The "Passive Income" trap ate a generation of entrepreneurs

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 financial success by who posts about it on HN is:

* The more someone is making at their solo business, the less they want to blab about it and attract competitors.

* The people earning at the low end are more desperate for people to see what they're doing so they can pick up new customers, so they're more likely to talk about their work.

* The more successful founders are busier and spend less time posting on HN.

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 started working on it part-time, then moved to full-time when the revenue justified.

It's now growing to where it exceeds what I would have made working for someone else.

Note this took 7+ years of constant work, improvements and care.

It's the type of dedication that makes you competitive with even larger organisations.

And the time required to be a 'success' ensures that you won't have any competitors who just want to make a quick buck or get to "passive income" within a year or two.

It's enough to pay for itself easily and pay for a vacation or two a year, for about 4 hours of work a week. If we really put effort in, it could replace our day jobs.

Where most people go wrong is their expectation. We expected this to fund a vacation and maybe car payments. That it's doing that is exactly right and we don't want to take it any further. If people had that view, instead of feeling like they have to make a billion dollars, I think side gigs would be a different beast entirely.

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 with her oil paintings. Not "passive income" but real money and profit. Not enough to retire (that's what I am for!) but actual money nonetheless.

Some people just lack the capacity for this sort of thing, and unfortunately fraudsters target them by trying to convince them otherwise.

Dropshipping, affiliate SEO, print-on-demand... these face the same margin compression regardless of how engaged you are. Ad cost inflation, platform saturation, algorithmic displacement, etc... it doesn't matter whether the operator is engaged or not.

Caring's a moat only where differentiation is possible. In commoditized markets, it doesn't move the needle.

From my perspective, you have to take a lot of shots, I did around 20 side hustle ideas last year and 2 are making over $100/mo. The other 18 I dropped. The only note I will give is that the 2 that succeeded really played to my strengths.

About me: I once had a hustle that did around $6k/month but that was many years ago and I decided I would be happier as a hired gun coder. The rise of AI made me rethink this so I'm clawing my back to providing services.

You're conflating two different things. Thanks to software, it's easier today than it's ever been to make money as a small business / solopreneur. It's also harder to compete with the big boys, possibly for the same reason and due to economies of scale.

That's why I don't bother entering the same markets the big boys are in. There are plenty of niche markets which they don't bother touching where a small business can thrive.

is someone making money on a side gig really a solopreneur? By definition a side gig is not something you expect to make significant amounts of money on. if a side gig starts generating significant amounts of money then you would probably make it your primary gig.

That amazed me when I heard it recently. The number of tradeable things continues to increase, but most of them are two or three steps removed from real-world production.

We remember the success stories, we don't remember the bankruptcies.

> I read an article recently that the number of public companies has halved compared to a few decades ago.

That's not because there are fewer companies but rather because private markets have much more capital.

OpenAI is the extreme example. If it were public, it would be the ~tenth most valuable public company in the world.

Part of that was accurately diagnosed by the article in the bit about the dog walking business vs dog walking platform.

My partner bootstrapped a successful full-time cleaning business that she ran for a few years and the limiting factor was basically her ability to hire and retain good employees. A physical cleaning business has no path to scale like a tech company though.

"Passive income brain" people are not the only one's trying to "build revenue engines," that same sort of talk exists in corporate America. There are already people that that own companies which are there "to generate passive income for me," right now--there's a whole class of millionaires and billionaires that don't have to work. Passive income people didn't ruin the "content quality of the entire internet" and are far from the only ones doing so. Many of these folks are likely the ones that would have owned a hardware store if America didn't ignore it's regulatory duties while preaching about how "important" small business is.

In the U.S. situation really seems to have fossilized into a few big players/platforms, and they continue to freeze up through the process of things like private equity roll-ups. There's a thread on the front page right now about Amazon's alleged price-fixing tactics, which hurt customers and small businesses. Further: Real-estate is an investment, so for most being able to pay commercial rents is a pipe dream. Healthcare is tied to employment, so people are less free to try and start something other than "on the side."

American's choose "convenience" when shopping and to put people in power that serve these large companies or their owners, not small businesses or communities. Dropshipping, creating a "sweaty startup," etc... it's all just people trying to make do within the system they're trapped in.

