There are two ways to make money in software:
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Services: You build what the customer asks for. (Consulting, Dev Agencies).
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Product: You build what the market needs. (SaaS, Tools).
Most founders start in Services because it pays the bills immediately. But if you stay there, you are not building a business. You are building a Job with Overhead.
The Math of Servitude
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Service Business:
Revenue = Headcount × Hourly Rate. To grow, you must hire. Complexity grows with revenue. Margins are eaten by management overhead. You are selling Time. -
Product Business:
Revenue = Users × Subscription. To grow, you do not need to add humans linearly. You are selling Code.
Code is the only form of leverage that can work while you sleep. A service agreement requires you to be awake.
The “Golden Handcuffs” Trap Services are addictive. You send an invoice, you get paid. Products are brutal. You build for 6 months, you get $0. The “Trap” is that successful service founders get used to the cash flow. They become too afraid to invest the time/money required to build the Product. They die rich (cash-heavy) but poor (asset-light).
The Protocol: The Bridge If you are in Services today:
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Do not quit. (You need the cash).
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Identify the Pattern. What problem do you solve manually for every client?
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Codify the Solution. Build a tool that solves that specific problem.
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Sell the Tool. Initially to your existing clients, then to the world.
Use the Service to fund the Product. But never confuse the two. The Service is the Fuel. The Product is the Engine.
#DhandheKaFunda: Wealth is not determined by how hard you work. It is determined by the disconnect between your inputs (time) and your outputs (revenue).