This website is junk. I just skimmed several of his articles and the only example of passive income he gives is maintaining his website--on how to make passive income.
He does though like to say things like you have to "create value". That's useful advice. Thanks Steve.
I understand everyone's sentiment about Steve's blogs on earning passive income. If you look around his site he does have some interesting blog posts on things like Polyphasic Sleep.
HN readers for the most part are probably not in need of his motivational/inspirational "speeches" and articles. And most understand the desirability of passive income but understand its challenges, obstacles, and reality.
Someone similar who shares Mr. Pavlina's strong beliefs and desires for everyone to achieve their life's goals and live every day to its fullest is Ramit Sethi (http://www.iwillteachyoutoberich.com/) with his own book and numerous other "programs" like Earn 1K. Ramit recognizes and addresses the reality of passive income and recommends not going after it at first.
Both Ramit and Steve are excellent reminders and motivators to keep working towards your goals similar to 21times.org's daily email newsletters for startups.
UPDATE: I like what someone else said in another comment here. Paraphrasing it: Don't think of it as passive income, think of it as delayed income.
UPDATE: Let's clarify what we all really mean by "passive". It's not really passive as in "you don't have to do anything". What we mean is that we are no longer trading straight time for income. Our income potential is no longer limited to the number of hours we are awake trading our time for money.
UPDATE: The delayed income relies upon a long tail return. Often the amount of energy consumed to setup the long term tail is very similar to the amount of time and energy early (and bootstrapping) startups invest in hopes of recouping their time and money investment at a later date (and in hopes of that return being many times greater than what a hourly rated "job" would pay).
the difficulty comes in building the passive income while having to be realistic about health insurance, and well, having food to eat.
i wish these sorts of articles would spend more time on the bootstrapping portion of this journey instead of the "glorious future" when everything is all running smoothly.
i mean its just as easy to write a article about Facebook and say "just build one of those" but obviously the devil is in the startup, so to speak.
"Suppose you were already very comfortable with passive income, just like I am. Imagine that you had many thousands of dollars coming in every month, more than enough to cover all your expenses. Whether you work or not, fresh income keeps flowing to you month after month and year after year, based on streams you set up years ago."
Aye, there's the rub.
Not sure what his point is after that supposition. The verbose fictitious conversation is rather ... absurd.
He once posted that he has calculated every article he writes earns him $2400 in revenue[1]. From that, he can calculate that if he wants to increase his annual income by $5,000, he just needs to write 21 more blog posts.
So from that perspective, this article is just another $20 per month in his pocket. That's the point.
The very term "passive income" sweeps the bootstrapping part under the rug. It's anything but passive. A more realistic term would be "delayed income".
Pff there is that passive income crap again. Passive income is not passive income. You have to work hard to GET to 'passive' income and when you have it, you have to grow it to make it realistic to live on. Earn so much that you can pay taxes, healthcare, mortgage, kids, pension and future (you know, when your very passive income suddenly ends). So during your first passive income you'll be working your ass off to add more streams. And, unless you hit it big with at least one of your streams, it is very likely you'll be in this loop the rest of your life; hence actually working hard. And usually harder than an actual job with more risk.
To be fair, Pavlina started as a mid-level Indie game developer and moved into the self-help world. I think the first buzz he received was on thirty day trials and (in particular) polyphasic sleep.
He's always been a bit unorthodox, but he wrote a book that I found to have quite a bit of value, and was quite a bit more challenging in its exercises than the standard self-help book.
I still read him, but more for the occasional nuggets now - for where I am in life, I don't receive much value from his current set of posts because it isn't where I am right now in life. That's okay.
As for the passive income bit, I'm hoping the series gets better, but I fear it is going to be a repackaging of what he's said before.
Proof by contradiction: You'll never read the blogs of people who failed to make a passive income by having a blog about making a passive income by having a blog about passive income, because you reading such a failed blog would imply that blog had a readership and would therefore make money off advertising so it wouldn't be a failed blog. QED.
It's sort of the Anthropic principle: you could only notice that if such blogs existed, and such blogs could only exist if you read them, so you've answered your own question.
I've always wondered this. Most of the time, the readers of a blog about passive income are people that want to make passive income, and likely have their own blog about how they also make passive income. It's like a snake eating its own tail.
I believe the purpose of the article is to get readers to step back and realize the absurdity of comparison between having a job versus having passive income.
Yes, your summary is correct, but short sided in that many need this sort of realization to remind those of us who are going to work for a boss everyday what other (and better) options are available.
It's a little weird to post this out of context. This article is part of a long (planned) series about passive income. And this particular article is focused more on convincing the people who want to go that path but have mental barriers holding them back.
In case it's not clear -- you know all those people who want to have passive income but have mental barriers to the concept of passive income? They are imaginary. There is no one saying, "why would I want money coming in every month for something I did years ago, instead of going to work?" Not being comfortable with the "passive income mindset," as the author describes the problem, is not a mental barrier human beings have.
The purpose of setting up a fictional person who doesn't like money coming in every month is so the author can explain at length how great his life supposedly is, and implicitly how great your life will be if you reject the stupid Friend character and instead give the author some money. This is not ambiguous. It's about as subtle as those Axe Body Spray commercials.
