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Congratulations on your success- but you must realize that a 400 person, instantly profitable service company is the exception, not the norm. The vast majority

by il 14y ago

Congratulations on your success- but you must realize that a 400 person, instantly profitable service company is the exception, not the norm. The vast majority of service companies are two guys in a garage treading water and struggling to survive. You probably won't be the next Facebook, but, generally speaking, it's a lot easier for a software company "Micro ISV" to get leverage and scale than a service company- that's why service companies don't get funded. Thanks for the detailed response- it was a really interesting read and great perspective for me to think about.

tluyben2 14y ago
Well, I am doing it again now and it works again. I think services companies don't get funded (in general, because they DO get funded once they get to a certain size) because they don't scale. If you invest $10 million in a service company, there is almost no chance you'll get a ROI of 1000% or even 10000%, but you actually, in my experience (but we actually might be an exception; the ONLY thing I see us doing differently from most companies on HN is that we watch the bottom line from the get-go; if there is $1 going out, there WILL be $1.3-2 coming in from the very first day we start) can expect 150-200% which is surely a better invest than most things you can invest in. And of course, 200-10000% ROI is on that ONE company that makes it, out of N companies invested in. Again, in my experience with services, and i'm talking bars/clubs, laundry services and software services; all of which I or very good friends have experience with, there is not that much failure going on. One of my good friends opens bars/clubs ; he gets $300k investment, opens up, hires people, makes everything run and the investor gets about $1 million back after a few years. Every time, even in crisis times. Why? My friend is brilliant at this and it's definitely not 'luck'; he knows what he is doing. Accidentally I met another guy in the place I live now who I befriended who does exactly the same; different country, different rules, different times and he does EXACTLY the same; from the way he finds places, does the makeover/revamp, hires and trains people etc. I learned a lot from these guys; if you work the same way in a software company it works as well. Of course the skills are different, but the management style the same. I can honestly tell you that every services company I will start or mentor will make profit and enough profit to have a really nice life. And I know a lot more of these. So I really think that there is a difference here :) If you want you can mail me, we can chat a bit, always interesting to meet people.

by il 14y ago

tluyben2 14y ago

Well, I am doing it again now and it works again. I think services companies don't get funded (in general, because they DO get funded once they get to a certain size) because they don't scale. If you invest $10 million in a service company, there is almost no chance you'll get a ROI of 1000% or even 10000%, but you actually, in my experience (but we actually might be an exception; the ONLY thing I see us doing differently from most companies on HN is that we watch the bottom line from the get-go; if there is $1 going out, there WILL be $1.3-2 coming in from the very first day we start) can expect 150-200% which is surely a better invest than most things you can invest in. And of course, 200-10000% ROI is on that ONE company that makes it, out of N companies invested in. Again, in my experience with services, and i'm talking bars/clubs, laundry services and software services; all of which I or very good friends have experience with, there is not that much failure going on. One of my good friends opens bars/clubs ; he gets $300k investment, opens up, hires people, makes everything run and the investor gets about $1 million back after a few years. Every time, even in crisis times. Why? My friend is brilliant at this and it's definitely not 'luck'; he knows what he is doing. Accidentally I met another guy in the place I live now who I befriended who does exactly the same; different country, different rules, different times and he does EXACTLY the same; from the way he finds places, does the makeover/revamp, hires and trains people etc. I learned a lot from these guys; if you work the same way in a software company it works as well. Of course the skills are different, but the management style the same. I can honestly tell you that every services company I will start or mentor will make profit and enough profit to have a really nice life. And I know a lot more of these. So I really think that there is a difference here :) If you want you can mail me, we can chat a bit, always interesting to meet people.