Skip to content

My honest advice to someone who wants passive income

2024-12-27 · Long video (solo, talking head or whiteboard) · Ali · recording, 42:31 · watch on YouTube

Topic: Business and entrepreneurship (also: Money and investing, Mindset, motivation and happiness) · mode: Explanation and tutorial · tags: His own products discussed, His own numbers, Lesson from a book, Sponsor segment present, Feel-Good Productivity thesis, His medical past

Retelling a holiday conversation with a lawyer friend he calls Harry, Ali explains passive income as income de-correlated from your time, compares investing from a job with building your own business, walks through finding an idea and choosing between an audience, a service and a product, and says Harry's failure to keep writing shows why passive income is hard.

What is said

The parts of the video and what is said in each (★ — how much it matters to the video).

00:00:00 — A friend called Harry wants passive income; Ali's own goal since 13

  • ★★ On holiday with friends a couple of months earlier, one of Ali's friends, whom he calls Harry, said he really wanted to build streams of passive income. — 00:00:00 · passive income
  • ★★ Passive income has been Ali's personal goal since about the age of 13; after many years of trying and failing to start businesses, he made enough money to quit his day job. — 00:00:29 · passive income

00:00:58 — What passive income means, why Harry wants it, his magic number, and the ship model

  • ★★★ People who want passive income rarely mean making money for doing nothing, which Ali calls a pipe dream: what they want is income de-correlated from their own time. — 00:00:58 · passive income

    “what they want is income that is de-correlated from their own time”

  • ★★ Ali's book Feel-Good Productivity, published at the end of 2023 after about four years of work, now sells on its own with a few thousand five-star reviews on Amazon and Goodreads, generating him some passive income. — 00:00:58 · Feel-Good Productivity (book), Amazon, passive income

  • ★★ Ali's first question to Harry was why he wanted passive income in the first place; Harry's answer came down to one word, freedom. — 00:01:29 · work optional, passive income
  • ★★ In these conversations Ali asks whether the person has a magic number in mind; Harry's was £10,000 (about $12,000) a month of passive income, enough to replace his salary. — 00:02:08 · passive income
  • ★★ To make money, Ali says, you can be crew on someone else's ship or build, own and captain your own; most people start working life as crew, which is known as a career or a job. — 00:03:06
  • ★★ Starting your own business is not the only way of making passive income, Ali says, though he would argue it is one of the better ones. — 00:03:36 · passive income
  • ★★ Contributing your time to someone else's ship is very active, Ali says: you are essentially trading time for money, which is fine and where everyone starts, but not the passive income dream. — 00:03:36 · passive income

00:04:17 — Passive income as crew on someone else's ship: savings, the S&P 500, the 4% rule, get rich slow

  • ★★ As crew on someone else's ship, Ali says, there are two ways of generating passive income, the first being a savings account, which lends your money to a bank. — 00:04:17 · passive income
  • ★★ Most of Ali's investments are in the S&P 500, which splits his money among the top 500 companies in the US, including Apple and Amazon. — 00:04:46 · S&P 500, Amazon, Apple
  • ★★ Ali says money invested in something like the S&P 500 has grown about 7% a year over the last 30 years, or up to ten depending on who you ask and whether inflation is counted. (hedged) — 00:05:15 · S&P 500
  • ★★ Ali explains the 4% safe withdrawal rate many finance gurus use: you can generally withdraw 4% of an investment account each year without touching the principal, so £1 million gives about £40,000 a year. (hedged) — 00:05:45
  • ★★ Harry's goal of £10,000 a month, £120,000 a year, would need £3 million invested at the 4% withdrawal rate, which Ali reckons would take him at least 10 and maybe 20 years. (hedged) — 00:06:14
  • ★★ Ali describes "get rich slow": in a fairly stable, relatively well-paid career, save more than you spend each month and put the savings into investments. — 00:06:43 · passive income
  • ★ Harry already had money in an investment account, having followed the advice in Ali's video How to Invest for Beginners. — 00:07:12

00:07:30 — Sponsor read for Make

  • ★★ Working on someone else's ship limits both how much money you can make and how far your time can be de-correlated from it, Ali says: an employer is essentially buying your time. — 00:09:09

00:09:20 — Limits of a job and the faster, riskier route of captaining your own ship