What real people have concerns about is whether the particular strategies available to them for generating ongoing income will be reliable, lasting, or lucrative enough to be worth the effort. That's an interesting question. But this article is an elaborate pitch not to address those concerns but to make you ignore them long enough to give the author some cash. If you're considering it, here's a hint: the small percentage of people who manage to start successful businesses are the ones who don't fall for this kind of pitch when they're spending their money.
I'm not sure what kind of friends OP has but I don't know a single person who would argue that a day job making the same amount is better than passive income.
I always read Steve's articles with a mix of fascination and horror. If I ever find myself taking him too seriously I just look at the bottom right of the page and remember that he believes that the number 11:11 has magic properties and is evidence that the universe is sending him secret messages. (Really, look at the bottom right of the page).
Some people are talking about how the point of this essay was to convince those who don't understand "the desirability of passive income." But is there really anybody in the whole world who doesn't understand the desirability of setting things up so you can get money while you are doing nothing? It's not that people think that's not desirable; it's that they think that's not possible. And that is almost always true, from widget factories to startups. Anybody who says otherwise is trying to sell you something by deceiving you.
It's definitely possible. But not as many say it is. And it's usually not a substitute for regular income from a job. It's a nice extra, that's for sure.
And doing nothing (which all people seem to think they like...) => by far most people I have ever met would have no clue what to do with their time if they didn't have to work. You'll do 'fun' things the first year or two and then you'll start feeling worthless about yourself and get all kinds of cool mental and physical issues.
Anecdotes a-plenty: my grandfathers (who are both smart and both were managers) were bored out of their skulls after pension as is my father. A few fathers of friends of mine literally dropped dead months to a year after they started with their pension. A friend of mine (smart guy, age 40) got 'independently wealthy' so did a lot of 'fun' stuff for a few years, then he began to get ailments like pain in his stomach, back pain, headaches (migraine) and started to get depressed. Went to tons of doctors; nothing wrong physically. Recently (few months ago) he took a 9-5 job and everything disappeared; he is happy and no more vague ailments.
There are plenty of exceptions to this obviously, but a lot of people I know, poor or rich, cannot live with themselves if they would have to manage their own time. They need the pressure, the fulfillment etc of a job or career. I have passive income sounds great at parties, but mostly these people are actually working twice+ as hard as people in 'normal jobs' or they are actually not happy at all. I built a lot of sites / apps for internet marketers and have been with them in clubs in Monaco or on boats somewhere tropical; not very happy campers, almost all of them; making millions /year on auto-pilot (just mail the good 'ol 'list' and plok, another $200k) but being utterly depressed, paranoid, weird and usually having 10s of small ailments (allergies etc) which they magically acquired after years of doing almost nothing. And having full days to feel every ache in your body, analyzing the type of pain and ___location in detail and talking about it on cancer forums doesn't help either :)
Amusing dialogue but the phrase "passive income" always strikes me as disingenuous.
I know a few people who technically have "passive income" in the way that this article suggests, but in reality they work harder than most other people that I know.
If you really have got yourself into a situation where you could literally take as much time as you wanted off without worrying about your income level because all your work has been delegated then congratulations; you're a parasite.
Yes, people need to realize passive income doesn't mean boatloads of income, or a better rate of dollars to hours put in. It just means, income isn't tied directly to trading time for money. So you can make income while sleeping or not actively "working" trading time directly for money.
You're absolutely correct, most people that have some passive income have invested lots of time into their endeavors and the ratio of time/$$$ is a large number (IOW, if they broke down their hourly wage it's really crappy, sometimes and often less than minimum wage). Few achieve the opposite and the end goals relies on a long tail return.
Passive income might be $2.54 per month revenue due to affiliate links (i.e. Amazon)... which might not redeemable until you accumulate a minimum dollar amount to withdraw the money...
This is a great read. From someone who was recently on the entrepreneur train and had to make a stop at jobville, it's giving me some serious yearnings to get back on the train.
Note that there are many industries in which passive income is simply impossible. Yes, this is _Hacker_ News, but fields outside of software engineering do exist.
Doddgy as all fuck any site that has a header dripping with faux iliminati symbols and appears to be punting MLM and make monney fast should not be on hacker news.
I have been thinking hard about passive income lately. The more I think, the more I realize that there is no such thing. Yes, there is something called "actively working hard on your own thing using your own resources/time that helps you being able to generate the most important thing in life :Time for yourself and your family/friends". And that for me means to bootstrap something and make it profitable enough that it takes care of your needs (whatever that is in your definition). Of course, that could take years of active/hard work.
How about another category of income called "My needs income". An income where you set the work, the ideas, the amount of hours you put in (vs. amount of hours you spend with your loved ones/leisure etc.) and the amount of money you can make out of it.
Some people are ok with maintaining a blog and making few hundred bucks a month (maintaining a day job perhaps) while some people want to take the full entrepreneurial plunge risking everything they got but hoping for a huge payout in terms of time, money and personal gratification.
He does though like to say things like you have to "create value". That's useful advice. Thanks Steve.