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.
> The more someone is making at their solo business, the less they want to blab about it and attract competitors.
Exactly! And this is why every time I see someone selling a course while bragging about making a lot of money, I know for sure they are _not_ making money.
"It is inconceivable that anyone will divulge a truly effective get-rich scheme for the price of a book. There is ample opportunity to use wealth in this world, and neither I nor my friends, nor anyone else I have ever met, has so much of it that they are interested in putting themselves at a disadvantage by sharing their secrets."
Victor Niederhoffer, The Education of a Speculator
A family member of mine has done really well out of Amazon fba. She took someone's course and that got her going. I did the same course but really struggled to get going. I gave up. It wasn't for me.
But yeah I'm guessing the guy selling the course makes more off that than his fba business
I have always felt that online courses selling on how to sell online courses are underserved market... You do not hear too much about those, not that I have looked.
There are a lot of people out there hawking a lot of different schemes that they say will get you where you want to go. “Build relationships,” they’ll say, or “work smarter, not harder,” or “first, decide what it is you really want.” And it sort of seems like they must know what they’re talking about, because aren’t they successful themselves? Don’t they have trophy spouses and expensive haircuts and mansions on the coast? Surely they’re in possession of some secret system for achieving one’s dreams!
Well, yeah, they’ve got a system. Their system is selling hope to schmucks like you. Their seminars, their self-help books, their crazy diets and exercise plans? That stuff doesn’t help you. It helps them.
It's possible that's where I found it originally, but my memory suggests to me that I found it somewhere else, on a blog, and that the continuation was different.
> 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.
> It for sure is but it's being ised to refute an affirmative assertion, not make it's own assertion.
To refute assertion you need to claim negation of that assertion, which is assertion in itself, as every negation can be rewritten to become affirmation, and vice versa.
This is not true. Producing a counter example to an assertion refutes the assertion.
While you can certainly argue that such a counter example entails the negation of the original assertion, that is not the same thing as claiming the negation of the assertion.
Putting forth an argument or demonstrating a counterexample is not the same as asserting all of the logical consequences of that argument.
The second statement doesn't actually imply that all cats are black but it does refute that all cats are white. It doesn't make it's own claim about all cats, it just adds an anecdote that doesn't conform to the first statement.
I don't stand to gain anything by exaggerating the results of the meetup attendees. Unless you think I'm trying to recruit people on HN to come to my meetups and meet successful founders?
I know over a dozen 1-2 person SaaS, not including my own. Some of them have hired some help now but they are still more on the "lifestyle business" side. They are in many different spaces, and founders from around the world. I am not a big networker, but this is my niche and it's big enough that I just know a slice.
I don't know any. I know a couple of people who had ideas that became bigger startups, but only 1 who was a friend rather than via networking. And I know a few people who did try the small saas or other small software based business but they all failed and now have jobs.
This is such a middlebrow dismissal. Like yeah, people are speculating based personal experience and knowledge, so what? If you have a different viewpoint or something specific you'd like to see data on call it out and engage in the discussion. Don't just be the "data or GTFO" guy because that's a super bland and pointless take.
> 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.
I'm not claiming that all indie founders are successful. I'm disputing the claim that almost all indie founders are struggling by saying I regularly meet indie founders who are successful. Not like driving exotic cars successful, but making a good living, in some cases with income on par with mid-to-senior FAANG dev jobs.
> 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.
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.
I think the bar has risen for what a comfortable life requires now. Housing costs have outpaced inflation for a couple of decades now. Health insurance has rocketed into the stratosphere, especially in states that dropped the Obamacare subsidies. Even staples like food and fuel are hard to keep up with. Lord help you if you have children and are trying to save for college. Projected costs for universities are getting to "buy a brand new luxury car every year" levels. Not to mention all of the school costs on top of that. It adds up so fast.
Sure, things like phones are much more feature packed and only slightly more expensive, so they get to be inflation adjusted as being significantly below inflation.
I appreciate you setting the bar on necessities. Too many people focus on the... "cheap" "luxuries" like air conditioning, smartphones, internet access.
You can see it in the comments though. Many many many people who fall for get rich quick schemes, whether it's an app or saas or drop shipping or whatever genuinely want that billion dollars.
You can be comfortable on not very much money with realistic expectations while not working yourself to the bone was kind of my point.
Indeed, I'd just like to decouple my earning from the whims of corporate overlords who may decide at any moment that I am redundant. I have no serious ambitions to be a billionaire. For that dream I just buy a Powerball ticket once a year or so.
100%. It should be cool to make enough with a business to live a comfortable life, not enough to hoard LITERALLY ALL OF THE MONEY at the sake of others.
Didn't feel like a misdiagnosis to me. My spouse around 2017 was one of those that got sucked into a course to earn income with an Amazon store. As I read the article basically every point resonated with my experience.
The dog walking business example was also appropriate in my mind. My spouse fortunately broke even, minus time, on her attempt with drop shipping garbage nobody really needs. Now she makes decent money with her oil paintings. Not "passive income" but real money and profit. Not enough to retire (that's what I am for!) but actual money nonetheless.
Dropshipping was also MASSIVE in /r/startup at around this time. I even got caught up in it: I spent a spell on flipping designer clothes found at thrift stores on eBay (overall lost more than I made, though not by much. Surprisingly intense business; definitely not passive.)
Would you mind sharing a little about how your wife does business? Like, are her clients regular people or art shops? How does she put a price on her work?
I'm not in any way doubting that lots of people were swept up in Amazon drop shipping scams. My argument is that this was not some sort of unique "passive income trap that ate a generation of entrepreneurs".
Years before your spouse enrolled in that Amazon course, people were spending tens of thousands of dollars on Trump University. Many years before that I had a friend that got sucked into the Equinox International MLM scam. Point being those types of promises of easy money after paying for a course, or outright scams, are not something new or unique.
I think this kind of "get rich quick" scam has always been around (MLM is a perfect example) - the interesting thing about the amazon drop shipping one is that it did actually work for a bit for quite a few people - until China realized they could cut out the middleman and drop ship directly (and things like Temu and friends came into view).
The vast majority of people who fall for things like MLMs will continue to pursue similar scams and never graduate to "real entrepreneurship" even when there's obvious and not terribly difficult paths (most anyone can become a realtor and at least not lose terrible amounts of money, even if they never get to "full-time job" levels).
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.
> You rarely see anything more than a couple hundred bucks a month
From my perspective, you have to take a lot of shots, I did around 20 side hustle ideas last year and 2 are making over $100/mo. The other 18 I dropped. The only note I will give is that the 2 that succeeded really played to my strengths.
About me: I once had a hustle that did around $6k/month but that was many years ago and I decided I would be happier as a hired gun coder. The rise of AI made me rethink this so I'm clawing my back to providing services.
Yes, passive income businesses didn't fail because operators stopped caring. They failed because the markets were structurally broken.
Dropshipping, affiliate SEO, print-on-demand... these face the same margin compression regardless of how engaged you are. Ad cost inflation, platform saturation, algorithmic displacement, etc... it doesn't matter whether the operator is engaged or not.
Caring's a moat only where differentiation is possible. In commoditized markets, it doesn't move the needle.
> It's just simply much harder as a small/smaller business to make money and compete with the big boys.
You're conflating two different things. Thanks to software, it's easier today than it's ever been to make money as a small business / solopreneur. It's also harder to compete with the big boys, possibly for the same reason and due to economies of scale.
That's why I don't bother entering the same markets the big boys are in. There are plenty of niche markets which they don't bother touching where a small business can thrive.
>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.
is someone making money on a side gig really a solopreneur? By definition a side gig is not something you expect to make significant amounts of money on. if a side gig starts generating significant amounts of money then you would probably make it your primary gig.
> 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.
My current read of the situation is similar. If you go to other countries, there are slews of small shops, even in run down areas. On top of that, in places within Asia, the malls are also open and full of regional chains. It also feels like there's such a wider variety of certain goods available, because the little bakeries are doing their own thing, while in the U.S. seemingly everybody is eating Costco danishes.
"Passive income brain" people are not the only one's trying to "build revenue engines," that same sort of talk exists in corporate America. There are already people that that own companies which are there "to generate passive income for me," right now--there's a whole class of millionaires and billionaires that don't have to work. Passive income people didn't ruin the "content quality of the entire internet" and are far from the only ones doing so. Many of these folks are likely the ones that would have owned a hardware store if America didn't ignore it's regulatory duties while preaching about how "important" small business is.
In the U.S. situation really seems to have fossilized into a few big players/platforms, and they continue to freeze up through the process of things like private equity roll-ups. There's a thread on the front page right now about Amazon's alleged price-fixing tactics, which hurt customers and small businesses. Further: Real-estate is an investment, so for most being able to pay commercial rents is a pipe dream. Healthcare is tied to employment, so people are less free to try and start something other than "on the side."
American's choose "convenience" when shopping and to put people in power that serve these large companies or their owners, not small businesses or communities. Dropshipping, creating a "sweaty startup," etc... it's all just people trying to make do within the system they're trapped in.
>Healthcare is tied to employment, so people are less free to try and start something other than "on the side."
It has long been easy for anyone to buy health insurance without an employer in the US. If you are self employed, you can even pay for it with pre tax income.
The problem is it costs $500 to $2,500 per month per person plus $10,000 out of pocket maximum per year, which means you need a high income to be able to afford it.
What do you think happens when you get sick as a self employed person? Do you think a health insurance company pays claims? Self-employed health insurance = Orwell's 1984
At least when you work for a corporation you don't have to see the truly ugly side of health insurance claim denial. Many people don't see this until their 50s/60s when they lose employer health insurance.
> At least when you work for a corporation you don't have to see the truly ugly side of health insurance claim denial.
I cannot tell if I am being trolled. The only logical conclusion to this statement is you think “corporations” instruct the managed care organizations they pay to pay all claims. To which…lol.
A health insurance company can easily manipulate claim stats by paying claims to doctors/healthcare companies owned/operated by the health insurance company. Essentially moving money from one subsidiary to another.
First-principles.
____
A Fortune 500 company has teams of lawyers, HR departments to ensure that a basic cholesterol blood test doesn't need to be approved or fought to be covered. When you are no longer "protected" by the corporation you are fighting on your own.
It doesn't seem like you have any real world experience dealing with health insurance companies.
> A health insurance company can easily manipulate claim stats by paying claims to doctors/healthcare companies owned/operated by the health insurance company. Essentially moving money from one subsidiary to another.
No, they can’t. They don’t even own hospitals, where a good portion of the spending happens. Nor do they own the medicines that are the highest profit margin item in the whole healthcare chain.
> It doesn't seem like you have any real world experience dealing with health insurance companies.
You would be wrong, but to avoid appeal to authority, you can explain why the managed care organizations are terrible investments if they deny claims willy nilly. It is one of the wonders of the modern world, all 7 publicly listed managed care organizations are simultaneously pilfering their customers and their shareholders. And they have the same insurance prices as the non profit insurers, who all have to get their prices approved by 50 different state insurance regulators.
If the health insurance executives can pull off that kind of coordination to achieve that kind of theft, they deserve it.
> A Fortune 500 company has teams of lawyers, HR departments to ensure that a basic cholesterol blood test doesn't need to be approved or fought to be covered. When you are no longer "protected" by the corporation you are fighting on your own.
