The video is of course inaccurate for Levels story.
It took me a long time to get there, but I no longer do anything for Ministry of Testing and make money from it every month. I don’t know how long it will last, nothing really lasts forever. But it’s definitely passive right now. Not $800k of passive annual income, maybe one day though!
I agree (about disagreeing). Another good example is having evergreens sales of an ebook – @robfitz talked about how his book The Mom Test generates passive income. Once a book reaches critical mass in terms of popularity, you don't need to put in any additional work to generate revenue.
There's a big difference between passive income and a passive business.
A business is usually a complex set of processes that somehow reaches customers and provides value for them. It's exceedingly rare for a business to be passive. Even if you can automate every part of it, you generally have competitors who are doing just as much automation and putting manual work into it. Given enough time, they will generally eat your lunch, take your distribution channels, surpass your product, etc. This isn't true 100% of time, but it's true 99.9% of the time.
Income, however, is different. It doesn't have to be connected to manual effort. You can earn income from a business by owning equity in it, even if other people are doing the day-to-day work. This is what investing is, of course. And theoretically Pieter could hire his own replacement but retain a ton of equity in all of his businesses and be paid a dividend plus a portion of any acquisition.
(I do know a few people who spend very little time operating their businesses, despite not having outsourced them to anyone else.)
Dividends from owning shares in public companies are passive income. Rent from a property that a management company manages is also passive. Dividends from private companies that you own, but delegate the management of to professional managers are also passive.
Most of the income made by the super rich is passive, but the petite bourgeoisie have to grind and work on and in their businesses to get anywhere.
I think when people say "there is no passive income" they don't mean it literally. They mean something like, "don't expect to start from nothing and get rich without working like a dog."
You purchase land, till the soil, plant seeds, water them, and watch over what you've planted from sprout to sapling. Over the next few seasons the trees bear fruit, reliably and consistently, without you having to do much of anything.
Can we call this passive fruit?
I suppose, but only because you spent thousands of hours actively planting and nurturing and now that time is being returned.
This is quite different from throwing some seeds on the ground and walking away which is the impression many of these videos give.
Pure investments get close. I know a number of people who have been holding Bitcoin or Amazon stock or some other equity as it's grown over the last 7 or 8 years and spent tons of time fretting about it and even buying and selling back into the same positions at a loss.
A few people just do a sanity check once a year and really do passively earn, though.
One class of investment that makes this easy is early startup options. In most cases, the holder has already done the work to earn them, can't sell them since the company isn't public and there's no secondary market. They have no choice but to earn passive income (of an unknown amount at an unknown time in the future).
Disagree about passive income not existing. 🤷🏻♀️
The video is of course inaccurate for Levels story.
It took me a long time to get there, but I no longer do anything for Ministry of Testing and make money from it every month. I don’t know how long it will last, nothing really lasts forever. But it’s definitely passive right now. Not $800k of passive annual income, maybe one day though!
I agree (about disagreeing). Another good example is having evergreens sales of an ebook – @robfitz talked about how his book The Mom Test generates passive income. Once a book reaches critical mass in terms of popularity, you don't need to put in any additional work to generate revenue.
There's a big difference between passive income and a passive business.
A business is usually a complex set of processes that somehow reaches customers and provides value for them. It's exceedingly rare for a business to be passive. Even if you can automate every part of it, you generally have competitors who are doing just as much automation and putting manual work into it. Given enough time, they will generally eat your lunch, take your distribution channels, surpass your product, etc. This isn't true 100% of time, but it's true 99.9% of the time.
Income, however, is different. It doesn't have to be connected to manual effort. You can earn income from a business by owning equity in it, even if other people are doing the day-to-day work. This is what investing is, of course. And theoretically Pieter could hire his own replacement but retain a ton of equity in all of his businesses and be paid a dividend plus a portion of any acquisition.
(I do know a few people who spend very little time operating their businesses, despite not having outsourced them to anyone else.)
His statement is absolutely false.
Dividends from owning shares in public companies are passive income. Rent from a property that a management company manages is also passive. Dividends from private companies that you own, but delegate the management of to professional managers are also passive.
Most of the income made by the super rich is passive, but the petite bourgeoisie have to grind and work on and in their businesses to get anywhere.
I think when people say "there is no passive income" they don't mean it literally. They mean something like, "don't expect to start from nothing and get rich without working like a dog."
You can buy a stock and get dividends regularly. It's also a passive income.
In business, it's hard to go completely passive. At most, you can turn to a low maintenance mode or spend less time working on it.
Can this help in other categories of some gardening products? I want to test for my ironsulphate program.
"passive" is different for each person. i no longer try to find a binary solution to what "passive" means.
You purchase land, till the soil, plant seeds, water them, and watch over what you've planted from sprout to sapling. Over the next few seasons the trees bear fruit, reliably and consistently, without you having to do much of anything.
Can we call this passive fruit?
I suppose, but only because you spent thousands of hours actively planting and nurturing and now that time is being returned.
This is quite different from throwing some seeds on the ground and walking away which is the impression many of these videos give.
I would disagree as well.
You can absolutely setup an evergreen launch on a cycle - and automate everything.
Pure investments get close. I know a number of people who have been holding Bitcoin or Amazon stock or some other equity as it's grown over the last 7 or 8 years and spent tons of time fretting about it and even buying and selling back into the same positions at a loss.
A few people just do a sanity check once a year and really do passively earn, though.
One class of investment that makes this easy is early startup options. In most cases, the holder has already done the work to earn them, can't sell them since the company isn't public and there's no secondary market. They have no choice but to earn passive income (of an unknown amount at an unknown time in the future).