Comment by mattzito | Hacker News Reader

Comment by mattzito | Hacker News Reader

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This is a very specific story, one clearly designed to sell a very specific vision of success. I could write an equally plausible one where Sam’s website got hacked because he was too busy working to keep up with Wordpress patches and it got blacklisted in every search engine. That vending machine turns into a huge time sink, because his spots keep going out of business or have too much competition - he can pay someone to scout, but that easily eats up a few months of income every time he has to move. Then his beach house gets hit with a bad storm, and insurance will cover the damage, but he’s not making money on it, and now he gets to play “construction project manager”, dealing with the GC and all of the other construction-related items.

Meanwhile, yeah, sure, Marks not building equity in businesses, but that car and that boat have bought him a good social life and correspondingly, a good professional network. Turns out the guy in the next slip is also a doctor, and thinking about getting into private practice on the side from their regular job. The hours would be long, but if they can get the practice established, they’ll be their own bosses. Mark has tons of free time working his 9-5, so he says what the hell, let’s give it a shot.

Sam couldn’t do this because he’s got too many irons in the fire. Mark might fail, but he’s got a good network now, and he’s going to be building his own relationships with his patients. Also he’s young! Worst case, sells the car, sells the boat and eats the loss - he doesn’t have obligations that are hanging around his neck.

I’m not saying my scenario is probable, but it’s equally as probable as the fantasy outlined in the article.

I'm not sure the outcomes are equally probable.

Boats and cars depreciate in value pretty hard, so those are most likely sunk costs. Now mark has a cool boat and car, but that doesn't guarantee you a social network, much less a social network of professionals.

A doctor wanting to start a practice in the slip over would be quite a stroke of luck. An even bigger stroke that he would be any good, and yet even bigger stroke that he would want to start his practice with some random dude on a boat. All that for a shot at putting in the hard work so you can maybe have a successful practice.

In your scenario, it seems likely that Mark is actually pretty charming, and that's what would lead another boat doctor to want to start a practice with Mark. If so, then Mark probably doesn't need the boat or car to charm a peer from his existing network. Which would almost certainly be better ROI.

Additionally, even if everything went wrong for Sam, as you describe, he would have learned a ton for future cash flowing assets, and can probably sell them for what he purchased them for, possibly more if he improved the numbers. Between the knowledge, and the intermittent cash, Sam almost certainly has a much better ROI.

I would like to point out though, that I don't fully agree with the goal of the article. Sam seems like he is going to wake up one day and wonder where his life went. Doesn't sound like he is making any great new memories. Mark, on the other hand, probably won't be retiring in the Hamptons, but he will probably look back on his life and have made some awesome memories.

I generally agree with your points, I might disagree on whether the personality is necessarily the key driver, after all, if you don’t meet the right people, they don’t get a chance to be charmed. But that doesn’t take away from the core of your point.

The sort of meta-comment that I think the article kind of doesn’t address at all is that there’s a lot of personal growth and development books that are all about “core competency”. Figure out what your core competency is and double down on that, make sure that is tended and watered and growing every single day, because that’s the thing you do better than other people.

Sam’s core competency is presumably being a doctor, but he has all these distractions. The author can say “passive income”, but it’s a drag even when things don’t go as wrong as my overwrought scenario. My father had a ton of “side hustles”, and some worked better than others, but they were all some amount of psychic drag on his attention and focus.

Mark isn’t necessarily doing the right thing from that perspective either, but we could imagine a third person, Alice. Alice is making the same money, but instead of either of the two previous paths, she devoted her free time to working in a clinic, did research, wrote papers, went to conferences. She studied on her own time, and worked to improve her craft and reputation. She hires an accountant to deal with her taxes, a money manager (or roboadvisor) for investments, outsources everything so she can focus on being the best at what she does.

That seems pretty likely to yield dividends too, imho.

> I'm not sure the outcomes are equally probable.

