I lived the passive income dream… and I HATED it.

I still remember earning my first 49 dollars in my sleep. I’d wake up, check my email, and see a PayPal message:

It was right after I launched my first online course, Success Systems. It was a 4-week online course that helped entrepreneurs and executives become more productive.

For a while, checking my phone first thing in the morning became my obsession.

I installed the PayPal app on my phone, so I would get a notification every time someone bought my course. It looked something like this:

Sometimes, I’d get one sale. 

Sometimes, I’d get 4 or 5. The dopamine rush of unexpectedly earning $200 in my sleep was insane.

Sometimes, I’d get no sales, and feel my stomach drop in disappointment.

As you can imagine, it wasn’t the healthiest habit. To preserve my sanity, I eventually removed the PayPal notifications from my phone.

Still, I felt like in that period of my life I was living the dream.

I’d get sales while I slept, while I went to the gym, while I was playing board games with my friends. It felt like all the hard work I put in was finally paying off.

As I increased the prices of my online courses and started to create more premium courses, the revenue became bigger and bigger.

At one point, I was consistently earning $2,000+/month just from the automatic sales of my online courses, whether I worked on my online business or not.

On one hand, it felt amazing to be able to earn a living doing what I loved, and to have the financial security of consistently earning thousands of dollars every month.

But in the back of my mind, something felt off.

I didn’t really know what it was. I couldn’t articulate it. I could just sense it.

Then, the signs came.

First, I opened my online course dashboard and saw something like this:

What I saw physically hurt me. 

Barely any of my students were finishing my online course.

A handful of students did. But most never made it past 38% of the course.

That didn’t feel right to me.

It didn’t feel fair that I was earning $2,000 every month, while my students only finished a fraction of the course.

Still, I gave myself the benefit of the doubt. 

Maybe my students were getting a lot of value out of my courses, even if they didn’t necessarily finish them.

I sent a few emails to my students to check in how they were doing with the course.

As I received the responses, some were positive, but I could see a negative trend forming:

Many of my students just didn’t find the time to go through the course, for one reason or another.

Most entrepreneurs might not care about that, or even blame their students for it.

Not me.

This didn’t feel good, nor right to me.

I didn’t want to just build an online business that earns me money in my sleep doing what I loved.

I wanted to build an online business that actually helps the majority of my students, not just 1-2% of them.

The right thing to do isn’t always the easiest

That’s when I knew I had two options:

Option #1: Improve my course to fix the success rate

I knew I had to do something different if I wanted to increase the success rate of my students, but at that point, I just didn’t know how.

I was taught to spend a few weeks creating an online course, build a sales sequence and sell it… Nobody taught me how to increase the success rate of my students, and I wasn’t smart enough to figure it out by myself.

The other problem was that I just didn’t feel the passion to improve an online course I created years ago. I spoke about productivity for the last 5 years, and I felt like it was time to move on to something else.

Option #2: Stop selling the course

The only other option I saw  was to stop selling the course. This was a difficult decision to make because I’d stop earning consistent monthly income that I worked so hard for. 

But it also felt like the right thing to do. I didn’t feel like it was the responsibility of my students to finish my course. I felt like it was mine.

That’s how I ended my passive income dream and started to run a much more involved and fulfilling online business. 

I realized I’d rather work hard to make my students succeed, than to earn money in my sleep with a bitter taste in my mouth.

The root cause of the issue: I thought passive income was the only way to build an online business

When I first started my online business, everyone was talking about how amazing online courses are and how to build them. 

They talked about how much freedom I could have with them, how I could earn money in my sleep, and help thousands of people by doing it.

But that last part wasn’t really true.

As I looked under the hood of my online courses, I saw a pattern. If I continued to sell online courses automatically and earn passive income, my students typically wouldn’t get the results I promised them.

And you know what pisses me off?

Many “marketing gurus” STILL promise the passive income to their clients, without showing the full story behind it.

They never mention the success rates of the courses in their programs, and they don’t show the success rates of their own courses to the world.

They pretend that everything is ok, sweep the problems under the rug, and continue to brag about how they earned $6,000 today while they’re on their vacation in Japan, without disclosing all the work that went into it.

Some entrepreneurs close their eyes. Others want to do better. 

Over the past few years, I’ve spoken to hundreds of entrepreneurs about this issue, and they typically fall into one of the two camps.

Camp #1: They don’t care.

