passive income is a lie

“If you want real passive income, dedicate your life to making the people around you better, every single day.”

-Anonymous

Thanks for all of your inspiring responses to our “Name our Movement” contest last week. Wow! We’re still sorting out the best name, but we have chosen the 10 random folks to win a free LYL shirt. We will email the 10 winners this week.

Now for today’s topic…

Btw, pardon the occasional unsavory language below – when I get on a rant, sometimes I can’t help myself!

The Biggest Lie on The Internet

Okay so I have a bit of a bone to pick.

The more time I spend online, the more I learn about how to build this business and the more I get requests from people for help, the more I hear the same damn word and it’s about to cause me to jump out my window (which would suck since I only live on the third floor).

The phrase is…

Wait for it…

Passive Income.

This word is complete bull shit.

And worse yet, it’s totally screwing up the hopes and expecatations of those of us trying to put our own dent in the world.

In my experience there are only two kinds of people who talk about Passive Income.

  1. The people who don’t have a clue what they’re talking about.
  2. The people trying to sell you something.

The Internet is an amazing place.

A place where we can take an idea or belief and have the possibility of turning it into a world-wide movement (and even a massively profitable business). We have the tools to offer our talents and skills to the world and to help everyone from your buddy down the street to the teenager just starting high school in Moscow – I have been fortunate to get the chance to do both and just about everything in between.

And you can do this for next to ZERO financial investment.

No time in the history of the world has anything like this been even remotely possible.

Today that is different.

The dream of doing work you love and living your life ‘on your own terms’ is alive and thriving.

But with this opportunity comes a few interesting problems.

When it’s possible to start and launch a business or website in a single afternoon, you will naturally have a lot more shitty sites and offerings out there. And hence, I believe that over 95% of the content and products sold on the web are total dog shite.

But what’s worse is if you’re a tad clever and willing to put in some hard work, you can learn about how to market to the masses of people out there who so badly want to be living this passive income dream. And if you learn enough and figure out how to apply it properly, you can successfully convince the masses to buy this b.s. dream, without hardly having to produce much of a product at all.

After all, it’s the marketing that deterimes how likely a new customer is to become a first-time buyer.

And this is how the slimy, smarmy, dark and evil world of Internet Marketing is born (for the record, I HATE that world and hope to never again mention it on this site)…

Learn how to sell the dream of passive income and in turn create an income of your own.

Sadly, people can operate like this for a while – as long as they are constantly finding new customers (which on the web could be endless), they can keep delivering half ass value (at best) and build their empire of bull shit.

This. Disgusts. Me.

But before I kick off on my rant, let me get something clear.

In business and in life you always have two options:

  1. You can take the easy road and spend your life trying to game the system, or
  2. You can pour your heart and soul into creating work that helps people in a way that can legitimately change the world.

Option one will seduce us for our entire life, and it’s surely brought all of us to the dark side once or twice.

And sometimes it will actually work. But you’ll know what you’re doing, and over time it will start to wear you down. People will start to notice and slowly you’ll get that reputation. The one that causes people to stop inviting you to parties and stop sending you emails.

As it turns out, I keep two lists of the people I’ve met and have spent time with online. One for the system-gamers and one for the genuine world changers.

Sadly list number 1 has a lot of people on it.

List #2 has very few.

If you’ve been a part of our community for a while, I’m sure you could list many of them – I can count them on two hands. If I mention their work on this site, it means they are on list #2. In fact I have a 10-point checklist that must be satisfied before I even considering doing a partnership or affiliate promotion with anyone online. If they don’t check all 10 boxes, we don’t work together (and we likely don’t become very good friends either).

When these guys on the short list launch a product, they have my full support. I trust them as people and trust the impact they strive to have on the people around them. I know how much they break their back to help their audience and create meaningful change. Some of them even do it to their business’s detriment.

I am thankful to know these people. They inspire me. They teach me. They make me better.

And they provide tools that I could never create on my own – that help our community in a very meaningful way.

Live Your Legend and you all would not be where we are without them.

That’s why I could hardly sleep when I found out my friend, mentor and SF workout partner, Leo Babauta, would be launching a course on Simple Fitness Habits – a topic so core to our mission here that I know will help all of us in game-changing ways.

That’s also why I have done everything I can to help Corbett Barr as he launched his new project Fizzle, an online membership dedicated to providing honest video training for online business builders. You can be sure that as soon as he releases it to the public, you will hear about it from me – after all, he’s serving a need that directly helps us live our legends.

Whether I receive an affiliate share for promoting their products or I recieve nothing but giver’s high, I will promote their work in every way possible. Because it’s genuine and I know it will help all of us in a massive way.

It’s not about the money. It’s about providing value.

The Passive Income Myth is Lined with Gold

But here’s the best news of all.

The countless dishonest marketers out there selling the passive income bull shit myth presents all of us with an opportunity.

They set the bar so low that even if we decide to just do what we say and deliver real value, by default we will stand out.

There is always a market for quality. And that market is getting more and more valuable.

Last month I launched a course on How to Connect with Anyone. I spent nearly 400 hours in front of my computer creating it.

I spent dozens of hours collecting case studies, reading books, doing interviews and filming hours of video, take after take after take…until we got the message just right.

In the past month it has genuinely changed the lives of hundreds of the people who have used it – I know because I get notes in the mail and emails and thank you cards almost daily. I will share more details and success stories when we open up the course to new members early next year.

Deciding which path to take…

Early in my career I decided that I was going to do everything in my power to create content and tools that would transform the lives of those around me.

I now have a lot of good friends with fantastic online “Passive Income” businesses.

They all also happen to work harder, smarter and more genuinely than anyone I’ve met.

Take two of the most successful online businesses and brands on the web: Ramit Sethi of I will Teach You To Be Rich and Tim Ferriss of The 4-Hour Work Week. They both have ‘passive income’ coming in from all sorts of sources. Their businesses and brands make a fortune. They are genius marketers. But above all that, they offer value that geninuely makes people’s lives better. And I know for a fact, from spending time around them and people close to them, that they work harder and smarter than probably anyone you’ve ever met.

Or even my buddy Pat Flynn at Smart Passive Income, is very honest and clear that the $40-$70k or so a month that he ‘passively’ makes and helps others learn how to make is the result of massive dedication – in fact I think Pat’s approach to passive income is the most honest and real out there.

But what about the offline world?

Do you know who holds the Guinness World Record for The Highest-Grossing Actor Of All Time?

Samuel L. Jackson.

He has brought in over $7.42 billion in his career and it’s said that he makes about $300,000 a month in residual ‘passive income’ from past films!

He has also stared in over 100 movies and often does more new movies per year than any other actor in Hollywood.

Doesn’t sound exactly passive to me.

That is not a coincidence.

work hard to do work you love and help people

So let this be a warning.

The words “Passive Income” are new age speak for “run for the fucking hills”.

Don’t buy into this lie. Don’t sell it to yourself. And please, please don’t sell it to others.

Stop trying to convince yourself that this is going to be easy. That you’ll be able to ‘set it and forget it’. What would be the fun in that anyway? If we’re doing work that embodies our deepest beliefs, talents and strengths, then the last thing you should want to do is eliminate it.

None of the people above work their face off because they have to. They do it because they have found the work they can’t not do. They are drawn to it. It make them whole.

This is not to say that hours spent is the right metric for success. Definitely not. It’s crucial to be efficient and automate wherever possible and constantly be applying the 80/20 rule.

But none of that will allow you to outsource the hard (and meaningful) work.

The first tentative tag line for the Live Off Your Passion career course that we launched last year was “how to work your ass off to do work you love.”

I meant every word of it.

In building that course, I wanted to do something different. Something on a totally new level. That’s why I wrote over 250 pages and had over a dozen hours of video and case studies. Because my goal was to get people results, not to make a quick buck. I also believe that’s why it was voted the #1 Personal Development Product of 2011.

If you focus on helping people in meaningful ways, the money will sort itself out.

The best things in life are the ones we earn.

Tools Change. Values and Principles Do Not.

Recently while on a fishing trip with my dad, I was out on the porch having a cocktail as a family friend came up to me and said “Scott I want to start a website and make a bunch of money.”

I laughed as I reminded him that for 5 years I poured my heart and soul into a site that no one but my mom, dad and wife paid attention to. That I so desperately wanted to help the world do work they loved, but no one would listen.

But I didn’t give up. Because it was about the movement, not the money.

The funny thing was that as he was joking with me about his future Facebook, it was the last six hours of the Connect with Anyone launch, and every few minutes an order for $397 was buzzing through the Paypal app on my phone.

Nobody knew but me.

Sure, for that night, as I drank beers and talked fishing stories with friends, I passively made money from my web business.

And if someone had seen my phone that night they would have thought just that.

But what they wouldn’t have known about were the 400 hours of work leading up to it and the combined 17 hours of sleep I got in the two weeks before the launch.

Passive for the night, sure.

But I knew that if I wanted a chance at it sticking around, I better get my ass back to work and helping people as soon as the fishing was over.

You see, building a successful web business is no different than any of the business building of the past 500 years.

Believe in something.

Be different.

