Yeah. That's what "The Man" wants you to believe in.
Back in the day, people used to be largely self-sufficient, filling their time with tasks for themselves (farming, weaving, building things), profiting by selling the surplus or charging to do something they were good at, and using the money to buy the things they needed.
As you know, industrial revolution and large scale monoculture changed that. People would sweat all day, and because there was no time (or energy) left for anything else, they couldn't build anything for themselves, making employees heavily dependent on their jobs. That power player had two important effects: because the employer has the upper hand, it can command lower wages; in turn, those lower wages drive credit, creating an entire economy based on debt, which reinforces the importance of securing a job, again driving wages lower, in a feedback loop.
So, why that "find a job that you love" is utter bullshit then? Because, ultimately, every job is bad. Every job is an asymmetric negotiation where the employee exchanges his lifetime to a monetary reward that is, guaranteed, smaller than the value he adds. Not to say that it isn't useful, but is certainly a sub-optimal way of using oneself's limited time on earth.
"Passive income" strategy is the exact opposite of that, since the rewards are not bound to how much you can charge your hour, and more to how valuable your work is. Historically, that's how writers, artists, inventors and such have made money. Nowadays, though, the potential is enormous given the cost of automation and reproduction of creative work is ever decreasing.
If you stop and think, this is mind-blowing. Of course, Forbes doesn't want you to realize that.
So hey, maybe you had an awesome idea and some ambition to build a company, you can be your own boss! Nah, just sell your soul to some investors, then you can have a master all over again just like you wanted.
Up to the industrial revolution the vast majority of the workforce was in agriculture, namely either in serfdom or working somebody else's land for a pittance. Not many were really self sufficient.
Secondly, artists, scholars, inventors where either nobles, priests or depending on the local court for their income.
Those things are not related. So what if you get paid less than the value you add? That doesn't mean that suddenly its not a job that you love.
>Nowadays, though, the potential is enormous given the cost of automation and reproduction of creative work is ever decreasing.
I'd argue the opposite actually. Because its so trivial to make a copy of something. Income based off of royalties can be sustainable for a very small minority. And this has always been the case.
>Of course, Forbes doesn't want you to realize that.
Why not? Large corporations - music producers, book publishers, movie producers, pharma companies, manufacturers, etc all run on the assumption that they will find enough people with passive income on their brains...
Samir: So what did you say?
Peter Gibbons: I never had an answer. I guess that's why I'm working at Initech.
Michael Bolton: No, you're working at Initech because that question is bullshit to begin with. If everyone listened to her, there'd be no janitors, because no one would clean shit up if they had a million dollars.
Jobs like that are supposed to be transitional, for students, etc, and they tend to be automated away. There isn't a real need for every human on earth to work, so it's feasible that everyone could focus at least part-time on what they really want. That's what tends to happen in advanced societies (more time spent on voluntary activities vs employment).
It's a common sensibility in the US and Western Europe because that's the Puritan Work Ethic.
No one thinks it's bad to find meaning in relationships, or whatever.
We don't want your pity. I enjoy my work, but it isn't my life, because you know what? Aside from sleep and work, I have another perfectly good 8 hours a day that I elect to spend on things completely different from my day jobs.
So while work is half of my life, work is not my life, and I do not intend to let it become my life.
Or how about we stop feeling sorry for people who obviously place value in different things than us?
The first part is not inherently hateful towards working while the latter one is.
> Considering how much of your life you dedicate towards working, why the hell aren't you making damn well sure it's doing something that gives you at least a sense of fulfillment, if not outright joy.
Maybe they are. But people that say that they don't "live to work" seem to be more in opposition to the mindset of viewing everything through the lens of productivity and utility. They are against the idea that free time is chiefly about "recreation", ie about recharging your batteries/not burning out so that you can go back to being a fully productive worker bee at 9 am the next morning. In this "recreation" view, free time serves office time. In the view of "I don't live to work", work chiefly is about survival, and free time is about actually living.
Does that mean they are necessarily against finding fulfilling work? No: work can be life-affirming (though I realize that some people might have such a chip on their shoulder towards work that they will never see it that way). But it certainly means that they refuse to delude themselves into thinking that working 60 hours a week at a job they at best feel lukewarm about is their grand purpose in life.
