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Comment by notforviewingit | Hacker News Reader

Yeah I have been wondering this myself as well. I'm one of 3 co-founders in a bootstrapped company doing consultancy for a few years in a LCOL area. We have been paying founders 50k/year salaries for the life of the company. We haven't been especially lucky and we haven't been super brilliant in our business decisions. Yet we are doing fairly well.

This year we made 400k revenue, 150k profit and 40% growth. Our sales prospect are a lot better than at the start of the year. So I'm expecting to have another strong year of growth next year. Also we are nowhere near saturating the market and can have strong growth for many years to come.

Salary + 1/3 of profits is equal to 100k for this year. 40% growth doubles the company every 2 years, If everything goes well just salary + profits will grow very nicely. Then on top of this come the exit opportunities where founders will make millions.

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Product and service businesses are very very very different things. Service you get immediate cashflow but the thing doesn't scale past the humans. Software scales infinitely in theory, but it takes a lot of time to build before you even get 1$ out of it.

I've know quite a few businesses that started with services then transitioned into product. Once you have enough domain knowledge it is the obvious next step.

You can hire people into consultancy business and grow it like any other business. Sure it won't become the next magnificent seven, but you can grow it enough that you can make a lot of money.

For example, there exist plenty of consultancy companies that have 10million revenue. That would be 20x growth for us. In practice that would mean 500k - 1m yearly income for founders in our case. On top of that the company probably could be sold for 30m - 100m.

With typical vc dilution founders need to grow a very successful product company to earn similar amounts of money. There are plenty of examples of unicorn exits where the founder team has made less.

'Just' making money is not very hard in IT. We have been for decades and it's only growing; we do emergency software fixes which means we can ask whatever. We do not, we have a high hourly rate but it is usually clear what it will cost. We don't grow because I do not want a big company and good people are almost impossible to find, but there are way too many projects as, and I know HN doesn't believe this in a survivor bias kind of way, software is getting worse very fast (thanks node and python; and we used to laugh at php; that's more or less a joy these days) so our regular clients are calling more often year after year and new clients come in at a rate I don't care for. But the dream still is products, not consulting; I sold my first product company 25 years ago; I shouldn't have. Nice money but I want it back; consulting is nice and we make a lot for the past 25 years, but making products is nicer so we are now doing 50/50 products vs consulting and hoping it will work. We don't have to work for decades already but why not if it's fun?

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