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The "Passive Income" trap ate a generation of entrepreneurs

joanwestenberg.com

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Re: The "Passive Income" trap ate a generation of entrepreneurs

#101

Post by mtlynch »

hn_throwaway_99 wrote: post #74

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…

>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.

Re: The "Passive Income" trap ate a generation of entrepreneurs

#103

Post by pdonis »

grebc wrote: post #76
pdonis wrote: post #68

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. Ther…

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.

Re: The "Passive Income" trap ate a generation of entrepreneurs

#104

Post by toast0 »

sfRattan wrote: post #69
recursivecaveat wrote: post #51

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 != infinit…

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 in…

> 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.

Re: The "Passive Income" trap ate a generation of entrepreneurs

#105

Post by Loughla »

saulpw wrote: post #94
Loughla wrote: post #85

Earlier quoted context omitted.

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 re…

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.

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.

Re: The "Passive Income" trap ate a generation of entrepreneurs

#106

Post by sfRattan »

toast0 wrote: post #104
sfRattan wrote: post #69

Earlier quoted context omitted.

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 in…

> 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.

Re: The "Passive Income" trap ate a generation of entrepreneurs

#107

Post by nightski »

happybuy wrote: post #93
hn_throwaway_99 wrote: post #74

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…

> 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…

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.

Re: The "Passive Income" trap ate a generation of entrepreneurs

#109

Post by redwood »

Marsymars wrote: post #98
eek2121 wrote: post #66

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…

> 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…

Sounds like he means the methods that they used to use to advertise to find customers online have broken
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