  • ★★ Even an investment banker or neurosurgeon who makes millions and invests them in stock market index funds takes ages to reach passive income that buys freedom, Ali says. — 00:09:38 · passive income
  • ★★★ The faster but higher-risk method of generating passive income, Ali says, is to build, own and captain your own ship, usually by starting your own business. — 00:10:07 · passive income
  • ★★ Investing in real estate also counts as owning your own ship, Ali says, but making good money from it needs very expensive properties or a lot of them, which takes money. — 00:10:07

00:11:02 — Internal barriers, the Instagram poll, and the Now, Not How challenge from Million Dollar Weekend

  • ★★ Ali reckons about 80% of the barriers to starting your own business are internal: thoughts such as lacking the right idea, knowledge, skills, network or money, or not yet having an MBA. (hedged) — 00:11:02
  • ★★ In a poll of Ali's Instagram followers, about 10% already ran a business part-time, about another 10% full-time, and 71% wanted to start their own business someday but had not yet acted. — 00:11:32 · Instagram
  • ★★ For a lot of people who want to start a business, Ali says, the real barrier is not knowing what they would do; that was Harry's position. — 00:12:01
  • ★★★ For anyone stuck without a business idea, Ali points to Noah Kagan's Million Dollar Weekend and its first-chapter Now, Not How challenge: ask one person you respect for a business idea. — 00:12:01 · Noah Kagan
  • ★★ Noah Kagan (quoted): Noah Kagan's challenge gives a script to text a friend now: you know me well, so what kind of business do you think I'd be good at? — 00:12:39 · Noah Kagan
  • ★★ Ali urges viewers who want a business but have none to pause the video and message a friend, or anyone they respect who knows them well, asking for a business idea. — 00:13:08
  • ★★ Ali calls chapter three of Million Dollar Weekend the best resource he has found on generating business ideas, and advises reading the whole book. — 00:14:36
  • ★★ Ali says his channel will make a video about chapter three of Million Dollar Weekend, on generating business ideas, at some point. — 00:14:36

00:15:20 — Make a thing people want and sell it; doing the work versus winning the work; how to learn to win the work

  • ★★ The more business-specific knowledge and skills you have, Ali says, the more leverage: the same time put in gives far more output in growth, revenue or customer fulfilment. — 00:15:34
  • ★★★ Ali boils pretty much every business down to two things: make a thing people want, and sell it to them. — 00:16:03
  • ★★ Ali names his online courses, such as his Life Productivity System and his YouTuber Academy, as things people want that he sells over the internet. — 00:16:33 · Part-Time YouTuber Academy, YouTube
  • ★★ Ali's Accelerator programme is a six-month service of one-on-one support from his team to help grow your business, sold through an application process and a call. — 00:16:33
  • ★★ Ali says he gets roughly 55% of what brands pay YouTube to advertise before his videos, as YouTube takes a cut of about half. (hedged) — 00:17:46 · YouTube
  • ★★★ Ali separates doing the work from winning the work: a job such as law or medicine teaches you to do the work, but most jobs outside sales and marketing do not teach you how to win it. — 00:18:15
  • ★★★ To earn a lot within a career, Ali says, you have to switch from doing the work to winning the work: law firm partners are made for bringing in new clients, not for being really good lawyers. — 00:18:48
  • ★★ Partners at McKinsey or other consulting firms are paid a lot not for better PowerPoint slides, which associates can make, but for winning more work by selling the firm's services, Ali says. — 00:19:18

  • ★★★ People think entrepreneurship is about doing the work, Ali says, but that is the easy part: winning the work, sales and marketing and finding people to buy your stuff, is way harder. — 00:19:47

    “doing the work is in a way the easy part. Winning the work is the harder part”

  • ★★★ If you want to captain your own ship and build a business, Ali recommends finding ways in your day job to also develop the knowledge and skills to win the work. — 00:20:16

  • ★★ Ali calls watching videos, reading books and listening to audiobooks and podcasts about entrepreneurship passive consumption, which is fine but only level one of gaining the skills to win the work. — 00:20:16
  • ★★ Ali's level two of learning entrepreneurship is doing it in your day job: get closer to the revenue side, get on sales calls, meet clients and pitch them new proposals. — 00:20:57
  • ★★★ By far the best and scariest way to learn entrepreneurship, Ali says, is to do it for your own business: build your thing on the side and try to land your first client. — 00:21:26

