SPI 838: The Problem with Passive Income

SPI 838: The Problem with Passive Income

Announcer: You’re listening to the Smart Passive Income Podcast, a proud member of the Entrepreneur Podcast Network, a show that’s all about working hard now, so you can sit back and reap the benefits later. And now your host. He’s at the age where when asked if he’s sleeping, he replies, “I’m just resting my eyes.” Pat Flynn.

Pat Flynn: Okay, here’s the problem with passive income, and I’m going to share with you a direct message that Paddy Galloway, I don’t know him directly, but we’ve exchanged a few messages here and there. Paddy Galloway is an incredible authority in the space of YouTube. He breaks down a lot of very successful videos, very successful channels.

He teaches YouTube himself, and he got this DM from a teenage follower, and I’m going to read his tweet and then I’m going to read the DM to you. And it will hopefully explain where I’m coming from here. And it’s going to be, it’s going to sound interesting as the passive income guy, right? It’s smartpassiveincome.com. And I’ll share with you my thoughts and my reaction to it. So here is, Paddy Galloway, in case you want to look them up. @PattyG96 on X. But here is that message.

“I got this DM from a teenage follower, and it’s blown my mind. Honestly, this is everything wrong with the YouTube strategy space right now. If you just see YouTube as a quick and easy way to make passive income, don’t do YouTube. If you don’t, wake up and get excited about making videos. Don’t do YouTube. If you aren’t willing to make videos for two years with no results, don’t do YouTube. You don’t have to do this. Not everyone should have a YouTube channel. Also, stop buying courses and hiring people before you even start a channel. WTF. Retweet, like, to share this message far and wide.”

And 145,000 people have already seen this. What does the text say, or the DM? Here it is, from this teenage person.

“Bro, I’m about to give up on YouTube. I’ve spent thousands of dollars on courses. I’ve hired and tried so many people for editors. Six months in and I have nothing. No progress. Can I show you my channels and you show me what to do?”

Paddy comes in and says, are you even passionate about making videos? And the reply, which is mind blowing, he says, No, I’m passionate about passive income. Can you help?

I’m passionate about passive income? I think he really wants passive income, but he doesn’t quite understand what the word passionate means, and that drive to just continue to do something again and again and again, even without getting results. You cannot be passionate about passive income and have it work because you are starting with the end in mind. You have to start with the beginning, which is passion to create. Passion to help and serve others. Passion to discover what works and what doesn’t. And do it all for the sake of just doing it. And learning as you go. Your earnings are a byproduct of how well you serve your audience. That’s what you should be passionate about. Your revenue, your views, your downloads, your subscribers, your followership will grow when you learn to become passionate about helping others, passionate about the language that they respond to, passionate scrolling and getting hooked on the video that you’ve created, the blog posts that you’ve written, the email that inserted into their inbox.

I get so upset when I read something like this because, again, Smart Passive Income. I started that in 2008. I’m the passive income guy. And this is why passive income is such a bad rap. In fact, we had, for a while, contemplated removing passive income from our entire domain and brand name just because of this.

But there was a moment, I remember, because I started smartpassiveincome.com because I was generating passive income for my architecture business. I was literally waking up to more money. But it was a year of posting, of getting involved in forums and discussions. It did not happen overnight. And I did not do a good enough job early on to get in front of that message of, this is not automatic. This takes a ton of work. And in fact, in general, passive income is pretty much a complete myth because no matter what, you still have to upkeep things. You still have to stay up to date with what’s happening to those who you serve. You still have to understand what is working and how the landscape is changing from technology to social, to marketing, to again, even the audience and the customers may change their taste and preferences.

It’s so important to get passionate about those people. That is what generates passive income. And passive income is the last step after a lot of active work to build something, to grow it, to then automate it, to understand how to then slowly remove yourself from that process, might you even consider the idea of seeing income come in with no additional work?

This teenager feels like most people, I would assume, who want those results without doing a ton of work. Or, not really understanding the purpose of the work. The purpose is not to create videos to make money. The purpose is twofold. Number one, grab attention. If you don’t grab attention, it doesn’t matter what you create.

So titles, thumbnails on YouTube, your subject line on emails the first line in your social post, all these things that are meant to stop a person from what they’re doing to then pay attention to you, it’s the number one rule in storytelling, get everybody’s attention. If you’re telling a story, but nobody’s listening, the story might as well not even exist.

And number two is the stick. So the click. And then the stick. How do you tell that story to retain people? How do you fit that story into something relatable that your target audience will then want to take action with? This is how you win on the internet. Not by trying to make money, but by having the money be a result of who it is that you serve and you being passionate about obsessing over who those people are.

What are they doing? What are their dreams? What are their obstacles? What are their nightmares? What are their what fuels them? Because when they can understand that they can understand that you are somebody who gets it and they’ll be more likely to listen and take action based on your direction. Now it’s interesting again, this passive income thing.

I remember a while Gary Vaynerchuk. Had once said that passive income is a myth. And I stepped up to defend myself because I’m generating passive income, but I always have to remember to remind people that this is not an overnight thing, that in most cases it will never be completely passive. And even the idea of stepping away from something can only happen when you’ve stepped full forward into the thing first.

A lot of people have noticed my Shorts channel has been blowing up. This Shorts experiment that I’ve been running this past three months, 120 days ish. And the channel has continued to stay stable with revenue. It’s generating about $300 to $400 a day. It’s at 510, 000 subscribers at this point.

So it’s almost, it’s going to be close to a million by the end of the year subscribers. Every day I’m putting in 30 minutes of work. I’ve carved out 30 minutes every single day to edit these videos and post daily. Quantity on short form platforms is key, not just for getting in front of more people, but for learning for iteration.

