“Get Ramen Profitable”

Written April 30th, 2009 by
Categories: CEO's Blog
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Paul Graham, a venture capitalist and eCommerce pioneer, recently posted 13 pointers for aspiring entrepreneurs on his website.  While all 13 pointers make perfect sense to me, and I'm sure Paul would be happy to know that we at b2b2dot0 are intuitive followers of his wisdom, the "Get Ramen Profitable" pointer really hit home with me.

Here is what Paul says about "Get Ramen Profitable":

"Ramen profitable" means a startup makes just enough to pay the
founders' living expenses…Once you cross over into ramen profitable, it completely
changes your relationship with investors. It's also great for
morale.
"

While b2b2dot0 was cash flow positive within two quarters of
our incorporation, for our first full year we plowed all of our revenues back into the business .  At the end of last quarter, our fifth quarter in business, we wrote ourselves our first paychecks. 

There was something very special about that milestone and, at the time, I really didn't know how to describe the full set of emotions that I was experiencing.

To be sure, we weren't overly excited about the size of our first checks.  They were hardly big enough to even come close to supporting the lifestyles to which we've become accustomed.  Nevertheless, it was a paycheck, it was exactly as we had planned it 15 months earlier, and it felt great.  And because of our recurring revenue model, unless we really screwed up (a great negative motivator), we could expect our paychecks to do nothing but grow over the next couple of years. Again, just as planned!

So here we were in the midst of a deep recession and we managed to get our company up and running and on sure enough footing to draw salaries and maybe even secure our future.  It was exhilarating. 

Our three paying production customers proved the value of our business model.  We also demonstrated an ability to attract talented people to work with us who collectively helped us develop, sell, implement and support an enterprise class Software-as-a-Service solution.

Thanks to Paul Graham, I now have words for this milestone.  The founders of b2b2dot0 (me, Adrian Zehnder and Joe Pryor) have recently become "Ramen Profitable"…it's…great for morale!"

Sam