The "Passive Income" trap ate a generation of entrepreneurs • Hacker News Board

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

#61

Post by pdonis » Thu, Apr 16, 2026, 10:05 PM UTC

butterlettuce wrote: post #34

coredog64 wrote: post #9

Earlier quoted context omitted.

"Rent seeking" has a specific definition* and it is not "I use large capital investments to generate regular payments". Buying housing with the intent of renting it is not rent seeking. This is Wikipedia, which is as good as most other definitions: Rent-seeking is the act of growing one's existing wealth by manipulating public policy or economic conditions without creating new wealth

[flagged]

People who can't afford to buy a house need a place to live too. Believe it or not, there are people who buy houses with the intent of renting them out to those people, to actually help them.

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

#62

Post by Glyptodon » Thu, Apr 16, 2026, 10:06 PM UTC

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.

My memory of RDPD was that it preaches getting assets which generate income, not that your management of those assets would be passive. Though obviously it also did have a subtext of "scale some kind of assets that generate income to a certain point and you can pay someone else to do more of the grunt work while you look into a new opportunity."

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

#63

Post by em-bee » Thu, Apr 16, 2026, 10:06 PM UTC

butterlettuce wrote: post #34

coredog64 wrote: post #9

Earlier quoted context omitted.

"Rent seeking" has a specific definition* and it is not "I use large capital investments to generate regular payments". Buying housing with the intent of renting it is not rent seeking. This is Wikipedia, which is as good as most other definitions: Rent-seeking is the act of growing one's existing wealth by manipulating public policy or economic conditions without creating new wealth

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i could not afford the capital investment to buy a house, and i am not interested, it would only lock me down. my family once bought an apartment. we lived there for a few years. the mortgage payments were twice as high as the rent would have been. when we moved out we were told the place could not be sold. the family still has the place and it is probably still empty. lots of money wasted.

when you buy a house with the intent to sell it for a profit, then you are driving up housing costs. i'd say that's even worse than renting it out.

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

#64

Post by mrdependable » Thu, Apr 16, 2026, 10:07 PM UTC

Ifkaluva wrote: post #22

jazz9k wrote: post #3

Passive income are just get rich quick schemes that were common decaded ago. I started a business like this, but it wasn't passive. I shipped everything to my office before inspecting and shipping product out. It lasted almost 10 years with 1 million annual revenue. It was not passive.

Sounds like you were running an import and distribution business. Not the same thing as drop shipping :) as the drop shipping people will joyfully tell you, “you’re not supposed to touch the product”

Dropshipping is just logistics. There is a lot of dropshipping that has nothing to do with ordering off Alibaba.

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

#65

Post by bluGill » Thu, Apr 16, 2026, 10:07 PM UTC

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…

often the real value of writing a book is you can convince people to pay you to speak. I've had several classes at work where they gave me a book that had everything in the class.

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

#66

Post by eek2121 » Thu, Apr 16, 2026, 10:08 PM UTC

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 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. Oh and before you ask, there are folks claiming they can solve that exact thing, and those hard working folks are buying those products, hoping it will solve their downtrend in internet leads.

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

#67

Post by dlcarrier » Thu, Apr 16, 2026, 10:09 PM UTC

qurren wrote: post #10

> Free to do what? Sit on a beach, apparently. Quite the opposite for me. I'd like to have freedom to work on things I want to work on without "paying rent", "paying medical bills", or "short term profitability" being a constraint.

I went the lean FIRE route, and now work on whatever open-source projects I feel like, plus local in-person volunteer activities. It's a much better quality of life, even though my job had been enjoyable, the extra scheduling flexibility is really nice.

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

#68

Post by pdonis » Thu, Apr 16, 2026, 10:09 PM UTC

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. There are lots of ways to game the system that don't involve the kinds of wacky things the article talks about.

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

#69

Post by sfRattan » Thu, Apr 16, 2026, 10:10 PM UTC

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 into the market (new products/services, more work marketing) to keep the "passive" flow stable.

If you look at the world of indie tabletop RPGs, for example: Kevin Crawford of Sine Nomine Press makes a very good living and a significant percentage of it is "passive" sales of his back catalog. But if he stopped publishing and promoting new game projects, sales of that back catalog would very likely shrivel to nothing within a calendar year.

The open-secret ingredient is always more work.

It's why someone like Crawford can afford to tell everyone exactly how he does what he does... Giving away extensive production files that show you his whole creative process, soup to nuts: 99% of people aren't going to put in the work necessary to sustain the passive portion of an individual income.

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

#70

Post by db48x » Thu, Apr 16, 2026, 10:13 PM UTC

valiant55 wrote: post #29

coredog64 wrote: post #9

Earlier quoted context omitted.

"Rent seeking" has a specific definition* and it is not "I use large capital investments to generate regular payments". Buying housing with the intent of renting it is not rent seeking. This is Wikipedia, which is as good as most other definitions: Rent-seeking is the act of growing one's existing wealth by manipulating public policy or economic conditions without creating new wealth

In what way does buying a property and renting it create wealth? Isn't buying a property with the intent to rent it manipulation of economic conditions?

Yes. The land is wealth, the house is wealth, and _living in_ the house is wealth. Like it or not, not everyone can afford to buy a house. Maybe they don’t have a down payment, or can’t get a good interest rate on a mortgage. Instead of renting money and using it to buy the house, they need to just rent the house instead. If there were no rentals available of any kind, they would go homeless¹. Having them renting something instead of going homeless makes wealth for both them and for society as a whole.

¹ We’ll just assume that homesteading is impossible these days.