Why passive income doesn't exist.
Edition #060
Hey friends, happy Sunday!
This newsletter is going back to a weekly schedule because it's too fun not to write every week!
We're also rocking a slightly updated structure to help tune up the signal-to-noise ratio. One lesson, two ideas, and three finds.
Here are a couple of pieces I want to hand deliver to your inbox this week.
Manage your energy, not your time: Living by the calendar is ineffective. Instead of planning your day around the clock follow your natural energy and put your best energy towards what matters most.
Freelancing: What I've learned in 4 1/2 years: I've learnt how to be a successful freelancer by failing, a lot. From unpaid invoices to nightmare clients. This thread distills what I wish I'd known when getting started.
One Lesson
Passive income doesn’t exist.
No matter what some internet marketer has told you, income is never truly passive.
All income is just more active, or less active.
With each stream of income operating on a different time horizon.
Take freelancing for example. The income is very active — you’re only earning money when you’re sat down doing the work. And the time horizon (the amount of time it takes to earn money) is very short — you can practically make money straight away.
The problem with freelancing is that you have no leverage. If you’re out sick there is no income.
Compare that to selling an online course. You create the course once and sell it multiple times. This type of income is less active than freelancing but it’s never fully passive.
After you’ve made the course you still need to do marketing, offer support, and update the content.
The time horizon to being able to make money from an online course is also longer — you need an audience who trusts you, something that doesn’t happen overnight.
No form of income is ever truly passive but there are many types of less active income.
Often the best path is to diversify between active and less active income, building an antifragile portfolio.
Two Ideas
I.
How to learn hard things?
Focus and consistency.
II.
"My formula for greatness in a human being is amor fati: that one wants nothing to be different, not forward, not backward, not in all eternity. Not merely bear what is necessary, still less conceal it… but love it." — Nietzsche
Three Favourite Finds
Business is like surfing: To build a successful business you need to understand the fundamentals. Justin Jackson draws parallels between this phase of learning and paddling out to catch a wave. With everyone in a rush to build companies, remember that it’s okay to spend time developing your fundamentals before you go out there and try catch a wave.
Laws of the internet: This thread is a masterclass in effectively using the internet.
The project-driven life: Instead of viewing life as a never-ending list of goals we should focus on living a project-driven life.
“A goal is your desired outcome: Lose 15 lbs. Become a millionaire. Learn French. A project is a plan of action: Stick to my daily workout for thirty days. Save and invest 25% of my salary for the next five years. Get a tutor, buy a textbook and practice speaking weekly.”
End note
If you enjoyed this edition of the Sunday Filter then I’d love it if you could share it with a few friends. You can send them over here to sign up or share it on Twitter.
Have a great week!
- Stephen