The "Passive Income" trap ate a generation of entrepreneurs

jazz9k

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.

faanghacker

This article has a narrow definition of passive income, limiting it to these low-barrier-to-entry schemes. Other parts of the FIRE world have emphasized being a landlord or flipping houses, for example. I personally made it happen by working a FAANG SWE job for 13 years, not getting sidetracked by the startup cult, saving and investing 70% of my after tax income, etc. And no I didn't get into crypto, but I still managed to make it with conventional investments. In fact, I chose to pursue a career in the tech industry in order to pursue financial independence in the first place. Because I knew back then (circa 2005) all the tech Kool aid was BS. That "don't be evil" was just a facade. And time has proven me right and my haters wrong, those who thought it was unethical for me to place wealth building ahead of career building. It's been four years since I've been out of a job. Now I'm creating more passion oriented content. I'm never bored.

georgemcbay

"Passive Income trap" wantrepreneurs haven't really gone away, they have just shifted to crypto rug pull culture and now prediction markets and app-based gambling. They'll keep existing as long as the root cause that creates them (massive wealth inequality in general and the growing delta between productivity and wages) exists, so probably until our financial systems fully collapse in about 2032.

secretsatan

Met a guy that ran some dropshipping thing in a bar once, once he found out i was a programmer he kept on trying to get me to fix his website for free because it was easy, would not take no for an answer. I just kept upping how much money i would charge him till i got sick of it and left. I knew a few guys like that in crypto too, before crypto came along and they got into that, this guy told me he’d written a twitter app, it was a bot that pumped gold at some influencers command. Spurred me to write an app though.

cucumber3732842

Everything I'd want to do on a "side gig to iron out the kinks and then eventual business" basis is regulated to the point where that path is economically impossible and the only way to be in the black is to take out a big f-ing loan, quit your job and go all in on your new business. And it's not just me, all my buddies have this gripe. We've all got skills and experience and equipment outside our immediate careers and we'd like to use those to provide value to people but there's just no way to do that inside the rules and none of us our interested in risking our retirements operating outside them. I just upped my retirement contribution and decided that the big evil BigCos can do all the value creating and the finance middle men can have their take. I guess that's the reason everyone does the slumlord or VRBO thing.

hannahstrawbrry

"It was an ouroboros that had incorporated in Delaware and was running Facebook ads," is my favorite line I've seen in a minute, great read

qurren

> 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.

quercusa

Got trapped in an Amway pitch in my teens and have been inoculated against such things ever since.

homeonthemtn

>But zoom out and what you had was just an enormous machine converting human ambition into noise. Ah, the story of a generation

paulpauper

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.

zem

this is unquestionably the best thing I've read on hackernews this week, perhaps all this month. should be required reading in high school, for the mental lens it provides.

add-sub-mul-div

It's like the flood of AI shovelware projects being spammed here daily. Were these the people who were really going to do anything substantive anyway? Or just the shortcut-taking types?

bitwize

"Passive income" as your only financial salvation is one of those memes that broke off from the MLM "tool scam" industry, that is, selling courses, seminars, and other training materials to people in MLMs on the pretext of teaching them sales, marketing, and business, but it's really just brainwash material designed to keep them from leaving. The other big one is positive thinking/the law of attraction/"The Secret". If MLM is the kaiju, these are the spider-things that fell off the Cloverfield Monster's body and started killing people in the subway tunnels. But like how Robert Smith performed with Siouxsie Sioux as "The Glove" while still fronting The Cure, these memes have built plenty of side scams while still enjoying friendly partnership with MLM itself.

vonnik

“You can’t cheat an honest man.” While that isn’t always true, honesty is a great defense against being enlisted in scams that promise easy money.

recursivecaveat

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 != infinite income. 99% of copies will almost certainly be sold within a few years, not least due to active marketing on your part. It's very likely to be a worse deal than getting paid a quite modest and disappointing sounding amount up front.

enraged_camel

Side note: after drowning in LLM-generated content, it's pretty refreshing to read something written by a human. They're a pretty good writer, too!

eek2121

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.

pdonis

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.

fred_is_fred

I'm not sure passive income is the right way to describe a drop shipping operation where you have to interact with customers. Passive income is $VT.

hn_throwaway_99

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 "ate a generation of entrepreneurs", as if that trap didn't exist then instead we'd see all these successful people. Instead, what I think has drastically changed over the past 40 years or so is the ability of a solopreneur to make real money. Just look at all the posts on HN asking about how much people make on their side gigs. 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. It's just simply much harder as a small/smaller business to make money and compete with the big boys. Wealth inequality doesn't just apply to people, but also companies. For example, in the past many entrepreneurial types may have started retail stores, while now it's incredibly difficult to compete with the likes of Amazon et al. I read an article recently that the number of public companies has halved compared to a few decades ago. The Wilshire 5000 stock index, for example, actually only includes about 3400-3700 companies now.