Offer real value.

Help people.

Work your ass off.

Repeat.

The tools may have changed, but the principles never will.

So the choice is yours. 

Choose to take the easy way, adding to the pile of garbage that makes up most the Internet – and have the reputation to go with it.

Or decide that you are going to use the most empowering and affordable set of tools in the history of the world, to alter the course of the universe in your own unique way.

Given that you’re reading this and you’re a part of our revolution here, I already know which camp you’re in.

I’m glad to have you with me.

Here’s to adding real value,

-Scott

For the Comments: So do you believe passive income exists or do you think it’s bull sh*t? Share in the comments. And if you have a passive income business, please let us know! I love being proven wrong ;).

Come Join Us for a Run Tonight in SF!

Remember, tonight at the Sport’s Basement in the Presidio from 6-9pm, a group of LYL readers and I are meeting for ultrarunner Scott Jurek’s book signing and a run to the Golden Gate. I cannot wait to finally meet this legend!

Hope to see you tonight!

—–

Images courtesy of Stuck in Customs

 


Leave a Reply

146 Responses to “The Myth of Passive Income & The Best Thing That Ever Happened to Online Business (do you agree?)”

  1. Ryan Ferrier says:

    As someone who’s been slugging it out for the last year, this post could not have been more encouraging or resonated more!

    Frankly, working hard – especially on something that matters – is fun. Thanks for keeping it real, Scott!

  2. Not that I have anything against working, but internet marketing world is not all lies, there’s a lot of lies but passive income is possible to generate and I don’t see any harm in it. Don’t understand really why so hateful towards the whole idea.

    Passive income would be a great platform on from where you can influence the world positively then.

    I still hope to earn some day passive income just to gain freedom to do as I wish and not have to feel pressured to do anything – that wouldn’t stop me from giving value to people actively every single day.

    It’s good to warn people about scammers but IM is not the dark place is made out to be here. With common sense you can in general figure out which is true and which isn’t.

    • Scott says:

      I hear you Jarkko – you happened to catch me on one of my rare rants ;). I do realize that I generalized a bit in this post. There are exceptions to every rule – the people I mentioned in this post, including Pat Flynn of Smart Passive Income are all great examples.

      The key is be honest, help people in a meaningful way and use today’s tools as a force for good instead of deceit.

      Thanks for chiming in!

      • JB says:

        I was actually going to mention Pat Flynn (You already did) and the hundreds of app producing businesses out there who do earn nothing but passive income. Lot’s of info websites also monetizing with AdSense of Aff programs.

        I think your whole idea of ‘Live off your passion’ is more unrealistic total BS than creating and living off systematically through passive income streams.

        ‘Live off your passion’ is the biggest lie, NOT passive income streams.

        You should be more ‘responsible’ when dishing out your rants.

        I will be writing a nice blog post about this one soon (My rant) :)

  3. Tim F. says:

    Whenever I mention the P-word on my blog, I always want to put it in quotes, because I know it doesn’t really mean in the IM world what the word’s natural meaning is.

    A better word is the one you’ve used up there when talking about Samuel L. Jackson – RESIDUAL.

    It’s busting your tail on something, then reaping the financial benefits into the future, long after you’ve stopped working on the thing.

    Residual. That’s the word we should be using.

    • Taylor Evans says:

      Great point. I believe it is the negative connotation from the word ‘passive’ that leaves such a bad taste in our mouths.

      It makes us feel as if we found a way to cheat the system and not work for our results. When really the income one earns from this type of revenue is an effect from hours upon months upon years of working on their craft.

      It is simply a delayed form of income that comes from dedicating your work to purpose and value.

      Much like a world-class athlete that has dedicated their life to their sport so they can go perform on the field and make the game look ‘easy’ and ‘natural’.

      It is what you do BEFORE the passive income stage that will eventually determine your success or failure.

      Using a word like residual much better fits the true meaning when people refer to creating ‘passive’ income streams.

      • Kate says:

        I definitely agree with both of these comments–

        the word ‘Passive’ has been taken and exploited just like the word ‘Passion’ –

        Telling people to live off their passion, that if they figure out what they love then they can make money doing that, is an incredible thing, and it’s what I do every single day.

        BUT what a lot of places fail to mention, just like with passive income, is that there is a lot of serious work that goes into ‘living off your passion’ and that you can’t just figure out what you are passionate about and expect money to magically roll in.

        With ‘passive income’, the majority of businesses and products completely skate over the part where you pour your heart and soul into ebooks, courses, products, connections, coaching in order to have that result.

        It’s not that you are working less, ever- it’s that you are doing work that energizes you instead of depletes you, truly makes a difference instead of just trading time for money, and even if you never got paid, you’d want to do it anyway.

        Semantics are important with so many buzz words getting picked up and rung out. Residual income makes a lot more sense. And so does working really hard on something awesome!! :)

        • Scott says:

          Wow – this string of comments is so dead on! I love distinguishing between residual and passive. That is the real thing to realize – work your ass and do good work and eventually that may pay dividends for a long time in the future. But don’t expect it. Just plan on helping people any way you can.

          And I loved this from Kate “It’s not that you are working less, ever- it’s that you are doing work that energizes you instead of depletes you, truly makes a difference instead of just trading time for money, and even if you never got paid, you’d want to do it anyway.”

          Amen!

  4. Gary Arndt says:

    I’ve never understood the logic of trying to work your ass off just so you can sit around on a beach and do nothing.

    Successful people tend to be active, not passive.

  5. Fab says:

    Hi Scott,

    nice post!!Passionate as usual!! Congratulations!!

    Here are some my comments.

    1) As far as:

    “..and the combined 17 hours of sleep I got in the two weeks before the launch.”

    Pay Attention To Your Health!!

    Bruce Lee died of intense training either physical and mental!!

    http://bruceleefansite.com/bruce-lee-death.html

    2)As far as “Passive Income”, here is my opinion.

    Passive Income in the offline world is a reality: rent from flats, dividends from stocks, interest from bonds, royalties and so on!!

    In the online world, in my opinion and in my experience, it’s just a false myth that greed marketers sell to make as much money as possible and they do it through advanced techniques of NLP!!

    Anyway, you mention Tim Ferriss and Ramit Sethi and you say they offer genuine value, I don’t agree with you because in my opinion they are only genius marketers which is a respectable art but it doesn’t imply genuine value!!

    Here is the “Smoking Gun”: you have offered much more value than Tim Ferriss and Ramit Sethi together( there isn’t any comparison at all !! ) but Tim Ferriss is still a very Big Online Superstar!

    Why??

    Just Marketing!! Anything else!!

    I repeat: it’a respectable business art but it doesn’t imply offering genuine value!!

    All the best!

    Fab

    PS

    a) I enrolled Tim Ferriss’ mailing list, I bought the first book. I still receive his emails and I even just written two posts to his latest article!!

    b) I received Ramith Sethi emails for a while but I couldn’t stand his aggressive style and all the things he said which were nothing special!!

    In other words, I know what I’m talking about!!

    • Scott says:

      Thanks Fab. Very kind of you to say.

      I did mean to mention that the one way to get true genuine passive income is if you are worth a few million or more dollars and can just invest in bonds or conservative dividend paying stocks or real estate. But that requires having boatloads of money and many people decide to sell their soul to get those boatloads ;). That’s why I didn’t even mention that type in the article.

      As for Ramit and Tim, I have spent a ton of time with their work and yes they are brilliant marketers. No question about it. But they back their marketing up with real value. I’ve benefitted from it first hand over the past few years.

      The way I see it, is that if you are dedicated to creating insanely valuable tools and products to help the people around you, then a huge part of your job is unfortunately becoming the best honest marketer on the planet – because that’s the only way to get your helpful tools in the hands of the people who need them most.

      And if you don’t become that honest marketer, there are likely a lot of deceitful b.s. passive income marketers who will convince the people around you to buy a bunch of overinflated hype instead of the true value you have to offer.

      I would rather not spend my time learning about marketing, but if I didn’t, we would not have the movement we do at LYL and the thousands of people who have quit their jobs to pursue a career of meaning as a result of our tools, likely would have never done so.

      Bottom line – if you’re going to be a good honest genuine marketer, you better be dedicated to producing damn good content. If you’re not, then please get out of the business :).

  6. Iris says:

    I hope I’m in list #2 Or at least in list #3 for soon-to-be world changers. :)

    A few questions about the concept of doing work you love. I’ve thought about these for a while now and I’d love to hear your opinion:

    How do you explain the concept of doing work you love to people stuck in the corporate world? What if they have been in a job they hate all their life? Or worse, one they don’t hate but that bores them to death?
    How do you tell them about the benefits of doing work you love when you have to sell them rhe “work your ass off” part when they don’t want their work to be their legacy? When they would like to do work they care about, but not necessarily change the world with it? When they want to separate life and work?When they would like to be able to go home after work and relax and still have a lot of free time? I’m thinking about my dad’s generation here.

    Would be really curious to hear what you think.

    -Iris

    • Scott says:

      Iris,
      Your comments resonate deeply for me — these are things that I think of as father of 2 young boys & my wife deeply entrenched in the corporate world.