My first passive income business was in high school. I sold video game cheats I made through the internet. I made around $400 a month (a fortune for a high schooler). I considered it "passive." Sure, I'd make some cheats per month, but not because I had to, but because I wanted to. It took me maybe a handful of hours per week to do this. No support.
My next passive income venture was in college. I built a service for students that I scaled up to almost $100,000 a year. I would work on this around 8 hours _every 3 months_. I considered that passive. I also had a full time job. So I was basically raking it in. PayPal transfers every night, a few thousand would show up per week. Passive.
My current passive income venture is a SaaS. It almost pays my rent every month. It takes up about 1 hour a month of my time for support.
At the same time, I'm starting a real, very not passive company that is unrelated to anything above.
So each and every passive income venture shared the following traits for me:
* I built it to solve my own problem, then charged for it because I figured other people would have that problem as well.
* I didn't expect to get "rich" from it, but if the income to hours spent ratio breaks down well, I'm happy. i.e. I'm paying rent on an hour or two of work a month right now. That is pretty good.
* I never had a "team" of more than 2 people. This was not a _business_. It is just a thing that makes money. Legally it is a business, it is taxed like a business, but from a managerial perspective, it just runs itself. The "employees" (all two of them) run themselves.
* When I felt like I didn't need it anymore, I let it go. So far, I'm 2/2 at selling my ventures. The first I sold for a few thousand dollars, the second I sold for much much more. The third I have no intention or plans on selling, but if I feel like I'm not giving it the time it deserves, maybe I will (but don't plan to anytime soon). And if I don't sell it? I'll keep running it, because it is easy.
* During all my passive income ventures, I've had a real job. I think passive income works best when supplementing your natural income. I've had steady passive income for the past 8 years of my life. This can really change your quality of life or your ability to save for retirement or that "next big thing" (car, house, etc.).
My point is: Don't try to build a life on passive income. Just let it happen if its going to happen. You can't force it. You shouldn't force it.
Just do what you like to do. And if you make money doing it, that is pretty darn cool. But if not, you're still doing what you like to do, so smile.
If you're asking why I don't own a house, its because I'm not quite ready to make that commitment at this point in my life. :) I'm happy with the flexibility of paying rent, and I pay a REALLY low amount of rent (by San Francisco standards) in a nice place. I'm content.
My current house I paid $567,000 for it and it's worth $540,000 based on my most recent appraisal. Again, paid 1% transfer tax to buy it and if I ever sell it (I hope to God not) I will pay 1% transfer tax and 6% Realtor "tax".
Notice I didn't mention routine maintenance and fixing things that broke during the last several years?
Believe me when I say I wish I would've rented. I'd have about $200,000 more in my bank account right now.
Buying is not for the faint of heart, the easily stressed, or anyone who's even slightly uncertain about the direction of the next 5-10 years of his life.
Some people just don't want the headache. And you don't know how big a headache it really is until you've taken the plunge. I know more than a few former homeowners who have sworn they'll never buy again, regardless of whether it makes financial sense.
Unless you have cash, the failure scenario in case of buying is extremely nasty. Also, there's a lot of administrative and maintenance related work that, in case of rented, is not my problem anymore.
That been said, I believe your story falls into "leverage" bucket OP talked about.
[1]: http://kuow.org/post/uw-robot-helps-students-register-classe...
(Don't quite have your history, but I do have one main passive source that pays my two mortgages for less than five minutes/year of work. Like you, I didn't build it to make money - just mucked around to create something as filler for a domain I'd bought, and people keep clicking the ads.)
Ah, what a terrible mistake to make! To think that one could derive meaning from one's life independently of wealth accumulation! What a ridiculous concept!
EDIT:
Here's another theory: what if the reason these people are miserable is because they made the "basic mistake" of assuming money would bring them meaning and/or happiness? They believed wealth would be an end-in-itself, and upon reaching that holy grail of financial security, they were struck with the terrible realization that there was no instant nirvana waiting for them. And now, having achieved the goal they were supposed to achieve, they're left wondering just what it is they're supposed to do now.
In other words, the problem wasn't believing money and meaning were separate. The problem was believing that they were innately connected.
What percentage of the worlds GDP is founded in open source technology? How many people working for peanuts in their basements wrote code that changed the world for nothing? It's like economists don't understand that there are people who can create utility at an exponential, amplified, perfectly scaling rate and their only limit is their self-determination and the empowerment of their chosen language. And they work on their own time. What happens when programmers start truly proselytizing the power of digital creation to the horde of consumers?
