Cutting a product often comes with layoffs. The other products may or may not be able to support the staff that were working on the products being cut. Obviously the larger the company is the more likely there are other options aside from layoffs.

In this case I expect he might have made a spot for those employees working on a different product, but that's not certain - technologies & skills were different & the vertical markets were completely different.

And in this specific case, the two staff thought it was an amazing opportunity for them - I think their short-term salary went up & they got a lot more flexibility plus potential upside if they could grow the business even slowly. Obviously some downsides in terms of benefits, etc. But even if it didn't work out it would have been a pretty good line item on their resume. :)