Unfortunately, there are a lot of people that do just care about the money in the online business space. They’re constantly thinking about how to optimize their funnels and conversions, and they don’t do much about the success of their students.

When I brought up the issue to them, many of them said “yeah, that’s just how the online courses are”. So they kept selling them, earning thousands (or millions) of dollars, without changing anything about them. Instead of fixing their courses, they just built more of them.

Camp #2: They do care.

Fortunately, a lot of entrepreneurs do care, want to do better, and care more about helping the majority of their clients succeed than about earning passive income.  

Many of them realized that their own courses have ultra-low success rates, and they don’t feel good about it either.

That’s why they move away from creating passive online courses to more active models like coaching and hybrid courses (courses delivered live / with some sort of live coaching) that are more involved, but lead to 80-90% success rates instead of the measly 1, 2 or 5%. 

I no longer spend much time talking to entrepreneurs that don’t care about the success of their students. I just can’t sit next to someone who only cares about money. It makes me want to puke.

On the other hand, I constantly talk to entrepreneurs that do want to do better, learn from them, and work with them to make the online course industry better. 

The truth about passive income

I’ve had enough of this passive income BS. It’s time to grab a hammer and show you what “passive income” REALLY is.

It’s not the holy grail of building an online business.

It’s not THE thing that helps you work from anywhere in the world.

It’s not the best way to build an online business.

It’s not fun or fulfilling.

And in most cases, it’s not even really passive.

Earning money in your sleep is NOT the same as passive income.

Every time I launch one of my online programs, I wake up to many emails like this, especially on the last few days of the launch:

Technically, I earn thousands of dollars in my sleep.

But in reality, this is not passive income.

Every time I earn money “in my sleep”, it’s a result of YEARS of hard work:

• I spent 7 years and well over $100,000 learning about building an online business through books, courses, coaches, conferences, conversations with entrepreneurs, trips to NYC… 
• I tested multiple business ideas and spent hundreds of hours researching them 
• I spent thousands of hours building my audience by writing my articles, Ultimate Guides, speaking at conferences, partnering up with other entrepreneurs and speaking on podcasts
• I had to research and test all of my product ideas to see if they are in line with the problems of my audience (and if I could actually help my students get the promised results)
• I spend weeks writing sales funnels and sales pages for each of my programs (and months iterating through them)
• I then beta-tested the programs, worked through hundreds of pages of customer feedback and spent many afternoons talking to my clients on the phone, asking them how to improve my programs
• During my programs, I spend hundreds of hours teaching my students – from creating a curriculum, delivering live coaching calls, responding to emails and critiquing the work from my students
• After the first iteration of the programs, I continued to improve my programs every time I ran them through additional feedback from my students
• I’ll continue building my audience for years to come (though blog posts like this one, guides, and other growth strategies)
• … (the list goes on and on)

So yeah, the income I earn “in my sleep” is really the result of years, and thousands and thousands of hours of hard work. 

It’s not a result of spending 5 hours on my business for 8 weeks. Not even close.

I laugh at anyone that promises you that you can “start your online business and earn passive in 8 weeks” (by taking their online course of course). 

First of all, that almost never happens (it takes most entrepreneurs 1-2 years to build an online business). 

Second of all, when it does, it’s not a very good business. 

It typically means that they sell a mediocre online course they haven’t thoroughly tested and improved, and as a result, their clients will not get results they promised them.

You will never do nothing in your online business

As exciting as earning money in your sleep sounds, it’s not all that fulfilling when it actually happens (after you get over the initial dopamine rush).

It often begs the question “now what?”.

Should you spend all of your days laying on the beach? (cool idea, but few people actually do it, and it gets boring fast)

Should you spend all of your days laying in bed watching Netflix? (more realistic, but just as boring, there are only so many Netflix shows you can watch)

The truth is, that if you run an online business to make a difference in the world, you’ll very quickly get bored of the passive income lifestyle.

You’ll want to do more. 

You’ll want to make sure your students succeed with your programs.

You’ll want to create more content to attract more readers to your business.

You’ll want to do everything in your power to make a difference in the world… not the minimum effort needed to earn a few thousand dollars a month.

So in reality, even if you DO create a passive income stream… You’ll want to do more than that.

You can have all the freedom you want WITHOUT passive income

I don’t run an online business based on passive income.

I’m personally involved in every online program I teach.

I typically spend 5-15 hours a week in coaching calls / research calls / calls with other entrepreneurs. Then, when I run my copywriting coaching program, I spend an additional 10 hours a week doing the copy critiques. 