      I would also be extremely curious to hear a posting directly addressing these questions and especially maintaining a healthy sense of work-life balance.

      -Scott

      • Alixandrea says:

        “I would also be extremely curious to hear a posting directly addressing these questions and especially maintaining a healthy sense of work-life balance.”

        Me too! These are exactly the sort of questions I have been asking myself as someone who currently works in the corporate world and who doesn’t hate her job but is bored by it (and my goodness, isn’t boredom exhausting?!)

        I’m not sure whether what I have to give the world is necessarily world-changing…

        Hmmm. I was just about to add that I didn’t believe that what I have to offer necessarily helps people either, but then I remembered a conversation I recently had with a fan of my band (and friend) who told my partner and I just how much our music had helped him get through his divorce. Maybe I’m under-estimating our impact… :-)

      • Dev says:

        Iris, Scott. This post directly addresses your questions. Having been in the corporate world for ages I got out 5 yrs ago. But this answer includes examples from the last 2 of the past 5 years of me pursuing my dream…

        Everyone has dreams. And there is something, if not many things… that a person wants to do…. When they have enough time, enough money or enough whatever. The thing is most ppl are comfortable with the security of their current job. Sometimes you may hate it. Sometimes its just a dead end place. But the fear is if it wasn’t there… how could you meet your commitments? Or maintain your lifestyle etc…

        So we work harder and longer hoping to reach that elusive place of “having enough” to take a break and do what we love.

        Often though, its been soo long that those dreams have died somewhere along the way. You cant even remember what it is that can really make you happy or put a smile on ur face and a song in ur heart. It happened to me, even though people know me as Mr. Inspireconfidence and I continuously train & inspire ppl to live beyond their boundaries.

        How did it happen to me? Well 3rd time bankruptcy and the end of a business I loved. Paying back my creditors for months on end, barely eating. By the time I was through, I couldn’t even remember how to smile from my heart anymore.

        It was Janet Attwoods “The Passion Test” book that made me sit up and take stock again. But as much as it inspired me, I needed more – so I could really find for myself, what it was that would make me love life passionately again. It took some time. Often, it takes some time to rid your system of bad vibes collected over time and to open your heart to what you really feel inside.

        T1Q (www theonequestion.com) had an amazing test which really made me sit back and think. I probably did it 3 or 4 times. When I sat back and looked at it, I realized that my passions had changed over time. Even as I had become more of the person I wanted to be, I needed to look anew at where I was now and where I wanted to be.

        One thing that really challenged and inspired me throughout the whole process was Scotts “Live Your Legend” site and articles. Going through the amazing stuff he gives for free, helped me to re-align myself again and start to dream again. These resources added lots of value to me.

        I believe that a person who is serious about changing his or her current situation, can use these 3 valuable resources to find the passions buried inside. Being truly honest with urself is totally worth it, and you may even find different outcomes or answers than you originally had thought of.

        You know it’s a real passion, when just thinking about it makes you feel soo good. Makes you feel Alive again, and when you start to believe its worth ‘doing what it takes’ to get it. In this process one of the strongest motivators for you will be the benefits or outcomes you can expect.

        But then comes the question – what about the “working your butt off” part of it? How do you handle that? The truth is that when you do something you love its not work anymore. It becomes something that drives you and makes you feel so good, the hours may pass, but you don’t feel it. Work aint “work” anymore. (though you may not share this thought with everyone, as most ppl aint comfy with another reality) Yes, there are times it will get to you. But if you compare it with a similar situation in your past “dead-end job” , you’ll be super happy to be in a new place now.

        Ok. So you don’t wanna change the world. That’s cool! Not everyone follows the same path. When ur a “world changer” your life and work are all integrated. You live and breathe that which inspires you. Which you’re passionate about. I know it coz I’m a guy like that. When I don’t have a clear focus on where Im headed and what Im doing, its almost difficult to breathe. BUT… when I came out of my 3rd Big Crash… which was bigger than most of my bluechip ceo friends would face in a lifetime – even if they were out of work overnight; I had no intention of changing my well worn Nikes, let alone changing the world!

        It is possible to chill out in a major way and even live on less, if you want to. At first I just slept, read books, took long walks and just chilled. It really helped to cancel those meaningless subscriptions and to cut down big time on my social life. Infact, I found it really awesome to live on a farm waay out of the city and walk barefoot, play with the dogs and even cook my own food. I also learnt very fast who my real friends were and those who like me were aligned to finding a better life consciously. Getting rid of all those things that cluttered my time and watching less tv (especially news) was a great way to connect with myself again.

        I could live for a month on like U$ 250/- a month compared to a minimum of U$ 5000 earlier. That was really huge for me. So to fund myself I just did 1 -2 assignments or consultations a month and it paid off big time. There was no need or desire to work endlessly. I read about 10- 12 books a week and coz of that sometimes had to work my butt off to prepare for an assignment in a very short time.

        At that time, what was important to me was ‘finding myself’ and totally chilling out. Hung out with my friends occasionally, had plenty of time to do what I wanted and in just a couple of hours a week, I funded my lifestyle. Totally laid back.

        Then after awhile, I needed something more. And gradually came back to being a ‘world changer’. BUT… this time I took it easy, and only did the stuff I like, when I liked and ofcourse got back into more social life which I really dig. Consciously choosing what I wanted now and doing it has helped me get back in the swing of things, yet keeping life fun, simple and easy.

        Even my dad tries to copy some of the things I do… in his retirement. So I am confident that what works for me, can work for other generations as well. If I was to describe in short what a week is like for me at present… I’m developing an International brand of Tea which is already in 15 countries and people love it, teach kids, attend social club functions and speak regularly, involved in some media productions, hangout with my friends and update my learning & growth every week… and still watch about 7 – 8 movies every week.

        My doctor confirms Im anti-aging. Friends say I look younger and anyone can tell by my fb fotos itself that its quite true. So yes, its worth it and Im living it.

        • Iris says:

          Hey Dev,

          thanks so much for taking the time to write this thoughtful post.

          For me the takeaway was this:
          1) It is possible to live your passions / come alive again even when you feel like you’ve lost it for good. You just need good resources / inspiration to get back on track.

          2) Living with minimum money doing nothing but enjoying your time, immersing yourself in things that you care about and making enough money to pay the rent is a good way to reconnect with your passions & dreams.

          3) You don’t have to be a world changer from the beginning.

          Thanks so much, Dev. It helped a lot!

        • Scott says:

          Wow Dev. Thank you so much for sharing your story- and for inspiring our community in a huge way in the process. Congrats on all you’ve done and discovered. You no doubt have made some realizations that are incredibly valuable to all of us here.

          So I’d say the short answer is that the people who are content with living the complacent life and not having any type of an impact, no matter how big or small, are most likely the people who have yet to discover what makes them come alive. Because once they do, there’s no stopping…

          That’s what we’re here for :)

          Thanks for sharing!

      • Darlene says:

        Hi Iris!!!

        Fellow Fizzler!

        I’d love to know that too, or people that don’t even KNOW what they are passionate about. I guess they take Scott’s other course, ;-)

        But seriously I know so many that are actually happy working 9-5 for someone else and doing just that, going home to watch TV for 4 hours. They complain they have no money and no freedom but I tell them that I’m building my business and I work 20 hours a week at a part-time job, then another 20 or so on contract work, and another 20 or so on my blog, and another 20 or so reading, researching, doing coures like Fizzle, etc.

        They want what I have, more freedom, but they just aren’t interested in working harder or smarter.

      • Iris says:

        I know what you mean, Scott. That’s what I’m struggling with right now; I want to change the world, make my world my legacy but get so caught up in it that I feel overwhelmed and just generally worn out. It’s hard for me to separate work & play, because sometimes it’s the same. I often feel like I have to use every minute of my free time to do something “worthwhile”, educate myself etc.

        Glad we’re having the same thoughts, ideas and questions on this topic, let’s see if we can bounce ideas off each other. :)

        • Scott says:

          So true ladies. The one real challenge with finding and doing your life’s work is that when you begin living it every day, it’s so easy to get totally consumed in it. I am guilty of this big time.

          The key is having something else that can be a hobby or area of interest in addition. What’s tough is that for many of us our hobby is what has now become our passion and our career. That’s fantastic but it means we must find another hobby or something to pull us away from our work. Maybe it’s exploring the town and the world with your child or husband or wife. Maybe it’s mastering a sport or getting fit. Or perhaps it’s playing an instrument.

          I’ve been lacking a bit in this area lately so I’ve decided that I’m going to take up either the violin or piano next year – still deciding which. I’m super excited about it. Oh and I’m going to start taking surf lessons, despite how freezing the SF Bay water is :).

          If we don’t have a way to fill our time outside of work, then we’ll just keep working.

          Oh and as a point of clarity, at LYL I’m not asking people to quit and start their own thing. Some will do that. Maybe a lot of you will do that. All I’m asking is that you wake up and be intentional about the way you spend your time on earth. Maybe that means just getting a slightly different role at your current job that better leverages your unique talents, strengths, values and passions. Or maybe it means a new job altogether, or perhaps striking out on your own.

