This article really felt like a misdiagnosis to me.
Sure, a lot of these people were just buying hype from these "get rich from drop shipping!" influencers, just like a million other suckers who got dollar signs in their eyes with real estate schemes, pyramid sale schemes, yada yada, a tale as old as time. I don't think this "passive income" trap is really anything new, and I don't think it was some unique thing that "ate a generation of entrepreneurs", as if that trap didn't exist then instead we'd see all these successful people.
Instead, what I think has drastically changed over the past 40 years or so is the ability of a solopreneur to make real money. Just look at all the posts on HN asking about how much people make on their side gigs. You rarely see anything more than a couple hundred bucks a month. There are notable exceptions, but unfortunately a lot of those notable exceptions are scammy, spammy business models. It's just simply much harder as a small/smaller business to make money and compete with the big boys. Wealth inequality doesn't just apply to people, but also companies. For example, in the past many entrepreneurial types may have started retail stores, while now it's incredibly difficult to compete with the likes of Amazon et al. I read an article recently that the number of public companies has halved compared to a few decades ago. The Wilshire 5000 stock index, for example, actually only includes about 3400-3700 companies now.
>You rarely see anything more than a couple hundred bucks a month. There are notable exceptions, but unfortunately a lot of those notable exceptions are scammy, spammy business models.
I suspect this is largely sampling bias.
I host meetups for indie founders, and several attendees earn their living through solo businesses. When I go to conferences like Microconf, I meet lots more.
The problem with measuring financial success by who posts about it on HN is:
* The more someone is making at their solo business, the less they want to blab about it and attract competitors.
* The people earning at the low end are more desperate for people to see what they're doing so they can pick up new customers, so they're more likely to talk about their work.
* The more successful founders are busier and spend less time posting on HN.
We started a trophy and award business because my spouse was already making shirts and stuff so we had most of the equipment. The overhead is really low thanks to quick shipping from a large employee owned national supplier (seriously, JDS industries is fucking awesome).
It's enough to pay for itself easily and pay for a vacation or two a year, for about 4 hours of work a week. If we really put effort in, it could replace our day jobs.
Where most people go wrong is their expectation. We expected this to fund a vacation and maybe car payments. That it's doing that is exactly right and we don't want to take it any further. If people had that view, instead of feeling like they have to make a billion dollars, I think side gigs would be a different beast entirely.
There are many levels between "pays for a vacation or two a year" and "billion dollars". I think most people just want to make a comfortable living (which includes eventual retirement) and not have to work themselves to the bone.
> Instead, what I think has drastically changed over the past 40 years or so is the ability of a solopreneur to make real money.
Hard disagree.
As the article notes, I think if you concentrate on a real business, not a scam-y 'get rich quick scheme' business then, especially with the internet, its never been easier to run a solo business at scale.
For myself, I wrote an app as a side hobby, which then took off, so I started working on it part-time, then moved to full-time when the revenue justified.
It's now growing to where it exceeds what I would have made working for someone else.
Note this took 7+ years of constant work, improvements and care.
It's the type of dedication that makes you competitive with even larger organisations.
And the time required to be a 'success' ensures that you won't have any competitors who just want to make a quick buck or get to "passive income" within a year or two.
The article's example is a person can't even be bothered to understand what the product he's selling is for, and doesn't appear to fully grasp they're losing money. Even in much better circumstances, success would presumably remain elusive.
Some people just lack the capacity for this sort of thing, and unfortunately fraudsters target them by trying to convince them otherwise.
> Instead, what I think has drastically changed over the past 40 years or so is the ability of a solopreneur to make real money.
Part of that was accurately diagnosed by the article in the bit about the dog walking business vs dog walking platform.
My partner bootstrapped a successful full-time cleaning business that she ran for a few years and the limiting factor was basically her ability to hire and retain good employees. A physical cleaning business has no path to scale like a tech company though.
I appreciated when "passive income" was the flavor of the week because it was a good signpost for people you could ignore. In particular anybody who didn't understand that you could assign a present value to future income, or that infinite series can sum to finite values. Seriously, the prototypical example of being an author is not particularly passive income lol! A book being print-on-demand indefinitely != infinite income. 99% of copies will almost certainly be sold within a few years, not least due to active marketing on your part. It's very likely to be a worse deal than getting paid a quite modest and disappointing sounding amount up front.
