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Comment by noname123 | Hacker News Reader

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.

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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.

Thanks for sharing, esp. the part about the strip clubs and Sports Illustrated style clothing. I wish you best of luck in your software venture. What was the best festival you went to?

Thank you!

My most poignant memory from the time was being a part of a circle of festival goers holding a large circular nylon parachute that caught and launched a seemingly infinite series of glow sticks into the air in a fountain like manner at Rothbury on July 4th 2009 during a Grateful Dead set.

The money from that period is long gone, and so is the girl but the memories and skills remain.

Ill share one more story about the ethics of the industry because it's worth it:

An acquaintance in the biz once bribed a Facebook employee whose job it was to approve or deny ads on the platform. His inside man set his account to auto approve any ad he wanted.

He used that to get the scummiest, most downright fraudulent ads he could up.

He told me that he made $80,000 in 4 days by placing ads like 'Google is hiring, apply here' that led to credit card rebill free trials for how to make money from home info products.

The bribed employee was led out of the building after four days of this.

I had always wanted to write a book about this industry titled "Internet Bandits", it was quite fascinating. There was a time when a kid with a credit card, poor ethics and some basic web design skills could make $50,000 a month.

Maybe you can write a treatment and direct a youtube short. I feel like the YouTube audience would be the target audience as both potential victims and wanna-be scammers of to Internet marketing.

I don't know about anyone else, but I think that could be a pretty interesting subject for a book. Why haven't you actually pursued writing it?

Funny story. This almost mirrors exactly my experience in affiliate marketing probably around the same time. Got out for the same reasons too, extremely fast competition and it got to the point where you had to have no ethics and basically commit fraud to profit. As a person trying to remain ethical it didn't make for very good profits.

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.

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.

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

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

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.

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

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.

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