To be fair, the original author makes some very improbable assumptions. Several people have posted research they've done or experience in things like vending businesses. At one point the author says that even with Covid affecting the short term rental market Sam could still get a 20% return in year 1. To make that math work he needs to make $100 profit a month from the rental property during a pandemic when he would actually have a hard time just minimizing his losses.

I’ll add another reason why these scenarios are ridiculous: they assume that the time that goes into the side hustle is “free” and that it’s impossible to advance any faster in one’s “primary” career. I don’t know how things work in medicine, but in software engineering at a high-level tech company a bump up in pay grade blows away the $250/month you’d make fiddling with a vending machine. And wasting time on the vending machine makes it that much harder to get the vastly more valuable promotion.

I wonder if these stories are appealing because it seems like an “easy” path to wealth, whereas “work hard at a demanding job” seems hard.

This is the same conclusion I arrived at after considering starting an AirBnB side business. It would be very difficult for my time to be better spent doing anything besides advancing my career.

That makes me wonder though: how would I even determine if an opportunity or side hustle is worth pursuing? If every SWE followed our logic, Silicon Valley would be a very different place.

I guess, there’s a big difference between starting an AirBnB and starting AirBnB: the latter has much higher potential reward. So if you’re going to start a side hustle, it better have the potential for fast growth.

In programming terms, choose a side hustle where O(Side Hustle) >= O(Career)

That $250/month happens regardless of your employment. If you retire/get laid off/fired/startup fails, that promotion doesn't get you income anymore, but that $250/month still happens.

Granted, you likely have the privilege of working in an in-demand field so you won't be out of a job for long, but not everyone is like that.

5k more a month just for switching jobs is pretty sweet. Even less responsibility too.

Your scenario is almost completely based on chance where as the article is saying you should use your money while you have it to try and build other sources of income. The examples are maybe shit though.

I’m a super biased reader though. I get very anxious when it comes to money so when the going was good for me, I used all the extra earnings to secure a moderate income outside my job.

> I used all the extra earnings to secure a moderate income outside my job.

How? You make it sound straightforward, but I wouldn't know where to begin.

Upvoted because it is a good question that never seems to get answered specifically. It’s always something vague and simple like “just invest in... uh... stuff, bro!”

Let’s say I have $1M liquid (I don’t) and I want to “build passive income”. What do I do? Specifically, what are the actual steps? As in, I pick up the phone and do what? Should I buy a laundromat? Great! HOW do I do this? Where is eBay For Laundromats? Once you but it you’ll need to hire someone to run it. How?

Buy a bunch of duplexes and be a landlord? OK... where is the step-by-step guide?

The answer of course is that it is not straightforward. It is complex and requires experience and not-widely-known niche know-how, and that’s why not everyone just does it.

If you have a million stick it in a boring old index fund. Above market returns require above market amounts of work.

Yeah, it is luck-based, but in a different way, the original was pretty luck-based as well, as everything worked out for Sam (bought a great low effort website for 3k? That’s pretty lucky).

I would say the scenario with the lowest amount of luck is not really outlined here, which is: get a good job with a high probability of stability. Work hard at it, spend less than you earn and put it in a diversified portfolio of investments and then don’t think about it once it’s in there.

I love the reactions I see when people are presented with sound financial advice. This is really boilerplate stuff every wealthy person knows. Over and over I see sound sane boilerplate financial sense get treated like it's poison and absolute garbage financial advice gobbled up like candy.

As my grandfather used to say, "If you sold $20 bills on the corner for $19 all you'd do is get arrested."

> This is really boilerplate stuff every wealthy person knows.

Since it's so common knowledge, can you point me to where I can buy a website that makes $200/month for $3000?

Also, 2nd mortgages aren't normally readily available. Particularly with such a small down payment. But maybe it's different for people making $200,000/year?

This is why: "You are the slave. You are at the mercy of your next paycheck and the mercy of your employer."

Immensely powerful quote.

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