The way it shakes out is that there's no widely accessible way of escaping actual, ongoing work, which is what unmotivated people actually hear behind the words "passive income." Whatever the industry/vertical/field, a tiny number will hit it so big that they can actually stop working. Everyone else can bolster their income with passive sources, but that passive income ultimately depends on continuing new stimulus into the market (new products/services, more work marketing) to keep the "passive" flow stable.
If you look at the world of indie tabletop RPGs, for example: Kevin Crawford of Sine Nomine Press makes a very good living and a significant percentage of it is "passive" sales of his back catalog. But if he stopped publishing and promoting new game projects, sales of that back catalog would very likely shrivel to nothing within a calendar year.
The open-secret ingredient is always more work.
It's why someone like Crawford can afford to tell everyone exactly how he does what he does... Giving away extensive production files that show you his whole creative process, soup to nuts: 99% of people aren't going to put in the work necessary to sustain the passive portion of an individual income.
often the real value of writing a book is you can convince people to pay you to speak. I've had several classes at work where they gave me a book that had everything in the class.
Quite the opposite for me. I'd like to have freedom to work on things I want to work on without "paying rent", "paying medical bills", or "short term profitability" being a constraint.
I went the lean FIRE route, and now work on whatever open-source projects I feel like, plus local in-person volunteer activities. It's a much better quality of life, even though my job had been enjoyable, the extra scheduling flexibility is really nice.
I'm pretty sure that being at the beach is really just universal marketing shorthand for "being somewhere that no one would ever expect you to even reply to emails from"
> I've met dozens of smart, capable people who had actual energy, and who spent their entire twenties bouncing between passive income schemes instead of building real skills // real businesses // real careers.
The author is acting like it hasn't always been this way. But it always has.
There have always been people who felt the allure of the get rich quick scheme. Its always been true that if they just spent the same effort on doing things properly they would probably make it but instead they bounce from one stupid scheme to the next.
Often its combined with some ideology about how the normal world is full of suckers and they are going to escape by not playing the game. Fraudsters love to target people who want to pull one over on the world. They are easy to manipulate so they usually fall for it when presented with an opportunity too good to be true.
The article, with a couple details about the specific examples changed could have probably been written in victorian times.
Free to do what? Sit on a beach, apparently. Every single one of these people wanted to sit on a beach. I've never understood this. Have they been to a beach? There's sand. It gets everywhere. You can sit there for maybe three hours before you want to do literally anything else.
8<------------
I laughed out loud when I read it, because it's so true.
You are reminding me about a day decades ago when a guy I met and his wife were sitting in my living room with my gf and I. He wanted to talk science fiction, and his wife and my gf were going to talk about nursing. Seemed like a nice couple until they started talking about "something they were doing" in a mysterious way...
I remember saying, "sounds like scamway or something" and he actually had to say that it was in fact amway he was talking about. uncomfortable.
didn't go much further than that.
Looking backwards I realized how little friction we had getting to know these people, etc... sigh.
At least amway has real product. You are expected to sell to make money in the early years. In 30 years of real work you get a passive income retirement plan - but you need to put in real work selling things to get there.
when you look at the real business model of those who have had success they are still selling the soap in retirement. It is not going to get you rich, but it isn't too bad a life.
well it was - the only people I know in amway are in their 80s and so it may be different.
amway deserves the hate. Truth is it isn't as easy as they tell you.
this is unquestionably the best thing I've read on hackernews this week, perhaps all this month. should be required reading in high school, for the mental lens it provides.
As someone who had actual passive income (small amount, a few hundred USD/mo) prior to my life being ruined by a medical accident: I agree (I killed my site because it was the right thing to do, I could not generate content for it because I couldn't function, so I did not want to waste the time/money of my users).
One thing the author does NOT see, however, is that the local folks doing all the hard work like mowing lawns, building furniture, etc. are in absolute panic over "AI" because their niche little lawn mowing/car washing/house cleaning business has been determined to be irrelevant by ChatGPT, etc. Oh and before you ask, there are folks claiming they can solve that exact thing, and those hard working folks are buying those products, hoping it will solve their downtrend in internet leads.
> One thing the author does NOT see, however, is that the local folks doing all the hard work like mowing lawns, building furniture, etc. are in absolute panic over "AI" because their niche little lawn mowing/car washing/house cleaning business has been determined to be irrelevant by ChatGPT, etc.
How does what ChatGPT thinks about lawnmowing matter? Like, specifically, who's going to be mowing the lawns if it's not the people who are currently doing it?