          I’d don’t care how you do it, as long as you are doing the work you believe you are meant to be doing!

          Amazing discussion here guys. The best I’ve seen on this site possibly ever!

          • Iris says:

            Thanks so much for this list of resources, Scott. I was thinking about sending some people over to LYL, but I think there’s just so much content that they might get lost or confused.

            I’ll definitely share your list as it says everything I want to tell them, with the difference that you explaine it a lot better than I ever could :)

            Maybe you could even share this list with more people? I imagine that a lot of people are wondering the same thing.

    • Aaron says:

      Iris:

      Thanks for sharing your post. To answer your question, you have to convey to the “corporate slave” that it is possible to become “unstuck”, no matter how long they’ve been working or how long they’ve hated or been bored by what they do/have done.

      Having said that, I completely disagree about people beilieveing you should be doing work you love (sorry, Scott). That just reeks of mythical thinking! I am of the belief now that you should do work based on who you are rather than what you love to do.

      The work you do should be an extension of your personality traits and habits. I’m not saying you should do work you hate, however. Rather, I’m saying your best work will be a reflection of you.

      Work you love will reflect how good you are at what you do. When you do work you love, you’ll be impossible to ignore by others! That means putting in the practice and the hours necessary to become an expert at whatever work you do. There will always be a legacy to the work you love because of the end result when you’ve helped someone because of your work efforts, even if your work is not “world changing” (i.e., finding a cure for throat cancer).

      The successful people I’m thinking of as exmaples are: Michael Jordan (NBA Basketball), Steve Martin (comedian), and Kathy Bates (actress). I almost wanted to include business people in this mix, but I believe luck plays an extremely important role in their success (BTW, if you want me to expound on this topic, please email me and I’ll be happy to explain what I mean by this).

      Finding balance between work and family is tough, but that too can be done once you commit to making time for valuing what you want the most out of your life.

      I hope this helps you, and I wish you the best of luck on your quest in finding your life’s work.

      P.S. – BTW, I am not dissing Scot’s work; the work he has put into his course is tremendous, as I have purchased both his courses and highly reccomend them to you! I just have a slightly different take on what it means to do work you love than Scott’s.

      • Scott says:

        Great comment Aaron. And the funny thing is that I totally agree with you!

        I believe it all starts with finding what those unique talents and strengths are and then finding a way to apply them to the world in a way that helps people. If you do that, then you will never have to worry about finding fulfillment in work again – because that is the core. That is where it all starts.

        At Live Your Legend ‘loving your work’ is synonymous with finding work that is congruent with your whole person -your values, strengths, weaknesses and definition of success. We call it the compass.

        Right on Aaron – thanks for the clarity!

  7. Ian Handcock says:

    I love your style Scott. You have become a mentor for me and I love getting the emails.

    My passion is farming and I have taken a route of coaching rather than consulting farmers. The outcome is simply fantastic with happy people reaching their goals they were too afraid to set. I do get frustrated that I do not get more clients as farmers are notorious for not trying something new.

    Marketing is certainly not one of my strong points.

    I love to see people acheive. So much so I am organising a Bush marathon called Surf 2 Firth with proceeds going toward Search and rescue and the Rescue Helicopter trust. This is a tough mother of a race but people are grasping the concept of determination always wins through.

    Surf 2 Firth Bush marathon can be found on Facebook or via my website until the race website gets finished.

    Thanks for your help

    Ian

    • Alixandrea says:

      Ian, do you teach conservation as well as good husbandry? I ask because I currently work in a conservation organisation here in the UK that is aimed at farmers and we have quite a lot of interest (although to be fair we’re offering a monetary incentive)… :-)

    • Scott says:

      This is amazing Ian! What a unique way to add real value to the world. Congrats!

      And your marathon sounds Awesome. I would love to run in that with you all out there!

      Two things come to mind:

      1. I’d love for you to share your success story by filling out this form, if you’re game: http://bit.ly/SnMQY3

      2. And it’d be great to profile you as a Living Legend in our Reader’s Spotlight one of these months. If you’d like to do that, then please fill out this form: http://bit.ly/OqGZiW

      Can’t wait to hear more about your story!

      Oh and btw, for everyone else, if you have a story you would like to share, please click on one of the links above and tell it to us. Our community would love some of your inspiration!

  8. Jo says:

    I really don’t understand why people are so desperate for a passive income. Surely it’s way better to get paid to do stuff you love doing? Regardless of whether or not it’s possible, I don’t think it’s the most desirable option. :-D

  9. Amazing article! Its really true. When you build a business you work your butt off while people doubt you, then once your successful and have time freedom they act like it was this magical thing that happened over night. I have had the fortunate opportunity to work for one of the best and few honest MLM companies out there and its an interesting industry where the words “passive income” get thrown around a lot. I do my best to make it clear to everyone that I mentor that you will only be successful if you A) put other peoples needs ahead of your desire to make money B) you work you butt off consistently….

    I think that when i started working with the idea of “passive income” like most people what I really wanted was “time freedom” the ability to make my own schedule, to travel when I want, to still work my butt off but to do it on my own terms. 3 years ago i was a miserable substitue teacher in inner city LA. Now a am typing this comment from my coach with my cat after a killer cross fit workout. Still working, still making an impact on the lives of a load of other people, but doing it on my terms.

    Its not about having nothing to do all day, because as Jim Rohn says “if you dont produce you wont be happy.” its about finding something to do that you love, that helps people and makes the world a better place.

  10. Shelby says:

    Hey Scott-
    I love your blog and mission! Keep up the great work.

    In this post…Believe in something, Be different,Offer real value, Help people,Work your ass off,Repeat…it seems so simple, but for some so hard stepping outside of themselves. I’ve always applied similar principles in everything I do personally and professionally…AND, I am having a very blessed life! Take care, Shelby

    • Scott says:

      Very true that the biggest answers are often very simple, but that doesn’t mean they are easy. But like Kennedy said…

      “We choose to go to the Moon in this decade and do the other things, not because they are easy, but because they are hard.”

      It may be hard, but I would not have it any other way!

  11. Rob Chipman says:

    I get passive income from rental properties, and to a degree from my bricks and mortar business. I worked very hard for both, early in the game, and work less hard now. Sort of like the over I gut success that took ten years of slogging it out.

    Online my ADD kicks in tenfold, so my income is low compared to my effort. I’m also a slow learner, and do a lot of things wrong. However, I get a big kick out of putting stuff on the web and making a few bucks. The challenge is to add value, of course, and that means good content, which means hard work. The equation remains the same – hard work today may become passive income tomorrow.

    What’s the draw of passive income? Not the money. You can get money anywhere if you trade your time. You can’t get more time as easily. Passive income gives me more free time. Free time = freedom.

  12. Ha. This post is GENIUS and I am going to share it everywhere. YES, PASSIVE INCOME IS BULL SHIT! I couldn’t agree more, and when I hear it, it’s almost always being used by greedy people looking for a short cut. I think the whole PI movement really picked up juice after Rich Dad Poor Dad was published (another book that put many people in financial ruin, except the author, of course!).

    I share in my blog and the articles I write that through my financial planning practice I’ve had the distinct *honor* to serve over 100 millionaires. I can tell you not ONE of them has or talks about passive income. If you want what people have, do what they do, and financially successful people aren’t looking for short cuts. They’re on Scott’s List #2.

    Hey Scott, any chance I can get a copy of that 10 point list??

    • Tom says:

      Just noticed your post.

      I make passive income; I assure you it’s not bull s***;

      but, yeah, you have to be smart.

    • Scott says:

      What a amazing set of folks to get to work with – and to see the real heart and soul they’ve put into getting where they are.

      Oh and send me an email and I’ll get you a copy of a slightly more general version of the checklist. Someone else recently emailed me about that too.

      Congrats on what you’re building Hilary!

  13. Christie Brodie says:

    Thanks for this post. I think that’s a really interesting perspective. I’ve always been interested in the idea of passive income, but it’s true that the people I’ve known who are successful also work very hard and very passionately. They are also the ones who I most want to emulate.

    I am also very curious to know what your 10 point checklist is!

  14. Fab says:

    @Hilary Martin

    as far as “Rich Dad Poor Dad was published (another book that put many people in financial ruin, except the author, of course!).”

    I don’t agree with you at all because I read the Italian version of that book and the authour only spoke about Passive Income in the offline world which is a reality: rent from flats, dividends from stocks, interest from bonds, royalties and so on!! He didn’t write any word about Online Passive Income which is the topic of Scott’s post.

    In fact, when Scott speaks about Passive Income, he takes for granted that he only means Online Passive Income!!

    It’s completely different!!

    All the best!

    Fab, greetings from Italy.

    • Scott says:

      True that I am referring mostly to online passive income in the post but I think it applies to most all passive income. The thing is, to get meaningful passive income from real assets like real estate, and stocks, you have to have a lot of money to put to work or you have to take a bunch of debt out to make the purchases (and the debt brings on a whole new set of problems). But if you do, then it is surely possible.

      My biggest point is that if you do end up getting into a situation where you have a lot of ‘passive’ income coming in, you more than likely worked your ass off to get there!

