Paul Jarvis

The myth of passive income

Few terms incite HULK SMASH feelings in me like “passive income”.

We might as well interchange it with “magic fairy dust” or “unicorns that shoot rainbows from their asses”.

It’s a false-positive in product data though.

It seems like money is being made while you’re: sleeping, binge-watching Netflix, eating cereal in your underpants, or jet-setting around the world.

The problem with this picture is that the work is done up-front, while little-to-zero revenue is being made. The allure of passive income makes it easy to forget all the hard work that goes into something before money ever starts coming in. After all, “earned income” doesn’t have as nice a ring to it.

Yes, products have the ability to generate more income than services, because of their 1-to-many relationship with customers. Whereas, with services, you can only take on so many 1-to-1 clients before you max out (even if you’re charging top dollar). So the allure of passive product income is there like a beacon, beaming out from a unicorn-operated lighthouse from the marshmallowy shores of Rainbowland.

I’ve never seen a single example of truly passive income — meaning someone made consistent revenue without doing anything. The myth is perpetuated online, mostly by people who haven’t made any products or are telling you about passive income because they want to sell you their product that teaches you how to make passive income.

“Make money in your underpants while watching reruns of Friends! Joey did it last month and raked in $34,873!”

An example like the above is easy to sniff out and ignore (even if, for some weird reason, you’re a fan of Friends). But if we’re not careful we’ll find ourselves chasing some version of that in our own lives.

I never make products because I want to make money while I sleep or hear beeps on my phone alerting me of sales, while I sit around in my underpants. I make products because I enjoy making things and providing value to others.

I also make products because I enjoy actively doing work. I don’t care about the easy road or hacking the system to make money without effort. I like making money because there’s effort involved. It’s hard work, and it feels good.

Products require investments. I’m not talking about Valley investors or series-A funding either, I’m talking about you, a person who makes things. If you want to make a product, you’ve got to invest your time and effort, hoping it’ll pay off. If it does, it’s because you did the work upfront, and not because a unicorn shot a rainbow out of it’s ass and made your product profitable.

My most profitable product is something I spent hundreds of hours working on upfront to make happen (and then I spend hundreds more hours refining it and even relaunching it). It makes me money because I’ve worked so hard on it — and not because I shit gold bricks while I watch TV.

All the people that I know who have a “passive income” from products also work harder than anyone else I know. They put in the time upfront to make valuable and awesome things. They continue to market, create and invest in their products. They spend endless hours a week doing interviews, making connections, putting out feelers and creating tons of epic content.

There’s no coincidence that the people making the most passive income from their products also work the hardest.

You can’t make money without doing work. This is a good thing. Because the people that work their asses off to make valuable products that help others are sometimes rewarded with sales that happen even if they’re not working at that specific moment.

Want articles like this in your inbox each Sunday, read by 35k+ subscribers? No BS, spam or tricks... just useful content: