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Definition
A startup is said to be ramen profitable when it’s able to generate almost enough revenue for its own survival. Typically, the profit generated only covers the founder’s or the creator’s expenses & other basic necessities.
How is it useful?
Paul Graham points out that the real idea of these types of startups is that they give their founders a good amount of free time. That is the startup doesn’t demand an active or high number of hours for its functionality.
Example
There are a lot of small & niche tools present on the internet, i.e. SaaS. In most cases, it’s a 1-time effort that the creator takes to build the project. Then through running ads or by offering customized features, the creator earns a standard amount of money on a recurring basis.
A tool like remove(dot)bg that removes the background of a photo, might not be able to generate millions of dollars every month, but it generates enough money for its self-sustainability & creator’s expenses.