Considering the lacking macro facilities in algol-syntax derivatives it's important to understand that programmers are not any more rational than economists. Complexity has gone from being a price of performance to being the crux of a fallen generation, of individuals unable to shower themselves of their neighborly turing tarpits.
I guess at this point what I am trying to say is that there are new fundamentals for the tech economy that are simply unknown. They aren't variables, they are completely off the board. I mean we use emacs/vim, pretend that virtualization can count as security and seem utterly choked in our own miasma of complexity. Integrating old ideas with new is not a matter of mixing software like a chemical mixture but a dick sizing competition without a ruler.
We are mechanics who barely understand our own tools and more than that are philosophically against questioning the separation between programming language/user. It is this behavior that puts more fear in me than what the government does or what tragedies may occur... because it is a sign that our communal process, despite making progress, is a frictional force that doesn't abide by logic.
I know most people are going to latch on to stereotypes or how the models used by an editor/os are still useful... but that isn't the point. The point is that the dynamics and decisions we see reflected everywhere are issues of personalities and groups, and thus the source and solution is via communal interaction. The solution is of course deeply unsettling but luckily novelized throughout our televisors in the form of AI systems that are doing there best to hide their HAL face.
When google shows you custom results, what are they doing? They are acting as a moderator or parent would. But it has always been seen under the guise of the friendly mentor. What happens when our mentors start making suggestions? Do you think that same data could be used to find the most efficient manner to shift your opinion? How deeply does the ranking of links affect your judgement about a subject? Are these new questions to you, or have you simply been holding your hands over your ears?
This isn't about google being malicious, or about another entity forcing their hand. The point is much more unsettling... that there are incredibly important and influential decisions being made not by individuals or beliefs, but by circumstance and yet they remain unquestioned despite their significant social and economic impact. I am supposed to be afraid of the NSA or some entity but what I truly fear is how blinded we all our own confidence with predicting the next day of this collective delusion.
I do not fear the man in Washington, the man in the Vatican or the man in Moscow. Instead I fear our inability to hold ourselves accountable as individuals and as a community to taking the stance for quantifying decisions based on potential impact and not limiting the debate to mob rule or to hand picked numbers. It is only through the somehow supply/demand immunized Moore's law will humanity be given its mirror, and that truly is an act of a fearful god if there ever was one.
I may add more later, but for now I will just say: welcome to the singularity.
Sir or Madam, I congratulate you. You have officially scared me shitless.
Everything built on the Internet, to begin with.
> I mean we use emacs/vim
Because they work.
> pretend that virtualization can count as security
No one thing can 'count as security' but virtualization makes a lot of secure systems easier to build.
> and seem utterly choked in our own miasma of complexity.
You are, maybe.
> Integrating old ideas with new is not a matter of mixing software like a chemical mixture but a dick sizing competition without a ruler.
This sounds profound but means nothing.
> We are mechanics who barely understand our own tools and more than that are philosophically against questioning the separation between programming language/user.
This is wrong. On every level, it is wrong. It is fractally wrong. Worse, parts of it aren't even wrong.
> The solution is of course deeply unsettling but luckily novelized throughout our televisors in the form of AI systems that are doing there best to hide their HAL face.
What? Are you saying nothing again, or are you implying you believe that Strong AI exists and is running the world?
> What happens when our mentors start making suggestions? Do you think that same data could be used to find the most efficient manner to shift your opinion? How deeply does the ranking of links affect your judgement about a subject? Are these new questions to you, or have you simply been holding your hands over your ears?
None of these ideas are new. You're saying absolutely nothing that hasn't been said thousands of times before, and you're saying it much, much worse.
> that there are incredibly important and influential decisions being made not by individuals or beliefs, but by circumstance and yet they remain unquestioned despite their significant social and economic impact.
Well, no shit. Why did humans end up in the Americas? Was it by planning or was it just following the game and winding up going across the Bering Land Bridge?
> It is only through the somehow supply/demand immunized Moore's law will humanity be given its mirror, and that truly is an act of a fearful god if there ever was one.
Waffle waffle whine. You have a platform. By all means, use it to say something.
