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"Starting consulting is easy - you just start charging people for your expertise. The hard part is knowing when to stop.""If you can't get consulting clients, you probably can't get product customers either.""The goal isn't to choose between consulting and products. The goal is to use consulting to fund the transition to products that actually work.""When you know your personal 'enough' number, you can make strategic decisions instead of desperate ones.""Consulting gave me the freedom to experiment with SimpleDirect without going broke.""Life isn't a binary choice. You can keep consulting longer than planned if it feels financially safer."
Founder Reality with George Pu. Real talk from a technical founder building AI-powered businesses in the trenches. No highlight reel, no startup theater – just honest insights from someone who codes, ships, and scales.
Every week, George breaks down the messy, unfiltered decisions behind building a bootstrap software company. From saying yes to projects you don't know how to build, to navigating AI hype vs. reality, to the mental models that actually matter for technical founders.
Whether you're a developer thinking about starting a company, a founder scaling your first product, or a technical leader building AI features, this show gives you the frameworks and hard-won lessons you won't find in the startup content circus.
George Pu is a software engineer turned founder building multiple AI-powered businesses. He's bootstrapped companies, shipped products that matter, and learned the hard way what works and what's just noise.
Follow along as he builds in public and shares what's really happening behind the scenes.
New episodes every Monday, Wednesday, and Friday.
George Pu (00:00)
Hi everyone. Welcome back to the founder REALITY podcast. I'm your host George pu And today I want to share with you some lessons from a recent free ebook, the anti unicorn, the consulting model in which I really talked about like how you can start a consulting model with your idea, make money first before, you know, making it into a product, which is very contrary to how most of Silicon Valley thinks, right? So in Silicon Valley, a lot of the thinking is that you build first, you validate first, you do the link startup first.
and then try to sell a product that's like $29 per month, 49 per month, or 99 per month to business customers per user. And then trying to use that to scale. So I have lived through it and I have put my personal experiences in the book, about arguing basically why I don't think it's a good route. But in today's episode, I want to talk a little bit about a question that many of you readers might be asking. So for example, like George, I have built a successful consulting company from having an idea.
However, I really have a question about when do I stop consulting and actually build a product? Right. So because like for myself, I can talk about my personal experience for the past three years. it was a really difficult past, you know, I guess like right before I started consulting, it was very difficult. Our cashflow basically went to negative and I was under almost, I think $20,000 of debt that's on the business side and everything was going nowhere.
And it was extremely, extremely difficult time for me and the business. And basically the past three years I have wrenched up the consulting side. have made six figures, of course, each year on this revenue of basically doing consulting. But the main problem, think a lot of us are asking is like, George, like, when do I stop consulting? Right. Like, like I said, like I'm actually in that phase myself. and the real reason about, you know, it's not about stopping consulting per se. It's more about like, you know, how can I make actually build.
this into a sustainable product that can be scalable, right? Because let's be honest, like when you do reach a number that's like personally safe for you, right? For example, like for me, I post it on Twitter a lot of times that for myself, I'm actually comfortable on a $48,000 annual salary, which is post-tax. So before tax is roughly like 63,000 and then after tax is roughly $4,000 per month. And I live a fairly frugal life.
So I can actually be okay with that amount of money, living with that amount of money, even though was like some, someone's sure it's like short, but I'm taking money out from the business, paying myself. And then the majority of the money is still in the business compound. Right. That's, think it's what makes the model so beautiful. but you know, getting back to the topic of like myself, I really feel like I'm selling my time on consulting side. Like it's been three years where I'm doing consulting and the question is like,
how, you know, what is next, right? Because when I look at KPMG, when I look at Ernest and Yon and different companies and law firms, accounting firms, right? Like any firm that's scaled to a national level in the US, you know, here in Canada, like Australia, UK, you see that they have to actually scale with people, right? Like KPMG, I believe has 128,000 employees, if I'm not mistaken. And I actually know a few friends who work there.