  15. Scott, great article. When I hear the phrase “passive income”, for some reason a sleazy hotel seminar fills my mind.

    I think this one ranks up there with the brief and notorious life of “house flipping” in our country.

    And Hilary, just to make one correction to your comment above, if I am not mistaken didn’t Robert Kiyasoki (Rich Dad, Poor Dad) just declare bankruptcy?? Karma.

  16. I think the concept of “passive income” is a great dream for those who hate their jobs but are too lazy to really do anything about it. Those who have no idea what their passion is and probably wouldn’t know where to start to look for it. Those who have bought into the lie that money, and lots of it, will make them happy. So they buy the “get rich quick” and “passive income” crap.

    I agree with Tim that a better term is “residual.” It seems that we have to come up with creative descriptions for ways of generating income that don’t follow the strict hours-for-dollars concept of jobs and other hourly work.

    Universal law: Deliver massive value to massive amounts of people in order to receive massive wealth (monetary or otherwise). If you’re not delivering massive value, however you create it, you’re not contributing to the flow so things don’t flow to you.

    As you described your experience with the time and effort it took to launch Connect With Anyone, I can totally relate. I’ve been getting very little sleep as I put in all I’ve got to put out the most value I can with my first program that I’m launching next week. Some people close to me wonder why I’m spending so much time on this “hobby” and why I don’t just focus on a job. They don’t get it. Like you’ve said, it’s about helping people.

    I’d love a copy of your 10 point list as well!

    • Scott says:

      Love this Paige!

      Universal law: Deliver massive value to massive amounts of people in order to receive massive wealth (monetary or otherwise). If you’re not delivering massive value, however you create it, you’re not contributing to the flow so things don’t flow to you.

      So true.

      Congrats on the launch!

  17. Jo says:

    I would much rather work hard and reap the rewards…where is the satisfaction otherwise? Fair enough if you put all the hard graft in and then reap the ‘passive’ rewards subsequently, but then again I would agree that ‘residual’ is a more appropriate term in that case.

  18. Pat says:

    Hey Scott – thanks so much for the kind mention at the end of your post! I’m honored! How could I not comment on a post about passive income though, hehe!

    About the definition, passive income and residual income are one in the same, in my opinion. In many dictionaries, they share the exact same definition: income received on a regular basis, with little effort required to maintain it.

    The issue is when people think, or (especially) when people teach that getting income received on a regular basis with little effort required is easy. It’s definitely not.

    Yes, there’s little “maintenance”, but there’s a TON of effort that needs to happen before one can get to that point.

    Samuel L. Jackson earns $300k/month from residual/passive income. That took an investment of 100s of movies but he’s earning passively. He could stop but he doesn’t and the extra work he does now is separate from already what he’s earning passively.

    People just don’t want to put in the work, or they’re taught they don’t need to, and that’s the big lie. I’m worried that people will begin to think that they can’t invest time now on something and earn continually later from that hard work. That’s absolutely possible and something I’ve done several times in various mediums.

    Wonderful topic dude, I could talk about this for days! :)

    • Scott says:

      Very fun to hear the authority chiming in my man! Sounds like we might need to borrow your brain for an interview on the topic one of these days (If I can pull you away from all the big projects for a few minutes ;)). I know our community would get a TON out of it.

      Seriously Pat, thanks for doing what you do. You communicate and teach the topic of ‘passive’ income in the most honest and real way I’ve see and your results are bar none.

      Huge congrats to you man. I continue to learn every time I swing by your site!

  19. Tom says:

    Scott, interesting article.

    But I have to disagree.

    I make passive income every month. I just got a check for $1,885.50 in my checking account today.

    I don’t sell passive income courses and I’m not sure I ever want to, but I do make a lot of money passively.

    And yes, it is passive.

    I literally don’t do anything except manage a few managers.

    I spend about 1 hour a month. So I’d say my return is decent.

    Can you make passive income online? I don’t think so – I think SEO is too dynamic and even thoughs w/ niche sites have to stay up on it.

    And Sethi / Feriss are 100% marketing and they’ll both admit it if you listen to their interviews / read their content…they’re proud to be great at marketing / conversion / copy writing.

    And while I enjoy some stuff from them, it’s mostly just to make myself smile.

    Passive income is real.

    But you’re right – you can’t do it online (that I’ve found).

    I think it’s great people try to live off their passion.

    I’m also aware that this is a very sensationalized concept. Even you would have to agree that you worked your ass off to get where you’re at.

    I don’t think people are scared of that – but I think most people don’t realize if they want to make money online, they must compromise.

    Like headlines for blog posts.

    I don’t like the one’s that are good copy writing. I like stylistic headlines. But I know if I use them, i won’t convert as well.

    Or blog post length.

    I write shorter posts. I like them that way – it’s what I enjoy. But I also know if I want to convert and get more shares, I should write between 1500-2000 words a post.

    I could go on, but let me summarize what I’m trying to say:

    It’s good to have your passion and work on it.

    and then it’s important to have your business and work on that.

    The two could be the same, but only if your passion actually manifests itself in an economically sustainable way – otherwise you will compromise that which you are passionate about…and trust me, that’s not living a passion any more.

    Come to think of it…I may write a blog post about this.

    Thanks for the inspiration! :)

    -Tom

    • Scott says:

      Can’t wait to see your post on this Tom. Great points and congrats on having some real passive income of your own! I know that must have taken very hard work to get there ;)

  20. Fab says:

    @Robert Henderson

    As far as:

    “And Hilary, just to make one correction to your comment above, if I am not mistaken didn’t Robert Kiyosaki (Rich Dad, Poor Dad) just declare bankruptcy?? Karma.”

    In reality, things are quite different:

    “ABC News reports that according to the bankruptcy filing, Rich Global LLC’s assets are $1.8 million, as against liabilities of nearly $26 million. Learning Annex is the company’s major creditor with a claim of $23.7 million.
    According to MSNBC, Forbes has estimated Kiyosaki’s personal wealth at about $80 million…”

    Read more: http://www.digitaljournal.com/article/334777

    Hence, the truth is quite different!!

    Anyway, apart from that ( facts above mentioned),I’m not a fan of Robert Kiyosaki but to be precise, if Tim Ferriss and Ramit Sathi are considered genius marketers in the online world, by analogy the same should be true for Robert Kiyosaki in the offline world!!

    Otherwise, it’s like having double standards which isn’t fair at all!!

    All the best!

    Fab

    PS you Americans have invented ( in brilliant ways) modern marketing and like in any business field there are the pros and the cons!!

    • Scott says:

      Very interesting comparison Fab.

      I am all for brilliant marketing – but ONLY if it is to promote tools and resources that help people in a genuine life changing way. The sad truth seems to be that for most situation either someone dedicates their life to becoming a rock star marketer (And has no time left for creating real value, so they sell crap) or they dedicate their whole life to creating mind blowing life changing products, but have no energy left to market them to the people who need them.

      There are so many great tools out there that never see the light of day because the creator does not realize how important good honest marketing is. It’s kind of a sad truth but it is the truth.

      That is a tragedy – when an important business or product, that really helps people, ends up dying because they did not focus the right energy on getting the word out.

      That is not something to be taken lightly.

  21. Alixandrea says:

    Scott, I just wanted to say thank-you, thank-you THANK-YOU!!! for writing this post. I see so many blogs/pople/products that are clearly all about making the people selling them rich, and have nothing whatsoever to do with helping the people who buy them. I HATE the greedy cynicism, the hysterical adverts, the “WAIT, DID YOU MEAN TO CLOSE THIS WINDOW??!!!” messages etc. that you get from these sorts of people. And I hate being lost in this sea of bullshit. It’s like the early days of pyramid selling and it completely SUCKS!

    Here’s to genuine people putting geuine work into selling genuine products that genuinely serve other people! :-)

  22. Stephanie says:

    Hi Scott,

    Thank you so much for this honest and true message. I miss that as well on the internet and you are definately one of the people on my list of big hearted entrepreneurs :)

    Greets and a big smile,
    Stephanie

    • Scott says:

      Well then I’m glad you found our community Stephanie :). You can expect nothing less from us here – you all hold me to a very high standard!

  23. Alberto says:

    Simply great.

    Passive income!! hahaha!! The Award of Laziness!

    You´re doing an awesome job Scott! Keep it up!

    All the best from Spain

  24. Fab says:

    1)Correction to my first post!

    Not:

    “Just Marketing!! Anything else!!”

    But obviously:

    “Just Marketing!! Anything else!!”

    I was in a hurry!!

    2)@Scott

    you have proved that you have a huge, enormous brain plasticity and you could be tempted to model the excellence of people like Tim Ferriss in the marketing field to be successful ( even more!) like him!!

    Remain wise, genuine, a person of real value, this is the best policy that will pay the best dividends in the mid long term!!

    They asked Warren Buffett:

    What is the value of good leadership skills and ethics in business?