Yes. I have revenue coming in and I can wake up and see more revenue gets dropped into my YouTube account. But once I stop, that revenue will slowly start to go down. This is not passive at all. However, I’m building an audience, there are mechanisms to passivify this audience and, and the content that’s coming.

And I’m working on that and experimenting with more things too. The YouTube channel for Deep Pocket Monster is more passive than the Shorts channel because it doesn’t rely on the daily posts. It relies on deep storytelling, longer form videos, 40 minutes, 50 minute videos that hold a person for longer than a television show.

And that channel has grown and I was able to celebrate a million subscribers last week, which was really cool. I was able to go on live to my audience. We had about 5,000 people watch me cross over a million subscribers, which was really cool. The revenue comes in from our backlog of videos that we’ve spent four years creating.

It comes from understanding how to point people from our newer videos to the older ones, and how the YouTube algorithm works. You think about our community at SPI, it’s the least passive thing ever because it requires actively listening to you and answering your questions and encouraging people to engage with each other, managing mastermind groups inside of our thrive community.

It’s. The most fulfilling thing in the world, but it’s one of the least passive things, and I think a lot of us have been so jaded by a lot of internet marketers that have not done us or you a service, and that is tout the idea of overnight riches and quick success and passive income being easy. Most of those people who probably are generating passive income are only making it because they’re teaching you how to generate passive income and get rich.

That is not in our language here at SPI. Because we want you to succeed, and it will not happen if you believe, like this teenager, that just spending money will give you the opportunity to make more money. On courses and communities, you have to put in the work. And that work is not in the creation so that you can make money.

It’s in the understanding of who you’re creating for, so you can create, and then as a by product generate revenue.

Now what’s got me really excited though, is I look at this comment from this teenager, when Paddy asks, are you even passionate about making videos? And he says, no, I’m passionate about passive income. Can you help? There was a little bit of a generational gap there. A lot of teenagers, I mean, Paddy even comes in after and says I don’t blame this kid, I think there’s just a culture in Gen Z of fast money.

If you don’t get rich, you’re not a man, etc. Things take time and you need that passion. YouTube puts fire in my eyes. I’ve loved it for almost 20 years. Like Paddy, I don’t blame this kid. He’s probably succumbed to a lot of great speakers, great advertisements, a lot of promises, and there’s no wonder why this person feels down.

What I am glad. Is that, at SPI at least, we seem to attract the people who are doing things for the right reason. Who are passionate about helping others. I see it every day in the community. We see people who are stepping up to serve people in so many different ways. From backyard ecology, to bringing women together as passionistas to help them on their journey. To becoming sober. To helping coaches. I mean there are so many different ways to generate revenue. But the revenue again is a byproduct of how well you serve your audience, how well you serve your audience is a byproduct of how well you understand them, how well you understand them is a byproduct of how well you communicate and show up and get curious and are passionate about who these people are.

So as we get here into the final stretch of the year, I want to invite you to two things. Number one, I want to invite you to just go deeper with your audience. And if you don’t know who your audience is yet, then you need to figure that out. You cannot start wide. You have to start more narrow. So I invite you to, and I challenge you to do that.

Get involved in more communities and have a conversation. Don’t just sit and lurk. Be curious. Ask questions. Research on Reddit. Go to events, online or offline. Find out where the conversations are happening and join them. And the second thing I want to invite you to is our SPI community because we have some incredible members, thousands. Who are there at various levels and you’ve probably heard this already, perhaps in the bonus episode with Caleb and I talking about the different tiers that you can get involved. There’s the starter tier where if you just want the education and the access to the general community, great.

It’s even at a lower price than what we had things before because we wanted to lower the barrier to entry. Then we have the accelerate tier where you can join in on more guided learnings through our courses and our workshops. Office hours with me twice a month so that you can get your questions answered.

And that’s going to be more for beginners. The Accelerate tier can help you get to where you want to go faster. And then finally the Thrive here, which does have an application process, but it has those higher level conversations, those conversations about things like budgeting for your business, hiring more team members, newer strategic marketing tactics that can only be unlocked once you get started, those kinds of things, mastermind matching.

Well, that actually happens in the accelerated tier as well, but I invite you to go to our brand new page. At SmartPassiveIncome.com/community. We are undergoing a new accelerator right now. Currently, some of you are probably in it, which is exciting for email. And we have so many more courses and things that are coming and being refilmed.

It’s going to be a big goal of mine next year is to refresh literally as much as possible. I’m not that it’s out of date, but it just, it just needs a refresh. We want to start fresh for you in 2025. It’s going to be a big year. It’s going to be a successful year all around and we’d love to take you with us and we’d love to help you.

So SmartPassiveIncome.com/community. Thank you so much and remember, be passionate about helping and serving others and go deep with who those people are. That will serve you more than any investment that you can make. However, if you’d like to invest in us to help you, because hopefully you could see we’re trying to teach it the right way. We’d love to take you on that journey and, and, you know, become a part of your success story. So cheers, thank you so much. I appreciate you. SmartPassiveIncome.com/community. It’s going to be huge. 2025 is going to be awesome. And can’t wait to have you be a part of it too. Thank you. Cheers.

Thank you so much for listening to the Smart Passive Income podcast at SmartPassiveIncome.com. I’m your host, Pat Flynn. Sound editing by Duncan Brown. The Smart Passive Income Podcast is a production of SPI Media and a proud member of the Entrepreneur Podcast Network. Catch you next week!