So basically they are a large corporation and they cannot simply scale their revenue without scaling the people. Right. And I talked about the example like Basecamp, which is a pretty good example because Basecamp actually has about 60 people overall and they're a SaaS product. And, but they actually started out doing web consulting and then they realized that, you know, doing web consulting, obviously there are a lot of clients managing clients are difficult, management projects are difficult.
So they built a project management software called Basecamp that they use internally before actually eventually ditching consulting entirely, I think around 2004 and going all in on the SaaS model. And now they're basically making $200 million per year annually for this SaaS product, right? Which on the other hand, if you think about it, it's actually not possible to do this just purely on a consulting basis, right? If you are 60 people, there's no way your consulting can make $200 million.
at least on consistent annual basis.
And that goes back to the topic of, you know, when is enough to actually know when I'm ready to transition from consulting to SaaS, right? Starting to consult is actually easy. Like I spoke about in the ebook, you just start charging people for money. And the hard part, which I think is really, really difficult is knowing when to stop. And that's kind of where everyone, including myself, gets stuck for a while. And I have done this in the, you know, expensive way, right? Simple Dragon ANC combined has made millions of revenue combined.
And they both started with consulting, SimpleDirect actually transitioned from a SaaS company to consulting. And then now we're switching back to B2C. But, know, of course, like I just said, like that transition, it almost killed SimpleDirect. Right. And the story is basically, you know, the reason why SimpleDirect switched to consulting, which I think is important to share. And also like how we made a lot of money just by switching back to consulting, right. And now why we're switching off again. So the story basically.
that we have about specific customers that you might be targeting. You might be interested in because, because we're a tech guy, they kind of actually like, they of course believed it. and then, and then I said, like, we're going to charge you early date, this early bird discount. So the original price is 2,500, but I'll give you 1,800 to 12,000 to 2,000. Do you want to do it or not? You know, and then to my surprise, actually, I remember we signed up two on the spot and then we signed up to, I think the week after. So overall four customers signed within the week.
And if you think about it, that was $8,000 per month, just on a monthly basis. And when we were back then, we were charged $29 per month. were busting our ass. We were calling so many contractors. And I still remember like we hired a salesperson named Steve at a time and he was calling all the way from San Diego. He was calling different customers and getting hung up and he, and, the Hon-Up rate was so high. We were doing all those cold calls. Right? So like we didn't do marketing, which is like another mistake for another day, but we bust our ass and the MRR was staying.
a thousand, a thousand, two hundred. It wasn't even enough to pay Steve's salary at a time. So we had to actually draw our personal money to pay Steve. And eventually we had to let him go. So a lot of mistakes, you know, like now looking back, a lot of mistakes that we have made. then during this direct mailing thing, within a week, I was able to get four deals done, eight thousand dollars per month. I can pay Steve. I can pay so many other people. So long story short, within 90 days, we called more customers. We use email marketing to our advantages. And in three months.
We made $45,000 in total just for simple consulting, just for basically selling this direct mailing service, which is crazy because if you think about it in Silicon Valley ways, direct mailing is something that's overdone. You can argue, I can argue it's a hyper local service. It's hyper local. You're competing against everyone in your local market. However, we showed by selling a generic product with this little bit twist at we trust.
And with the process and with discipline, we were able to make $45,000 from consulting, which to be honest, like if we were selling 20 hours per month, it's just like, it's just thinking, I don't even think it's possible to make that much per month, to be honest, just based on how hard it is to convert a blue color customer to do something, right? To do anything, even if it's $29 a month, I think customers still like doubt it a lot.
That was like, you know, the initial pivot I think I had. then of course, for my other company, ANC, we ended up doing direct consulting first. And that company has generated a lot of six figures in the past three years. So overall, I think these two brands I'm really happy with. And right now I think, you know, we're basically deciding that, okay, now the party is kind of over. We are kind of getting too comfortable being consultants. But of course I personally realized the problem about being consultants is that.
You're selling your time. Like I said, again, you're selling your time. And as someone who's a 27 year old, I really find it difficult to believe that by the time I'm in my thirties and my forties, my fifties, I'll be still doing consulting. And I think that is going everything against my personal values, which is hyper, which is like valuing freedom about everything else. Right. Freedom is the key. I think most people do forget how important freedom is to me. So personally, I have developed a framework.