A fortune 500 company is likely self insuring. The managed care organizations wouldn’t even be affected by approving or denying the claims, the employer is the one paying. Smaller businesses are buying the same ACA compliant insurance as an individual would from healthcare.gov.
Optum Health: Delivers care directly to patients via local medical groups, urgent care centers, and surgical facilities.
Optum Care: A major component of Optum Health, this network employs or partners with physicians across the country to provide value-based care.
Optum Rx: Pharmacy care services.
International: Owns and operates healthcare facilities in South America and Europe.
It's not difficult to see how a Health Insurance company with 4,000 subsidiaries could easily move money around and manipulate claim stats.
I think we're saying the same thing. Most people don't necessarily [functionally] have the option (or at least don't think they do, there are sometimes ways through.)
But, public hospitals with low or no cost care exist in some of these places, and from my observation, I do currently think it's a contributing factor to why small businesses are more likely to exist. But, it's only one knob to turn.
While I agree with the sentiment, I need to point out your numbers are exaggerated. There are calculators available on these healthcare marketplaces. The calculator for my state shows I would owe less than $130/mo unless I earned above a particular amount ($36k IIRC). The next “bracket” would have me paying around $240/mo up to around $90k earnings IIRC.
If you were earning above six figures then your numbers may be correct but let’s be honest and not dissuade folks from doing their own research. Everyone’s goals are different.
> The Wilshire 5000 stock index, for example, actually only includes about 3400-3700 companies now.
That amazed me when I heard it recently. The number of tradeable things continues to increase, but most of them are two or three steps removed from real-world production.
Yeah, it feels like the author is blaming his personal bugbear but entrepreneurship and independent businesses are facing systemic issues of massive concentration of market power and zero antritrust enforcement.
The US economy is in a death spiral. It’s where the UK was after WW2: lost an empire, didn’t want to admit it or address it. The foundational jobs of the economy - blue collar work - are gone. There simply aren’t enough people with jobs at each layer to support the businesses and jobs in the next layer up. The US will discover its total inadequacy if it gets into a war with China. We just can’t build weapons as fast as they can because we can’t build anything any more. Currently they are building solar and EVs while we can’t pave our roads. If they wanted to switch to pumping out destroyers, missiles and drones, we would be out gunned very quickly.
These desperate attempts at passive income are simply another symptom of the absence of a functioning economy.
> if they wanted to switch to pumping out destroyers, missiles and drones
This is such a naive take. Nobody is coming to US to try to outgun you. The moment petrodollar wobbles, the moment US Dollar stops being the world reserve currency, the game will be over for you. You will discover what it really means to be competitive, once the world stops giving you goods essentially in exchange for glass beads.
Sure. If US leaders had sense, they wouldn’t engage adversaries they can’t beat. I’m not saying China will start this war. I’m saying China doesn’t need to. China can just watch it happen. Like the US watched the British in Suez. But the US might start something and that’s how they’ll discover they are the just the last of the failed empires.
Pretty sure the current administrations end game here is copying North Korea. The rich have enough oil in Texas to perpetuate their lifestyle, while violently suppressing all opposition.
Anyone making real money on their ‘side gigs’ is very unlikely to be on that thread, let along telling anyone in detail what they are doing. It invites unwelcome competition.
When I was in high school 25 years ago, unless you got lucky with an IPO, tech didn't pay all that well. (I worked in software while I was in high school, so I know some of this first hand).
It was office space. It didn't matter how smart you were, if you didn't go into management, or join Apple/Microsoft at just the right time, you weren't going to live a rich lifestyle.
Not only that, you'd probably be reporting to some MBA type biz guy who has no idea how software works, you'd not be well respected, and your perks were drip coffee and occasional donuts on friday.
Of course brilliant, hard working, talented engineers said "fuck that" and go build something awesome themselves. Things have changed drastically. Now, brilliant hard working people can literally make millions at dozens of companies .
You will report to another engineer who has slightly optimized for soft skills, you get lavish perks (except amazon, but at least you get paid well there), and real equity.
There's a whole spectrum of options for ambitious software folk that didn't texist ~25 years ago.
I was a software engineer 25 years ago, and tech paid very well - and in a non-Bay area location, and I'm only counting my cash comp as my stock options ended up being worthless (dot com bust and all). I made more my second year out of college than a family member's first year as a physician post-residency.
Can you tell me more? 25 years ago I was only a high school getting paid minimum wage 'cosplaying' as an office worker writing SQL and VBScript.
So, my view is skewed, but I got the impression software engineering was not a place people were retiring 'early' from, unless you made it in management. It seemed like a pretty standard office job, maybe with a little more perks due to the eccentric nature of the majority of workers.
> 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.
This is true. It's a plot point in "Little Miss Sunshine," a movie that came out in 2006. One of the main characters tries to sell a SYSTEM to get their family out of lower class living.
Get-rich-quick books have been around a long, long time. I'd wager they've been around since the printing press. And they always devolve into "buy low, sell high" or selling get-rich-quick systems to other people.
Passive income's not new either. It was (sometimes still is) a massive marketing play for franchisees. Spend $100k+ to open a franchise; the franchisor takes care of the rest; grab a hammock while you watch the money roll in. Never ever works that way, but that's how they've been marketed for a while.
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.
The way to escape is through consistent, long term investing in the stock market. You get a regular job and live below your means, investing the difference. Buy and hold. Invest regularly. Not day trading, long term. The problem is most people don’t have the patience, the right temperament, to do this.
This is not what people mean by passive income. Yeah, if you have a few million dollars of capital already you can easily just toss it in the market and collect 4% every year indefinitely. Pretty much one of the only truly passive income streams there is.
The problem is how long and what you have to do to get that 3-5 million number. No one who is drawn to the “passive income” hustle is thinking “work a normal job for 30 years, live under my means, and invest everything I can”. They want to get much more immediate results so they can enjoy life on easy street because grinding it out for so long sounds extremely depressing.
What you describe is a retirement plan, not a passive income lifestyle. Kinda the opposite of escaping.
This is literally the traditional definition of passive income - using your capital to generate more capital.
There is no free lunch, you need to provide something to get $$$. If you are providing labour it is by definition not really passive. That leaves land or capital.
The point is though, that no one pitches it this way. Everyone knows if you have millions of dollars you can generate passive income. That's simply not interesting to anyone.
If you have to grind out making millions over the course of a decade or three, that's simply called having a regular job. That's the status quo.
The passive income folk are all about finding some "hack" where you can be clever or smart or out-hustle the next guy and unlock some secret method to making passive income without capital. That's the entire "industry" in a nutshell. They are not going to folks with $1m in the bank telling them how to make 4% returns on it by tossing it into low cost ETFs. They are going to folks grinding out a living saying they have a shortcut to not needing that capital base to start off with.
tldr; If you already have capital, you don't need to think about passive income. It just happens.
‘everyone knows’ is doing a lot of work here. you still need to spend time, and make a lot of good judgement calls (not easy!) to earn a useful amount of passive income on investments without losing your principal.
being a professional investor (what you’re referring to) is especially terrifying in a low interest rate environment.
You don't need millions - if things go modestly well and you have a high savings rate, you can get out in 5-10 and draw enough to cover modest means. I do agree that people eying passive income maybe have a different patience / willingness to sacrifice & self-teach threshold but the calculus of grinding for a few years to escape has its adherents.
Yup. This was my approach. Left my business a decade ago with low six figures cash in my pocket. It would have lasted about 18 months at my existing burn rate.
So I moved to a cabin in the woods in a country with a low cost of living, and stuck pretty much all of it in the markets.
Had I not done that, I would have had to go back to work - instead I lived a modest life (€500/mo, max) off the income from putting my apartment on Airbnb, and regained my sanity after a decade of relentless work while my investments did their thing.
Anyway, it’s a decade on, still haven’t done a jot of “work”, and the assets are now worth several million, and are being redeployed to continue to maximise value growth - and we now treat ourselves to spending months travelling at exorbitant budgets, real estate, expensive toys - and had enough stability to decide to have a kid.
So yeah, it’s possible - although had we grown at 6%/yr rather than an average of 80%/yr, it would be a different picture - but I firmly believe there are plenty of other opportunities for rapid capital growth elsewhere in the markets, and yet to come. I’m just some average dude who buys equities on vibes and then sits on them for a decade. If I of all people managed it, others can.
Way to bury the lede. Being able to average 80%/yr returns takes talent and skill and is a type of work. The type of work, by the way, that is rewarded with millions at finance companies in NYC, or even more if you launch your own trading shop.
Nope. I just think about the probable shape of the future, and who benefits.
I stick with the fields I know and understand - tech, engineering, sciences - don’t go for long bets so much as “if this relatively predictable set of circumstances arises, who will inevitably benefit”.
For example, in 2017 I was keeping abreast with ML research, and realised that within a decade this stuff was going to be huge - so I bought Nvidia and their supply chain and sat on it. Also Tesla as I figured as if I saw them as an adjacent incumbent beneficiary of an AI boom, then others would, too.
I’ve followed that chain of logic through - caught the nuclear renaissance in its entirety, as well as predictable resource squeezes.
So - that’s just one of my trees of bets - but my whole thesis is “predict a future, model out what that looks like, place bets accordingly”.
Passive income through assets is the basis of our entire society, trying to out earn the base line is the entire economy. Banks wouldnt lend, employers would do something else, if they didnt believe they could earn more doing what they do, instead of owning US treasuries or earning dividends from stocks.
Not just one word though. Also hard work and grit. Telling someone interested in escaping the rat race (who is not in the top 10% of income earners) to just stick with a job they despise for 15-25 years is just not going to hit home. They know they can grind out a miserable life. That's the status quo they currently live.
Sure there are the scammer/grifter types who just want a super easy mode get rich quick scheme, but a lot of these folks are somewhere in the middle which is where they get taken by the actual scammers. They get told if they just hustle harder than everyone else for a few years they can achieve escape velocity.
It is good to encourage people to save money and invest them, but 8 out of 10 people out there don't earn enough to gather so much capital to live off it.
In general, you are right, but many people on this site do earn enough. Engineers have some of the highest paying "normal person" jobs out there. If we can't save and invest for the future, who can?
Agreed. And if more high income professionals pursued this path, it would tip the balance of power in the workforce away from employers. That's a win for all except those at the top.
> 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."
25x expenses in s&p 500 works ok. (Adjust the multiplier for your level of pessimism) Funding it isn't easy, but save a good amount of your income for a few decades and control your expenses and you can get there.
I generally agree, but that basically sounds like prudent investing for eventual retirement. Yes, tune the degree of aggression both in terms of work input and spending restraint, but the "work input" has to be high (and effective) for those few decades.
EDIT: I'm also kind of writing in the context of having your own little economic engine that you own and control, and can be continually running, rather than owning a tiny piece of the abstracted aggregation of an entire economy's engines. That said, dead-simple, low-fee, market-indexed funds are a generally good place to put the surplus fruits of your own little economic engine.
The difference is, in retirement, you're maintaining an awareness of your own end of life and it's okay if your net worth goes down YoY as long as it doesn't do so too fast.
Creating an additional 30%-50% on top of whatever a normal person would consider passive income in order to actually have passive income is NOT a realistic option for a huge % of the population.
The key is living below your means by ~30%. You make 150k? Live like you make 100k. Every time you get a raise, 30% goes towards investing. For most engineers this is achievable.
Everyone getting income passively is not going to work for society in general. Work still needs to happen. Until we live in a post-scarsity society, if nobody works then everything collapses.