While I intend to seek out employment this fall in Texas, right now I have a dozen foss projects I want to work on and have a larger issue finding the projects that most need the development effort and are willing to accept new contributions than finding things to do. I have patches in the works for 4 projects right now, in varying levels of bug tracker hell, and I'm eyeing another 3 for this weekend.
I'm much more concerned about looking lost after spending 6 months writing some java crapware for a faceless company 8 hours a day after losing all my passion.
So you are right, the money and the purpose are completely distinct, and for some they can completely conflict with one another. I always intended to try freelancing instead of going into a droll office setting to grind myself to hate my profession, but I've realized it takes way too much networking and social engineering to get a start that I just don't have, which sucks.
It really isn't hard to find a normal salary level of freelance gigs if you like working with other people making software, though you do have to want to do it and you have to be both open minded and (oddly) selective about the kinds of projects you take on. Not to mention that you do have to send out a lot of feelers and try and learn how to read prospective situations.
Most of what I do isn't as nice as adding features to FOSS projects, but it's fun in the same way.
... just an attempt to encourage you to freelance (even if you take a job first). To be honest, it doesn't take "social engineering"... it just takes a while to learn how to present yourself better than the alternatives and learn it as a business (it took me about 2 years). I work 3-6 billable hours a day, and spend the rest of my 8-10 hour work day (when I don't have a gig or go hiking) learning new stuff (which I find fun).
Personally, I like freelance developing a lot more than "passive income" strategies... I spend a lot of time working for people trying to flesh out those strategies, and sometimes it works, sometimes it doesn't. But I think I have more fun, and will keep on this path until doing it when I'm 75 doesn't sound appealing.
Passive incomes means financial independence and freedom to make life decisions independent of monetary compensation. Financial freedom means having leverage in the business of life. That's hugely valuable and worth aggressively pursuing in my opinion. You can always find and pursue your passions after that.
I know I'd love to have some amazing AI or robotics lab, pay modest salaries to some computer scientists to do research and just see what happens.
There have been maybe five times in my entire life that I've failed to finish reading a book that I've started, this was one of them, and it was by far the easiest to put down.
I can soundly say that those first few chapters are literally about nothing. (At least, nothing pertinent to work or income).
I will say though that, from the title to the terminology, the book definitely has its cheesy, "get rich quick" moments. Why? Probably because that was the best way to sell it. It wasn't initially called "The 4 Hour Workweek," but Ferriss tested titles and found that one got the most reaction.
It has some great ideas on marketing, though.
Tell that to everyone who is wealthy enough to live off their investment portfolio (or just savings-interest, which is implicitly a very low-volatility investment portfolio provided by the bank.) Tell that to trust-fund kids. Tell that to artists and musicians and writers who make their money off royalties. And, meanwhile, also tell that to the population of some cities in the US where business revenue is supported entirely by disability cheques[1].
There are a lot of people in this world who don't "work for a living"; the middle-class seems to have a mental block associated with imagining how they got there.
The people you listed make up less than 1% of the population (unlikely by definition). As for people living off disability and SSI (social security income) checks, that only affords an average livelihood (or below).
The middle class mental block is how an economy can function if everyone (or most people) were to live from passive income. It is well understood that most "financially independent" had their good fortune through inheritance.
1. An ebook is a shitty source of passive income. People buy it once and there will be a limited market for it, specifically if you are targeting a niche. Anyone who thinks an ebook is the path to financial freedom is an idiot. You need to find a market you can serve where people pay monthly or have to order your product regularly (something that runs out/gets used up).
2. If you're aiming for passive income why are you building a team?? When you need something done you hire a freelancer for a few weeks, solve the problem and move on. If you require a team and 'great talent' you're running a startup, not a passive income business.
3. Your customers won't leave if they realise you aren't spending all your time on the business. This doesn't mean you don't care about them. Of course you do. Without them you would be working 9-5. If you have a superior product they will stay with you. Your customers only care that you have a good product and are there to help when they need you. How much free time you have is your own business.
4. You can stay ahead of the competition. People who run these types of businesses don't spend all day doing nothing. With the business generating income passively you have more time to research how to stay ahead of the competition. If someone is coming out with a better product you can spend 100% of your time improving yours and once you're competitive advantage is maintained, go back to living your live.
Just before Christmas a checked one of my Investment accounts and found that I had an extra £1500 in dividend income that I hadn't realised I had.
