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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

#251

Post by tombert »

nobleach wrote: post #247
tombert wrote: post #156

Earlier quoted context omitted.

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…

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 s…

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.

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

#252

Post by lazide »

bawolff wrote: post #130
jandrese wrote: post #111

Earlier quoted context omitted.

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…

> Housing costs have outpaced inflation In fairness though, given inflation is the average, housing costs outpacing means something else underpaced.

Imported goods.

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

#253

Post by lazide »

phil21 wrote: post #230
bawolff wrote: post #196

Earlier quoted context omitted.

> 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-hu…

‘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.

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

#254

Post by lazide »

madaxe_again wrote: post #204
littlexsparkee wrote: post #201

Earlier quoted context omitted.

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…

guess how much you would have made with the same skills/work at a VC or hedgefund?

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

#255

Post by nyantaro1 »

hunter-gatherer wrote: post #118
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…

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?

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

#256

Post by circumcised »

lotsofpulp wrote: post #238
circumcised wrote: post #224

Earlier quoted context omitted.

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…

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.

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

#257

Post by lotsofpulp »

circumcised wrote: post #256
lotsofpulp wrote: post #238

Earlier quoted context omitted.

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…

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 "…

> 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.

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

#258

Post by bulbar »

parineum wrote: post #241
wolvesechoes wrote: post #214

Earlier quoted context omitted.

> 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.

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.

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

#259

Post by circumcised »

lotsofpulp wrote: post #257
circumcised wrote: post #256

Earlier quoted context omitted.

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 "…

> 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 does…

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.

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

#260

Post by pc86 »

lotsofpulp wrote: post #41
pc86 wrote: post #31

Earlier quoted context omitted.

If you think buying a house and renting it out "manipulates economic conditions" you need to prove it because that's a claim, especially with regard to "manipulate."

The manipulation is in the political limit of housing supply and the limit on land value tax rates.

Maybe it is (I'm not so sure but I'm open to the argument), but even if true, it's a completely separate thing from someone buying a home and renting it out.
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