The Muffin Company - 5
2026-07-13
Ok I think this will be the final blog post about ‘The Muffin Company’ as a start up. Here is what we have so far:
- Found a company
- Back of the napkin math and plans
- Gathered recipes
- Done some basic market research
- Created an MVP (one dozen perfect muffins)
- Told our family and friends about the company
- Tried a bunch of things for a year and found what worked
I have again never gotten this far with a real company and perhaps I never will. This is all conjecture (is that the right way to use that word) at this point. Hopefully with all of our sales we are finally covering our expenses. We buy flour, water, blueberries, gas (for the truck), chocolate chips every day. We have formed some good relationships with vendors, we get high quality fruit year round at a good price. And perhaps we have hit something called ramen profitability:
https://paulgraham.com/ramenprofitable.html
This is a long article you don’t have to read it, basically we are making enough money to barely cover expenses and to eat ‘ramen’ everyday. We can call it the barely profitable stage.
And so we as the founder are making a living, barely, but making a living. Lets say we can pay off the loans for the truck each month, we live in a small place in SF, we have a few part time workers for busy days, we pay our bills but aren’t saving much, we dont have health insurance, etc.
But lets also say we have pretty high demand, people really like our muffins, they are always good quality, we sell out every day. There is a tiny cult following for our truck. We really have hit on something here.
And the next step is to scale, a small amount. Even though we aren’t making a lot of profit we have hit the product market fit stage and scaling is possible. Let say we get a small loan from our parents, who believe in us and have some money lying (laying?) around, and we buy:
- A professional oven
- One more muffin truck
- The salaries of a few more employees
With the new oven and the second food truck we are able to double our output (lets say) and some of the expense have doubled (we have twice the muffin truck payments to make). These are what I think of as variable costs (they scale with the business) and so we don’t make any more money on this side. Also we had a bunch of additional fixed costs, the oven and the down payment on the second muffin truck. But many of our costs didn’t scale, lets say I am making all of the muffins and I can make double batches now. Actually since we used to sell out there was some extra demand so we can either up the prices or make triple batches, lets say we go with the triple batches.
So we 3x our revenue with 2x our variable costs, this is going well. It takes a few months to settle in but eventually we go from ramen profitability to steak and lobster profitability, we pay back our loans to our parents, we pay off the principle on the food trucks, we move our operations from our apartment (the fictional one in SF) to a small warehouse space (also fictional, also in SF).
And so slowly we scale our business. I have joined a few software starts up at this stage, after people get product market fit and they try to scale sometimes I am able to join and help them try to reach more customers and expand their business.
-Gary