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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

#111

Post by jandrese »

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.

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.

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

#112

Post by TZubiri »

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.

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

#113

Post by rootusrootus »

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.

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.

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

#114

Post by datadrivenangel »

ryandrake wrote: post #21
paulpauper wrote: post #16

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.

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!

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

#115

Post by hellopineapple »

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.

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

#116

Post by bilegeek »

jandrese wrote: post #111
saulpw wrote: post #94

Earlier quoted context omitted.

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…

I appreciate you setting the bar on necessities. Too many people focus on the... "cheap" "luxuries" like air conditioning, smartphones, internet access.

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

#117

Post by brunoborges »

mtlynch wrote: post #101
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 financi…

> 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.

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

#118

Post by hunter-gatherer »

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…

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.

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

#119

Post by Raidion »

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.

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.
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