Right? So if you decided to start consulting first, great. I really think everyone should, especially people who don't live in SF, New York City or Boston, over Harvard Business School estimated over 75 % of venture capital money goes to those three cities in the U.S. So if you're not from those three cities, you're basically picking up scraps, you know? And I personally think it is very unfair, especially that, you U.S. itself is a venture capital market. Everywhere else in the world is not a market.
but we have more than 6.7 billion people outside of the US, right? So it's important to understand that for those 99.9 % of population, what are the ways to actually do a startup? And in my personal opinion, do it consulting first, right? But here's, after you do it, here's what most people screw up after they start consulting first. They think consulting is just one thing, right? And I personally think it's time to make a decision once you're generating some sort of six figures.
And then you're realizing essentially by reaching to seven figures is going to take a significantly more time, more energy, and maybe that's something that you don't want to do. I personally recommend every founder, every business owner, every consultant to think about it this way. There are two path forward and there's no wrong answer. The first path forward is basically that you have found your game. You're really satisfied with how consulting is.
and you're really satisfied with the revenue and the lifestyle is giving you, you're saving enough money in your bank. You're not entirely relying on this. You're not going paycheck to paycheck or, you know, customer by customer. You have diversified your customer base and now you have won the game. So it's naturally okay to think I want to keep doing consulting for the rest of my life and I want to keep doing it. And personally, I think there's perfectly okay doing that. In my book, I personally talked about
There are many successful examples about people who just kept doing consulting and actually made an empire out of it. So that is one way to do it. And I think the only downside, as I mentioned, is that you will be selling your time for money. Even though, even when you were 50s, 60s, and 70s, and the multiples on the consulting business is not that high, probably two X to three X to five X at most. And also consulting business have a problem being founder attached. So the brand itself is always tied up to a founder. So when a founder leaves.
the business itself is going to be sold for a penny on a dollar, right? Whereas a SaaS business, when it's sold, obviously it doesn't need that much transition from the founder. The business itself still carries forward. So think about those risks before you think about transitioning basically to making the decision of whether to keep consulting or as your branch out and do a SaaS business. My personal preference is going the second route. And the second route is basically a slow transition of basically using your consulting revenue.
just start building the SaaS revenue a little bit and prioritize your business. Because for example, for us for the past three years, we have personally worked with so many businesses, so many companies and starting to work with them on a very close basis. So many emails, so many Slack messages, and basically we have helped a lot of companies do a lot of things. So a specific example is ANC, where we're specifically helping students to build successful tech businesses, right?
in Canada and in the US. So for the past three years, we have learned a lot about what it works with validation. We have learned a lot about like for, you know, for example, engineering students, they are not really good at validations. They're really good at building, but they're not good at validations. So we're building a potential product that basically has a series of, you know, product that helps in this type of engineering students to actually figure out how to do validation, except it scales, right? I personally don't really like like a course framework, for example, like selling a course.
or selling an ebook or selling a book or something like that for money. But however, it is definitely a revenue stream for a lot of people. making that something, making it into a very useful tool, making an email course, making a content course, can actually scale a lot faster because you can help different companies, different people at different stages and quote unquote, making money while you sleep, right? Because content is scalable. So that's why I think a lot of people are turning to content to actually scale their businesses.
So that is one way. And my personal take is that you actually don't have to quit consulting on day one. We have decided you want to go to second route and a second route is a fully like, like I just said before, it's slowly transitional model. can help you allow you to keep your consulting revenue, right? But you are going to actively build out a product. And that is exactly where ANC and simple like is in where my two of my businesses are these days for ANC. Like I said, we are prioritizing a lot of what we have learned and we're going to make them.
essentially products that's going to be marketed through my personal Twitter brand, through my personal brands, and also through SimpleDirect and ANC's individual brands. And of course, we're going to use SEO, we're going to get in marketing to basically help bring the product forward. And this also includes software product as well. For example, for SimpleDirect, we're going to enable, we have pivoted, by the way, we have pivoted from home improvement financing to basically everything, you know, personal, whether it's personal finance or personal freedom.
