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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

#221

Post by pipes »

brunoborges wrote: post #117
mtlynch wrote: post #101

Earlier quoted context omitted.

> 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.

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

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

#223

Post by coldtea »

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…

>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? :)

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

#224

Post by circumcised »

lotsofpulp wrote: post #164
atomicfiredoll wrote: post #159

Earlier quoted context omitted.

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. "…

>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 abl…

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.

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

#225

Post by icedchai »

Nasrudith wrote: post #206
Ekaros wrote: post #187

Earlier quoted context omitted.

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.

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

#226

Post by bombcar »

hn_throwaway_99 wrote: post #180
hunter-gatherer wrote: post #118

Earlier quoted context omitted.

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…

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…

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).

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

#227

Post by Serhii-Set »

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…

[dead]

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

#228

Post by phil21 »

chii wrote: post #181
phil21 wrote: post #171

Earlier quoted context omitted.

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 fo…

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.

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

#229

Post by icedchai »

wolvesechoes wrote: post #215
icedchai wrote: post #155

Earlier quoted context omitted.

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.

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?

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

#230

Post by phil21 »

bawolff wrote: post #196
phil21 wrote: post #171

Earlier quoted context omitted.

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 fo…

> 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.

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