That's not to say that passive income is impossible, its just not going to work if large swaths of the population are doing it.
> I appreciated when "passive income" was the flavor of the week because it was a good signpost for people you could ignore.
This is why I still do random sampling of Reddit, Twitter, Threads, and a few other social media sites: It’s a good way to keep up with some of the discussion trends that start spreading in online discussions.
I can pick up quickly when someone is parroting the latest info memes from Reddit or Twitter now. It’s very helpful for identifying who isn’t really thinking for themselves and will latch on to the first opinion they see on a topic.
I can’t bring myself to watch TikTok or other video shorts, though.
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.
Same - I wasn't sure where I'd stop (always been a minimalist anyways, savings rate above 2/3) but ran into a health issue so seeing what the future holds: taking another crack at the 'career' or maybe something more low key that aligns with my passions or a side project. I just want more time for learning, everything else feels like a distraction.
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"
Or more generally, just doing whatever you want. I dont think anyone literally wanted to sit on a beach 24/7 365 days a year. However plenty of people would want the ability to just wake up one day and on a whim fly to a hawaii until they get bored then fly somewhere else.
> If you've tried to google "best [anything]" in the last five years and gotten a wall of nearly identical listicles, all with the same structure ("We tested 47 blenders so you don't have to!"), all making the same recommendations, all linking to the same Amazon products, you've experienced the results.
This also ruined Reddit as the source for this research. Before social media growth hackers figured out how to run campaigns on Reddit (around three years ago feels right, though I'm sure it's been happening at a smaller scale for a lot longer), you could type "best $THING site:reddit.com" and be fairly sure that you'll get a discussion about really good products amongst actual people. Nowadays, you can be fairly sure that most of the discussion is astroturfing, with some of it being completely AI-generated.
This is also ruining my _other_ use case for Reddit: finding good places to eat in my favorite cities recommended by locals that live there.
> podcast hosts interviewing each other in an endless circle of mutual promotion where everyone claimed to make $30K/month
It's always $30k/mo _revenue_. Never profit. We don't talk about profit.
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.
Apple makes devices people like and use. Many people loved their Teslas. Netflix makes shows people enjoy. Facebook really did help people stay in touch with friends and family before replacing it with the Feed of Rage. Google was far better than anyone else at finding things on the early web.
I would say really successful companies at least go through a stage of Building Something People Want. Even if they stray from that as they become more successful.
How many people got really rich as a result of Apple, Facebook, and Google doing things that created actual value? I get that all those companies are really rich, but most of the people involved aren't.
Perhaps I misunderstand you, but I imagine those three companies have minted quite a few IC millionaires (let alone management). But maybe high single-digit millions isn't what you consider to be "really rich", dunno.
In what I quoted, she wasn't talking about passive income; she was talking about making money by actually creating value. I'm saying it's a shame that our system is set up so people who actually create value don't end up really rich, while people who game the system do.
When the Internet was a quite new a guy who knew I was a programmer met with me to pitch an Internet business and it took me a while to figure out he was literally pitching Amway online.
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.
There is no other word that reeks more of ideology than entrepreneur. It is a name of the fake promise fed to masses by people having wealth and power, and not willing to share it.
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 think its pretty obvious that "sit on a beach" is a metaphor for being able to do whatever you want not literally sitting on a beach for the rest of your life.
At the same time, you guys really can't imagine relaxing on a beach for more than a few hours? Like i'm not really a beach person but back when i lived near the ocean i spent the odd saturday just unwinding on the beach with a book. Certainly wouldn't want that every day, but y'all acting like it would be impossible to enjoy say abeach vacation for a few days seems crazy to me.
A home on the beach is seen as an expensive status symbol.
House maintenance costs in sea air cost at least double. Appliances and aircon rusts and corrodes. Everything needs regular painting.
Cars rust out. I buy second hand shitters and replace them every ~5 years. Certainly not worthwhile owning anything collectable or precious.
If you want a garden, be prepared to spend twice the time and money and, perhaps plants and trees still struggle or die.
I live in New Brighton in Christchurch, mostly because it is cheap housing (for no reason I can understand). Plus the coastal wind from the sea avoids hayfever (town is irritating for me).
It has a good community. Many people that choose a beach vibe are relaxed and friendly.
> But zoom out and what you had was just an enormous machine converting human ambition into noise
Calling it “ambition” is generous IMO. Passive income chasers always give “desperation” more than “ambition”. I also feel a bit weird about mourning “a diverted generation of entrepreneurs”, personally I feel like this generational obsession with entrepreneurship almost forcibly led to the dropshipping scams we see today. In a world where everyone is constantly trying to get some side project off the ground of course some folks are going to pursue the shortcut version of that.
The author apparently never read Tim Ferriss’ The 4 hour work week which not only whiteboarded some of the described schemes 20 years ago, but also had an illustration of a hammock suspended between two palm trees on the cover.
That was the dream: Set up a system, live on a beach.
Very well written article, it gets into the core of the problem and explains the hidden patterns. I want to articulate few other variations of this just as a reference.
- The productivity gang, if everyone is so productive and so well organised then what are the outcomes of this productivity?
- Self help - if self help books are solving real problems then where is the need to buy multiple self help books?
- The course trap - if someone is already earning millions dollars where is the need for him to sell $699 course
These are some questions I would ask myself regularly, there is nothing right or wrong because end of the everyone has to servive.
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.
I was in community college taking some real basic, entry-level I.T. classes. And one of my classmates seemed nice, normal young guy about 20, already married.
And one day on campus I see him drive up in a Mercedes. And I ask him what’s going on.
Well, he tells me that he learned a little bit about cryptocurrency, and now he had gone into business where he advises people on how to invest in cryptocurrency. And I thought, “That’s really wise!” and I hope he is still doing well!
Basically a great way to stay above the hype and scams. Surely some sort of federal regulations would begin to apply... but good luck!
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?
Yeah, I get that, but I'm asking why that matters in the aggregate. Presumably there are still the same number of lawns that need mowing. Like, is chatgpt going to result in a significant change in who is mowing those lawns, or the frequency of lawn mowing, or the composition of yards?
Back when I was young and motivated about being left wing instead of being old and jaded but still left wing, we called people who lived off other people's work or by profits without effort "rent seeking social parasites"
I like the sound of a "rent seeking social parasite" trap.
As the Mikado says in the eponymous Gilbert & Sullivan opera:
"something humorous, but lingering, with either boiling oil or melted lead."
That was before I became old enough (as I am now) to live off my superannuation and pension, which is also "passive income" but joy of joys, not a side gig. I'm not in denial about where my pension income comes from. It's other people's labour. That's what I'm invested in.
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.
The larger message is young people cannot get passive income in a short time. Sure there are a few born rich, and a tiny handful who by luck and skill (both are needed) get rich quick. However for the vast majority passive income is a long slog of saving a little here and there. (there is a third option - really lower your standard of living so you need almost nothing to live - get a good job but live in a tent city with the poor, cooking on a camp stove - everything you own fits in a backpack). The idea that you can in a few years get enough invested to live on a beach for the rest of your life is a fantasy that sells books but doesn't otherwise exist.
I agree with all that. I've known a couple of people (at least one was out of investment banking--think both were) who pretty much fully retired in their forties, which of course isn't really that young. Some people hit the startup or some other lottery early on and, even if you get a million dropped on you at 25 or 30, you should probably think long and hard about whether you can really just not work any longer. Gives you a lot of breathing room but isn't really a huge pile.
Certainly, there are degrees of frugality. I could probably spend more than I do but don't have a real interest in doing so and generally avoid expensive things that might give me some incremental pleasure but prefer to arrange things so that increment is pretty small and doesn't revolve around "stuff."
A LOT of Millenials were born rich. They may not have realized it, but now that boomers are dying off, it is stratifying Millennials through inheritance.
A lot of them have and continue to receive massive wealth transfers from their boomer parents through free-ish rent, gifts (aka pay for your down payment on a house), etc, etc.
Hard to keep up with what generations are supposedly uniquely disadvantaged. For Millennials specifically, houses would seem to be rather late in the game as they're probably mostly buying in their 30s maybe if they're buying at all and probably haven't been living with their parents for most of that period before.
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.
There really should be a special category for business books written by people who’ve gone bankrupt. I know at least two well known examples, but there’s got to be a whole lot more.
Sure, these people could have "worked" for their money, self-employed or as a "wagey in a cagey", but the whole point was that they didn't want to do it.
the obvious problem with any such scheme is that things are already priced in.
if it would be so easy to build personal passive income businesses hedge funds would be going around recruiting people and funding them. or the government. or the Effrctive Altruist.
but most small business are bad, inefficient, hard to scale them, etc.
(that doesn't mean there are no way to make money this way, but economically those boil down to bets. sure, sure, the aforementioned fancy investment funds also do bets, usually more sophisticated ones, and who doesn't, right? unless you are actively building a bunker somewhere around the Darién gap and recruiting people to your doomsday cult you are betting on the global economy chugging along.
but! eventually one has to price in risks-weighted return, and usually "passive income" is pretty poor compared to a boring job that pays really well.)
Actually it also reminds me of one of my friends. He is doing everything very shallowly and yeah, chasing passive income, but never succeeded on building anything lasting. I think the only way is to realize that labor and work is some basic human conditions like what Arendt said before, then you start to have some awe towards work, which is not something hated by passive income chaser.
the "giving a shit is by definition not passive" line is the whole essay imo. everything else follows from that.
the piece ive been thinking about though is the distinction between extractive info-products and compiled info-products. the affiliate blog churning out blender reviews someone never touched is extractive. but a furniture maker who writes a book about furniture making, from 20 years of doing it, isnt really "passive income" even if the book sells while they sleep. its just consulting-at-scale. the work was front-loaded, not absent.
the trap as she frames it is when the book comes first and the 20 years of experience never happens. when the product IS the meta-product about how to make the product. thats the ouroboros she nails.
fwiw im currently 4 days into a 30-day experiment shipping public work daily before asking anyone to pay for a compiled version. its painful in a way the "passive" framing cant accommodate, which is probably a sign its real. the people who sold "passive" never had to live through the days where nothing happens.
I'm partially familiar with this ideology that the author refers to, but I think it's important to separate it from actual passive income:
dividends and treasury bonds give passive earnings, you need capital. the "passive income" savants did not and do not have capital.
case in point: it should not be noteworthy that the author's friend was "$800 in the hole", it should be such a rounding error that it couldn't be any of Joan's concern. And honestly, it probably isn't and Joan put an obsessive amount of weight into an off-comment.
$800,000 in treasuries, on the other hand, now you have passive income - only ~$37,000/yr - but enough to live like a royalty in South East Asia for the next 30 years, passively, followed by getting all $800,000 back.
Class inequality aside, throwing darts at the wall and seeing what sticks isn't a bad business strategy, and you really don't need to be passionate about any particular business idea to collect income.
I hope Joan's friends found something that worked from them. For me its just stay employed so I can accumulate capital for the side projects. Sometimes side projects become bigger than the employment, but my businesses are just expeditions, not forever projects.
I've never watched dropshipping influencers but I did sell some of my own electronics on eBay and noticed some opportunities in the process. Sometimes I put up identical listings as someone else's at a wildly inflated price, and people would buy from me because it seemed more serious. I would buy from the cheaper ad and put my own buyer's address in the shipping destination. Never seeing the product. Not scalable as I think its against the one of the terms, but you can do it between marketplaces too.
