any real work done. Why? Because I thought about it all the time.
直到今年早些时候,我才明白(或者更确切地说,我还记得)为什么筹集资金会让人如此分心。我注意到,当我们投资的初创公司开始融资时,他们通常会陷入停顿,但我不记得 YC 自己融资之前为什么会这样。因为我们做得比较轻松;我问的第一个人就答应了融资,但我花了好几个月的时间来解决细节问题,在这段时间里,我几乎没有完成任何实质性的工作。为什么?因为我一直在想这件事。
At any given time there tends to be one problem that’s the most urgent for a startup. This is what you think about as you fall asleep at night and when you take a shower in the morning. And when you start raising money, that becomes the problem you think about. You only take one shower in the morning, and if you’re thinking about investors during it, then you’re not thinking about the product.


被 rasie money 占据最高优先级。

Whereas if you can choose when you raise money, you can pick a time when you’re not in the middle of something else, and you can probably also insist that the round close fast. You may even be able to avoid having the round occupy your thoughts, if you don’t care whether it closes.


Ramen profitable means no more than the definition implies. It does not, for example, imply that you’re “bootstrapping” the startup—that you’re never going to take money from investors. Empirically that doesn’t seem to work very well. Few startups succeed without taking investment. Maybe as startups get cheaper it will become more common. On the other hand, the money is there, waiting to be invested. If startups need it less, they’ll be able to get it on better terms, which will make them more inclined to take it. That will tend to produce an equilibrium. [2]
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 you should 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. Making money right away was not only unnecessary for them, but probably would have been harmful. I do think Joe’s rule could be useful for many startups, though. When founders seem unfocused, I sometimes suggest they try to get customers to pay them for something, in the hope that this constraint will prod them into action.

另一件拉面盈利能力不能暗示的事情是Joe Kraus的想法,即当你把你的产品放入测试时,你应该把你的商业模式放入测试。他认为,你应该从一开始就让人们付钱给你。我认为这太拘束了。Facebook没有,而且他们比大多数初创公司做得更好。马上赚钱对他们来说不仅没有必要,而且可能会有害。不过,我确实认为乔的规则对很多初创公司都有用。当创始人看起来注意力不集中时,我有时会建议他们尝试让客户为某些东西付钱,希望这种约束能促使他们采取行动。


The difference between Joe’s idea and ramen profitability is that a ramen profitable company doesn’t have to be making money the way it ultimately will. It just has to be making money. The most famous example is Google, which initially made money by licensing search to sites like Yahoo.
Joe 的想法和拉面盈利能力的区别在于,一家拉面盈利的公司不一定要按照它最终的方式赚钱。它必须要赚钱。最著名的例子是谷歌,它最初通过授权给雅虎这样的网站来赚钱。
Is there a downside to ramen profitability? Probably the biggest danger is that it might turn you into a consulting firm. Startups have to be product companies, in the sense of making a single thing that everyone uses. The defining quality of startups is that they grow fast, and consulting just can’t scale the way a product can. [3] But it’s pretty easy to make $3000 a month consulting; in fact, that would be a low rate for contract programming. So there could be a temptation to slide into consulting, and telling yourselves you’re a ramen profitable startup, when in fact you’re not a startup at all.
拉面的盈利能力有负面影响吗?可能最大的危险是,它可能会把你变成一家咨询公司。创业公司必须是产品公司,从制造每个人都使用的单一产品的意义上来说。对于初创公司来说,最重要的是他们成长迅速,而咨询公司无法像产品那样扩大规模。但是一个月赚 3000 美元的咨询费是很容易的;事实上,这对于合同来说是很低的价格。所以可能会有一种进入咨询行业的诱惑,告诉自己你是一家盈利的初创公司,而实际上你根本不是一家初创公司。
It’s ok to do a little consulting-type work at first. Startups usually have to do something weird at first. But remember that ramen profitability is not the destination. A startup’s destination is to grow really big; ramen profitability is a trick for not dying en route.


[2] There’s a good chance that a shift in power from investors to founders would actually increase the size of the venture business. I think investors currently err too far on the side of being harsh to founders. If they were forced to stop, the whole venture business would work better, and you might see something like the increase in trade you always see when restrictive laws are removed.

Investors are one of the biggest sources of pain for founders; if they stopped causing so much pain, it would be better to be a founder; and if it were better to be a founder, more people would do it.



[3] It’s conceivable that a startup could grow big by transforming consulting into a form that would scale. But if they did that they’d really be a product company.