yea i kinda figured that

but its hard to figure what some of these web 2.0 companies are doing with millions of funding if not paying the founders big 6 figures

I think you could swing paying yourself 6 figures with an investment of $10 million assuming you were one of only a few employees.

Hiring 10-20 people and holding enough cash in the bank that it'll last them for 2 years or so.

Employing people is very, very expensive. If you run a company with more than say 3 people, you're also going to be needing an office. And computers.