Nice blog post, but I have to say that having a link on top of the page to some creative agency subscription service is quite ironic. These services are a dime a dozen, providing the same zero value product to the users, advertising on a cool looking website done by outsourcing to some guy that vibecoded it.
A more hasty fellow might have flagged this post as self-advertisement without necessary tags.
There is nothing wrong with pass income, exchange time for Money by definition has its limit and only when your money compound you still to build savings then wealth. I scroll through half the article and the only under luring reason the author came up with is that dropshipping guy don’t care. People who don’t care have little chance at successful entrepreneurship anyway.
At that point I wonder why not just invest in REIT. And then look at how those compare to other possible companies... And then figure out nothing makes much sense.
Have you seen the taxes for REITs? They are complicated and often taxed as ordinary income instead of capital gains. I have heard recommendations to only use them in Roth IRAs.
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.
There's a type of similar trap for devs, not necessarily a passive income trap because most go for a saas and accept the infinite-version release cycle.
What some devs usually fall for ( not by watching some youtube video, but by falling into the idea organically on their own as a kind of emergent behaviour ) is doing the minimal effort of a saas, like a template of the necessary part without adding the actual value.
The way this most often presents itself is a payment proxy, think about the minimal requirements for any software service, it charges money, so that's where they start, a stripe account, maybe an LLC, payment links or payment tables, they can now charge money. Then they make a frontend, a website, of any kind, this comes first, not to serve some kind of need, a landing page, and the actual product is a landing page as well, use react as well because that's the thing you do.
Finally, what is computing, it has something to do with data, so let users upload some images or videos, then you let them charge users for it. Bam, you have now reached the same app SaaS that millions of indie devs developed, like a patreon thing, an OnlyFans if you allow that shit, a gumroad. A host that allows uploaders to charge money.
If you don't even want to go through the hassle of hosting the images or content, you can just let the users upload a link, and charge for that
Must be thousands of these Linktree, campsite, taplink, patreon, cafecito, matecito, tecito.
The dropshipping thing is similar to this but it has a physical component, the idea of a business is just the minimal core, a caricature conception of what a business is, you buy a thing, and you sell it for more.
I’ve met a lot of “passive income” folks over the last few years, and all of them sounded like their businesses were very actively managed. Never made much sense to me.
I do disagree that all sub$100 blenders are the same, though. But still! The main reason restaurants use Vitamix blenders is that they are so much safer when blending burning hot stuff, like soups. When you turn off a normal blender, you’re fairly likely to create an air bubble that pops a little later, sending drops of very hot liquid into the face/eyes of the operator. A Vitamix, if you turn it off correctly, does not create the bubble. This is irrelevant for most home users, including me. So I don’t have one.
Blending hot liquids requires care because turning on and heating the air causes the lid to blow off. Most blenders are limited by physics. Vitamix have an analog dial for speed which allows you to heat the air more slowly. Turning off bubble? Maybe I’ve experienced that … but seems like an inexperienced operator with hot liquids and powerful motors is just a recipe for disaster.
"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."
I think the 14 year old nephew has been around for every iteration of technology - there are probably clients now threatening to just have their nephew vibe code the thing you're trying to spec out.
Once, when fed up with this during a discussion on a small moonlighting job I said "Yeah, kids are pretty good with this stuff these days, Tell you what - have him get started and I'll be available to give him any help he needs at 2x my rate".
Someone told me that in 2013 when I was trying to do contract work. I gave him a quote that I thought was reasonable, and he thought it was too much and he told me that his thirteen year old son could do it for free.
I responded that he was the one who had reached out to me, and if he feels like his son can do it then he shouldn't have wasted his time trying to find a contractor since that will be more expensive.
The client didn't like the attitude and I didn't get the job, but I was kind of glad because it was pretty clear to me that he would have tried to weasel out of paying me regardless.
Yeah, that's really the hard part of contracting. I was in my 20s and was certain I HAD to win every bid to keep feeding myself. I took longer than I should to realize that 3 worthwhile jobs is far better than 10 hassles. All clients required changes, most thought they were overpaying, and many gave me a hard time when the bill was sent. Meanwhile, when I'd toss out $20,000 as a price tag, those folks were far more serious, and they paid on time! It caused me to learn a valuable lesson. You want to quote high enough to offend the folks that aren't serious. They were gonna be such a pain.
I don't even think I was charging very much. I was still pretty junior in my career, so I think I was charging something like $40/hour, which was double my nominal wage at my previous W2 software job (doubled to cover stuff like health insurance and overhead and the like).
$40/hour is an extremely low rate for a software engineer, even at the time. I'm not sure what the guy was expecting, and I'm quite confident that he would have tried to weasel out of paying the second I delivered a product by claiming it didn't match his spec. Honestly I don't really think I'm ever going to contracts for small clients again regardless; a lot of them can get away with a SquareSpace site, and the ones that can't should probably spend their money buying a few courses on using Claude Code or ChatGPT.
There's also the fun scam of wannabe Steve Jobs characters. I had a person try to recruit me for a job where I worked for 2% equity in their business, where I was expected to write the entire codebase myself. Of course the remaining 98% went to them, and as far as I can tell they felt that their "idea" was just that valuable and didn't plan on contributing anything else. Fortunately, I didn't really fall for that one.
Tangential, but in my previous apartment one of my neighbors really wanted me to build him a website after he found out I work with computers.
I told him that I don't really build websites, and what I mostly do is write things that move information from one computer to another and that I haven't really enjoyed web development so it's not something that I do in my free time so I'm not good at it, and he should check out SquareSpace or Wix something.
He kept assuring me that it would "be easy". To shut him up, I gave him a quote of my daily rate for contract work (which honestly wasn't even that high by software engineering standards), and he backed off because he didn't realize how expensive software engineering is.
I think the article conflates two different things: the idea of passive income and the grift around it. Having a SaaS product that runs while you sleep isn't a trap — it's just good business design. The trap is paying $997 for a course on how to do it.
And what makes it worse is the survivorship bias baked into these communities. The ones loudly promoting passive income strategies are almost always making their money teaching passive income — not from the strategies themselves. The actual successful indie founders I know are pretty quiet about it. The concept isn't broken; the ecosystem around selling the dream is.
I blame Tim Ferriss and his "4 hour work week" book. I belive he talks about selling vitamins and letting some guys in India manage his site. Doesn't get his hands dirty. (This is from memory, so please forgive any misconceptions about it).
The core was simply that he created a successful business, but was spending more time running it than he would be working a normal full time job.
Then he delegated more and more responsibilities, allowing them to make decisions for anything up to a certain dollar amount, then kept raising the dollar amount.
This ended in him checking email a few times a week totaling about 4 hours altogether.
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.
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.
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".
"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.
My small brother is part of that hype. At his age I had a few lucrative freelance jobs under my belt, but he is oddly fixated at getting money without putting in anything that could be specified as work. I did what I loved doing and got paid for it, for him there is nothing he loves doing that he could earn money with.
I now work in high level education in one of the top universities in that field in Europe and so I am in touch with many of his generational peers. Sadly I can't help but recognize this a significant trend, within some students (luckily a minority) thst has emerged in the past 5 years. As if they want to do the thing without actually doing the thing. Like a musician who wants to be a musician, but despises spending time on playing or rehearsing actual music.
I am not entirely sure what it is all about, but I could imagine both the internet and a certain US president has shaped the idea that appearance is the only thing that matters, while substance is for losers and suckers.
I literally roll my eyes when people tell me about about some massive market opportunity that they feel like they’re better positioned to arbitrage away than people with more capability / infrastructure / domain expertise - and can’t explain why those market participants are ignoring this “obvious” opportunity
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.
> The more someone is making at their solo business, the less they want to blab about it and attract competitors.
Exactly! And this is why every time I see someone selling a course while bragging about making a lot of money, I know for sure they are _not_ making money.
"It is inconceivable that anyone will divulge a truly effective get-rich scheme for the price of a book. There is ample opportunity to use wealth in this world, and neither I nor my friends, nor anyone else I have ever met, has so much of it that they are interested in putting themselves at a disadvantage by sharing their secrets."
Victor Niederhoffer, The Education of a Speculator
I’ve seen people bragging about making a lot of money selling a course about selling courses. That somehow felt honest.
A family member of mine has done really well out of Amazon fba. She took someone's course and that got her going. I did the same course but really struggled to get going. I gave up. It wasn't for me.
But yeah I'm guessing the guy selling the course makes more off that than his fba business
Well you never know, maybe selling the course is the profitable part?
I have always felt that online courses selling on how to sell online courses are underserved market... You do not hear too much about those, not that I have looked.
They do exist if you dig - for example: https://johntreed.com/products/how-to-write-publish-and-sell...
There are a lot of people out there hawking a lot of different schemes that they say will get you where you want to go. “Build relationships,” they’ll say, or “work smarter, not harder,” or “first, decide what it is you really want.” And it sort of seems like they must know what they’re talking about, because aren’t they successful themselves? Don’t they have trophy spouses and expensive haircuts and mansions on the coast? Surely they’re in possession of some secret system for achieving one’s dreams!
Well, yeah, they’ve got a system. Their system is selling hope to schmucks like you. Their seminars, their self-help books, their crazy diets and exercise plans? That stuff doesn’t help you. It helps them.
This text can currently be found in the blurb for a shirt at https://shirt.woot.com/offers/steamworks-operatica .
It's possible that's where I found it originally, but my memory suggests to me that I found it somewhere else, on a blog, and that the continuation was different.
So true. The latest rage on IG is "this guy built a trading system on OpenClaw and is now making 10k, comment MONEY and i'll DM you the recipe."
No indy hedgefund algotrader gives away their golden goose, that would crowed out the trade.
> 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.
Isn't this also sampling bias?
It for sure is but it's being ised to refute an affirmative assertion, not make it's own assertion.
> It for sure is but it's being ised to refute an affirmative assertion, not make it's own assertion.
To refute assertion you need to claim negation of that assertion, which is assertion in itself, as every negation can be rewritten to become affirmation, and vice versa.
This is not true. Producing a counter example to an assertion refutes the assertion.
While you can certainly argue that such a counter example entails the negation of the original assertion, that is not the same thing as claiming the negation of the assertion.
Putting forth an argument or demonstrating a counterexample is not the same as asserting all of the logical consequences of that argument.
Not really.
> All cats are white.
> All the cats I see are black.
The second statement doesn't actually imply that all cats are black but it does refute that all cats are white. It doesn't make it's own claim about all cats, it just adds an anecdote that doesn't conform to the first statement.
The second statement implies the negation of the first though. So OP is correct assuming the term "claim" includes "implies".
However, the original argument regarding smoking bias is correct of course.
> successful founders are busier
I thought it was supposed to be "passive".
They are busy sipping martinis on the beach, not working.
>I host meetups for indie founders
Speaking of sampling bias, isn't this like asking a shovel vendor about the success rate of gold prospectors? :)
Honestly, no. They're free meetups.
I don't stand to gain anything by exaggerating the results of the meetup attendees. Unless you think I'm trying to recruit people on HN to come to my meetups and meet successful founders?
I note neither your post or the one you replied to contain any quantitative data about how many profitable solo businesses there are.