One thing in the article struck me as way too optimistic:
> What actually makes money hasn't changed. You find something people need. You get good at providing it. You charge a fair price and you keep showing up even when it's tedious and even when you don't want to. You build relationships over years. You build reputation over years.
You can make money doing this, yes--but most people who are really rich don't. There are lots of ways to game the system that don't involve the kinds of wacky things the article talks about.
Isn't passive income a cornerstone of of the Rich Dad Poor Dad Books? This long predates 2020. I would say selling masks and only being $800 in the hole is a lot better than starting a "regular business" and down $80k-800k.
My memory of RDPD was that it preaches getting assets which generate income, not that your management of those assets would be passive. Though obviously it also did have a subtext of "scale some kind of assets that generate income to a certain point and you can pay someone else to do more of the grunt work while you look into a new opportunity."
By working and investing. More successfully at some points than others. But you’re totally right that different people are better set up and more or less inclined to move on from a job than others.
Yes, it was the exact same scheme. Rich Dad Poor Dad was basically "Buy lots of cheap, crappy houses and become a slum lord" expanded into thousands of pages of books, seminars, and self help guides.
Sounds like you were running an import and distribution business. Not the same thing as drop shipping :) as the drop shipping people will joyfully tell you, “you’re not supposed to touch the product”
the inspection part is a big deal. drop shippers don't add any value, but inspecting the goods (and rejecting those that don't meet spec) actually adds value.
Everything I'd want to do on a "side gig to iron out the kinks and then eventual business" basis is regulated to the point where that path is economically impossible and the only way to be in the black is to take out a big f-ing loan, quit your job and go all in on your new business. And it's not just me, all my buddies have this gripe. We've all got skills and experience and equipment outside our immediate careers and we'd like to use those to provide value to people but there's just no way to do that inside the rules and none of us our interested in risking our retirements operating outside them.
I just upped my retirement contribution and decided that the big evil BigCos can do all the value creating and the finance middle men can have their take.
I guess that's the reason everyone does the slumlord or VRBO thing.
Where I live out in the country there are a lot of people with those kind of businesses. They bring you the goods and services to/from in a truck. If you ask to look at what they have... they have no address and won't tell you anything more than their goods/services dropped from the sky. At that point, I don't try to probe further... if I am happy I would rather not know.
>Where I live out in the country there are a lot of people with those kind of businesses. They bring you the goods and services to/from in a truck. If you ask to look at what they have... they have no address and won't tell you anything more than their goods/services dropped from the sky.
Yeah there's a fair amount of that here too.
Thinking about it on a meta level I think on the "low end" it's basically just a hack around how expensive employees are when you consider exposure. Sure you could have your $15/hr guys stay late and power wash your box trucks, deep clean your facility, etc, but some guy with a van will come in and do it on the weekend for a flat fee and if he falls off the ladder that's not your problem.
And on the high end it's a hack around overhead. You can have some guy show up on a jobsite, set up a tent to keep predatory eyes off and weld up the broken thing on your backhoe or the rental company calls that guy and repairs it on your job site without telling you giving you deniability. No expensive compliance costs of adding hot work to your job site or running a shop where that stuff happens regularly.
>if I am happy I would rather not know.
Always better to be able to say you don't know rather than "I asked and the answer seemed fishy but I didn't probe".
Yeah, I don't think I could do a pure 'passive income' thing with no 'soul' to it, but there is something to be said for building a business that runs and makes money even when you are asleep or on vacation. This is something that some 'passion businesses' where it's all about the founder and their skills, fail to do.
"Passive income" as your only financial salvation is one of those memes that broke off from the MLM "tool scam" industry, that is, selling courses, seminars, and other training materials to people in MLMs on the pretext of teaching them sales, marketing, and business, but it's really just brainwash material designed to keep them from leaving. The other big one is positive thinking/the law of attraction/"The Secret". If MLM is the kaiju, these are the spider-things that fell off the Cloverfield Monster's body and started killing people in the subway tunnels. But like how Robert Smith performed with Siouxsie Sioux as "The Glove" while still fronting The Cure, these memes have built plenty of side scams while still enjoying friendly partnership with MLM itself.
Met a guy that ran some dropshipping thing in a bar once, once he found out i was a programmer he kept on trying to get me to fix his website for free because it was easy, would not take no for an answer. I just kept upping how much money i would charge him till i got sick of it and left.
I knew a few guys like that in crypto too, before crypto came along and they got into that, this guy told me he’d written a twitter app, it was a bot that pumped gold at some influencers command. Spurred me to write an app though.