    His response:

    “I have seen plenty of people succeed that don’t have either one. And I have also seen an awful lot of people succeed that do; and those are the ones I admire and they are the ones I want to associate with. Honesty is a terrific policy. What do you look back on in terms of whether you have been a success? You have certain things you want to achieve, but if you don’t have the love and respect of peo- ple, you are always a failure. That is the one thing you must earn, it can never be bought. No one that has the love and respect of others is ever a failure.”

    Source: http://buffettfaq.com/#advice

    All the best!

    Fab

  25. Fab says:

    PS Neu­ro­plas­tic­ity or brain plas­tic­ity refers to the brain’s abil­ity to CHANGE through­out life….

    http://www.sharpbrains.com/blog/2008/02/26/brain-plasticity-how-learning-changes-your-brain/

  26. Fab says:

    In the end I haven’t corrected the original mistake!!

    Not:

    “Just Marketing!! Anything else!!”

    But obviously:

    “JUST MARKETING!! NOTHING ELSE!!”

    I was such in a hurry that I hadn’t the time to review the post!

    Ciao!

    Fab

  27. Fab says:

    The last consideration:

    The best definition for people like Tim Ferriss, Ramit Sethi (online world) and Robert Kiyosaki ( offline world ) is “Charming Enchanter”!!

    Source:The Pathfinder by Nicholas Lore.

    ( chapter 18 “Natural Roles” )

    All the best!

    Fab

    PS obviously on the dark side, Enchanters manipulate or seduce others into their web with selfish designs!!

  28. Hi Scott,

    I agree with you that 95% of products on the internet are BS. With reviews and ratings, I feel like if you have a shitty product, people aren’t going to buy it so there will be no “passive income.” I always do research before buying online.
    If you have a killer product that genuinely helps people, you can make all the passive income that your heart desires… and you know how much effort you put into that product so it feels good to see the money come through the PayPal app.

  29. Amelia says:

    Yes! At last debunking the myth of passive income. I love the way you are talking about this Scott.
    thanks for calling BS!
    Amelia

    • Scott says:

      I’d been wanting to write this for a long time. Thanks Amelia! And it has the added benefit of raising the standard even higher for the work we do here at LYL :)

  30. Carmelo says:

    I know this post is about “passive income” (online) but it’s also relating very directly to the peddlers of internet marketing (a term you hate, I know) in general.

    LYL and many other truly outstanding movements, blogs, and online businesses suffer because the junk peddlers are spoiling the minds of hungry achievers who get caught up in the notion that tactics and strategies will offer them “easy street.”

    Perfectly sane people go insane within weeks. What a terrible waste of truly amazing human talent! Once they get caught in the web of deceit, it can take months or even years to break free. You, and LYL and other honest leaders are more hand-tied than you even imagine. It takes patience, persistence and passion to niggle your way inside the confused brain of people who are suffering.

    You have all those Scott. Great post!

    • Scott says:

      Really good point Carmelo. Never really looked at it like that. On one end, all the BS out there makes it really easy for honest genuine sites, products and movements to stand out. But on the other hand it creates a ton of noise and makes it very hard for people to distinguish the marketers from the world changers.

      All the more reason why it’s so important for all of you as members of this community and movement, to spread the LYL message to those close to you who really need it. Show them the way and help them to come along and join us for some genuine world changing work.

      This movement needs all of your help more than you probably realize!

  31. John Franco says:

    I must admit that I followed some of these bullshiters for a while. They used deceptive advertising so it took me some months until I realized they were not real. I have solid principles but I was another victim. I think that at some deep level, we all desire “something for nothing”.

    Newcomers who try to start online usually find them first; they are easy to find (on blogs, forums, ads, etc).

    I wish I would have read this article when I started.

    Thanks Scott

    • Scott says:

      Unfortunately this is often the most powerful way to learn a lesson John. Sorry you had to go through it though. I’m glad you’ve found a place where you belong…it’s great to have you!

  32. Darlene says:

    Hey Scott

    I’ve thought for a while the term “Passive income” was BS or at least the carrot on the stick that sucks too many people in. Funny enough that Pat’s site is Smart Passive Income. My guess is he named it that because that’s what so many people search for and want.

    Passive income, true passive income, comes from very few places: real estate investments (however only the very rich with many millions and a staff to run it are truly passive, I know many that own properties and it’s a full time job); stock market investments (but iffy at best and I’ve lost more than I care to discuss on “sure things”); big business owners that are hands off like owners of McDonald’s franchises for example. But even look at Steve Jobs before he died – he didn’t NEED to work, his income would keep coming. But he still worked his butt off for something he believed in.

    I agree with you, it’s a myth and a trick.

    • Scott says:

      Pat really does do amazing work in that space. The best I’ve seen in fact! I’d love to have him in for an interview sometime soon.

      Great point about Jobs. When you love the work you’re doing and it’s truly the work you can’t not do, then the money doesn’t make a difference. You are called to it and you would not be whole unless you answered that calling. So we keep showing up and keep creating…

  33. Debi says:

    HI Scott,
    GREAT article! I wholeheartedly agree with you and love your ethics and how genuine and honest you are. I wouldn’t mind seeing that 10 point list either ;)

    I have the same beliefs. My businesses are all built on my passions. One is a coaching business with residual income. Most people leave out the “work” part of the explanation. Not me. I live, believe and teach that
    1) You can make a living from your passions IF you’re providing value for others.
    2) You must have multiple streams of income.
    3) You should incorporate residual income streams, BUT also understand they still involve WORK. It’s heavily front-end loaded then manageable maintenance work, but it’s work nonetheless.

    So thanks :)

    • Scott says:

      Great points! I especially love #3: You should incorporate residual income streams, BUT also understand they still involve WORK. It’s heavily front-end loaded then manageable maintenance work, but it’s work nonetheless.

      Send me an email and I’ll send you the checklist too!

  34. Kyle says:

    Hey Scott,

    Long time no speaky. This post really hit the mark. Having just launched my first ebook, I know from the work I put into it frantically getting it ready that the income definitely is not passive. If anything though, the pay day was an anti-climax. The most enjoyable part was actually creating the product (food for thought).

    While on the topic, I will say one positive thing for the scammy internet marketers, if I had never bought one of their products 3 years ago, I never would have realised that this world of helping people and making money online existed. That mistake was an awesome lesson.

    Thanks for keeping it real,
    Kyle

    • Scott says:

      Congrats on getting something out to the world Kyle! I know how amazing that feels. Hard to beat in fact.

      Great poing about the process too. I’m in Maui, Hawaii right now and am planning on taking “the road to Hana” tomorrow. Hana is a town in Maui but the whole point of going to the town is to experience the gorgeous road, water falls, lakes and scenery you get to see in getting there.

      So far, with everything in life, I’ve found that the journey has always been better than the destination :).

      Good point about the scammy internet folks too – It’s the same reason why I’m so glad I had that first absolutely miserable job with a Fortune 500 company because it made me promise to myself that I would NEVER put myself in that position again. If it wasn’t for that misery, Live Your Legend likely would not exists.

      Everything has its purpose.

  35. Fab says:

    Hi Scott,

    very glad to read your comment on my first post!!

    Anyway, I haven’t been kind, I’ve only reported the truth as impartial as possible!!

    I’ve taken the Strength Finder 2.0 test and consistency is one of my top five Strengths, hence I always treat people the same!!!!

    Anyway, I’ll write something else later because I’m in a hurry!

    See you later!

    Fab

  36. Enjoyed the rant!

    Very much agree – similar thinking has motivated our work on creating engaging online learning experiences & communities. We’ve seen that a lot of ‘online learning’ is just content delivery that doesn’t help people learn deeply or make change in their lives. It’s very challenging but we believe there’s a great opportunity to do better — and part of the answer is for dedicated experts, like you, to actively facilitate and support their online learning communities. Just the opposite of passive. Keep fighting the good fight!

    • Scott says:

      I love to hear you are focusing your time here. The way we learn and how much compliance we actually get with our courses is huge.

      That is why I spent some many dozens of extra hours to create our How to Connect with Anyone course into a format that was much more digestible and likely to actually get people results. And so far that outcome has been SO exciting. I could have just made it into a long eBook but then most of the buyers would have never used it. For me getting people results will always come first, then the business and making money. And I believe if that remains the focus, then you’ll never have to worry about the money anyway.

      Thanks for doing what you’re doing!

      • Cool – it would be helpful if you could share some of your specific lessons learned and examples from Connect with Anyone at some point – to help galvanize further work in creating engaging online learning experiences.

  37. Fab says:

    Hi Scott,

    as promised, here are my final notes:

    1) I keep on saying that Ramit Sethi and Tim Ferriss are mainly genius marketer because:

    a) In the case of Ramit Sathi, there is an English author, Tom Butler Bowdon, which has written a far more interesting book about the subject but he remains quite unknown, here is his book:

    http://www.butler-bowdon.com/prosperityclassics

    Apart from that, Ramit’s message is nothing special because he says: spend less, invest properly, live wisely.

    It’s like to tell an overweight person: eat less, take regular exercise, live happily!

