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Flexport founder Ryan Peterson on getting “ramen profitable”

December 14, 2023

Ryan Peterson is the founder and CEO of Flexport, which was valued at more than $8 billion last year.

In the clip below, he talks about how he adopted Paul Graham’s “be a cockroach” philosophy and aimed for “ramen profitability” with the company he started before Flexport (Import Genius) which didn’t raise venture capital.

He adjusted his lifestyle to minimize his living expenses. And then to cover those expenses, he picked up part-time jobs that still allowed him to spend most of his time working on his startup. He wrote case studies for Columbia Business School, tutored people for the GMAT, and did SEO consulting.

“That gave me freedom to be successful on any time horizon. I couldn’t die. My expenses were low… It took me a number of years before we found success, but success was certain because we didn’t have this time horizon where the idea had to work in 18 months or else the company would go bankrupt.”

Paul Graham describes this as being “Ramen Profitable”:

“Ramen profitable means a startup makes just enough to pay the founders' living expenses… The main significance of this type of profitability is that you're no longer at the mercy of investors.”

This is probably the best approach if you can’t or don’t want to raise venture capital today. The revenue to cover your living expenses can come from your startup or—as was the case for Ryan—part time jobs (or a full-time job) that offer the flexibility to still devote a material chunk of your time to your startup.

The other main benefit of ramen profitability is that it’ll improve your ability to raise money in the future. If you don’t need money from investors, it’ll improve your negotiating position, and you can get better terms.

Airbnb is another good example of ramen profitability. Their goal during Y Combinator was to make $4,000 per month from the business which would cover $3,500 for rent, and $500 for food. They taped this goal to the mirror in the bathroom of their apartment until they eventually hit it.