00:22:05 — A new day: the video is a bit all over the place

00:22:54 — Finding Harry's idea: enjoy, good at, useful, will pay; serving your own communities; emotional intelligence for professional men

  • ★★★ To find a business idea, Ali looks at the intersection of four things: what you enjoy, what you are good at, what could be useful to others and what people would be willing to pay for. — 00:22:54
  • ★★ Another way to find what you are good at, Ali says, is to ask what you are surprised that people around you seem weirdly bad at. — 00:23:38
  • ★★ Ali and Harry realised Harry was quite good at emotional intelligence: it always amazes him that people in law seem bad at reading the emotions of their clients. — 00:23:38
  • ★★★ Ali advises building a business for a community you are already part of: it is far easier for a lawyer to serve other lawyers than plumbers, unless he knows the plumbing business. — 00:24:13
  • ★★ The first successful business Ali started helped people get into medical school, because he was at medical school himself. — 00:24:41 · 6med
  • ★★ A mistake many people make with business ideas, Ali says, is chasing what would seem sexy or cool instead of solving problems they or the people around them actually have. — 00:24:41
  • ★★ Ali says to think of the communities you belong to not only by work but demographically and psychographically: a lifelong coffee nerd, for example, belongs to coffee communities. — 00:26:02
  • ★★ Ali says men as a group definitely need more emotional intelligence and are famously bad at it. — 00:26:31
  • ★★ Asked whether his law firm would hire someone for an emotional intelligence workshop, Harry said firms pay large sums for workshops on all sorts of topics, so Ali saw a route to monetisation. — 00:27:29
  • ★★ Ali says he would pay for a course on how to be more emotionally intelligent and has already bought books on it, since he sees it as a valuable skill. — 00:27:58
  • ★★ The market for a business idea has to be validated further down the line, Ali says, but intuition is a pretty reasonable place to start. — 00:28:27
  • ★★ After about half an hour of back and forth, Ali and Harry landed on the idea of Harry teaching emotional intelligence to professional men. — 00:28:27
  • ★★ At the idea stage, Ali says, you are never going to have the perfect idea; you just need one good enough to get started with. — 00:28:57
  • ★★ Once he had an idea, Ali says, Harry had three options: build an audience, a product or a service around emotional intelligence. — 00:28:57

00:29:00 — Audience, product or service: the J-curve, the $2,000 service, doing things that don't scale; Harry picks the audience route

  • ★★ Ali generally does not recommend starting with a product: you spend ages building it before knowing there is demand, and since services can charge more, products need more customers, who are hard to get. — 00:30:02
  • ★★★ Ali generally recommends starting with either an audience or a service and ending up with products, rather than starting with a product, though he calls this a broad generalisation. — 00:30:31
  • ★★★ The audience business model is a J-curve that takes a while to get going, Ali says: he often thinks of the period of putting in effort before any results as two years long. — 00:31:35 · J-curve
  • ★★ Building an audience monetises later, Ali says, but is easy to start: an account on Substack, a YouTube channel, writing on LinkedIn or making Reels and TikToks, with basically no barrier to entry. — 00:32:34 · Part-Time YouTuber Academy, LinkedIn, YouTube
  • ★★★ For a service business, Ali says you ideally want to sell for at least $2,000, a figure based on conversations with entrepreneur friends including Daniel Priestley. — 00:33:03
  • ★★ Ali has sometimes been offered $20,000, $30,000, $40,000 and even $50,000 to run workshops for corporates. — 00:33:33
  • ★★★ A service business makes money from day one, Ali says: you sell first, get paid, then deliver, so no work is wasted; the downside is a very high-friction sales process. — 00:33:54 · J-curve
  • ★★★ As a beginner you probably should not worry about scale, Ali says: at the start, working towards your freedom, you have to do things that don't scale. — 00:34:32
  • ★★ A service business becomes more like passive income only once a big chunk of it is automated and delegated, Ali says; until then it is very active income. — 00:35:01 · passive income
  • ★★ Harry chose the audience route rather than selling emotional intelligence workshops to corporates, though he knew they could make money, because he had too much imposter syndrome about it. — 00:36:00 · imposter syndrome
  • ★★ Ali and Harry imagined that writing a few times a week for two years, with a Substack newsletter on emotional intelligence for professional men, could build enough audience to sell a course or corporate workshops. (hedged) — 00:36:28
  • ★★ Ali says he would probably have gone the service route himself, because it is so nice to be able to get the money in. (hedged) — 00:36:58
  • ★★★ Harry started writing on LinkedIn, made one or two posts and an accountability pact with the group to publish every week, then stopped publishing. (hedged) — 00:36:58 · LinkedIn