And one angle that we're really excited about is actually how can we help employees who are currently earning W-2 income in the US or, you know, in everywhere else. like, if you're living by paycheck, if you're getting paid by paycheck and you have think you have thought about starting your own business, but it is super, super frightening to do so right without like the old way of thinking is that you had to quit your job. You had to have like hundreds of thousands or at least $50,000 in savings before it can start your own business to have a safety net.
And for people with mortgages can be really scary. So for simple drag, what we're doing next is we're targeting this specific target audience and building software tools that allows them to see when exactly they can quit their job and also other tools to help them build a stable side income with consulting before they quit. So we're protesting in two ways. The first is obviously content, like I just said, the second is the software, which basically you come and use software. helps to track your quit calendar. It helps to track exactly where you are. And we're going to protest that as well.
So as you can see, we have moved a lot from just consulting to making it into a product. So personally, I think you have to make this decision and this distinguish between what is just purely consulting versus what is purely SaaS. So of course, at this time, we're not doing fully SaaS at the moment. I think we're going to take a little breather and slowly build up the content empire on the content side. That's going to take at least maybe three to six months. And in the meantime, we'll keep running consulting, but we're slowly winding down.
So to give a hypothetical example, we're making $500,000 per year on consulting on this line of product. We're going to drop it slowly and slowly, taking fewer clients and then spending more time using the consulting revenue into SaaS. So for example, next month I'll be making 450, next month I'll be making 400,000. And then eventually it's going to plateau around $300,000 where I do spend a lot, let's say 20 hours of my time each week on consulting.
And the other 20 hours a week, I'm going to spend on building my SaaS products. I'm going to try validate whether this product has value. So that is exactly where I am right now. And I think for every founder who's thinking about it, you're going, it's going to make sense. Right. So recap stage one, you're in pure services, right? You're the learning curve. That's usually takes about 12 months. You're actually doing like everything is manual. You're super high touch with clients. You're basically getting paid to do school, to do validation.
right and you're charging enough money so the simple direct example I already gave you and the second stage it's basically more scalable stage one is not scalable
So the second stage is basically like hybrid, which I just talked about. So you're starting to do consulting and also building tools for yourself. You're starting to automate the boring, repetitive stuff, which is also very important to save yourself more time to actually being able to invest more on a product side. And delivery will slowly become semi-automated, right? For example, like I have, the example I just gave, the 500,000 revenue. So it is going to drop a little bit because you're taking on those clients, but you're also going to save a lot of cost because you're going to be
automating a lot of things the way that you do those consulting and you're going to have frameworks, you're going to have documentations you share with your clients ahead of time so that they can actually, you can actually spend less time negotiating and talking with them. So see lower revenue, but also lower costs as well. And you are using that lower, you're using that saved money to invest in your SaaS, your content to push the more automated way to way. So some clients use a product, but some will also want yourself personally.
And of course, the important thing is you'll also actually be pitching your product, your SaaS product to your existing consulting customers who are probably going to be using your product anyways. So that is essentially step two.
So state three is basically called product first, which is like the scale phase. And I also mentioned this is probably when you are in month 25 and it also takes like at least two or three years, you know, before you reach this phase. And for myself, I'm currently on year three of consulting and I'm slowly making the transition. So I'm personally, I'm like month 36. So a little bit late to the game, but you know, still doing it. So what you're actually doing in this stage is that you've got a real software product with a self-service, right? So you only do consulting for huge enterprise clients.
Most of stuff is already automated and now you're building it for actual scale. So the revenue target could be two, three, or even five times higher than just doing consulting, right? And the shift actually happens, like I said, it was a transition, but when your product revenue consistently beat your consulting revenue, you are now a product company that does some consulting on the side, not the other way around. And if you come from a software background, this can be super interesting because that's exactly how most SaaS companies actually work.