"My nephew makes websites, and he's 14... I could just have him do it"
- Every client of mine during my contracting days. It took me way too long to reply with, "Oh that's great news! I wasn't sure of my availability, and was certain I was going to be way too expensive. Glad you got it figured out."
This article has a narrow definition of passive income, limiting it to these low-barrier-to-entry schemes. Other parts of the FIRE world have emphasized being a landlord or flipping houses, for example.
I personally made it happen by working a FAANG SWE job for 13 years, not getting sidetracked by the startup cult, saving and investing 70% of my after tax income, etc. And no I didn't get into crypto, but I still managed to make it with conventional investments.
In fact, I chose to pursue a career in the tech industry in order to pursue financial independence in the first place. Because I knew back then (circa 2005) all the tech Kool aid was BS. That "don't be evil" was just a facade. And time has proven me right and my haters wrong, those who thought it was unethical for me to place wealth building ahead of career building.
It's been four years since I've been out of a job. Now I'm creating more passion oriented content. I'm never bored.
> those who thought it was unethical for me to place wealth building ahead of career building.
that might well be the first time I've seen "career" and "ethical" conflated in that way. I've definitely seen the people who think you're a fool and possibly a sucker if you chase short term wealth over career stability, and there's definitely a veneer of unethicalness clinging to the notion of get-rich-quick, but I cannot understand how "establish yourself in a career" is an ethical concern.
Keep in mind that for me it was before the FAANG companies became the new evil tech overlords, and to some extent even before the Great Financial Crisis of 2008. Back then it was much easier for naive young college students or new grads to buy into that narrative of using our talents to make the world a better place through professional careers.
This is the way. There is huge survivorship bias when it comes to start-ups, even AI start-ups. When it comes to wealth creation, it's hard to beat a 20-30% CAGR with big tech stocks since 2010 or so, which was doable.
"Passive Income trap" wantrepreneurs haven't really gone away, they have just shifted to crypto rug pull culture and now prediction markets and app-based gambling.
They'll keep existing as long as the root cause that creates them (massive wealth inequality in general and the growing delta between productivity and wages) exists, so probably until our financial systems fully collapse in about 2032.
These people migrate like geese through the exact same stuff. I knew a couple of people way early on into affiliate marketing, then they all migrated to LeadGen, then to Drop Shipping, then online poker, then crypto, then NFTs, and now of course, they're all doing AI gigs. It's the exact same group of people migrating like birds from scheme to scheme.
This article really felt like a misdiagnosis to me.
Sure, a lot of these people were just buying hype from these "get rich from drop shipping!" influencers, just like a million other suckers who got dollar signs in their eyes with real estate schemes, pyramid sale schemes, yada yada, a tale as old as time. I don't think this "passive income" trap is really anything new, and I don't think it was some unique thing that "ate a generation of entrepreneurs", as if that trap didn't exist then instead we'd see all these successful people.
Instead, what I think has drastically changed over the past 40 years or so is the ability of a solopreneur to make real money. Just look at all the posts on HN asking about how much people make on their side gigs. You rarely see anything more than a couple hundred bucks a month. There are notable exceptions, but unfortunately a lot of those notable exceptions are scammy, spammy business models. It's just simply much harder as a small/smaller business to make money and compete with the big boys. Wealth inequality doesn't just apply to people, but also companies. For example, in the past many entrepreneurial types may have started retail stores, while now it's incredibly difficult to compete with the likes of Amazon et al. I read an article recently that the number of public companies has halved compared to a few decades ago. The Wilshire 5000 stock index, for example, actually only includes about 3400-3700 companies now.
>You rarely see anything more than a couple hundred bucks a month. There are notable exceptions, but unfortunately a lot of those notable exceptions are scammy, spammy business models.
I suspect this is largely sampling bias.
I host meetups for indie founders, and several attendees earn their living through solo businesses. When I go to conferences like Microconf, I meet lots more.
The problem with measuring financial success by who posts about it on HN is:
* The more someone is making at their solo business, the less they want to blab about it and attract competitors.
* The people earning at the low end are more desperate for people to see what they're doing so they can pick up new customers, so they're more likely to talk about their work.
* The more successful founders are busier and spend less time posting on HN.
We started a trophy and award business because my spouse was already making shirts and stuff so we had most of the equipment. The overhead is really low thanks to quick shipping from a large employee owned national supplier (seriously, JDS industries is fucking awesome).