When I was in high school 25 years ago, unless you got lucky with an IPO, tech didn't pay all that well. (I worked in software while I was in high school, so I know some of this first hand).

It was office space. It didn't matter how smart you were, if you didn't go into management, or join Apple/Microsoft at just the right time, you weren't going to live a rich lifestyle.

Not only that, you'd probably be reporting to some MBA type biz guy who has no idea how software works, you'd not be well respected, and your perks were drip coffee and occasional donuts on friday.

Of course brilliant, hard working, talented engineers said "fuck that" and go build something awesome themselves. Things have changed drastically. Now, brilliant hard working people can literally make millions at dozens of companies .

You will report to another engineer who has slightly optimized for soft skills, you get lavish perks (except amazon, but at least you get paid well there), and real equity.

There's a whole spectrum of options for ambitious software folk that didn't texist ~25 years ago.

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.

This is why I still do random sampling of Reddit, Twitter, Threads, and a few other social media sites: It’s a good way to keep up with some of the discussion trends that start spreading in online discussions.

I can pick up quickly when someone is parroting the latest info memes from Reddit or Twitter now. It’s very helpful for identifying who isn’t really thinking for themselves and will latch on to the first opinion they see on a topic.

I can’t bring myself to watch TikTok or other video shorts, though.

I remember saying, "sounds like scamway or something" and he actually had to say that it was in fact amway he was talking about. uncomfortable.

didn't go much further than that.

Looking backwards I realized how little friction we had getting to know these people, etc... sigh.

I would say really successful companies at least go through a stage of Building Something People Want. Even if they stray from that as they become more successful.

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Free to do what? Sit on a beach, apparently. Every single one of these people wanted to sit on a beach. I've never understood this. Have they been to a beach? There's sand. It gets everywhere. You can sit there for maybe three hours before you want to do literally anything else.

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I laughed out loud when I read it, because it's so true.

https://m.youtube.com/watch?v=biYciU1uiUw

And one day on campus I see him drive up in a Mercedes. And I ask him what’s going on.

Well, he tells me that he learned a little bit about cryptocurrency, and now he had gone into business where he advises people on how to invest in cryptocurrency. And I thought, “That’s really wise!” and I hope he is still doing well!

Basically a great way to stay above the hype and scams. Surely some sort of federal regulations would begin to apply... but good luck!

How does what ChatGPT thinks about lawnmowing matter? Like, specifically, who's going to be mowing the lawns if it's not the people who are currently doing it?

if it would be so easy to build personal passive income businesses hedge funds would be going around recruiting people and funding them. or the government. or the Effrctive Altruist.

but most small business are bad, inefficient, hard to scale them, etc.

(that doesn't mean there are no way to make money this way, but economically those boil down to bets. sure, sure, the aforementioned fancy investment funds also do bets, usually more sophisticated ones, and who doesn't, right? unless you are actively building a bunker somewhere around the Darién gap and recruiting people to your doomsday cult you are betting on the global economy chugging along.

but! eventually one has to price in risks-weighted return, and usually "passive income" is pretty poor compared to a boring job that pays really well.)

This is a good article indeed.

- Every client of mine during my contracting days. It took me way too long to reply with, "Oh that's great news! I wasn't sure of my availability, and was certain I was going to be way too expensive. Glad you got it figured out."

I told him that I don't really build websites, and what I mostly do is write things that move information from one computer to another and that I haven't really enjoyed web development so it's not something that I do in my free time so I'm not good at it, and he should check out SquareSpace or Wix something.

He kept assuring me that it would "be easy". To shut him up, I gave him a quote of my daily rate for contract work (which honestly wasn't even that high by software engineering standards), and he backed off because he didn't realize how expensive software engineering is.

Then he delegated more and more responsibilities, allowing them to make decisions for anything up to a certain dollar amount, then kept raising the dollar amount.

This ended in him checking email a few times a week totaling about 4 hours altogether.

that might well be the first time I've seen "career" and "ethical" conflated in that way. I've definitely seen the people who think you're a fool and possibly a sucker if you chase short term wealth over career stability, and there's definitely a veneer of unethicalness clinging to the notion of get-rich-quick, but I cannot understand how "establish yourself in a career" is an ethical concern.

Twelve year olds?

The cost of starting a new business has returned to the historical baseline.

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