I spend another 10-20 hours a week writing new content, developing my online programs and thinking how to grow my business, and my assistant spends another 5 hours a month supporting me with research and admin tasks.

These numbers vary a lot from week to week. I work more one week and feel like I’m working from dusk until dawn, while I take other weeks easier.

Still, I design my online business in a way that I’m in control of my schedule and have the freedom to do what I want when I want. 

For example, here’s an example of my typical weekly schedule:

On Mondays, I have the whole day empty to work on whatever I want to, and I have a call with two entrepreneurial friends at 6pm.

Tuesdays and Wednesdays are often wide open to write, develop my programs, etc.

On Thursday afternoons, I do most of my live coaching calls.

I also have a coaching call with one of my 1on1 clients on a Friday morning, but have the whole day wide open after that.

I love having a lean schedule like this because I can organize it in any way I want to.

If I want to sleep in, I can (well, except for Fridays, when I can take a nap in the afternoon instead).

If I want to hit the gym at 1pm to take a break from work and avoid the crowds, I can (I hate waiting for equipment in the gym, so this is a blessing for me).

If I want to watch a friend play tennis at an ATP tournament, I can take a few hours out of my day to do it (I did that TWICE last week).

If I want to take a trip to Slovenia to visit my parents, or to NYC to attend a business conference, or to take a 3-week vacation in Bali, I can do it easily by moving a few of my coaching calls (and without having limited vacation days).

Best of all, I can work from my home, from my bed, from a cafe, coworking space, sushi restaurant or from the beach if I really want to.

Yes, I can do all of that despite the fact that my business is very much active and includes a lot of hands-on work. 

I know I’ll WANT to put in the work anyway (I get bored of not working VERY quickly), but I also appreciate having the freedom to organize my time any way I want to. 

And when I want to take time off, whether it’s on a Monday or Wednesday or Friday, I can easily make it happen (Thursdays are typically the only days when I don’t move meetings as I have most of my coaching calls then). 

Just because you choose not to run a passive income based business, it doesn’t mean you can’t quit your full time job, do what you love, and have the freedom to do whatever you want whenever you want.

You can have all of that – AND sleep at night knowing you’re doing the best you can to help your students succeed.

It’s a win-win.

The benefits of saying no to passive income

Here are the benefits of passive income:

• You don’t have to work and earn money in your sleep
• You can live anywhere in the world
• You can do whatever you want whenever you want

Here are the benefits of saying no to passive income:

• You can still “earn money in your sleep”
• You can live anywhere in the world
• You can do whatever you want whenever you want
• Your students will get better results than ever before
• You’ll have a flood of testimonials and case studies. 
• You’ll get paid well for it (often better than with just passive income). 
• You’ll feel like you’re doing everything in your power to help your students succeed. 
• You’ll reach and impact more people with your work.
• You’ll be able to sleep well at night.
• …

The only tradeoff you’re really making by saying no to passive income is that you WILL have to work hard to earn your money authentically.

But if you’re like me, you don’t mind hard work. You love doing what you love and you’d be bored if you’d just do nothing all day.

On the plus side, you’ll build a much more impactful, profitable and sustainable online business that will actually make a difference in the world for years to come.

Is there a way to earn passive income the RIGHT way?

To be completely honest, if you crave passive income, you’d be better off investing in real estate than running an online business (though even that requires a lot of initial learning, capital, trial and error,… so it’s not really passive until you figure it out).

Still, let’s play the devil’s advocate. It would be false to say that passive income doesn’t exist, and that you can’t authentically earn passive income through an online business.

There are a handful of ways that technically generate passive income (though they’re still a lot more work than you would expect.

Authentic Passive Income Strategy #1: Affiliate Marketing

For example, affiliate marketing (recommending products and services you believe in and getting a cut from them) can be a way to earn passive income (as you don’t need to deliver the product or service).

I don’t do much affiliate marketing myself as I prefer developing and selling my own products and services, but in the past, I’ve sold a handful of programs I believed in (that I knew would deliver my readers amazing results) and earned $30,000+ of “passive income” that way.

Still, it’s not 100% passive income. It takes years of work to build enough traffic, test the products you’ll be recommending, figure out how to best sell them, write content / sales funnels / product reviews to sell them,… AND stand out from everyone else doing it.