It's enough to pay for itself easily and pay for a vacation or two a year, for about 4 hours of work a week. If we really put effort in, it could replace our day jobs.
Where most people go wrong is their expectation. We expected this to fund a vacation and maybe car payments. That it's doing that is exactly right and we don't want to take it any further. If people had that view, instead of feeling like they have to make a billion dollars, I think side gigs would be a different beast entirely.
There are many levels between "pays for a vacation or two a year" and "billion dollars". I think most people just want to make a comfortable living (which includes eventual retirement) and not have to work themselves to the bone.
> Instead, what I think has drastically changed over the past 40 years or so is the ability of a solopreneur to make real money.
Hard disagree.
As the article notes, I think if you concentrate on a real business, not a scam-y 'get rich quick scheme' business then, especially with the internet, its never been easier to run a solo business at scale.
For myself, I wrote an app as a side hobby, which then took off, so I started working on it part-time, then moved to full-time when the revenue justified.
It's now growing to where it exceeds what I would have made working for someone else.
Note this took 7+ years of constant work, improvements and care.
It's the type of dedication that makes you competitive with even larger organisations.
And the time required to be a 'success' ensures that you won't have any competitors who just want to make a quick buck or get to "passive income" within a year or two.
The article's example is a person can't even be bothered to understand what the product he's selling is for, and doesn't appear to fully grasp they're losing money. Even in much better circumstances, success would presumably remain elusive.
Some people just lack the capacity for this sort of thing, and unfortunately fraudsters target them by trying to convince them otherwise.
> Instead, what I think has drastically changed over the past 40 years or so is the ability of a solopreneur to make real money.
Part of that was accurately diagnosed by the article in the bit about the dog walking business vs dog walking platform.
My partner bootstrapped a successful full-time cleaning business that she ran for a few years and the limiting factor was basically her ability to hire and retain good employees. A physical cleaning business has no path to scale like a tech company though.
I don't think there was ever a time where a solo-entrepenur could make real money without putting in lots of effort and taking lots of risks.
We remember the success stories, we don't remember the bankruptcies.
I appreciated when "passive income" was the flavor of the week because it was a good signpost for people you could ignore. In particular anybody who didn't understand that you could assign a present value to future income, or that infinite series can sum to finite values. Seriously, the prototypical example of being an author is not particularly passive income lol! A book being print-on-demand indefinitely != infinite income. 99% of copies will almost certainly be sold within a few years, not least due to active marketing on your part. It's very likely to be a worse deal than getting paid a quite modest and disappointing sounding amount up front.
The way it shakes out is that there's no widely accessible way of escaping actual, ongoing work, which is what unmotivated people actually hear behind the words "passive income." Whatever the industry/vertical/field, a tiny number will hit it so big that they can actually stop working. Everyone else can bolster their income with passive sources, but that passive income ultimately depends on continuing new stimulus into the market (new products/services, more work marketing) to keep the "passive" flow stable.
If you look at the world of indie tabletop RPGs, for example: Kevin Crawford of Sine Nomine Press makes a very good living and a significant percentage of it is "passive" sales of his back catalog. But if he stopped publishing and promoting new game projects, sales of that back catalog would very likely shrivel to nothing within a calendar year.
The open-secret ingredient is always more work.
It's why someone like Crawford can afford to tell everyone exactly how he does what he does... Giving away extensive production files that show you his whole creative process, soup to nuts: 99% of people aren't going to put in the work necessary to sustain the passive portion of an individual income.
And that 4 figure advance from a publisher won’t go far either even if you earn it out and get a few royalties.
often the real value of writing a book is you can convince people to pay you to speak. I've had several classes at work where they gave me a book that had everything in the class.
> Free to do what? Sit on a beach, apparently.
Quite the opposite for me. I'd like to have freedom to work on things I want to work on without "paying rent", "paying medical bills", or "short term profitability" being a constraint.
I went the lean FIRE route, and now work on whatever open-source projects I feel like, plus local in-person volunteer activities. It's a much better quality of life, even though my job had been enjoyable, the extra scheduling flexibility is really nice.
Me too. It has been great. Im working on projects that are fundable, and now I have joy from it (did go through a lonely pity party phase).
Yeah, I'm a musician and a certified audio engineer. I'd rather be writing and recording music than working for healthcare/mortgage costs
yeah, but the guys selling the courses were/are all obsessed with being at the beach
I'm pretty sure that being at the beach is really just universal marketing shorthand for "being somewhere that no one would ever expect you to even reply to emails from"
> I've met dozens of smart, capable people who had actual energy, and who spent their entire twenties bouncing between passive income schemes instead of building real skills // real businesses // real careers.
