A family friend of mine operates a couple small businesses in a rural community. They’ve tried to bootstrap or acquire a couple companies over time, operating them at a loss for a while as they try to make them efficient enough to work.
It’s surprisingly hard to make a break-even business. There’s a common misconception that business owners are all raking in cash at the expensive of their employees, but that’s not easy or common. A lot of small businesses close because it costs more to pay employees than the business can actually bring in (minus operating expenses).
Even many big companies like Uber are operating at a loss, contrary to the public perception that these companies are a rip-off that exploit everyone to the max.
Ironically, in software I’ve seen a lot of people getting compensated far above their output for many years before the company finally catches on. This is one field where people who interview well can get a foot in the door and then coast on organizational inefficiencies at a lot of places while doing very little work. Obviously this doesn’t apply at all companies, but it’s weirdly common to hear engineers bragging here on HN about how few hours they work each week, or even people expressing disbelief that anyone can do more than an hour or two of work each day.