Forget The MBA: How About a Masters In Startup Awesomeness?

By Dharmesh Shah on November 7, 2011

This weekend marks the 6 year anniversary of OnStartups.com (it was launched on November 5, 2005).  The OnStartups community has grown -- a lot.  There are now over 30,000 RSS subscribers, and 218,000 members in the OnStartups LinkedIn Group -- making it the largest entrepreneurial community on LinkedIn.  There's also OnStartups on Facebook, with over 27,000 people there.  And, of course, the Q&A OnStartups powered by StackExchange. 

Thanks very much for all of the support and encouragement over the years.  The blog started as a birthday present to myself, but it also had an academic purpose.  I was working on my master's degree at MIT at the time, and as part of my degree requirements, I had to write a graduate thesis. The title of my thesis was “On Startups: The Patterns and Practices of Contemporary Software Entrepreneurs”. I needed some “real world” feedback from actual software entrepreneurs to include in the thesis. I figured out quickly that this would involve talking to humans (something I found reasonably unpleasant). And, I had heard about this “blogging thing” so decided to give it a shot. I took the first two words of my thesis title, tacked it together, and came up with OnStartups.com.graduate onstartups

I had a really good time in business school at MIT. Learned a lot, met some exceptional people.  But, I think the whole MBA thing is a little old-fashioned. How many people do you know that want to get really good at business administation? What would be cool instead is a Masters in Business Awesomeness.  The coolest would be a Masters in Startup Awesomeness. Of course, there is no such thing, and no university you can go to get that degree yet (but there should be).  The good news is MIT -- and other great universities are starting to introduce much more entrepreneurial content in their programs. [Shout out to my friend Bill Aulet, chair of the MIT Entrepreneurship Center]

So, below, are some of my favorite (and I think most useful) articles from 6 years of OnStartups.com. If I were to design a curriculum for the Masters In Startup Awesomeness, some of this material would likely be included. I recognize that this a lot of stuff, so feel free to just bookmark this article and read later.

The Best Articles From 6 Years of OnStartups.com 

Sales and Marketing

Startup Websites That Work

Startup Marketing: Tactical Tips From The Trenches

17 Mutable Suggestions for Naming A Startup

The 5 Minute Guide to Cheap Startup Advertising

Building Startup Sales Teams: Tips for Founders

How to Pick a Company Name: Tips From The Trenches

A Geek's Guide to Hiring Marketing People

5 Startup Sales Tips From Turkish Rug Dealers

The 900 Pound Gorrilla: Why Strategic Partnerships Aren't

People

Choosing A Minimum Viable Co-Founder

14 Ways To Be A Great Startup CEO

The 11 Harsh Realities of Being An Entrepreneur

SaaS 101: 7 Simple Insights From Inside HubSpot

Startup Founder Compensation: The Good, The Bad and the Irrelevant

17 Pithy Insights for Startup Employees

Startup Hiring: Why You Should Date Before Getting Married

Pricing

Important Questions Startup Co-Founders Should Ask Each Other

How to Price Software Without Just Rolling The Dice

Startups and the Challenges Of The Freemium Pricing Model

Strategy

4 Quick Tips on Raising Funding Without a Plan or a PowerPoint

14 Reasons Why You Need To Start A Startup

The @dharmesh Test: 16 Questions for Better SaaS Companies

Startups: 10 Things MBA Schools Won't Teach You

Startups: Your Customers Are Not Ignorant, Selfish, Control Freaks

Development Shortcuts Are Not Free: Understanding Technology Debt

17 Pithy Insights for Startup Founders

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Thanks again for all of your support.  If you want to find me online, I'm @dharmesh on twitter and +Dharmesh Shah  

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Startups: You're Not Really Ramen Profitable, You're Ramen Sustainable

By Dharmesh Shah on October 21, 2011

A new phrase entered the startup vocabulary a little while ago: “Ramen Profitable”. The phrase is used to reference startups that are making enough money for the founders to live on the startup staple of Ramen noodles. [For our friends in India, Ramen noodles are similar to what you would know locally as “Maggie”, which is what I grew up on. I like the Masala flavored one].ramen

So, here's my issue with the term “Ramen Profitable” — in most cases where it's being applied, the company's not really profitable. Reason? Because the entrepreneurs/founders are paying themselves negligible (if any) salary. This distorts the actual value being created. Some of you might argue that founder's are simply making an investment of their time/energy, in lieu of salary. That's a wonderful thing, but from an accounting perspective, just because you're not properly calculating expenses, doesn't mean it's profit. To be fair and more accurate, founders should look at their fair market value to determine actual profitability.  

For example: Lets say you happened to inherit some prime real-estate in downtown San Francisco. You got it for free. Now, you open a really swank gelato bar for Python developers. If you weren't charging yourself any rent for that space, nor paying yourself anything, and the business made $100/day, would you really consider that profitable? You could have rented the space out at fair market value for much more money than that.  I'd argue you're losing money -- and I'd be right.

My point: It's awesome for startups to get to a point that they're not reliant on external funding sources to survive. Paul Graham describes this well in "Ramen Profitable".  Great article and I agree with his points -- particularly around the morale boost.  But, I'd call this stage of a startup “Ramen Sustainable”. This stage gets a startup “infinite runway”. This can be a very good thing, because the entrepreneur can than tweak, iterate, pivot to her heart's content. But, that's also the problem with Ramen Sustainable startups. The entrepreneur may keep going longer than would have been warranted, instead of moving on to their next big idea.  

Oh, and on a closing note (which came up in discussion as a result of an article by Scott Kirsner (of the Boston Globe), titled “Is Boston spawning too many startups, and starving growth companies for talent?” My thoughts on this:

You can never have too many startups, but you can have too few shutdowns.

Do you think I'm right about the Ramen Sustainable vs. Ramen Profitable characterization? Any thoughts on the pros and cons of reaching this stage in a startup?  How do you know when your Ramen Sustainble startup is better off being shutdown so you can move on to bigger things?

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