All of these passive income stories fall into three buckets:<p>1) The passive income these people generate is from selling suckers who want to believe in free money a book for $9.95.<p>2) Their definition of a good passive income is at or near the poverty line in the U.S (That mustache guy?). That's fine, there's nothing wrong with that, but it's not the life most people want to live.<p>3) The person got massively lucky with a startup (lots of hours invested there) or real estate and think that idea is easily translatable into a few blog posts. These stories are all survivorship bias and don't account the 1,000 people who failed.<p>Everyone wants to believe that there's a free lunch out there. That's why scams like stock trading apps, time shares, ponzi home marketing schemes, etc. are so prevalent.
I am a passive income hacker, here are my thoughts:<p>Studied CS at university for 2 years, dropped out to pursue an idea. After a couple years of work, I was bringing in 20k a month.<p>It was the most incredible time of my life. It lasted for 7 years before it hit the bottom. During that time I spent my days playing beach volleyball, tennis, golf, skateboarding, gaming, girls, beautiful car/apartment, the life in Santa Monica CA!<p>I wasn't the least bit afraid when the project/business started slowing down. I decided to launch two more ideas - BOTH FAILED. At that point I was burnt out and was running low on savings. I had no other choice but find employment. In my mind, I failed and lost everything. It hurt me for years, and still hurts me to this day.<p>While I have a great job, the feeling of imprisonment and failure is always with me. Eventually I got the strength to work on another idea during weekends and late nights. That gives you very little time, especially when you have a demanding job. It took over the course of a year to launch this new idea and it's not working out the way I hoped it would.<p>Call it what you want, but in my mind that's three failures in a row.<p>I've learned that luck and timing are definitely part of the equation. I've learned that you can spend year after year obsessed with coding your ideas and end up with only the knowledge.<p>It's extremely tough and taxing to go down this route. Be prepared to fail multiple times. Be prepared to lose every cent of your savings.<p>I know I'll continue trying, hopefully one day I'll come back on top again :)
That's a nice way to think about it. Looking back at the big "travelling phase" in my 30s, there were lots of years where I only grossed between $10,000 and $20,000 for the year. That was plenty, though, to spend most of the year living out of a backpack on some remote tropical beach. A lot of it actually ended up in savings.<p>That was contracting, so I needed to come back to LA to refill the travelling stack. It doesn't take much work to pivot that into a SaaS product or two that replaces the same amount of income. Again, maximising for free time and flexibility with profit being a nice side effect.<p>Then it gets really good.
I've had friends who tried to go the start-up route and didn't pan out; so they decided to do some affiliate marketing with Google Adwords, that didn't pan out. Then they tried to build a SaaS for developers to help with their development, designers to manage their CMS. So far, they haven't seen a dime. The only one success story I've heard said Google screwed up his search result ranking, so it only lasted about a year of supplementing 15% of his full-time job income.<p>I'd love to hear some passive income hacker (PIH) failures, risk & reward, opportunity cost in terms of time spent on your own venture vs. spent on climbing the corporate ladder and vs. traditional passive income paths say, becoming a slum lord, dividend investing etc.
I was waiting for the pitch at the end, but it didn't appear. Other than that it's a straight forward restatement of what others have said already.<p>The problem with these types of posts is that they make it seem like passive income is easy. In fact it is a hell of a lot of work to create, say, an info product, and marketing it can also be a full-time job. You need to have surplus income and time to take on the risk of doing this, which is hard to do if you're an employee. This probably explains why most of the passive income stuff we read on HN comes from consultants.