The author is acting like it hasn't always been this way. But it always has.
There have always been people who felt the allure of the get rich quick scheme. Its always been true that if they just spent the same effort on doing things properly they would probably make it but instead they bounce from one stupid scheme to the next.
Often its combined with some ideology about how the normal world is full of suckers and they are going to escape by not playing the game. Fraudsters love to target people who want to pull one over on the world. They are easy to manipulate so they usually fall for it when presented with an opportunity too good to be true.
The article, with a couple details about the specific examples changed could have probably been written in victorian times.
Have we all forgotten Tim Ferriss' book 'The 4 Hour Work Week'?
It was enormously influential and was likely involved in every one of these failed entrepreneur's ventures
This discussion reads like 'staying inside from 2019-2022 changed social structures' without saying COVID once
"It was an ouroboros that had incorporated in Delaware and was running Facebook ads," is my favorite line I've seen in a minute, great read
my favourite bit was
8<------------
Free to do what? Sit on a beach, apparently. Every single one of these people wanted to sit on a beach. I've never understood this. Have they been to a beach? There's sand. It gets everywhere. You can sit there for maybe three hours before you want to do literally anything else.
8<------------
I laughed out loud when I read it, because it's so true.
I “retired” about a year ago. Back to actively doing some tech industry analyst stuff with some folks I know. Keeps me as busy as I care to be.
I would dearly love to be as busy as I care to be.
Right? That's my ultimate goal.
Nature is wonderful because it will relax and center oneself while making it clear why we created civilization.
I love the beach.
Living near the beach is nice.
You can sit on it, walk on it, swim on it, surf on it, run on it, fish on it.
Better than a cement sidewalk, IMO.
I love the ocean, but I have to confess I don't care much for beaches. sand gets everywhere.
A lot of beaches happen to be near oceans.
Fortunately a lot of ocean isn't anywhere near a beach.
Got trapped in an Amway pitch in my teens and have been inoculated against such things ever since.
You are reminding me about a day decades ago when a guy I met and his wife were sitting in my living room with my gf and I. He wanted to talk science fiction, and his wife and my gf were going to talk about nursing. Seemed like a nice couple until they started talking about "something they were doing" in a mysterious way...
I remember saying, "sounds like scamway or something" and he actually had to say that it was in fact amway he was talking about. uncomfortable.
didn't go much further than that.
Looking backwards I realized how little friction we had getting to know these people, etc... sigh.
I wish Amway was bigger so more people would be exposed to it and be similarly inoculated.
At least amway has real product. You are expected to sell to make money in the early years. In 30 years of real work you get a passive income retirement plan - but you need to put in real work selling things to get there.
when you look at the real business model of those who have had success they are still selling the soap in retirement. It is not going to get you rich, but it isn't too bad a life.
well it was - the only people I know in amway are in their 80s and so it may be different.
amway deserves the hate. Truth is it isn't as easy as they tell you.
Well it was bigger. But the people who used to get swept by MLMs are now selling drop-shipping, affiliate websites or blockchain.
this is unquestionably the best thing I've read on hackernews this week, perhaps all this month. should be required reading in high school, for the mental lens it provides.
“You can’t cheat an honest man.”
While that isn’t always true, honesty is a great defense against being enlisted in scams that promise easy money.
As someone who had actual passive income (small amount, a few hundred USD/mo) prior to my life being ruined by a medical accident: I agree (I killed my site because it was the right thing to do, I could not generate content for it because I couldn't function, so I did not want to waste the time/money of my users).
One thing the author does NOT see, however, is that the local folks doing all the hard work like mowing lawns, building furniture, etc. are in absolute panic over "AI" because their niche little lawn mowing/car washing/house cleaning business has been determined to be irrelevant by ChatGPT, etc. Oh and before you ask, there are folks claiming they can solve that exact thing, and those hard working folks are buying those products, hoping it will solve their downtrend in internet leads.
> One thing the author does NOT see, however, is that the local folks doing all the hard work like mowing lawns, building furniture, etc. are in absolute panic over "AI" because their niche little lawn mowing/car washing/house cleaning business has been determined to be irrelevant by ChatGPT, etc.
How does what ChatGPT thinks about lawnmowing matter? Like, specifically, who's going to be mowing the lawns if it's not the people who are currently doing it?
