Ep 8: Turn Active Value into Passive Income
With only a handful of ways to truly become financially free, we've got to figure out which route works best for us. Some of us work hard and spend hard. Some of us are working on the next app that we hope will be acquired by an industry giant. Some of us are immensely talented, marketable and have connections. Some of us want to fly high yet still be under the radar. I might fall into the latter category. Here's why...
There was a stint of time where I was convinced that developing the next big app would bring me the financial freedom I so strongly desired.
I played a substantial role in the product-output of two start-ups that felt destined for great things - the brainchildren of admirable men. My primary job was to give these products faces and brands - to give them life while going from concept to launch to viability. I worked for a combination of a salary and sweat equity in these companies.
The pre-launch phase was where I excelled. But post-launch saw hardships and complexities well beyond my realm of control and influence. I learned that it's never just as simple as having a great idea, throwing some money behind it, putting together a team and a product, and then the world loves it. There's so much more to it. In both cases, the main 'ah-ha' realization was that we launched too late with products that were way more than they needed to be upon initial launch. Still, my partnerships with these companies remain strong because they have tenacity and agility - thus they're still evolving and are not failures.
Some lessons I learned were that these days, #1, trying to develop the next big app to quickly be acquired for billions by Google or someone is more akin to winning the lotto and #2, creating a start-up with plans to be a legitimate long-term business requires an entirely different set of thinking and actions. If I could find a way to remove the headaches (hunting for investors, loans, customers, etc) and leverage my resources (artistic abilities, business acumen, idea extraction, etc), could I create a business or two that could thrive in simplicity, scalability, and uniqueness?
It's been done before and will be done again. But this business model is still wide open and not nearly as saturated as the app market. Scalability is its middle name. It's way less risky than you might think. What I'm referring to is a business model of passive income. This means putting yourself in a position where you don't have to continually trade time for money.
If you aren't collecting residuals, you're in a rat race with everyone else - trading your time for a paycheck.
The 3% that own 97% of the world's wealth all earn passive income, whether it's in the form of residuals, commissions, compounded interest, equity, stocks, etc.
The fascinating thing is that while these people clearly think differently than a huge portion of the world, that doesn't necessarily mean that they're any more talented or smarter than you and I. It could simply be a matter of taking action where others did not. Generating passive income (PI) significant enough to meet and exceed your current standard of living is no walk in the park though. It requires patience where others are impatient. It requires steady traffic. And to get organic traffic, you need value. To provide value, you need purpose. To find purpose, you need clarity. To get to clarity, you need bulletproof ambition. The irony is that you've got to be aggressive about being passive.
I have a passion of growing my wealth passively as opposed to instantly for several reasons. It's much less riskier and allows you the privilege to evolve your business(es) over a longer, more feasible arc of time. Not to mention having sustainability and automation. To go a step further, I decided to build businesses independent of investors, loans and debt so that my first sale marks profitability and to prove that bootstrapping works.
Most of us want to travel more, have more time for family and friends, be financially fearless, love our jobs, etc. Yet we don't see the impossibility of realizing these desires by doing the same things we're already doing, so they just remain fantasies. If you're not going to strike gold as an entertainer, athlete or founder of the next big thing, why not try your hand at creating PI?
You'll need concise automation if you want to be able to spend your time elsewhere, with other people, and doing other things - and still earn money at the same time.
Not sure about you, but I personally detest the idea of always trading my time for money. Being at the mercy of someone paying you based on the hours you're selling them is no longer appealing to me. My preference is to put systems in place where I'm not constantly required to be avail to spearhead and manage them. I call these nest eggs and you've always got to have more than one, just in case some don't hatch.
With several eggs in the nest, you're reducing the likelihood of failure. You're increasing the chance of triumph. You're multiplying your fields of influence. You're very much being aggressive to become passive.
If you have a passive income stream, I'd love to know yours. If you don't, do you see an opportunity where you could have one? Some examples include selling books, selling music, selling courses, and selling graphic assets. In a future post, I will dive into several passive income business models that could work for you.