I know over a dozen 1-2 person SaaS, not including my own. Some of them have hired some help now but they are still more on the "lifestyle business" side. They are in many different spaces, and founders from around the world. I am not a big networker, but this is my niche and it's big enough that I just know a slice.
I don't know any. I know a couple of people who had ideas that became bigger startups, but only 1 who was a friend rather than via networking. And I know a few people who did try the small saas or other small software based business but they all failed and now have jobs.
There’s one on the front page right now - healthchecks.io
This is such a middlebrow dismissal. Like yeah, people are speculating based personal experience and knowledge, so what? If you have a different viewpoint or something specific you'd like to see data on call it out and engage in the discussion. Don't just be the "data or GTFO" guy because that's a super bland and pointless take.
"Oh yeah, you think you know something about entrepreneurs? Name every business."
> 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.
> I suspect this is largely sampling bias.
FTFY.
I'm not claiming that all indie founders are successful. I'm disputing the claim that almost all indie founders are struggling by saying I regularly meet indie founders who are successful. Not like driving exotic cars successful, but making a good living, in some cases with income on par with mid-to-senior FAANG dev jobs.
> 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.
A real business is simply one that makes money. Not some gatekeeping criteria presented by the ridiculous OP.
Just because you took 7+ years to develop a business does not mean that all businesses require that or that it is the only way.
You keep telling yourself that.
Why the hate? If you believe GP is wrong, then why not outline where you think they are wrong?
HN is one of the few places left where low effort snark is thankfully below the noise floor, please don't destroy that.
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.
I think the bar has risen for what a comfortable life requires now. Housing costs have outpaced inflation for a couple of decades now. Health insurance has rocketed into the stratosphere, especially in states that dropped the Obamacare subsidies. Even staples like food and fuel are hard to keep up with. Lord help you if you have children and are trying to save for college. Projected costs for universities are getting to "buy a brand new luxury car every year" levels. Not to mention all of the school costs on top of that. It adds up so fast.
> Housing costs have outpaced inflation
In fairness though, given inflation is the average, housing costs outpacing means something else underpaced.
Sure, things like phones are much more feature packed and only slightly more expensive, so they get to be inflation adjusted as being significantly below inflation.
You are right about "house prices", but not all housing costs. Home loan interest repayments are not included in official inflation calculations.
Imported goods.
I appreciate you setting the bar on necessities. Too many people focus on the... "cheap" "luxuries" like air conditioning, smartphones, internet access.
You can see it in the comments though. Many many many people who fall for get rich quick schemes, whether it's an app or saas or drop shipping or whatever genuinely want that billion dollars.
You can be comfortable on not very much money with realistic expectations while not working yourself to the bone was kind of my point.
Indeed, I'd just like to decouple my earning from the whims of corporate overlords who may decide at any moment that I am redundant. I have no serious ambitions to be a billionaire. For that dream I just buy a Powerball ticket once a year or so.
100%. It should be cool to make enough with a business to live a comfortable life, not enough to hoard LITERALLY ALL OF THE MONEY at the sake of others.
Didn't feel like a misdiagnosis to me. My spouse around 2017 was one of those that got sucked into a course to earn income with an Amazon store. As I read the article basically every point resonated with my experience.
The dog walking business example was also appropriate in my mind. My spouse fortunately broke even, minus time, on her attempt with drop shipping garbage nobody really needs. Now she makes decent money with her oil paintings. Not "passive income" but real money and profit. Not enough to retire (that's what I am for!) but actual money nonetheless.
Dropshipping was also MASSIVE in /r/startup at around this time. I even got caught up in it: I spent a spell on flipping designer clothes found at thrift stores on eBay (overall lost more than I made, though not by much. Surprisingly intense business; definitely not passive.)
Would you mind sharing a little about how your wife does business? Like, are her clients regular people or art shops? How does she put a price on her work?
I'm not in any way doubting that lots of people were swept up in Amazon drop shipping scams. My argument is that this was not some sort of unique "passive income trap that ate a generation of entrepreneurs".
Years before your spouse enrolled in that Amazon course, people were spending tens of thousands of dollars on Trump University. Many years before that I had a friend that got sucked into the Equinox International MLM scam. Point being those types of promises of easy money after paying for a course, or outright scams, are not something new or unique.
I think this kind of "get rich quick" scam has always been around (MLM is a perfect example) - the interesting thing about the amazon drop shipping one is that it did actually work for a bit for quite a few people - until China realized they could cut out the middleman and drop ship directly (and things like Temu and friends came into view).
The vast majority of people who fall for things like MLMs will continue to pursue similar scams and never graduate to "real entrepreneurship" even when there's obvious and not terribly difficult paths (most anyone can become a realtor and at least not lose terrible amounts of money, even if they never get to "full-time job" levels).
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.
> You rarely see anything more than a couple hundred bucks a month
From my perspective, you have to take a lot of shots, I did around 20 side hustle ideas last year and 2 are making over $100/mo. The other 18 I dropped. The only note I will give is that the 2 that succeeded really played to my strengths.
About me: I once had a hustle that did around $6k/month but that was many years ago and I decided I would be happier as a hired gun coder. The rise of AI made me rethink this so I'm clawing my back to providing services.
Yes, passive income businesses didn't fail because operators stopped caring. They failed because the markets were structurally broken.
Dropshipping, affiliate SEO, print-on-demand... these face the same margin compression regardless of how engaged you are. Ad cost inflation, platform saturation, algorithmic displacement, etc... it doesn't matter whether the operator is engaged or not.
Caring's a moat only where differentiation is possible. In commoditized markets, it doesn't move the needle.
> It's just simply much harder as a small/smaller business to make money and compete with the big boys.
You're conflating two different things. Thanks to software, it's easier today than it's ever been to make money as a small business / solopreneur. It's also harder to compete with the big boys, possibly for the same reason and due to economies of scale.
That's why I don't bother entering the same markets the big boys are in. There are plenty of niche markets which they don't bother touching where a small business can thrive.
>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.
is someone making money on a side gig really a solopreneur? By definition a side gig is not something you expect to make significant amounts of money on. if a side gig starts generating significant amounts of money then you would probably make it your primary gig.
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.
> 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.
My current read of the situation is similar. If you go to other countries, there are slews of small shops, even in run down areas. On top of that, in places within Asia, the malls are also open and full of regional chains. It also feels like there's such a wider variety of certain goods available, because the little bakeries are doing their own thing, while in the U.S. seemingly everybody is eating Costco danishes.
"Passive income brain" people are not the only one's trying to "build revenue engines," that same sort of talk exists in corporate America. There are already people that that own companies which are there "to generate passive income for me," right now--there's a whole class of millionaires and billionaires that don't have to work. Passive income people didn't ruin the "content quality of the entire internet" and are far from the only ones doing so. Many of these folks are likely the ones that would have owned a hardware store if America didn't ignore it's regulatory duties while preaching about how "important" small business is.
In the U.S. situation really seems to have fossilized into a few big players/platforms, and they continue to freeze up through the process of things like private equity roll-ups. There's a thread on the front page right now about Amazon's alleged price-fixing tactics, which hurt customers and small businesses. Further: Real-estate is an investment, so for most being able to pay commercial rents is a pipe dream. Healthcare is tied to employment, so people are less free to try and start something other than "on the side."
American's choose "convenience" when shopping and to put people in power that serve these large companies or their owners, not small businesses or communities. Dropshipping, creating a "sweaty startup," etc... it's all just people trying to make do within the system they're trapped in.
>Healthcare is tied to employment, so people are less free to try and start something other than "on the side."
It has long been easy for anyone to buy health insurance without an employer in the US. If you are self employed, you can even pay for it with pre tax income.
The problem is it costs $500 to $2,500 per month per person plus $10,000 out of pocket maximum per year, which means you need a high income to be able to afford it.
That's a naive statement.
What do you think happens when you get sick as a self employed person? Do you think a health insurance company pays claims? Self-employed health insurance = Orwell's 1984
At least when you work for a corporation you don't have to see the truly ugly side of health insurance claim denial. Many people don't see this until their 50s/60s when they lose employer health insurance.
That’s a naive statement.
> Do you think a health insurance company pays claims?
Yes, see exhibit 2:
https://www.oliverwyman.com/our-expertise/insights/2025/may/...
> At least when you work for a corporation you don't have to see the truly ugly side of health insurance claim denial.
I cannot tell if I am being trolled. The only logical conclusion to this statement is you think “corporations” instruct the managed care organizations they pay to pay all claims. To which…lol.
A health insurance company can easily manipulate claim stats by paying claims to doctors/healthcare companies owned/operated by the health insurance company. Essentially moving money from one subsidiary to another.
First-principles. ____
A Fortune 500 company has teams of lawyers, HR departments to ensure that a basic cholesterol blood test doesn't need to be approved or fought to be covered. When you are no longer "protected" by the corporation you are fighting on your own.
It doesn't seem like you have any real world experience dealing with health insurance companies.
> A health insurance company can easily manipulate claim stats by paying claims to doctors/healthcare companies owned/operated by the health insurance company. Essentially moving money from one subsidiary to another.
No, they can’t. They don’t even own hospitals, where a good portion of the spending happens. Nor do they own the medicines that are the highest profit margin item in the whole healthcare chain.
> It doesn't seem like you have any real world experience dealing with health insurance companies.
You would be wrong, but to avoid appeal to authority, you can explain why the managed care organizations are terrible investments if they deny claims willy nilly. It is one of the wonders of the modern world, all 7 publicly listed managed care organizations are simultaneously pilfering their customers and their shareholders. And they have the same insurance prices as the non profit insurers, who all have to get their prices approved by 50 different state insurance regulators.
https://totalrealreturns.com/s/CVS,ELV,UNH,MOH,VOO,CNC,HUM,C...
If the health insurance executives can pull off that kind of coordination to achieve that kind of theft, they deserve it.
> A Fortune 500 company has teams of lawyers, HR departments to ensure that a basic cholesterol blood test doesn't need to be approved or fought to be covered. When you are no longer "protected" by the corporation you are fighting on your own.
A fortune 500 company is likely self insuring. The managed care organizations wouldn’t even be affected by approving or denying the claims, the employer is the one paying. Smaller businesses are buying the same ACA compliant insurance as an individual would from healthcare.gov.
Take United Healthcare for example. They own...
Optum Health: Delivers care directly to patients via local medical groups, urgent care centers, and surgical facilities. Optum Care: A major component of Optum Health, this network employs or partners with physicians across the country to provide value-based care. Optum Rx: Pharmacy care services. International: Owns and operates healthcare facilities in South America and Europe.
It's not difficult to see how a Health Insurance company with 4,000 subsidiaries could easily move money around and manipulate claim stats.
I think we're saying the same thing. Most people don't necessarily [functionally] have the option (or at least don't think they do, there are sometimes ways through.)
But, public hospitals with low or no cost care exist in some of these places, and from my observation, I do currently think it's a contributing factor to why small businesses are more likely to exist. But, it's only one knob to turn.
I live in canada with free health care. People are always complaining about how we are much less entrepreneurial than our southern neighbours.
Maybe free health care would help, but i think its kind of minor compared to other factors.
While I agree with the sentiment, I need to point out your numbers are exaggerated. There are calculators available on these healthcare marketplaces. The calculator for my state shows I would owe less than $130/mo unless I earned above a particular amount ($36k IIRC). The next “bracket” would have me paying around $240/mo up to around $90k earnings IIRC.
