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I've had friends who tried to go the start-up route and didn't pan out; so they decided to do some affiliate marketing with Google Adwords, that didn't pan out.

I've had friends who tried to go the start-up route and didn't pan out; so they decided to do some affiliate marketing with Google Adwords, that didn't pan out. Then they tried to build a SaaS for developers to help with their development, designers to manage their CMS. So far, they haven't seen a dime. The only one success story I've heard said Google screwed up his search result ranking, so it only lasted about a year of supplementing 15% of his full-time job income. I'd love to hear some passive income hacker (PIH) failures, risk & reward, opportunity cost in terms of time spent on your own venture vs. spent on climbing the corporate ladder and vs. traditional passive income paths say, becoming a slum lord, dividend investing etc.

minimax 13y ago
Good point. There does seem to be a lot of survivorship bias built into the outlook espoused in the original post.
_delirium 13y ago
Just some aggregate numbers on how many people are doing it successfully in different niches would be interesting, to calibrate whether we're talking about ecosystems that sustain a handful of people, thousands of people, tens of thousands, hundreds of thousands, or millions. In a previous discussion about making a living from Android apps, I asked if anyone had numbers on how many people successfully do so [1]. I received several responses arguing that quite a few people do make a living that way, but I still haven't been able to find any solid numbers, even an order-of-magnitude estimate (does Google release enough data to make such an estimate possible?). [1] https://news.ycombinator.com/item?id=6108491 https://news.ycombinator.com/item?id=6108491
unlucky 13y ago
I did affiliate marketing for about 10 months total. This was starting with not even knowing what affiliate marketing was, to making $200+ a day completely passive from ads. When the ad campaigns worked, it was one of the best feelings in the world. It is very hard to replicate the satisfaction of waking up and knowing that you had already made half your income for the day while still asleep. The problem is with any "easy" money like this is that there is no consistency. Like most ad campaigns, the fuel behind them runs out. You are constantly having to come up with new ideas, that in which most will fail. I would say less than 10% of your work is directly profitable (just due to testing and failed ad campaigns.) So while I did have "passive" income for moments at a time, it wasn't truly "passive" because I would constantly be preparing for my next campaign. The stress that can come with the down time of not having any campaigns hitting can be brutal. I would never do affiliate marketing again, but the taste of passive income was enough for me to completely realign my goals towards it. For me, it's not about the top end number anymore, its about the consistent one.
- jonathanjaeger 13y ago
  Affiliate marketing is a tough business when you're in a niche with tons of competition. Due to my own experience (as an employee at a company, not self-employed), the best case scenario is a model that harnesses your own portals and products that ultimately generates leads for other brands/clients. But that's easier said than done with a team of one in a short period of time -- you really need a good deal of systems in place to get into the higher margin game.
rwhitman 13y ago
I definitely think a lot of these passive income evangelists tend to have had a fair amount of luck, finding the right niche opportunity at the right time and then thinking their experience is applicable to everyone. Personally I've had nothing but failures in my attempts. And I've definitely met a number of people who did have success at one point but are back to working full time after the well ran dry. The assertion that this is a low risk path for everyone I think is a little misguided
- unlucky 13y ago
  The amount of luck needed is the same as any other industry that you are trying to break into. It is far more common to hear about the crazy success stories of a niche than the ones of grinding for years with little money and eating PB & J. It is only low risk if you aren't fully committed to it.
willholloway 13y ago
In my college days I had dreams of passive income, because I wanted to self-fund a career as a writer/director of micro-budget indie movies. A friend told me about a friend who claimed to be making loads with affiliate marketing, so I started to immerse myself in performance marketing, the lifestyle was just too attractive. I started with a $100 FB ads coupon and by the time that was spent I luckily stumbled on a profitable campaign. I quickly realized that the globalized economy is extremely competitive, and internet businesses with low barriers to entry are radically hyper competitive. There was no way to be completely passive and successful. So I obsessively scaled my profitable campaigns and researched and experimented with new ones. I went to conferences, and sought to strike better deals with affiliate networks and even sought direct deals with the companies whose products I was selling. I spent a lot of time building relationships with the ad reps of the companies I was buying ad space from. I did a lot of industrial intelligence to find what was working and what wasn't. My girlfriend at the time was finishing her last year of college and I did all of this while she was at class. When she finished school we embarked on a cross country trip, went to a lot of music festivals and moved to Boulder, CO. It was a pretty sweet lifestyle for a while. The money was still coming in from my old campaigns, but the distraction of being on a permanent working vacation took a toll on my efforts. Then the industry kind of imploded. The field got incredibly more competitive and a lot of affiliates began engaging in outright fraud to increase conversions. Because of the unethical behavior, the companies I was buying traffic from started making it harder for affiliates to operate, they wanted national brands as advertisers and I don't blame them. The industry was scummy, not so much because the conferences I went to had their opening night festivities at strip clubs. Or that even at the relatively more respectable events naked women wearing only paint would serve drinks. It was just corrupted by the huge amounts of easy money made possible by the implosion of the global economy and the resulting plummeting of ad rates combined with the deceptive marketing practices employed by the affiliates. When more and more people heard about the easy money available, only the sociopaths or otherwise ethically impaired could profit. My dreams of easy passive income were dashed and I threw myself into software development. Now I create real value, instead of exploiting narrow arbitrage opportunities. Making amazing software products is so much more valuable, rewarding and sane than film making anyhow. To answer your question, is it possible? Yes it is, but it is very dependent on market conditions and they are forever trending to be less favorable. There are still incredible opportunities in lead gen (better connotations than affiliate marketing) but these days you have to build a platform that delivers real value instead of just buying cheap traffic and selling it for more.
mlapeter 13y ago
To add more data, I've been successful (generating more than average salary in my area for programmers I think) in creating a small online saas business. I would say it's totally possible, but for me it took a lot longer than I think most people realize (4-5 years) from the beginning, where I had no programming knowledge whatsoever, to where I'm at now. I had to continue working my regular job and slowly transition into it. Also I have a few other friends with similar bootstrapped businesses, and I can say I've never actually met anyone with true "passive income". I really enjoy the freedom and flexibility I have, but if I stopped working on my business it would eventually shrivel and die. Competition is fierce, and I'm in a commodity type business (basically online marketing/ websites for realtors) with several huge competitors and hundreds of smaller ones, so I'm continually trying to improve the software/ product. I'm not in it to generate passive income, and I think starting with that goal in mind could be frustrating because as others have said, most passive income preachers secretly do a ton of work (think of how hard tim ferris actually works, every single day). I'd reiterate what others have already said, just treat it like learning to program, realize it's going to take a long time, and steadily improve on it. The goal for me is freedom to do or make what I want, flexibility, financial security, and to have my efforts tied directly to my success.