They have most of the money making things on a SaaS side, but they also do have an enterprise side where they invest a lot of their time in consulting with bigger clients who want to integrate the products, right? Whether they want white labeling, whether they want to host on their cloud, that's all called enterprise, which is like more expensive, but still SaaS. So once you hit this stage, I think it's going to be super important. And to be honest, SimpleDock itself didn't reach stage three as yet. We just made a strategic choice, like I said, to move into the employee to owner.
steps or making entirely a B2C product. But at the end of the day, I think it was the right move to make. I wasn't really motivated by solving direct mailing problems and also helping countries with financing. to me, it was just like very difficult to getting them to use our products. And, know, even though consulting was fun, but we have to take a lot of calls, support. I think I'm 27 and I want to build a real actual product business. So the simple direct is my vehicle for doing that.
And I have the option to keep ANC exactly where it is in consulting and making simple direct my product business on the sad side so that it actually balanced things out. So that is the honest assessment of where we are. And, but I think at the end of the day, consulting gave me the freedom to actually experiment with simple direct without going broke. And we have gone through so much with simple direct, to be honest, just trying to like find product market fit.
And now I can be very confident to basically turn everything that we have learned from ANC into products and deliver them through simple direct. So that is basically my personal feedback to every founder who's thinking about it. Don't jump into productization that fast. Do it while you also have consulting revenue to keep you going, right? To keep you motivated and keep you thinking about, okay, I'm extending my runway. So right now, like for my company, we probably have at least like 36 to 48 months of runways. And that is super important.
you know, when we have runway, we can be more confident about decisions that we make. We can take months without getting any revenue and we're still going to be fine. Right. Of course, it's naturally reasonable to be wanting monthly revenue every single month. And in consulting, of course, sometimes we get paid on the milestone side stages. So there are some few months that we don't match and make money or policy changes, clients, mood changes, different things, kind of cancels. Those things do happen. Right. Of course. But my personal thing is.
It is going to be significantly better for you if you do the consulting route and then slowly transition into product. But at the end of the day, I think as a founder, it is your choice, whether you want this to be a consulting business or you want this to be a product business. So at the end of the day, it is your choice. I hope you can make a healthy judgment. If you really want a number, I think your consulting revenue must be try to make at least a hundred thousand dollars per year.
or $200,000 per year on an annual basis before you think about transitioning into a productized business. And I'm saying it with a filter of basically being a North American. so of course, if you're elsewhere, um, if you are making money from the US from Canada, your clients are here. And let's say you're in India or in China or in like a lower cost of living places, it will be absolutely more different. Right? So make that decision for yourself. and being in the community and also like, you know, making that decision for yourself.
And most importantly, remember that, you know, life is not a binary choice. You can keep going for consulting for next year, just like me. I spent three years, right. But in my own playbook, I said two years of consulting is well enough. And then starting with the end of second year, you should be transitioning into a product company. But, know, myself, I started, I started doing this in the year three, because I feel like I'm financially more secure of doing this in year three. So that's perfectly fine. So conclusion is that everything is fine. Make the decision that works for you, but.
You know, if you're a founder listening, who's building a SaaS product and who's getting squeezed out, who's good, like thinking about going bankrupt or thinking about your failure. Definitely try the consulting first method of, of, of what I just described instead of selling the product, sell a service. And if you are a consulting business where a founder transition to a consulting service, just like me, and you're thinking about going back to the product side, that's complete, complete rational. And think about doing this, follow my guide and you know, you can also found.
the free ebook at founderreality.com and personally I'll be sharing more of this journey of transition with you guys because it is a journey right I'm not saying that I personally know everything we're transitioning to a product company ourselves and you know the good thing about the podcast is that I can actually share with the exact learnings I have on a weekly basis so every week you know exactly where we are and also lessons I have learned so that will be it for this week if you want to learn the specific frameworks you can go to founderreality.com to learn more
And also of course, I'm on Twitter as the George pu and I post my daily insights there on Twitter. For newsletters, you can join my weekly newsletter where I share the insider information you won't find anywhere else, including on a podcast at newsletter.foundalred.com. So thanks for tuning in. I'll see you next time.