And in the UK maxing out your share save (share options) should your company offer it is a no brainer - the one that is just due to end at BT is returning over 50K (tax free) on an investment (over 5 years of 8k)
By that definition, I've only met a handful of people who are wealthy.
Some people who I've thought are relatively wealthy have alimony, child-support, large mortgages on 2nd homes in nice coastal areas.
Even consultants I've met who have charged $10k/day (healthcare), they can't sit around and play golf - they go nuts.
The best passive income is selling something that improves people's lives in a small way (whether it be an entertaining iPhone game that connects friends for a game or a healthy meal planner that brings a family together for dinner).
I don't see it in that way because wealth is also about protection against risks. If a big economic crisis arises being wealthy gives you, in general, more weapons to defend you and your family.
Was it this book that brought the idea of passive income (especially using the leverage of outsourcing) to the masses, or was there some other mass media fad generator before this book?
There was an epidemic of this among leaders of the "minimalist lifestyle" fad a while back: Leo Babauta, Tammy Strobel, Ev Bogue, and others. I'm sure it's cropped up in other niches too. That's where I learned about it.
I think the reason passive income gets a bad rap, in this forbes piece and others, is that most people don't possess the skills to create a passive income source that is not a scam. Paying $1/page for an ebook that doesn't deliver leaves a bad taste in peoples' mouths. But simple SaaS businesses can absolutely create real value to others without significant maintenance as many people in this thread have already described.
Re: #4 Can't you use the money you get from whatever you're doing passively to spend on something you support passionately?
It also don't know any business that is actually making money that is considered passive. You will have customer complaints, returns (or chargebacks), the market changes, If you are attempting any of the passive techniques you see on the various SEO forums, you may get banned by Google and have to start over.
While I agree that info products and affiliate marketing are not the passive cash cows that a lot of people are being tricked into believing they are, those are not the only forms of passive income.
In addition, it's completely possible to enjoy the passive business you've created while at the same time enjoying stuff that brings you no monetary value. I personally enjoy snowboarding, track racing, rock climbing, and power lifting, but I don't have any desire to try to turn them into income generating activities. It's like the author is completely unaware that there are other things to do with your non-work time than partying on a beach. I find my most fulfilling moments when setting and accomplishing goals in activities that give no other reward than the meaning and gravity I have given it.
This whole article reads more like SEM/lead-gen for his book. I read it a bit over a year ago and found it disappointing.
I do like setting "passive income generation" as a goal, but only as a useful thought experiment. It helps to think about "what would have to be true for me to remove myself from this business indefintely?"
That's great as a thought experiment; it can facilitate some creative brainstorming, but it's not so wise as a business strategy.
The author almost gets there by saying, >Of course, you can make honest money in Internet info-products, or affiliate marketing, or other such areas where people tend to get drawn to “passive income” fantasies. But, to make real money over the sustainable long-haul, you must treat these like any other business.
If this were true, then no one is able to generate such income. Not sure if I agree with that then. Interesting read though.
I pick my bed size, and see a list of the various type of fitted sheets. Then I select a type and pick a color.
This might work as a dropship company.
I do not want to buy a sheet set. I don't use flat sheets.
When I look on Amazon, some bed sheets list "1500 thread count" in their title, but there are one star reviews explaining that it's microfiber, not cotton. At my local Bed Bath & Beyond, all the fitted sheets available are for Cal King beds, not King beds.
In fact, as of typing this post, "buyfitted.com" is still available!
Oh, and you need to find and keep amazing managers which is a whole world of finesse unto itself.
I would like to point out that it is equally fantastical for the author to suggest that everyone just find a business area they can put their heart and soul into. Some people really enjoy the process of business itself, somewhat separated from the product or service.
What most people want is more freedom-- so they don't sweat the prospect of losing this job or that client-- and that's an admirable and worthy thing to strive for, but not necessarily long-term passive income. This is just the wrong business for that. The idea that an iPhone app is going to be making the same money, with no improvements, 20 years out, is laughable.
What people are experiencing and calling "passive income" is actually a result of the fact that good engineers are so underpaid in comparison to their value that, by going alone and interacting with the market directly, they can often do better than they would under an employer and taking a 90% haircut (largely, to pay for all the less competent people) on the value they deliver.