00:37:20 — What happened: Harry stops writing; why passive income is hard; the three Cs and the flywheel

  • ★★ Months later, asked how the writing was going, Harry told Ali he had done his first post but never had the time to do any more. — 00:37:47
  • ★★★ In a J-curve business you may be in the red for years, Ali says, and most people never even take the first step, which is the hardest. — 00:38:12 · J-curve
  • ★★★ Passive income is hard, Ali says, because it is so hard to stay disciplined and motivated enough to work consistently, possibly for years, on something that is not making money. — 00:38:33 · passive income

  • ★★★ To make passive income you must create assets that create value while you are not there, Ali says: the three Cs, content, capital and code. — 00:38:58 · passive income

    “3C is content, capital and code”

  • ★★ With content, capital and code alike, Ali says, you go through a period of making no money; code includes software such as his app VoicePal. — 00:38:58

  • ★★ Ali compares this to a flywheel: it takes ages and a lot of energy to start moving, but once going it spins more or less on its own. — 00:39:26
  • ★★★ Harry has no passive income at the end of the story, Ali says, because he took the first step but failed to execute on it consistently. — 00:39:26 · passive income
  • ★★★ People who fail to execute consistently often say they don't have the time, Ali says, but in reality they didn't make it: Harry has the time and chooses not to use it. — 00:39:55

00:40:24 — Ali's seven years of procrastinating on YouTube and the advice to enjoy the process

  • ★★★ Ali procrastinated for seven years before starting his YouTube channel, telling himself every school summer holiday that this was the year; in 2016 he made a couple of music videos, got about three views and five dislikes, and lost motivation. — 00:40:24 · YouTube
  • ★★ No one who builds anything meaningful gets there without battling how hard it is to stay consistent, especially when things are not working, Ali says. (overstated) — 00:40:53
  • ★★ Once his channel got momentum, one to three new subscribers a day or a comment a week, those signals fuelled Ali's motivation, and on days he did not feel like it he made it more fun, the principle of feel-good productivity. — 00:40:53 · feel-good productivity (concept), Feel-Good Productivity (book)
  • ★★★ Building passive income does not happen easily, Ali says: basically nobody in the UK earns £120,000 a year without doing anything, and extraordinary results require extraordinary inputs, effort and consistency. — 00:41:30 · passive income
  • ★★★ Ali's final advice to anyone seeking passive income: accept a journey of potentially years while it is not working, and stay consistent by finding a way to enjoy the process so you are not wedded to the outcome. — 00:42:00 · feel-good productivity (concept), passive income

In the description and comments

  • ★★ Asked why you cannot build an audience and provide a service at the same time, Ali replies that you totally could, though doing more than one thing at a time is harder, especially alongside a full-time job. — creator comment
  • ★★ Asked for the same video about someone in fast food, Ali says his friend happens to be a commercial lawyer, and if he has a similar conversation with someone working in fast food he will turn it into a video. — creator comment
  • ★ To a viewer who says Harry is made up, Ali replies that if he were fictional, Harry would have stayed consistent, made passive income and quit his job. (playful) — creator comment · passive income

Threads in this video

Where the stories that moved here went next

Mentioned

Central: content, capital and code · emotional intelligence · Harry · J-curve · Million Dollar Weekend · Now, Not How challenge · passive income · winning the work

Also: People: Daniel Priestley · James Hoffmann · Noah Kagan

Projects: Life Operating System · Part-Time YouTuber Academy · Part-Time YouTuber Accelerator

Works: Feel-Good Productivity (book)

Organizations: 6med · Amazon · Apple · Facebook · Google · Instagram · LinkedIn · McKinsey · Tesla · YouTube

Concepts: do things that don't scale · feel-good productivity (concept) · flywheel · four percent rule · imposter syndrome · index fund · leverage · the $2,000 offer rule · work optional

Places: London

Products: Goodreads · S&P 500 · Substack · VoicePal

Also centred on Million Dollar Weekend: How to Start Your First Business in 48 Hours · 19 Books to Transform Your 2026

Replies to

← Previous: 19 Books to Transform Your 2026