Software industry VS “Real world” industry

I was just reading this article about opening a restaurant in Portland, found on Hacker News. Then, this comment happened: I’ve changed it a bit, but it’s almost untouched. Credits at the end.

It’s amazing how much better we Software folks have it when it comes to starting a business.

The profit margins for a single-player SaaS business (like many, out there, check this) can be somewhere around 90%.

And the interesting thing about that isn’t even the number. It’s that SaaS is so profitable that you don’t even have to calculate your margins.

To an order-of magnitude, every dollar a customer pays for the service can be considered profit. Real Businesses, like restaurants, shops, etc… have expensive office or retail space. We have “wherever we happen to be living at the moment” when it comes to software development.

Real Businesses have employee salaries. We have an industry where a single person can plausibly run every aspect of the business from writing the code to marketing to racking servers to high-touch Enterprise sales.

That single “employee” can have his “salary” set to (Total Profit) / 1.

Real Businesses have equipment and other recurring costs. We have those too, but they’re tiny compared to other types of business. Like, single-digit-thousands per year tiny. All in, for servers, software, dev hardware, etc.

It’s almost unfair, how Software wins in pretty much every category against pretty much everything else.

From an Hacker News comment.

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