    And if his message is so ordinary in meaning that it doesn’t add any particular value, it means that “I will teach you to be rich” is just a catchy marketing slogan!

    b) In the case of Tim Ferriss and in particular for his first book, there is an American author, Scott Fox, which has recently written a much more interesting book about the subject:

    “Click Millionaire”

    The title could be misleading but the contents are much more valuable ( there isn’t any comparison at all !!) than those written in the first book of Tim Ferriss (“4HourWeek”)but Scott Fox and his recent book haven’t enjoyed the same success at least!!

    You say that you have had benefits from a guy like Tim Ferriss, yes, ok, but it’s your personal case that can’t be taken as a standard rule because one of your top strengths is “Maximizer” and so you are attracted from this kind of people (like Tim Ferriss) by nature!!

    Apart from that,if Tim Ferriss had not written this book, a passionate and smart guy like you would have found productivity tips in other ways!!
    There are tons of books about productivity in English language, you could even have invented an ecourse about the subject!! Who knows..!!

    2)As far as “I did mean to mention that the one way to get true genuine passive income is if you are worth a few million or more dollars and can just invest in bonds or conservative dividend paying stocks or real estate. But that requires having boatloads of money and many people decide to sell their soul to get those boatloads ;) . That’s why I didn’t even mention that type in the article.”

    To be more precise, I would say that $1.500.000 would be enough to live off passive income in nice places around the world in which the cost of living is low!

    Obviously, you can’t enjoy a luxurious life but you can have a comfortable life!

    All the best!

    Fab

  38. Srinivas says:

    Scott,

    Love this post. When I interviewed Ramit for BlogcastFM, his exact words were “Passive income is bull#$# for most people.” Even people like Tim and Ramit don’t earn their income passively. Somebody told me a better way to think of it is deferred time income. Like you said even if your course generates money now, 400 hours of research and dedication is anything but passive.

    The two commonalities I’ve found between people who are successful online is they provide TONS of value to their readers and they’ve been at it for a long time. Kind of like you, I have a filter that I use for joint ventures and people who are guests on BlogcastFM. I think the low barrier to entry creates unrealistic expectations for people. I’m reminded of this great quote by Scott Belsky

    “While it can be psychologically and financially difficult to depart from the race toward conventional rewards after a lifetime working with one mind-set, doing so is imperative to succeeding in the long term. Otherwise, you will struggle to sustain your long-term projects amidst the desire to be validated in the near term.”

    Great post.

  39. Marlee says:

    The words “Passive Income” are new age speak for “run for the f**king hills”. LOL and Amen.

    Thanks for speaking so much truth, Scott. I totally agree and more people need to hear this.

  40. The only passive income I find is real is my non online income (real estate, dividends, CD interest, private equity dividends). It’s nowhere near the likes of other folk’s online income, but I can survive fine on $85,000 a year.

    This is where the intersection of passive income in finance and personal finance blogging comes. Now I’m actively trying to earn income online and I find it very rewarding. The passive income I do generate is from affiliate income. It’s fun!

    Sam

  41. Aaron Black says:

    Passive income is just asset acquisition re-named. Assets are things like real estate, intellectual property, stocks, and businesses you own but don’t run. The problem is that while these assets may indeed be passive, acquiring then isn’t. It requires years of anything but passivity to acquire the knowledge and capital required to create and acquire such assets. The lie being sold is that it’s easy. There will always be folks promising something for nothing to get into your pocketbook.

    • Derek says:

      Oops, this reply was supposed to go to you:

      It’s easy! You just need to become an expert on copywriting, SEO, email marketing, conversion optimization, web design, web development, automation, and security analysis

      People could probably get a relatively good grasp of all those subjects relatively quickly (aka within a year or two) if they were shown the simplest route to get there. Everyone promises the simplest route, but nobody delivers. Yet.

  42. Ashley G says:

    Scott,
    Thanks so much for this post. I’m just now getting started in changing my life, the way I think about work, and how I appreciate every day. I’ve seen this word, and actually was seduced by it for about a year and half but never acted on it. Your post really lit a spark in my heart and debunked a lot of everything I’ve always been curious about. Thank you!

  43. Scott Seong says:

    Generating passive income online is easier said than done. I have been blogging since 2004 (mostly part-time) writing technical articles, but my blogs rarely generate any income. I do have sites that offer web services, which produce 4-figure passive income. I’ve read Pat Flynn, John Chow, and Steve Pavlina’s blogs; and find their approach very interesting. I’m software engineer, so I prefer building web applications rather than spending most of time writing articles. Earning passive income is not easy, but doable and if you plan carefully and follow through. You may not live off of passive income, but it would certainly help you live better. The key earning online is offering a great value to your audience.

  44. I quit my job as an art director in July 2011, and left for a 6 months volunteering adventure that cost me about my monthly paycheck. And even if I do not make as much money as I used to, for me it is more rewarding to do what I love (travel and make websites), than to work for “maybe” be able to do what I love later.

    I decided to stop working for money, and start working for what I am really passionate about. Yes, I do need money, but if I will get some money from the things I love to do, they are a bonus to what I already gained. And I do intend in helping people by writing about stuff that I discovered, either by myself, or by others (like you). The fun fact is that whenever I think I am so smart, I almost instantly find that I wasn’t the first one to think about this. Which is actually great, because it is a proof that my thoughts were right.

    So I totally agree with doing work that you love. Even if you do work hard to make a living out of it, it is actually better than working hard for something you hate. You already love it, and you’re doing things for yourself, so I really do not see the problem in doing “hard work” for you.

    As for the “passive income”, I also found myself asking “Why should I pay for something that seems so easy to do?”. If that guy is so smart and can be so rich because of those methods and systems, why is he selling his product instead of just being “open-source”? Well, the answer came quickly. He has some sort of passive income from me actually, buying his stuff. Would I do that also? I don’t think so. If I have something to offer, something better than anyone on the market does already, I would prefer to give it for free and let people donate something if they think I improved their life somehow.

  45. gill says:

    Passive income is more about how it is TAXED, which is called Passive income!!! I Have read a lot of Robert Kiyosaki books, and at no point does he say it is easy or that you don’t have to work for it. He promotes financial education and yes he sells books ect. but he is talking about instead of keeping earned income in the bank and it being eaten by tax and inflation, to invest it in something like real estate, for rental and earn Passive income from it, thus increasing your savings rather than it loosing value like it does when you keep it in the bank. Passive income is taxed at a lower rate than capital gains and income tax and corporate tax.

  46. Finally, somebody with a brain! Passive income is the biggest lie ever, and it becomes rotten BS when coupled with Internet Marketing. That’s why, on my blog, I called it with is real name, “Idiotic Marketing”.

    Instead of focusing on a way to earn doing nothing, one should focus on doing something that makes him feel fulfilled. The rest will fall in place.

  47. Very Solid Post Scott. It could be said that Passive Income is still a possibility, but buying an ebook for $47 is not the path! Smart work…and often hard work can develop long term passive income streams, but they almost always require significant amounts of work up front.

  48. Tim O'Rourke says:

    Great article! I signed up for your emails because of articles like this one!

  49. Chris says:

    So….you have a semantics problem? Who cares about labels anyway?

  50. I’m really inspired with your writing talents as well as with the structure on your weblog. Is this a paid topic or did you modify it your self? Either way keep up the nice quality writing, it is uncommon to look a nice weblog like this one today..

  51. Derek Conjar says:

    With any investment, there’s a continuum between actively-managed and passively-managed.

    Set-it-and-forget it portfolios (like index funds and Harry Browne’s Permanent Portfolio) are all the way at the passive end of the spectrum.

    Microbusinesses (particularly web real estate) are like physical real estate. It’s position on the continuum depends on the individual circumstances.

    Web businesses can in fact be quite passive. If you spend a few years building many unique information products for niche markets, rapidly identifying product/market fits using lean startup methodologies, you wind up with a fully-scalable empire that runs on its own.

    Of course, some passive income investments are safer than others. Your undervalued dividend achievers won’t stop paying dividends because Google launched an algorithm update. Your web properties aren’t nearly as safe.

    So it’s probably best to use online business as a tool to rapidly expand your income, and then gradually diversify into safer income generators.

    Thoughts?

    • Ernie says:

      I believe thru investing a passive income can be created.
      I recommend you take a look at this robotic trading software…
      wwww.passivemoneytree.com

  52. Derek Conjar says:

    It’s easy! You just need to become an expert on copywriting, SEO, email marketing, conversion optimization, web design, web development, automation, and security analysis :)

    People could probably get a relatively good grasp of all those subjects relatively quickly (aka within a year or two) if they were shown the simplest route to get there. Everyone promises the simplest route, but nobody delivers. Yet.

  53. Jacob says:

    There is nothing wrong with passive income. Passive income is quite doable and very real. Passive income is not a get rich quick type of of deal, if it is run the other way real fast.You must find the right legal vehicle that can build your dreams to help you acquire a passive income. There are many ways to do so but you have to do your research. Don’t listen to quitters and failures find someone who have succeeded with passive income or MLM or anything of the sort. Be open, be cautious, have fun, and have a big dream and a WHY? Hard work and dedication will make it happen nothing else.

  54. Daniel Law says:

    Great article Scott. Signed up!