If you were earning above six figures then your numbers may be correct but let’s be honest and not dissuade folks from doing their own research. Everyone’s goals are different.
> The Wilshire 5000 stock index, for example, actually only includes about 3400-3700 companies now.
That amazed me when I heard it recently. The number of tradeable things continues to increase, but most of them are two or three steps removed from real-world production.
Yeah, it feels like the author is blaming his personal bugbear but entrepreneurship and independent businesses are facing systemic issues of massive concentration of market power and zero antritrust enforcement.
The US economy is in a death spiral. It’s where the UK was after WW2: lost an empire, didn’t want to admit it or address it. The foundational jobs of the economy - blue collar work - are gone. There simply aren’t enough people with jobs at each layer to support the businesses and jobs in the next layer up. The US will discover its total inadequacy if it gets into a war with China. We just can’t build weapons as fast as they can because we can’t build anything any more. Currently they are building solar and EVs while we can’t pave our roads. If they wanted to switch to pumping out destroyers, missiles and drones, we would be out gunned very quickly.
These desperate attempts at passive income are simply another symptom of the absence of a functioning economy.
> if they wanted to switch to pumping out destroyers, missiles and drones
This is such a naive take. Nobody is coming to US to try to outgun you. The moment petrodollar wobbles, the moment US Dollar stops being the world reserve currency, the game will be over for you. You will discover what it really means to be competitive, once the world stops giving you goods essentially in exchange for glass beads.
Sure. If US leaders had sense, they wouldn’t engage adversaries they can’t beat. I’m not saying China will start this war. I’m saying China doesn’t need to. China can just watch it happen. Like the US watched the British in Suez. But the US might start something and that’s how they’ll discover they are the just the last of the failed empires.
Pretty sure the current administrations end game here is copying North Korea. The rich have enough oil in Texas to perpetuate their lifestyle, while violently suppressing all opposition.
Please keep up this mentality because it means less competition for the rest of us.
Anyone making real money on their ‘side gigs’ is very unlikely to be on that thread, let along telling anyone in detail what they are doing. It invites unwelcome competition.
The Census Bureau reports 10% of the workforce being self-employed for their main occupation. That's virtually the same as it was 20 years ago.
> I read an article recently that the number of public companies has halved compared to a few decades ago.
That's not because there are fewer companies but rather because private markets have much more capital.
OpenAI is the extreme example. If it were public, it would be the ~tenth most valuable public company in the world.
Is it possible this has things backwards?
When I was in high school 25 years ago, unless you got lucky with an IPO, tech didn't pay all that well. (I worked in software while I was in high school, so I know some of this first hand).
It was office space. It didn't matter how smart you were, if you didn't go into management, or join Apple/Microsoft at just the right time, you weren't going to live a rich lifestyle.
Not only that, you'd probably be reporting to some MBA type biz guy who has no idea how software works, you'd not be well respected, and your perks were drip coffee and occasional donuts on friday.
Of course brilliant, hard working, talented engineers said "fuck that" and go build something awesome themselves. Things have changed drastically. Now, brilliant hard working people can literally make millions at dozens of companies .
You will report to another engineer who has slightly optimized for soft skills, you get lavish perks (except amazon, but at least you get paid well there), and real equity.
There's a whole spectrum of options for ambitious software folk that didn't texist ~25 years ago.
I was a software engineer 25 years ago, and tech paid very well - and in a non-Bay area location, and I'm only counting my cash comp as my stock options ended up being worthless (dot com bust and all). I made more my second year out of college than a family member's first year as a physician post-residency.
Can you tell me more? 25 years ago I was only a high school getting paid minimum wage 'cosplaying' as an office worker writing SQL and VBScript.
So, my view is skewed, but I got the impression software engineering was not a place people were retiring 'early' from, unless you made it in management. It seemed like a pretty standard office job, maybe with a little more perks due to the eccentric nature of the majority of workers.
Do I have the wrong impression?
You're conflating "passive income" with "real money". Competing with the big businesses is completely off topic.
> 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.
This is true. It's a plot point in "Little Miss Sunshine," a movie that came out in 2006. One of the main characters tries to sell a SYSTEM to get their family out of lower class living.
Get-rich-quick books have been around a long, long time. I'd wager they've been around since the printing press. And they always devolve into "buy low, sell high" or selling get-rich-quick systems to other people.
Passive income's not new either. It was (sometimes still is) a massive marketing play for franchisees. Spend $100k+ to open a franchise; the franchisor takes care of the rest; grab a hammock while you watch the money roll in. Never ever works that way, but that's how they've been marketed for a while.
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.
The way to escape is through consistent, long term investing in the stock market. You get a regular job and live below your means, investing the difference. Buy and hold. Invest regularly. Not day trading, long term. The problem is most people don’t have the patience, the right temperament, to do this.
This is not what people mean by passive income. Yeah, if you have a few million dollars of capital already you can easily just toss it in the market and collect 4% every year indefinitely. Pretty much one of the only truly passive income streams there is.
The problem is how long and what you have to do to get that 3-5 million number. No one who is drawn to the “passive income” hustle is thinking “work a normal job for 30 years, live under my means, and invest everything I can”. They want to get much more immediate results so they can enjoy life on easy street because grinding it out for so long sounds extremely depressing.
What you describe is a retirement plan, not a passive income lifestyle. Kinda the opposite of escaping.
> This is not what people mean by passive income.
This is literally the traditional definition of passive income - using your capital to generate more capital.
There is no free lunch, you need to provide something to get $$$. If you are providing labour it is by definition not really passive. That leaves land or capital.
The point is though, that no one pitches it this way. Everyone knows if you have millions of dollars you can generate passive income. That's simply not interesting to anyone.
If you have to grind out making millions over the course of a decade or three, that's simply called having a regular job. That's the status quo.
The passive income folk are all about finding some "hack" where you can be clever or smart or out-hustle the next guy and unlock some secret method to making passive income without capital. That's the entire "industry" in a nutshell. They are not going to folks with $1m in the bank telling them how to make 4% returns on it by tossing it into low cost ETFs. They are going to folks grinding out a living saying they have a shortcut to not needing that capital base to start off with.
tldr; If you already have capital, you don't need to think about passive income. It just happens.
‘everyone knows’ is doing a lot of work here. you still need to spend time, and make a lot of good judgement calls (not easy!) to earn a useful amount of passive income on investments without losing your principal.
being a professional investor (what you’re referring to) is especially terrifying in a low interest rate environment.
You don't need millions - if things go modestly well and you have a high savings rate, you can get out in 5-10 and draw enough to cover modest means. I do agree that people eying passive income maybe have a different patience / willingness to sacrifice & self-teach threshold but the calculus of grinding for a few years to escape has its adherents.
Yup. This was my approach. Left my business a decade ago with low six figures cash in my pocket. It would have lasted about 18 months at my existing burn rate.
So I moved to a cabin in the woods in a country with a low cost of living, and stuck pretty much all of it in the markets.
Had I not done that, I would have had to go back to work - instead I lived a modest life (€500/mo, max) off the income from putting my apartment on Airbnb, and regained my sanity after a decade of relentless work while my investments did their thing.
Anyway, it’s a decade on, still haven’t done a jot of “work”, and the assets are now worth several million, and are being redeployed to continue to maximise value growth - and we now treat ourselves to spending months travelling at exorbitant budgets, real estate, expensive toys - and had enough stability to decide to have a kid.
So yeah, it’s possible - although had we grown at 6%/yr rather than an average of 80%/yr, it would be a different picture - but I firmly believe there are plenty of other opportunities for rapid capital growth elsewhere in the markets, and yet to come. I’m just some average dude who buys equities on vibes and then sits on them for a decade. If I of all people managed it, others can.
Way to bury the lede. Being able to average 80%/yr returns takes talent and skill and is a type of work. The type of work, by the way, that is rewarded with millions at finance companies in NYC, or even more if you launch your own trading shop.
Did you do a ton of research to make those picks? These days I just do broad market ETFs, don't trust myself to beat the market.
Nope. I just think about the probable shape of the future, and who benefits.
I stick with the fields I know and understand - tech, engineering, sciences - don’t go for long bets so much as “if this relatively predictable set of circumstances arises, who will inevitably benefit”.
For example, in 2017 I was keeping abreast with ML research, and realised that within a decade this stuff was going to be huge - so I bought Nvidia and their supply chain and sat on it. Also Tesla as I figured as if I saw them as an adjacent incumbent beneficiary of an AI boom, then others would, too.
I’ve followed that chain of logic through - caught the nuclear renaissance in its entirety, as well as predictable resource squeezes.
So - that’s just one of my trees of bets - but my whole thesis is “predict a future, model out what that looks like, place bets accordingly”.
guess how much you would have made with the same skills/work at a VC or hedgefund?
You need to be around different people
Thats all it comes down to
Passive income through assets is the basis of our entire society, trying to out earn the base line is the entire economy. Banks wouldnt lend, employers would do something else, if they didnt believe they could earn more doing what they do, instead of owning US treasuries or earning dividends from stocks.
It may be "not what they mean", but they're wrong. No business that actually adds value is ever truly passive.
one word from the parent post sums up everything you said: patience. Or lack thereof (two words).
Not just one word though. Also hard work and grit. Telling someone interested in escaping the rat race (who is not in the top 10% of income earners) to just stick with a job they despise for 15-25 years is just not going to hit home. They know they can grind out a miserable life. That's the status quo they currently live.
Sure there are the scammer/grifter types who just want a super easy mode get rich quick scheme, but a lot of these folks are somewhere in the middle which is where they get taken by the actual scammers. They get told if they just hustle harder than everyone else for a few years they can achieve escape velocity.
Stop telling people this bullshit.
It is good to encourage people to save money and invest them, but 8 out of 10 people out there don't earn enough to gather so much capital to live off it.
In general, you are right, but many people on this site do earn enough. Engineers have some of the highest paying "normal person" jobs out there. If we can't save and invest for the future, who can?
Agreed. And if more high income professionals pursued this path, it would tip the balance of power in the workforce away from employers. That's a win for all except those at the top.
Lol what
> 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."
25x expenses in s&p 500 works ok. (Adjust the multiplier for your level of pessimism) Funding it isn't easy, but save a good amount of your income for a few decades and control your expenses and you can get there.
I generally agree, but that basically sounds like prudent investing for eventual retirement. Yes, tune the degree of aggression both in terms of work input and spending restraint, but the "work input" has to be high (and effective) for those few decades.
EDIT: I'm also kind of writing in the context of having your own little economic engine that you own and control, and can be continually running, rather than owning a tiny piece of the abstracted aggregation of an entire economy's engines. That said, dead-simple, low-fee, market-indexed funds are a generally good place to put the surplus fruits of your own little economic engine.
The difference is, in retirement, you're maintaining an awareness of your own end of life and it's okay if your net worth goes down YoY as long as it doesn't do so too fast.
Not so if you're doing the same thing at 38.
Creating an additional 30%-50% on top of whatever a normal person would consider passive income in order to actually have passive income is NOT a realistic option for a huge % of the population.
The key is living below your means by ~30%. You make 150k? Live like you make 100k. Every time you get a raise, 30% goes towards investing. For most engineers this is achievable.
Everyone getting income passively is not going to work for society in general. Work still needs to happen. Until we live in a post-scarsity society, if nobody works then everything collapses.
That's not to say that passive income is impossible, its just not going to work if large swaths of the population are doing it.