In other words, I spent years building my email list, went through the products myself, loved them, decided to sell them, and then spent a few weeks writing the best possible affiliate launch for my email list – and after all of that was done, only then the “passive” income came.

It’s possible to build passive income streams through affiliate marketing, but it’s definitely not an “earn passive income in 8 weeks” solution. It takes years of learning and hard work to do it well.

Authentic Passive Income Strategy #2: Sell online courses in static industries with natural urgency

Or, you could find an industry where online courses do work really well because there’s some natural urgency involved (for example, online courses for job interviews), so the follow through rate of courses is a lot higher.

One of my clients does that – he sells an online course on interviewing – and he has an incredible follow-through rate because the students don’t go through his course “on their own time”. They have an interview coming up in a few weeks, so they work through the materials, and get results (job offers).

You could also find a “static” industry where the proven methods don’t change over time (so the same advice you share today will still be relevant 10 years from now).

For example, the same techniques for learning guitar, English or organic chemistry will continue to work without your course becoming obsolete.

Still, creating courses like typically requires years of testing your business idea, building an audience, beta-testing your course, collecting feedback and improving it, creating sales funnels, updating the course as necessary, etc. – so it’s a lot of work for a stream of passive income.

Authentic Passive Income Strategy #3: Templates, Scripts and Tools

Finally, you could create some sort of templates, scripts or tools that are really easy to use and get your students instant results. 

A great example of a company that does this is Renaissance Periodization – they sell excel-based fitness and diet plans and e-books, that work so well that they have over 4,000 success stories. 

But just like with the other ideas, you need to build an audience to sell these, develop them, test them, track the results from them, and improve them over the next few years based on the customer feedback.

(and in the case of Renaissance Periodization, they released at least 4 updated versions of their templates based on the customer feedback – so they keep innovating and improving their products instead of laying on the beach or watching Netflix)

What I’m getting to is…

Passive income is the END goal, not the beginning

If your main reason to start an online business is to earn passive income, don’t bother.

It will take much longer than expected. It will be less fulfilling than you think. And it won’t be nearly as active as you hope it to be.

And while earning more money can be motivating for the first few months or years of running an online business, once you earn a certain amount, that charm goes away.

At least for me, it’s much more fulfilling to see my students succeed that to see another $20,000 in my bank account (it’s nice, but it doesn’t drastically change my lifestyle, and doesn’t motivate me to work harder).

It feels much better to know that I’m doing everything in my power to help my students succeed, and it’s amazing to slowly see the difference I make in the world.

“So what can you do to build an online business without passive income?”

Instead of focusing on passive income, focus on the success of your students first.

Here are a few examples of how you can do that.

When developing a new online program, don’t focus on “how much money you can make”.

Instead, focus on creating the best possible program in your industry (that gets your students the best possible results).

Instead of developing online programs that you are not involved in, develop programs that are extremely hands-on until you get your students the desired results… and THEN slowly remove yourself from the process while making sure the results of your students stay.

Instead of starting with online courses, start with coaching programs and then evolve those into online course (or, like, me, decide to only offer programs that you deliver live).

Whenever you’re making any sort of a decision in your online business, ask yourself:

“How can I put my students first?”

Then act on it. Over and over again.

There’s a lot I have to say on this topic, but since this article is already a zillion pages long, I’ll point you to this article instead (in there, I share 5 ways to increase the success of your online courses).

Join the Impact Over Revenue Movement

If you’ve read this far, it’s clear that you care about much more than just building online business to earn $$$ in your sleep. 

Which means we’ll get along really well…

And it means you’re looking for people that feel the same way as you do. 

If you want to build an online business to make an impact, but don’t know HOW to do it…

…join us in the Impact Over Revenue Movement.

My mission is to connect impact-driven entrepreneurs that want the majority of their clients to succeed with their online programs, and I regularly write about what it takes to do that.

I’m committed to always telling you the truth about what it takes to start and grow an online business, without sugar-coating things, BSing you, or selling you on false promises.

My dream is to teach a new wave of online entrepreneurs how to build better online businesses that transform the online education world to the better.

If you want to learn how to build and grow an impact-driven online business in the new decade, download my free guide to starting a 6-figure online business in 2020.

It’ll give you a deeper insight into how I develop online programs to run a successful online business, earn a good living doing what I love, without sacrificing the success of my students.

Just enter your name and email address in the box below and I’ll send you the e-book to get started (it’s one of the best things you’ll read in a long time).

What about you? What’s your experience with passive income as an online entrepreneur?