Yes, I think $1MM is enough to pay 7 people, although it depends a lot on the specifics.
My business makes $2.2MM ARR and has 17 employees (counting the founders). We're profitable, although we try to put about as much money as we can afford back into growth, so we're right around break even. There are a number of factors to consider when thinking about whether this is "enough" money.
Location - We're based in St. Louis which has significantly lower cost of living than, say, the Bay Area (we moved from SF for this reason). St. Louis is much more expensive than some other parts of the world. So the amount of revenue a company "needs" is highly dependent on where it's located.
Types of employees - More than half of our employees are on the support team, and almost every came in as an entry level employee right out of college. We pay our support people very well (almost as much as the engineers) but it's definitely cheaper to employ a handful of entry-level support people vs. senior engineers. I think it's a common mistake to think that every startup is made up entirely of engineers.
Revenue per employee - Right now we're at about $130k ARR per employee, and like I mentioned, that's close to break even. If we keep growing somewhat quickly, we'll bring in enough new entry-level employees at lower salaries to bring the average down. But as our growth slows (which is happening, and happens to everyone eventually), our team becomes more and more senior and so we pay them accordingly. For this reason, I think we'll need to shoot for a higher $/employee. But not much higher I don't think. I bet $200k/employee would cover us long-term.
"Maximizing shareholder value" - One of the things that drives most tech companies to make so much money is that their primary goal (regardless of what their mission statement says) is to maximize shareholder value. When you're bootstrapped, you can choose not to do that. I work full-time as a founder/CEO and get paid well (probably about what I'd be making working for someone else, maybe a bit less). If I wanted to become a billionaire, then yeah, this business model wouldn't work. But that doesn't have to be the goal.