> The way it shakes out is that there's no widely accessible way of escaping actual, ongoing work.
Real estate. Historically, that's the way to escape work. It helps to inherit it.
> I appreciated when "passive income" was the flavor of the week because it was a good signpost for people you could ignore.
This is why I still do random sampling of Reddit, Twitter, Threads, and a few other social media sites: It’s a good way to keep up with some of the discussion trends that start spreading in online discussions.
I can pick up quickly when someone is parroting the latest info memes from Reddit or Twitter now. It’s very helpful for identifying who isn’t really thinking for themselves and will latch on to the first opinion they see on a topic.
I can’t bring myself to watch TikTok or other video shorts, though.
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).
Same - I wasn't sure where I'd stop (always been a minimalist anyways, savings rate above 2/3) but ran into a health issue so seeing what the future holds: taking another crack at the 'career' or maybe something more low key that aligns with my passions or a side project. I just want more time for learning, everything else feels like a distraction.
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"
Or more generally, just doing whatever you want. I dont think anyone literally wanted to sit on a beach 24/7 365 days a year. However plenty of people would want the ability to just wake up one day and on a whim fly to a hawaii until they get bored then fly somewhere else.
Working from the beach is much more enjoyable than working from a cubicle in Toronto in January all work tasks being equal.
Much cheaper too, ridiculously enough.
> If you've tried to google "best [anything]" in the last five years and gotten a wall of nearly identical listicles, all with the same structure ("We tested 47 blenders so you don't have to!"), all making the same recommendations, all linking to the same Amazon products, you've experienced the results.
This also ruined Reddit as the source for this research. Before social media growth hackers figured out how to run campaigns on Reddit (around three years ago feels right, though I'm sure it's been happening at a smaller scale for a lot longer), you could type "best $THING site:reddit.com" and be fairly sure that you'll get a discussion about really good products amongst actual people. Nowadays, you can be fairly sure that most of the discussion is astroturfing, with some of it being completely AI-generated.
This is also ruining my _other_ use case for Reddit: finding good places to eat in my favorite cities recommended by locals that live there.
> podcast hosts interviewing each other in an endless circle of mutual promotion where everyone claimed to make $30K/month
It's always $30k/mo _revenue_. Never profit. We don't talk about profit.
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
Or the writings of the guy who created this web site.
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.
Apple makes devices people like and use. Many people loved their Teslas. Netflix makes shows people enjoy. Facebook really did help people stay in touch with friends and family before replacing it with the Feed of Rage. Google was far better than anyone else at finding things on the early web.
I would say really successful companies at least go through a stage of Building Something People Want. Even if they stray from that as they become more successful.
How many people got really rich as a result of Apple, Facebook, and Google doing things that created actual value? I get that all those companies are really rich, but most of the people involved aren't.
Perhaps I misunderstand you, but I imagine those three companies have minted quite a few IC millionaires (let alone management). But maybe high single-digit millions isn't what you consider to be "really rich", dunno.
She does just mention passive income covering your monthly spend, which to be fair is not ‘really rich’.
In what I quoted, she wasn't talking about passive income; she was talking about making money by actually creating value. I'm saying it's a shame that our system is set up so people who actually create value don't end up really rich, while people who game the system do.
Got trapped in an Amway pitch in my teens and have been inoculated against such things ever since.
Primerica were our local huge MLM. They were ruthless!
When the Internet was a quite new a guy who knew I was a programmer met with me to pitch an Internet business and it took me a while to figure out he was literally pitching Amway online.
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.
There is no other word that reeks more of ideology than entrepreneur. It is a name of the fake promise fed to masses by people having wealth and power, and not willing to share it.
"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 think its pretty obvious that "sit on a beach" is a metaphor for being able to do whatever you want not literally sitting on a beach for the rest of your life.
At the same time, you guys really can't imagine relaxing on a beach for more than a few hours? Like i'm not really a beach person but back when i lived near the ocean i spent the odd saturday just unwinding on the beach with a book. Certainly wouldn't want that every day, but y'all acting like it would be impossible to enjoy say abeach vacation for a few days seems crazy to me.
yes, but that didn't prevent the passage from being funny :) it's a rant, being literal about stuff like that is part of its schtick.
(also I could happily relax anywhere for a few hours, but ideally not on a beach because that's uncomfortable)
Nature is wonderful because it will relax and center oneself while making it clear why we created civilization.
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.
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.
A home on the beach is seen as an expensive status symbol.
House maintenance costs in sea air cost at least double. Appliances and aircon rusts and corrodes. Everything needs regular painting.
Cars rust out. I buy second hand shitters and replace them every ~5 years. Certainly not worthwhile owning anything collectable or precious.
If you want a garden, be prepared to spend twice the time and money and, perhaps plants and trees still struggle or die.
I live in New Brighton in Christchurch, mostly because it is cheap housing (for no reason I can understand). Plus the coastal wind from the sea avoids hayfever (town is irritating for me).
It has a good community. Many people that choose a beach vibe are relaxed and friendly.
I wish most beach cities weren't tourist traps with B- grade restaurants/bars. It's one of my biggest pet peeves with them.
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.
Ours are along the river, that's nice too.
> But zoom out and what you had was just an enormous machine converting human ambition into noise
Calling it “ambition” is generous IMO. Passive income chasers always give “desperation” more than “ambition”. I also feel a bit weird about mourning “a diverted generation of entrepreneurs”, personally I feel like this generational obsession with entrepreneurship almost forcibly led to the dropshipping scams we see today. In a world where everyone is constantly trying to get some side project off the ground of course some folks are going to pursue the shortcut version of that.
> Free to do what? Sit on a beach, apparently.
The author apparently never read Tim Ferriss’ The 4 hour work week which not only whiteboarded some of the described schemes 20 years ago, but also had an illustration of a hammock suspended between two palm trees on the cover.
That was the dream: Set up a system, live on a beach.
Very well written article, it gets into the core of the problem and explains the hidden patterns. I want to articulate few other variations of this just as a reference.
- The productivity gang, if everyone is so productive and so well organised then what are the outcomes of this productivity?
- Self help - if self help books are solving real problems then where is the need to buy multiple self help books?
- The course trap - if someone is already earning millions dollars where is the need for him to sell $699 course
These are some questions I would ask myself regularly, there is nothing right or wrong because end of the everyone has to servive.
a very entertaining, highly-recommended, and intense gonzo video essay on the topic of the courses scams
https://m.youtube.com/watch?v=biYciU1uiUw
A timely recommendation, as the Mikkelsens were recently ordered to pay $1.5 million by the FTC for misleading customers
https://www.ftc.gov/news-events/news/press-releases/2026/04/...
“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.
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 the old saying goes: the best way to make money on the internet, is to tell other people how to make money on the internet
I was in community college taking some real basic, entry-level I.T. classes. And one of my classmates seemed nice, normal young guy about 20, already married.
And one day on campus I see him drive up in a Mercedes. And I ask him what’s going on.
Well, he tells me that he learned a little bit about cryptocurrency, and now he had gone into business where he advises people on how to invest in cryptocurrency. And I thought, “That’s really wise!” and I hope he is still doing well!
Basically a great way to stay above the hype and scams. Surely some sort of federal regulations would begin to apply... but good luck!
> And I thought, “That’s really wise!”
He was smart, but not necessarily wise. Wisdom would've been not spending the money on a Mercedes at 20 years old.
I mean that's ok he was a kid. I would've done the same at that age.
That's just a modernization of the selling shovels thing...
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?
the robotaxi-ification of any and all movable capital goods is coming... ([insert intense Helms deep music!])
so some guy with a robot, Elon Mows, of course initially it will be just kids from India remote controlling the robots, but ... the AI is coming!
(okay, it's likely about leads and advertising, the negative sum game, and OpenAI wants to have an ad-supported free tier)
Sounds like he means the methods that they used to use to advertise to find customers online have broken
Yeah, I get that, but I'm asking why that matters in the aggregate. Presumably there are still the same number of lawns that need mowing. Like, is chatgpt going to result in a significant change in who is mowing those lawns, or the frequency of lawn mowing, or the composition of yards?
Get-rich-quick schemes/scams existed long before this generation.
Back when I was young and motivated about being left wing instead of being old and jaded but still left wing, we called people who lived off other people's work or by profits without effort "rent seeking social parasites"
I like the sound of a "rent seeking social parasite" trap.
As the Mikado says in the eponymous Gilbert & Sullivan opera:
"something humorous, but lingering, with either boiling oil or melted lead."
That was before I became old enough (as I am now) to live off my superannuation and pension, which is also "passive income" but joy of joys, not a side gig. I'm not in denial about where my pension income comes from. It's other people's labour. That's what I'm invested in.
“The game looks easy, that’s why it sells” - Elliott Smith
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.
The larger message is young people cannot get passive income in a short time. Sure there are a few born rich, and a tiny handful who by luck and skill (both are needed) get rich quick. However for the vast majority passive income is a long slog of saving a little here and there. (there is a third option - really lower your standard of living so you need almost nothing to live - get a good job but live in a tent city with the poor, cooking on a camp stove - everything you own fits in a backpack). The idea that you can in a few years get enough invested to live on a beach for the rest of your life is a fantasy that sells books but doesn't otherwise exist.
I agree with all that. I've known a couple of people (at least one was out of investment banking--think both were) who pretty much fully retired in their forties, which of course isn't really that young. Some people hit the startup or some other lottery early on and, even if you get a million dropped on you at 25 or 30, you should probably think long and hard about whether you can really just not work any longer. Gives you a lot of breathing room but isn't really a huge pile.
Certainly, there are degrees of frugality. I could probably spend more than I do but don't have a real interest in doing so and generally avoid expensive things that might give me some incremental pleasure but prefer to arrange things so that increment is pretty small and doesn't revolve around "stuff."
> Sure there are a few born rich
A LOT of Millenials were born rich. They may not have realized it, but now that boomers are dying off, it is stratifying Millennials through inheritance.
A lot of them have and continue to receive massive wealth transfers from their boomer parents through free-ish rent, gifts (aka pay for your down payment on a house), etc, etc.
Hard to keep up with what generations are supposedly uniquely disadvantaged. For Millennials specifically, houses would seem to be rather late in the game as they're probably mostly buying in their 30s maybe if they're buying at all and probably haven't been living with their parents for most of that period before.
That is a nice windfall but most are not getting enough to retire early on.
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.
and Kiyosaki has declared bankruptcy at least once!
There really should be a special category for business books written by people who’ve gone bankrupt. I know at least two well known examples, but there’s got to be a whole lot more.
Dave Ramsey went bankrupt but to be fair he incorporates it into his teaching.
“Hear are the things that led me to bankruptcy, and here are the things I did to climb out of it and become financially stable again.”
I've been hearing about "passive income" for at least the last 10 years, and I reckon it goes back further than that.
Was it ever a trap? I don't think so.
Sure, these people could have "worked" for their money, self-employed or as a "wagey in a cagey", but the whole point was that they didn't want to do it.
Great read. Didn't realise how widespread this was, and I know someone who is stuck in this system.
How would you approach someone to help them out of it? Don't think I can just throw them this article and say "you're wrong".
the obvious problem with any such scheme is that things are already priced in.
if it would be so easy to build personal passive income businesses hedge funds would be going around recruiting people and funding them. or the government. or the Effrctive Altruist.
but most small business are bad, inefficient, hard to scale them, etc.