minimax 13y ago

Good point. There does seem to be a lot of survivorship bias built into the outlook espoused in the original post.

_delirium 13y ago

Just some aggregate numbers on how many people are doing it successfully in different niches would be interesting, to calibrate whether we're talking about ecosystems that sustain a handful of people, thousands of people, tens of thousands, hundreds of thousands, or millions. In a previous discussion about making a living from Android apps, I asked if anyone had numbers on how many people successfully do so [1]. I received several responses arguing that quite a few people do make a living that way, but I still haven't been able to find any solid numbers, even an order-of-magnitude estimate (does Google release enough data to make such an estimate possible?). [1] https://news.ycombinator.com/item?id=6108491 https://news.ycombinator.com/item?id=6108491

unlucky 13y ago

I did affiliate marketing for about 10 months total. This was starting with not even knowing what affiliate marketing was, to making $200+ a day completely passive from ads. When the ad campaigns worked, it was one of the best feelings in the world. It is very hard to replicate the satisfaction of waking up and knowing that you had already made half your income for the day while still asleep. The problem is with any "easy" money like this is that there is no consistency. Like most ad campaigns, the fuel behind them runs out. You are constantly having to come up with new ideas, that in which most will fail. I would say less than 10% of your work is directly profitable (just due to testing and failed ad campaigns.) So while I did have "passive" income for moments at a time, it wasn't truly "passive" because I would constantly be preparing for my next campaign. The stress that can come with the down time of not having any campaigns hitting can be brutal. I would never do affiliate marketing again, but the taste of passive income was enough for me to completely realign my goals towards it. For me, it's not about the top end number anymore, its about the consistent one.