One thing in the article struck me as way too optimistic:
> What actually makes money hasn't changed. You find something people need. You get good at providing it. You charge a fair price and you keep showing up even when it's tedious and even when you don't want to. You build relationships over years. You build reputation over years.
You can make money doing this, yes--but most people who are really rich don't. There are lots of ways to game the system that don't involve the kinds of wacky things the article talks about.
She does just mention passive income covering your monthly spend, which to be fair is not ‘really rich’.
“The game looks easy, that’s why it sells” - Elliott Smith
Thanks for posting, great article and I read one of Joan’s pieces earlier this week without realising.
Isn't passive income a cornerstone of of the Rich Dad Poor Dad Books? This long predates 2020. I would say selling masks and only being $800 in the hole is a lot better than starting a "regular business" and down $80k-800k.
My memory of RDPD was that it preaches getting assets which generate income, not that your management of those assets would be passive. Though obviously it also did have a subtext of "scale some kind of assets that generate income to a certain point and you can pay someone else to do more of the grunt work while you look into a new opportunity."
You’re right. Books like the Four Hour Workweek and Escape From Cubicle Nation were guides to passive income twenty years ago.
It’s not totally risk-free income (but what is) but a decent pile invested sensibly makes for pretty good passive income depending on your goals.
now where do you get that pile to invest? I have a pile invested - but I'm close to retirement and it took me many years to save it up.
By working and investing. More successfully at some points than others. But you’re totally right that different people are better set up and more or less inclined to move on from a job than others.
Yes, it was the exact same scheme. Rich Dad Poor Dad was basically "Buy lots of cheap, crappy houses and become a slum lord" expanded into thousands of pages of books, seminars, and self help guides.
I've been hearing about "passive income" for at least the last 10 years, and I reckon it goes back further than that.
Get-rich-quick schemes/scams existed long before this generation.
Passive income are just get rich quick schemes that were common decaded ago.
I started a business like this, but it wasn't passive. I shipped everything to my office before inspecting and shipping product out.
It lasted almost 10 years with 1 million annual revenue.
It was not passive.
Sounds like you were running an import and distribution business. Not the same thing as drop shipping :) as the drop shipping people will joyfully tell you, “you’re not supposed to touch the product”
Dropshipping is just logistics. There is a lot of dropshipping that has nothing to do with ordering off Alibaba.
the inspection part is a big deal. drop shippers don't add any value, but inspecting the goods (and rejecting those that don't meet spec) actually adds value.
Everything I'd want to do on a "side gig to iron out the kinks and then eventual business" basis is regulated to the point where that path is economically impossible and the only way to be in the black is to take out a big f-ing loan, quit your job and go all in on your new business. And it's not just me, all my buddies have this gripe. We've all got skills and experience and equipment outside our immediate careers and we'd like to use those to provide value to people but there's just no way to do that inside the rules and none of us our interested in risking our retirements operating outside them.
I just upped my retirement contribution and decided that the big evil BigCos can do all the value creating and the finance middle men can have their take.
I guess that's the reason everyone does the slumlord or VRBO thing.
Where I live out in the country there are a lot of people with those kind of businesses. They bring you the goods and services to/from in a truck. If you ask to look at what they have... they have no address and won't tell you anything more than their goods/services dropped from the sky. At that point, I don't try to probe further... if I am happy I would rather not know.
>Where I live out in the country there are a lot of people with those kind of businesses. They bring you the goods and services to/from in a truck. If you ask to look at what they have... they have no address and won't tell you anything more than their goods/services dropped from the sky.
Yeah there's a fair amount of that here too.
Thinking about it on a meta level I think on the "low end" it's basically just a hack around how expensive employees are when you consider exposure. Sure you could have your $15/hr guys stay late and power wash your box trucks, deep clean your facility, etc, but some guy with a van will come in and do it on the weekend for a flat fee and if he falls off the ladder that's not your problem.
And on the high end it's a hack around overhead. You can have some guy show up on a jobsite, set up a tent to keep predatory eyes off and weld up the broken thing on your backhoe or the rental company calls that guy and repairs it on your job site without telling you giving you deniability. No expensive compliance costs of adding hot work to your job site or running a shop where that stuff happens regularly.
>if I am happy I would rather not know.
Always better to be able to say you don't know rather than "I asked and the answer seemed fishy but I didn't probe".