  55. Thank you so much for this post! I’ve been working hard on my blog and store for over 18 months now, and I love every minute of it. It doesn’t feel like work to me at all, but it does drive me a little crazy when my family and friends say, “Wow, you just made $$ while having supper. Cool!” Yea right, I worked more hours in the last week than they can even imagine to make that little extra money – but I’ll take it because I love what I’m doing. :)

    Thanks for justifying what I’m doing!
    ~HoJo~

  56. Jarrad says:

    This article is retarded. It assumes a very narrow minded reality of passive income. What if you own rental real estate and have someone manage it for you like millions of people around the world do? Or you have some nice juicy dividends (technically portfolio income, but it is still passive.) I think its dangerous to try and tell people that passive income in general is a fruitless pipe dream. I think that would only be the case for people that dont know much about it.

  57. I think creating some intellectual property and selling it is the best way for passive income to work. It may be photos, music, videos, books, patents. I am also reading Rich Dad Poor Dad these days. Awesome book for finance dummies like me!!

  58. Bernhard says:

    Hi Scott,

    I guess passive income is many times misinterpreted and I think you bring up some good points.

    As you mentioned.. digital marketing heads work hard and a lot. So maybe it’s time to change some domain names to hard-active-income.com ?

    However, what counts is that you like what you do. Well then, all the best & happy blogging !

  59. William says:

    If you are smart enough to earn passive from working only 2 hours per week then I think you will get extremely bored very quickly.

    If you earned passive income, what would you do all day?

    Sit on a beach for a few weeks might be good in theory but if you are smart enough to earn passive income then eventually you will need a new stimulus.

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  61. Some of these questions also came to my mind, but I personally feel that some of the online income streams can be termed as Online Passive Income since they do earn for you once they are established..

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  63. Andre says:

    Great blog post Scott! The term “passive income” and “residual income” both get a little redundant a bit. Very interesting piece and I am glad that I found this website as well. Thanks!

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  67. anon says:

    there are 2 kinds of income: earned (or active) and passive

    earned income – samuel L jackson stars in a film. the film shows in theaters. he earns a percentage of the total gross income of the film as his actor’s fee.

    passive income – because the film is so popular, people bought the the blurays and dvd copies. they also bought the soundtrack cd and memorabilia. samuel L jackson did not make copies of the movie himself, nor did he mass produce the cd and memorabilia, yet he still earns a percentage of the total income of these things. this is called passive income.

    another example:

    a man starts a business. he manages it himself and sees that it is running smoothly. he earns active income because of this.
    his business grows and expands, now he hires a manager and an accountant. he is rarely in the office now, yet he still earns money from the business. he is earning passive income. earning without hands-on work from him (although he still has the overall thinking brain of the business).

  68. Hasan says:

    Passive Online Income isn’t a lie completely, there are actually many ways through which one can easily keep on earning from the internet, famous ways include affiliate marketing, working as a freelancer at ODesk / Fiverr and monetizing one’s blog with one & only highest paying publisher network that is Google Adsense. These ways do generate highest profit with minimal efforts. The rational behind online passive income must be helping others with your knowledge, primary motive shouldn’t be generating money, it should be winning your readers / users and then eventually cash them with above ways!! :)

  69. Hasan says:

    Passive Online Income isn’t a lie completely, there are actually many ways through which one can easily keep on earning from the internet, famous ways include affiliate marketing, working as a freelancer at ODesk / Fiverr and monetizing one’s blog with one & only highest paying publisher network that is Google Adsense. These ways do generate highest profit with minimal efforts. The rational behind Online Passive Income must be helping others with your knowledge, primary motive shouldn’t be generating money, it should be winning your readers / users and then eventually cash them with above ways!! :)

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  72. So I read you article. I don’t agree with you. I make passive income. I bust my butt to create the systems that generate this income. In the beginning it HARD, HARD, work and only after you have successfully implemented a business do you get to relax. Assuming you go the automation down right (Tim Ferris). I do not care to tell anyone my system or even what products I sell. However, the idea is simple.

    The Idea
    A business is not a business unless it can make you money for 1 year without you touching it.

    I have 2 businesses that fit that category. First, I am not rich. I live below my means (very comfortably), and have close to total freedom to pursue whatever I want because I also chose not to get into debt. This did not come to chance, this was years of acquiring skills. I write in over 14 computer languages and learn everyday something new in my field. Computer programming, web programming, data base building, photography, graphic design, social networking, analytics, SEO, are just some of the of the skills I need to make passive income. Most people without these skills will never succeed in any online passive income business… which is the lie I assume you are referring about.

    I provide a good product to niche customers, and since I only do the work once, and it is bought multiple times. I consider that passive income. If I have the option to choose whether to expand my business or simply leave it without growth generating income, that means I have somehow figured out how to live the lie….

    Not all of us are scammers, some of us just use our cognitive abilities to create systems of passive income. If more people used that ability, there would be more entrepreneurs.

    -End of Rant

  73. Jerrod White says:

    None of you have any idea of how passive income works because you’re all stuck in the rat race. Go read secrets of the millionaire mindset. Your Welcome.

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  76. Stephen Tracey says:

    Hi Scott. I disagree with what you are saying. I have one small accommodation website that makes me between $95–>$200 a month depending on the time of year. I make all this from hotels combined affiliate program. This is very small income, but after the website was set you over 18 months ago, I have not touched it and earns me a small amount of “Passive Income” each month. I also dont like all the internet scammers out their. But I also dont agree with you in some points. I wont post my website incase you label me a “spammer”.. I am an honest IT Professional who has a regular day job and earns a small amount of passive income each month.
    For you to label Passive income a Myth is simply wrong.
    Think I am lying? Email me and I will supply me hotels combined affiliate payments.
    Regards
    Stephen Tracey

  77. sl says:

    You sound so frustrated. maybe you just don’t know how to work it out.

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  79. Marge says:

    I agree “passive income” is poor description of what people are looking for. However, I really enjoy my new almost passive income venture.I am hopping by selling all types of jerky!
    http://MargeM.jerkydirect.com seems to be a lot of fun. I enjoy the craft and vendor show circuit. I get to meet lots of cool people and I hope to use this to get out of debt. I really want to help others and feel this might be my ticket!

  80. Chris says:

    I dunno, Scott. Personally, I love passive income. I think it’s the best thing ever. Sounds like your rant should be aimed at dishonest marketing rather than passive income.

    I have a website where members submit blog articles on various topics and they earn passive income. It’s kind of like HubPages or Squidoo, but earnings have nothing to do with stats. Every writer makes money on every post every month regardless of page views and other traffic stats. It’s passive income and it’s legit. Nothing dishonest about it.

  81. med says:

    this is the worst post i’ve ever read, and you call your self a mentor.

  82. Alz says:

    Sorry Scott but most blogging gurus out there who make a living out of selling the “lifestyle dream” are nothing more then con artists .
    9/10 of passive income gurus on the internet sell zero REAL products or real skills .

    Alll they do is:

    Start a blog, become an affiliate for every service needed to run a blog, then regurgigtate every damn article from copyblogger/problogger and any other Original Copywriting/marketing website and then sell the dream of ” Quit your job, become free!”

    When in fact, all the buyers will receive is a package saying “start a blog about blogging” .

    Ditto for personal development bloggers. Majority is all snakeoil.

    The REAL entrepreneurs online are Web designers, coders, Online personal trainers , copywriters , fashion bloggers, etc People that blog about real topics BESIDES blogging.
    Writing a book about writing doesnt make someone a writer… Same thing here!

    I.e selling a real service- Not hype-fluff-snakeoil

    And sorry but the entire Internet knows Pat Flyns internet income earnings are nothing but fake claims. Really? $40k a month? My backside more like it. Him giving away this ” income report” claim as info for free is proof that its fake. Really? If i made$20-$40k PER MONTH, then every cell in my body would charge for it in a real profesionally developed course. ….Not same “numbers’ on the top of the page
    [ I'm just giving you an example ] and you can Google his fake claims- I’m not the only skeptic here.

    Selling the laptop income dream will make someone “rich” by appealing to vulnerable internet enthusiasts when infact- its all nothing but a fake dream.

    Selling REAL services that really matter is what makes real entrepreneurs.

    There are a few secrets and in actuality- none in this world.

    Business’s have textbooks, guides,mentors etc – but these are real professionals with backgrounds of making real business’s.

    Yet TOO MANY of these blogging gurus who say” I quit my job last year to start this blog. Subscribe now to learn how to live the lifestyle of your dreams”
    99% of “guru’ blogs follow that Snakeoil-Fluff model.

    Subjectively speaking, you offer Careers consulting and counselling a way and you offer alot of nice inspiraitonal content.

    Stevepavlina.com is probably one of the realest sites Ive ever seen in the PD field for that note.

    On the same topic- I’m a personal trainer, training photographer and marketing graduate. If I were to start a blog about fitness, photography (Like Darren Rowses) and real business marketing (Not Guru Blogging fake stuff), then that would be a rea service.

    But a blog about blogging and selling products to vulnerable internet consumers selling the dream lifestyle in forms of “blog about blogging”

    I think you need to really write about this snake oil trend thats showing up left and right being the legend you are!

    Regards
    Alz

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