Every ounce of energy you put into a side project comes from your main job and is carved out of your free time and peace of mind. Period.<p>I used to think I could just contract on the side and make some good money. I did that for about 7 months...but every day you come home wanting to mentally relax...guess what? More work! Your weekends? More work too! Everyone has deadlines at their main job...now you have two deadlines! Deadlines when you are at work and deadlines when you get home.<p>I ultimately decided to never take any more side work (which might lead to passive income) simply because the mental toll it takes is harsh. Money is sort of not really just lying around on the ground...if it were that easy, some hacker in Russia who is out of work would figure out how to get it before you simply because they are desperate and you are just sort of doing this as a hobby.<p>Real success requires being pathologically driven to beat everyone or having some kind of advantage of everyone else.<p>I work with a very smart engineer who runs a full on side business which nets him a good amount of money. His day-to-day motivation is noticeably less than everyone else and his output is less...because he is dividing his time between work, side work, a child, a wife etc. He eventually just announced he was leaving to do his side project.<p>Yes you can do side work, but if you are any kind of regular adult your side projects will all be temporary unless you are willing to quit for them. The mental toll adds up.
I've been traveling full time for the past 5-6 years ever since leaving a full time job in Silicon Valley. I've lived pretty much all over the world (now based in Eastern Europe).<p>I probably only make about $20-$25k a year off a few low maintenance projects, taking up random contracting gigs when I feel like.<p>The experience of seeing new places and meeting new people is priceless. No amount of money, equity or incentives can ever make up for that.<p>If I could change one thing, it would've been quitting my full time job even earlier.
My 2 cents:<p><i>Passive income</i><p>- To echo many other entrepreneurs in this thread, successful passive income <i>does</i> contain a healthy portion of timing and luck.<p>- Passive income also requires a lot of optimization and making slight changes to improve performance, adjusting to new trends over time.<p>- Passive income is a lot about running a business and exploiting opportunities. For example, cold-calling a non-tech-savvy mom & pop store to become a partner in your online venture.<p>- One good passive income generator is not enough for the long-haul. One will need 3 - 5 different niches to be comfortable for many years to come. There is lots of volatility and some niches will eventually fail.<p>- The only real passive thing about passive income is that your websites are running while you sleep. There is always day-to-day work.<p><i>Finding new opportunities</i><p>- Once you find a good niche and quit your day job, you will try to create new businesses in other niches and fail dozens of times. It may take 2 - 3 years to find or create another viable niche or business. This can be soul-crushing if your expectations are not set. However, all of the tech created in those failures <i>will</i> come in use in the future.<p>- My [current] most successful way of finding new opportunities is to do contracting work for small businesses. They always have lots of problems and deep knowledge of their niche. Keep a conversation going with those small businesses and start creating solutions for them.
They make it sound so easy. I'm holding down a full-time job and raising a son with my fiancee. I've only got 2.5 years experience programming, but I'm getting up an hour early to hack on side projects, hoping to get some of this mythical passive income that people talk about like its so easy.<p>I can code/debug for a corporate in my sleep but creating entire products on one's own is a whole different ball game. I'm tired of these articles making it sound _so easy_.
Great post. I wonder if there's space for an alternate Hacker News- a Passive Income Hacker News (PIHN) that works as a sort of support group for PIHs.
All these posts about 'Passive Income Hackers' and I have yet to see any mention of what a reader of these articles could do to become one.<p>"That's a shame, because as a programmer in the 21st Century, you're in a unique position to do something that most people simply can't; live a life with adequate income, lots of time and total freedom over what you do with it."<p>That sounds great, but how?
Here's what I've tried:
1) Built a website that let people send USPS (real) mail, from the website. 0 sales.
2) During the social news height, built a digg like social news website with a coworker. Never used by anyone outside of those I work with.
3) Built a custom trail mix website (still running, making regular sales.... barely profitable...).<p>I've been building sites for years, and I'm starting to think that my focus should be on what I'm really good at: C/C++ software (instead of trendy websites). I've been obsessed with the idea of finding an underserved vertical, and taking my knowledge of machine learning and analytics and building some game changing software for that niche. The only issues I have is: what niche?
"As at all times, so now too, men are divided into the slaves and the free; for he who does not have two-thirds of his day to himself is a slave, let him be what he may otherwise: statesman, businessman, official, scholar." ~Nietzsche
The myth that all startups make their employees work 7 12 hour days every week, pay them way under market rate, and that there's no flexibility for time off or travel is pretty silly.<p>Do you work extra hard at startups? Of course. But in my experience startups are <i>more</i> flexible in terms of working remotely while traveling and freedom in letting people work on parts of the business they are interested in.<p>And maybe I'm the exception, but I've been able to take a lot of weekends off - it helps me be more productive during the week.
so this basically mean you gotta take the spot of the actually rich people (ie the top 0.5%) of the planet, which don't need to work.<p>This takes a lot of luck, in general (more than work) or/and a lot of ruse and malice.<p>Otherwise, if everyone just end up being a founder, it obviously doesn't work either. You need minions to do the actual work. If you don't wanna be a minion anymore, someone else has to be. Never ending loop.
I like this article more than the typical PI article because he clearly states that there is a trade off. Want more freedom? Be prepared to accept less money. I don't understand some of the criticism in these comments. He never claims there's a free lunch to be had here.
Hmm, I guess many people have a false definition of 'passive' in mind. It's not like "build something and it will make you money forever" - it's rather like "Build something and for the time you build another thing it will make you money. But then go back and put some more work into it or it will die".<p>Passive income sources always dry up if you don't put constant work into them. I never had one last longer than 2 years without working on it from time to time.<p>To me the prototypical passive income model is a software product. Once you get it out you can reap revenue for one or maybe two years without much additional work. But after that you better release an update.
Beautiful post, thank you! Love the idea of a 3-dimensional matrix. It really is that complicated, and simple.<p>Harder than you thought it would be, but easier than most just-starting-out passive-earners would expect, if that makes sense.
If you care about anything or anyone then you have obligations. Such obligations are not liabilities. These are assets. The entire conceptual optimization offered is false.
This is not a PIH vs. VC funded startup issue, except that this seems to be part of an ongoing flamewar between people from both communities.<p>You can achieve the same balance and freedom with a part-time job, freelancing, as a PIH (although I don't think the OP actually earns passive income in the accounting sense) or some other work arrangement.<p>What's most important to have the kind of freedom that the OP describes is to first have a relationship with money that supports it.
Even if passive income is easy, it's not for everyone. I've been doing consulting work the past couple of months and can have 1-2 days of straight work pay for my entire week. Unfortunately, the free time isn't as fun as you'd think since almost everyone I know is working full time jobs. Maybe I'm more social than most but having free time without being able to enjoy it with others isn't something to strive for.
There is a difference between wealthy and financially independent. FI is have about 20 times or more your annual exenses saved up. Except for deep recessions you could live off an income stream from that. If you got a good job and are frugal you might reach that stage in a decade as I did. faster if you start a successful business.<p>Wealthy means few constraints on lifestyle. travel where you. Buy most of the stuff you want.
<i>But if you're interested in pursuing passive income, you probably have a different view of what constitutes wealth.</i><p>I have the same view of wealth as you and I am a programmer at a startup. I wasn't hugely interested in this but now I am.
Offtopic, but is the blog meant to be accessible or designed for people with poor eyesight? The font is enormous and only 4-5 words fit on each line. The column width should be at least doubled.
There's a false adversary here, in the 12-hour days and 7-day weeks associated with startups. If you're not a founder, don't work more than 40-- possibly 50 on occasion but only for a project that benefits your career in a major way. Giving your all to a company in exchange for 0.02% of something without a well-defined value is a chump's game.<p>On the other hand, most passive income material smells more like an old-fashioned pyramid scheme than anyone else.<p>Yes, there are terrible startups out there that expect extreme hours. It's easier to leave one of those, and get a better job, than it is to generate a passive income stream from that point. Take the first step first. Get a better job first. Get some security and sanity in your life. Then, start to think about passive income.<p>It's hard to come up with good ideas when there's a gun in your face, which means that having a really bad job (e.g. the 84-hour-per-week startup gig) will make it almost impossible to build something that people will pay for. However, I wouldn't advise quitting wholesale for most people; if you end up with no job, then you have a different gun in your face, which is that you're rapidly running out of money.<p>I'm not going to argue that it's easy to generate passive income while working full-time; only that it's not easier for most people to just quit their day jobs and "magically" come up with the golden iPad app.