Frugality and Entrepreneurship

Inc. Magazine has a (possibly too lengthy) profile, complete with the expected insights, of Paul Graham—author of Hackers and Painters, co-founder of Y Combinator, and all-round entrepreneurship guru.

Cheap meals are, in a strange way, part of Y Combinator’s formula for start-up success. Graham wants founders to spend as little money as possible. Live cheaply enough, he believes, and you can become cash-flow positive without going on a lot of sales calls or spending too much time talking to investors. Graham calls this “ramen profitability” and says it allows companies to say no to bad investment terms and forces them to think about long-term viability. […] “That culture of frugality and discipline is really important for the Y Combinator mindset,” says Sam Altman, founder of Loopt, a graduate of Y Combinator’s first class. “The start-ups that do well are the ones that are working all the time.”

[…] Despite having spent five years painting, Graham long ago put away his brushes. None of his work is on display in his home in Palo Alto, and he’s none too eager to talk about matters of technique or style. But one thing painting taught him was the value of living frugally. “It taught me how to do cheap in a cool way,” Graham says. Artists, Graham discovered, don’t pretend to be rich; they live in sparsely decorated lofts and wear cool vintage clothes. “A start-up is that philosophy applied to business.”