(that doesn't mean there are no way to make money this way, but economically those boil down to bets. sure, sure, the aforementioned fancy investment funds also do bets, usually more sophisticated ones, and who doesn't, right? unless you are actively building a bunker somewhere around the Darién gap and recruiting people to your doomsday cult you are betting on the global economy chugging along.
but! eventually one has to price in risks-weighted return, and usually "passive income" is pretty poor compared to a boring job that pays really well.)
Actually it also reminds me of one of my friends. He is doing everything very shallowly and yeah, chasing passive income, but never succeeded on building anything lasting. I think the only way is to realize that labor and work is some basic human conditions like what Arendt said before, then you start to have some awe towards work, which is not something hated by passive income chaser.
This is a good article indeed.
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?
the "giving a shit is by definition not passive" line is the whole essay imo. everything else follows from that.
the piece ive been thinking about though is the distinction between extractive info-products and compiled info-products. the affiliate blog churning out blender reviews someone never touched is extractive. but a furniture maker who writes a book about furniture making, from 20 years of doing it, isnt really "passive income" even if the book sells while they sleep. its just consulting-at-scale. the work was front-loaded, not absent.
the trap as she frames it is when the book comes first and the 20 years of experience never happens. when the product IS the meta-product about how to make the product. thats the ouroboros she nails.
fwiw im currently 4 days into a 30-day experiment shipping public work daily before asking anyone to pay for a compiled version. its painful in a way the "passive" framing cant accommodate, which is probably a sign its real. the people who sold "passive" never had to live through the days where nothing happens.
I'm partially familiar with this ideology that the author refers to, but I think it's important to separate it from actual passive income:
dividends and treasury bonds give passive earnings, you need capital. the "passive income" savants did not and do not have capital.
case in point: it should not be noteworthy that the author's friend was "$800 in the hole", it should be such a rounding error that it couldn't be any of Joan's concern. And honestly, it probably isn't and Joan put an obsessive amount of weight into an off-comment.
$800,000 in treasuries, on the other hand, now you have passive income - only ~$37,000/yr - but enough to live like a royalty in South East Asia for the next 30 years, passively, followed by getting all $800,000 back.
Class inequality aside, throwing darts at the wall and seeing what sticks isn't a bad business strategy, and you really don't need to be passionate about any particular business idea to collect income.
I hope Joan's friends found something that worked from them. For me its just stay employed so I can accumulate capital for the side projects. Sometimes side projects become bigger than the employment, but my businesses are just expeditions, not forever projects.
I've never watched dropshipping influencers but I did sell some of my own electronics on eBay and noticed some opportunities in the process. Sometimes I put up identical listings as someone else's at a wildly inflated price, and people would buy from me because it seemed more serious. I would buy from the cheaper ad and put my own buyer's address in the shipping destination. Never seeing the product. Not scalable as I think its against the one of the terms, but you can do it between marketplaces too.
Nice blog post, but I have to say that having a link on top of the page to some creative agency subscription service is quite ironic. These services are a dime a dozen, providing the same zero value product to the users, advertising on a cool looking website done by outsourcing to some guy that vibecoded it.
A more hasty fellow might have flagged this post as self-advertisement without necessary tags.
There is nothing wrong with pass income, exchange time for Money by definition has its limit and only when your money compound you still to build savings then wealth. I scroll through half the article and the only under luring reason the author came up with is that dropshipping guy don’t care. People who don’t care have little chance at successful entrepreneurship anyway.
Running an online store isn't "passive income."
Passive income is from rental properties, mutual funds and (my dream) a rich uncle's trust fund.
I’d argue that unless you’re using a property manager, rental property isn’t really passive, either. Do you want that call at 3 am to fix a flood?
At that point I wonder why not just invest in REIT. And then look at how those compare to other possible companies... And then figure out nothing makes much sense.
Have you seen the taxes for REITs? They are complicated and often taxed as ordinary income instead of capital gains. I have heard recommendations to only use them in Roth IRAs.
I have a bunch of REITs in my "dividend" portfolio. This is true, most of the dividends are not qualified.
Hope your rich uncles are watching their backs!
I'm sure I don't know what you're talking about.
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.
There's a type of similar trap for devs, not necessarily a passive income trap because most go for a saas and accept the infinite-version release cycle.
What some devs usually fall for ( not by watching some youtube video, but by falling into the idea organically on their own as a kind of emergent behaviour ) is doing the minimal effort of a saas, like a template of the necessary part without adding the actual value.
The way this most often presents itself is a payment proxy, think about the minimal requirements for any software service, it charges money, so that's where they start, a stripe account, maybe an LLC, payment links or payment tables, they can now charge money. Then they make a frontend, a website, of any kind, this comes first, not to serve some kind of need, a landing page, and the actual product is a landing page as well, use react as well because that's the thing you do.
Finally, what is computing, it has something to do with data, so let users upload some images or videos, then you let them charge users for it. Bam, you have now reached the same app SaaS that millions of indie devs developed, like a patreon thing, an OnlyFans if you allow that shit, a gumroad. A host that allows uploaders to charge money.
If you don't even want to go through the hassle of hosting the images or content, you can just let the users upload a link, and charge for that
Must be thousands of these Linktree, campsite, taplink, patreon, cafecito, matecito, tecito.
The dropshipping thing is similar to this but it has a physical component, the idea of a business is just the minimal core, a caricature conception of what a business is, you buy a thing, and you sell it for more.
Wantrapreneurs
I’ve met a lot of “passive income” folks over the last few years, and all of them sounded like their businesses were very actively managed. Never made much sense to me.
I do disagree that all sub$100 blenders are the same, though. But still! The main reason restaurants use Vitamix blenders is that they are so much safer when blending burning hot stuff, like soups. When you turn off a normal blender, you’re fairly likely to create an air bubble that pops a little later, sending drops of very hot liquid into the face/eyes of the operator. A Vitamix, if you turn it off correctly, does not create the bubble. This is irrelevant for most home users, including me. So I don’t have one.
Blending hot liquids requires care because turning on and heating the air causes the lid to blow off. Most blenders are limited by physics. Vitamix have an analog dial for speed which allows you to heat the air more slowly. Turning off bubble? Maybe I’ve experienced that … but seems like an inexperienced operator with hot liquids and powerful motors is just a recipe for disaster.
Thanks for posting, great article and I read one of Joan’s pieces earlier this week without realising.
"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."
I think the 14 year old nephew has been around for every iteration of technology - there are probably clients now threatening to just have their nephew vibe code the thing you're trying to spec out.
Once, when fed up with this during a discussion on a small moonlighting job I said "Yeah, kids are pretty good with this stuff these days, Tell you what - have him get started and I'll be available to give him any help he needs at 2x my rate".
Someone told me that in 2013 when I was trying to do contract work. I gave him a quote that I thought was reasonable, and he thought it was too much and he told me that his thirteen year old son could do it for free.
I responded that he was the one who had reached out to me, and if he feels like his son can do it then he shouldn't have wasted his time trying to find a contractor since that will be more expensive.
The client didn't like the attitude and I didn't get the job, but I was kind of glad because it was pretty clear to me that he would have tried to weasel out of paying me regardless.
Yeah, that's really the hard part of contracting. I was in my 20s and was certain I HAD to win every bid to keep feeding myself. I took longer than I should to realize that 3 worthwhile jobs is far better than 10 hassles. All clients required changes, most thought they were overpaying, and many gave me a hard time when the bill was sent. Meanwhile, when I'd toss out $20,000 as a price tag, those folks were far more serious, and they paid on time! It caused me to learn a valuable lesson. You want to quote high enough to offend the folks that aren't serious. They were gonna be such a pain.
I don't even think I was charging very much. I was still pretty junior in my career, so I think I was charging something like $40/hour, which was double my nominal wage at my previous W2 software job (doubled to cover stuff like health insurance and overhead and the like).
$40/hour is an extremely low rate for a software engineer, even at the time. I'm not sure what the guy was expecting, and I'm quite confident that he would have tried to weasel out of paying the second I delivered a product by claiming it didn't match his spec. Honestly I don't really think I'm ever going to contracts for small clients again regardless; a lot of them can get away with a SquareSpace site, and the ones that can't should probably spend their money buying a few courses on using Claude Code or ChatGPT.
There's also the fun scam of wannabe Steve Jobs characters. I had a person try to recruit me for a job where I worked for 2% equity in their business, where I was expected to write the entire codebase myself. Of course the remaining 98% went to them, and as far as I can tell they felt that their "idea" was just that valuable and didn't plan on contributing anything else. Fortunately, I didn't really fall for that one.
Tangential, but in my previous apartment one of my neighbors really wanted me to build him a website after he found out I work with computers.
I told him that I don't really build websites, and what I mostly do is write things that move information from one computer to another and that I haven't really enjoyed web development so it's not something that I do in my free time so I'm not good at it, and he should check out SquareSpace or Wix something.
He kept assuring me that it would "be easy". To shut him up, I gave him a quote of my daily rate for contract work (which honestly wasn't even that high by software engineering standards), and he backed off because he didn't realize how expensive software engineering is.
I think the article conflates two different things: the idea of passive income and the grift around it. Having a SaaS product that runs while you sleep isn't a trap — it's just good business design. The trap is paying $997 for a course on how to do it. And what makes it worse is the survivorship bias baked into these communities. The ones loudly promoting passive income strategies are almost always making their money teaching passive income — not from the strategies themselves. The actual successful indie founders I know are pretty quiet about it. The concept isn't broken; the ecosystem around selling the dream is.
Hey mister AI!
I blame Tim Ferriss and his "4 hour work week" book. I belive he talks about selling vitamins and letting some guys in India manage his site. Doesn't get his hands dirty. (This is from memory, so please forgive any misconceptions about it).
The core was simply that he created a successful business, but was spending more time running it than he would be working a normal full time job.
Then he delegated more and more responsibilities, allowing them to make decisions for anything up to a certain dollar amount, then kept raising the dollar amount.
This ended in him checking email a few times a week totaling about 4 hours altogether.
This is horribly written but largely true.
Legit Vitamix blenders are great though
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.
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.
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.
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.
The YCombinator era where you could start a web business for low cost for a still unserved market was a short lived anomaly.
The cost of starting a new business has returned to the historical baseline.
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".
"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.
What does it mean to be doing AI gigs? Because AI seems really different than drop shipping, online poker, crypto, and NFTs.
I think this is what the 'forest for the trees' phrase is getting at...
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.
My small brother is part of that hype. At his age I had a few lucrative freelance jobs under my belt, but he is oddly fixated at getting money without putting in anything that could be specified as work. I did what I loved doing and got paid for it, for him there is nothing he loves doing that he could earn money with.
I now work in high level education in one of the top universities in that field in Europe and so I am in touch with many of his generational peers. Sadly I can't help but recognize this a significant trend, within some students (luckily a minority) thst has emerged in the past 5 years. As if they want to do the thing without actually doing the thing. Like a musician who wants to be a musician, but despises spending time on playing or rehearsing actual music.
I am not entirely sure what it is all about, but I could imagine both the internet and a certain US president has shaped the idea that appearance is the only thing that matters, while substance is for losers and suckers.
I literally roll my eyes when people tell me about about some massive market opportunity that they feel like they’re better positioned to arbitrage away than people with more capability / infrastructure / domain expertise - and can’t explain why those market participants are ignoring this “obvious” opportunity