jonathanjaeger 13y ago
Affiliate marketing is a tough business when you're in a niche with tons of competition. Due to my own experience (as an employee at a company, not self-employed), the best case scenario is a model that harnesses your own portals and products that ultimately generates leads for other brands/clients. But that's easier said than done with a team of one in a short period of time -- you really need a good deal of systems in place to get into the higher margin game.

rwhitman 13y ago

I definitely think a lot of these passive income evangelists tend to have had a fair amount of luck, finding the right niche opportunity at the right time and then thinking their experience is applicable to everyone. Personally I've had nothing but failures in my attempts. And I've definitely met a number of people who did have success at one point but are back to working full time after the well ran dry. The assertion that this is a low risk path for everyone I think is a little misguided

unlucky 13y ago
The amount of luck needed is the same as any other industry that you are trying to break into. It is far more common to hear about the crazy success stories of a niche than the ones of grinding for years with little money and eating PB & J. It is only low risk if you aren't fully committed to it.

willholloway 13y ago

In my college days I had dreams of passive income, because I wanted to self-fund a career as a writer/director of micro-budget indie movies. A friend told me about a friend who claimed to be making loads with affiliate marketing, so I started to immerse myself in performance marketing, the lifestyle was just too attractive. I started with a $100 FB ads coupon and by the time that was spent I luckily stumbled on a profitable campaign. I quickly realized that the globalized economy is extremely competitive, and internet businesses with low barriers to entry are radically hyper competitive. There was no way to be completely passive and successful. So I obsessively scaled my profitable campaigns and researched and experimented with new ones. I went to conferences, and sought to strike better deals with affiliate networks and even sought direct deals with the companies whose products I was selling. I spent a lot of time building relationships with the ad reps of the companies I was buying ad space from. I did a lot of industrial intelligence to find what was working and what wasn't. My girlfriend at the time was finishing her last year of college and I did all of this while she was at class. When she finished school we embarked on a cross country trip, went to a lot of music festivals and moved to Boulder, CO. It was a pretty sweet lifestyle for a while. The money was still coming in from my old campaigns, but the distraction of being on a permanent working vacation took a toll on my efforts. Then the industry kind of imploded. The field got incredibly more competitive and a lot of affiliates began engaging in outright fraud to increase conversions. Because of the unethical behavior, the companies I was buying traffic from started making it harder for affiliates to operate, they wanted national brands as advertisers and I don't blame them. The industry was scummy, not so much because the conferences I went to had their opening night festivities at strip clubs. Or that even at the relatively more respectable events naked women wearing only paint would serve drinks. It was just corrupted by the huge amounts of easy money made possible by the implosion of the global economy and the resulting plummeting of ad rates combined with the deceptive marketing practices employed by the affiliates. When more and more people heard about the easy money available, only the sociopaths or otherwise ethically impaired could profit. My dreams of easy passive income were dashed and I threw myself into software development. Now I create real value, instead of exploiting narrow arbitrage opportunities. Making amazing software products is so much more valuable, rewarding and sane than film making anyhow. To answer your question, is it possible? Yes it is, but it is very dependent on market conditions and they are forever trending to be less favorable. There are still incredible opportunities in lead gen (better connotations than affiliate marketing) but these days you have to build a platform that delivers real value instead of just buying cheap traffic and selling it for more.

mlapeter 13y ago

To add more data, I've been successful (generating more than average salary in my area for programmers I think) in creating a small online saas business. I would say it's totally possible, but for me it took a lot longer than I think most people realize (4-5 years) from the beginning, where I had no programming knowledge whatsoever, to where I'm at now. I had to continue working my regular job and slowly transition into it. Also I have a few other friends with similar bootstrapped businesses, and I can say I've never actually met anyone with true "passive income". I really enjoy the freedom and flexibility I have, but if I stopped working on my business it would eventually shrivel and die. Competition is fierce, and I'm in a commodity type business (basically online marketing/ websites for realtors) with several huge competitors and hundreds of smaller ones, so I'm continually trying to improve the software/ product. I'm not in it to generate passive income, and I think starting with that goal in mind could be frustrating because as others have said, most passive income preachers secretly do a ton of work (think of how hard tim ferris actually works, every single day). I'd reiterate what others have already said, just treat it like learning to program, realize it's going to take a long time, and steadily improve on it. The goal for me is freedom to do or make what I want, flexibility, financial security, and to have my efforts tied directly to my success.