Feasibility of implementing Ramen Profitability in product driven startups
Ramen Profitability, if we go by theory/definition, talks about earning revenue until the living expenses of the founders/investors are met. So it is very clear that the intention is not to look for growth by fixing deadlines which usually every other startup does. It is a peculiar concept when compared to few others which are followed by today’s startup founders. This concept is attributed or linked to consultancy firms for the basic reason that there is less iteration in the process and the approach is by large unilateral.
Now let’s understand why this concept is not suitable for product driven startups.
a.) Seed funding wouldn’t be much of a concern but when it comes to the later stages such as VC, Series A etc. there is an anticipation and an expectation by the investors that the company will grow or should grow at the proposed rate so that the benefits of the returns can be availed.
b.) There is a lot of back and forth movement between ideation and implementation stage which will further propel the founders to pump in more and more capital before the actual beta version is launched.
c.) A lot depends on the success of the product in the first go (which usually doesn’t happen in the case of ‘technological product’ driven startups) failing to which the pressure from the investors towards the founders to deliver is understandably high.
The above reasons together are just the broader version of many other impracticabilities that arise if this concept is implemented in product driven startups.
But do we have an area where we can really implement this ? The answer is NO to the advanced stages of the product development as such.
A peep into the term ‘technology start up’ !!!
Not everyone agree with Ramen profitability, hence, a different perspective which talks about being ramen sustainable rather than being ramen profitable.
Still wondering what made me to write the above article ? Here goes the link (below) which has sprouted that thought of ramen profitability as a concept not being effective in product driven start ups (of course , my class room learning has also played a major role in developing a view point) along with the article by Paul Graham