Yeah, I don't think I could do a pure 'passive income' thing with no 'soul' to it, but there is something to be said for building a business that runs and makes money even when you are asleep or on vacation. This is something that some 'passion businesses' where it's all about the founder and their skills, fail to do.
Side note: after drowning in LLM-generated content, it's pretty refreshing to read something written by a human. They're a pretty good writer, too!
Who needs LLM garbage when you have MLM garbage?
"Passive income" as your only financial salvation is one of those memes that broke off from the MLM "tool scam" industry, that is, selling courses, seminars, and other training materials to people in MLMs on the pretext of teaching them sales, marketing, and business, but it's really just brainwash material designed to keep them from leaving. The other big one is positive thinking/the law of attraction/"The Secret". If MLM is the kaiju, these are the spider-things that fell off the Cloverfield Monster's body and started killing people in the subway tunnels. But like how Robert Smith performed with Siouxsie Sioux as "The Glove" while still fronting The Cure, these memes have built plenty of side scams while still enjoying friendly partnership with MLM itself.
It's like the flood of AI shovelware projects being spammed here daily.
Were these the people who were really going to do anything substantive anyway? Or just the shortcut-taking types?
>But zoom out and what you had was just an enormous machine converting human ambition into noise.
Ah, the story of a generation
Just one?
Indeed. In the case of music-obsessed boomers, that saying rings true in a very literal way.
Met a guy that ran some dropshipping thing in a bar once, once he found out i was a programmer he kept on trying to get me to fix his website for free because it was easy, would not take no for an answer. I just kept upping how much money i would charge him till i got sick of it and left.
I knew a few guys like that in crypto too, before crypto came along and they got into that, this guy told me he’d written a twitter app, it was a bot that pumped gold at some influencers command. Spurred me to write an app though.
"My nephew makes websites, and he's 14... I could just have him do it"
- Every client of mine during my contracting days. It took me way too long to reply with, "Oh that's great news! I wasn't sure of my availability, and was certain I was going to be way too expensive. Glad you got it figured out."
I'm not sure passive income is the right way to describe a drop shipping operation where you have to interact with customers. Passive income is $VT.
This article has a narrow definition of passive income, limiting it to these low-barrier-to-entry schemes. Other parts of the FIRE world have emphasized being a landlord or flipping houses, for example.
I personally made it happen by working a FAANG SWE job for 13 years, not getting sidetracked by the startup cult, saving and investing 70% of my after tax income, etc. And no I didn't get into crypto, but I still managed to make it with conventional investments.
In fact, I chose to pursue a career in the tech industry in order to pursue financial independence in the first place. Because I knew back then (circa 2005) all the tech Kool aid was BS. That "don't be evil" was just a facade. And time has proven me right and my haters wrong, those who thought it was unethical for me to place wealth building ahead of career building.
It's been four years since I've been out of a job. Now I'm creating more passion oriented content. I'm never bored.
> those who thought it was unethical for me to place wealth building ahead of career building.
that might well be the first time I've seen "career" and "ethical" conflated in that way. I've definitely seen the people who think you're a fool and possibly a sucker if you chase short term wealth over career stability, and there's definitely a veneer of unethicalness clinging to the notion of get-rich-quick, but I cannot understand how "establish yourself in a career" is an ethical concern.
Keep in mind that for me it was before the FAANG companies became the new evil tech overlords, and to some extent even before the Great Financial Crisis of 2008. Back then it was much easier for naive young college students or new grads to buy into that narrative of using our talents to make the world a better place through professional careers.
> thought it was unethical for me to place wealth building ahead of career building
Twelve year olds?
High achieving college students.
This is the way. There is huge survivorship bias when it comes to start-ups, even AI start-ups. When it comes to wealth creation, it's hard to beat a 20-30% CAGR with big tech stocks since 2010 or so, which was doable.
"Passive Income trap" wantrepreneurs haven't really gone away, they have just shifted to crypto rug pull culture and now prediction markets and app-based gambling.
They'll keep existing as long as the root cause that creates them (massive wealth inequality in general and the growing delta between productivity and wages) exists, so probably until our financial systems fully collapse in about 2032.
These people migrate like geese through the exact same stuff. I knew a couple of people way early on into affiliate marketing, then they all migrated to LeadGen, then to Drop Shipping, then online poker, then crypto, then NFTs, and now of course, they're all doing AI gigs. It's the exact same group of people migrating like birds from scheme to scheme.
I think this is what the 'forest for the trees' phrase is getting at...