So You Want Some Passive Income

Today I’m going to answer a reader question about passive income.  This arose out of an actual conversation, so I can’t post a verbatim quote here.  But it’s simple enough to paraphrase.

Do you mind telling me about some of the ways that you earn passive income?

Not at all.

It’s not something I talk about a whole ton on this blog, but income models are something I feel fairly strongly about.  I actually think that one of the weirder things about the modern, knowledge economy is that we assign monetary value to what is, essentially, “hours toiled,” which puts knowledge work on the same footing as “guy dressed like a giant chicken, holding a spinning arrow sign next to the road.”  You show up somewhere and get money for attendance, regardless of outcome.

Oh, sure, if you’re embroiled in enough bad outcomes, you’re eventually sacked, but generally speaking, your pay is decoupled from value that you deliver, unless you’re in the odd incentivized role, such as a sales person.  Show up hungover and stare at your screen for a day?  $400.  Show up and invent Javascript in a day?  $400.  (If you’re interested in a more in-depth treatment of this subject, I talk at length about the divorce between value and labor in corporations in my upcoming book, Developer Hegemony)


Apart from the problem that hours worked and value delivered are so unrelated as to often be orthogonal, there is another, subtler problem with this paradigm.  Hourly labor creates a tight coupling between time spent and earning power; you’re in a constant state of decision between whether you’re providing for yourself or whether you’re doing anything else.  Doing both at the same time is generally called “misappropriation of company time.”

Hourly comp is ubiquitous to the point of seeming inevitable.  But it’s really and surprisingly not.  In this post, I’m going to explore a few pretty achievable ways of earning income that is decoupled from time.  In this sense, it is passive.  Last Saturday, I was sitting at a beachside bar, reading, when I got a notification on my phone informing me that I’d just earned $300 that day.  The only labor I performed that day was a bike ride up and down the beach.  So, it is possible.  And, it’s possible for you — not just me.

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