Looking for passive income?

Stop asking the wrong question

Read Time: 7 mins
(or upgrade to listen to this issue)

If you’ve been following along here or know me from my past work, you know I have a previously existing company called New Haircut. It’s a product strategy consultancy. Naturally! (with a name like that)

It’s a fun name. It’s also easy to say and, more importantly, remember. But when it comes to positioning and SEO, I didn’t do myself any favors.

Do you know how many calls I’ve gotten over the years from someone asking for a perm or blowout?

When I started Passive Profits, I wanted the name to be simple and obvious. Something more clear than clever.

Since my ultimate goal is to help people earn additional income streams without working longer days, I chose a name with a tieback to passive income.

Since then, I’ve learned a lot about the perception people have of passive income. It’s more complicated than I imagined. The term stirs up emotion. Especially from people who have:

  1. Tried earning it and failed (been there)

  2. Not yet dedicated real effort to earning it

It’s these two groups that tend to scoff at the notion of passive income. And while I empathize greatly with the first, I roll my eyes at the second. Armchair quarterbacks suck.

But then there’s also an outlier group that simply doesn’t like the phrasing. Their main argument: Nothing is truly passive. There’s always upfront work and more work to maintain it.

For example, there are passive income channels like stock investments and real estate.

Some argue that the money you invest often comes from active income sources. Or that you had to invest time (and money) to learn and study the markets so that your investments were profitable.

I get that. But it also seems like semantics; i.e. a pissing match.

“Portfolio income”

As part of my research, I learned an important nuance.

In the US, income generated from dividends (e.g. stocks) should not be conflated as passive income, but as “portfolio income.” The IRS classifies and taxes them differently.

Same outcome. Different name (technically).

My experience with passive income

There’s also the passive income channel that I champion and teach: Productizing your expertise into digital products (e.g. courses, templates, ebooks) that you create once and sell forever.

I’ve shared my results doing this. Here’s the recap for you…

In 2020, I created a few digital products. They took a decent amount of work to build and launch. Ballpark: 300 hours

Then I made updates to them. Ballpark: 100 hours

Then I built a series of free content and lead magnets that drew a growing audience to them. This self-perpetuating growth loop became my flywheel. Ballpark: 50 hours

During and afterward, I did the bare minimum to market & sell them. Ballpark: 10 hours

After a while, I stopped working on them altogether. I stopped talking about them. I had other things going on in my life. They were good enough.

And yet, people to this day —3 years since I last touched them — continue to discover and buy them.

Total time: ~460 hours
Product revenue: $80,000

Even crazier? I’m not even actively operating the company (New Haircut) that these products were built for.

There’s no one at the wheel, and yet the products I offer through the company still sell. That feels pretty passive to me.

But here's the most interesting opportunity — which most are oblivious to — your passive income products can also market and upsell your active income streams; e.g. your consulting and coaching services.

Case in point, my digital products have done the lion’s share of winning me $975,000 in premium consulting services. Including a 6-figure contract I just won last month… from products I created 4 years ago.

I don’t know about you, but that feels fan-fucking-tastic compared to the soul-sucking sales pitches I used to do to try and win business.

Now that I’ve driven my point into the ground, let’s pick our heads up to see how others feel.

A passive income poll

Last week, I attempted to gather some additional perspectives on passive income. To do that, I ran a poll on LinkedIn:

I braced for an onslaught of votes for ❌ No such thing. Instead, this happened:

Turns out, 85% of people (granted, within my network) believe in passive income. But roughly half called for a rebrand.

As some shared in the comments, the problems start when people misinterpret passive to mean devoid of any effort. In other words, it’s the passive qualifier that irks people.

Here are a couple suggested name changes from the voters:

  • Automated Income

  • Semi-Passive Income

Semi-passive vs “true blue” passive

The semi-passive suggestion taught me something I wasn’t aware of.

A connection of mine, Brad Hines, clarified the difference between semi-passive income and (what he calls) “true blue” passive income.

Semi-passive income is something like operating vending machines that earn money for you, so long as you maintain them. Or, in my world, an online course that’s continually purchased, so long as it’s kept up to date with related technology or legislation trends.

Whereas “true blue” passive income are things like royalties on music or running ads on your newsletter/website. You create it / set it up once, with minimal effort, and it earns as long as it exists. No further work required.

Let’s hear from the robots

As part of the research I did to write this deep dive, I fed ChatGPT with the points above and asked it to contribute to the passive income rebrand.

Here are a few of my favorites:

  • Leveraged Income: Emphasizes the use of leverage (capital, time, or resources) to generate income, suggesting your initial efforts amplify over time.

  • Deferred Income: Income that comes after an initial investment of time or money, with the benefits deferred to a later period.

  • Residual Income: Income you continue to receive after your initial effort, such as royalties or ongoing earnings from previous work.

Wherever you stand on passive income — for or against, experienced or noob — I actually think we’re asking ourselves the wrong question.

The right question

I spent my 20s working 100-hour weeks for Accenture. The company gave us six weeks PTO (vacation) each year. During my first 5 years, I took a total of 10 days off. Ten.

I was too busy working to live my life, let alone take a vacation.

I’ve been “earning a living” that way my entire career. Trading all of my time for money.

My time? Un-leveraged... Work 1 hour, get paid for 1 hour. Work 100 hours, get paid for 100 hours. Clock in. Clock out.

In 50 years, future generations will laugh at us for doing stupid shit like this.

And so when I started Passive Profits, I swore I’d help others earn without sacrificing their time and joy. Life’s too short.

And so the question isn’t whether passive income is real (it is, debate over).

The right question is: How do I leverage my inputs to multiply my outputs (perpetually)?

My answer? Productize your expertise.

📌 Ready to earn passive income?

Use the Productizer Co-Pilot to turn your expertise into monetizable offers.

Subscribe to keep reading

This content is free, but you must be subscribed to Passive Profits to continue reading.

Already a subscriber?Sign In.Not now

Join the conversation

or to participate.