The Passive Income Scam

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Almost 60 days ago, I posted a page on my website offering to give away $10,000. To win, all you had to do was give me your email address. Guess how many people entered.


Yes, you read that right. Zero people gave me an email address for a chance to win $10,000.

Watch the video version of this article or scroll to continue reading.

If you’re wondering why I’d give away $10,000 for an email address, I did it to prove a point and ultimately to teach you one of the most important lessons you might ever learn about business.

If you’ve spent time on YouTube, you’ve undoubtedly seen those spammy passive income ads. The type of ads that promise to show you have to make six, seven, or eight figures of income while you sleep.

If I’m being honest, I can’t stand these ads. They’re misleading. They set people up to fail. And the only person who profits is the person selling the course.

If you watch enough of these ads, you’ll realize they’re a carbon copy of the same ad.

In every case, the person in the ad struggled to make money. Then they found a little-known secret that allows them to make passive income.

Luckily, they’ve simplified their process and are now willing to share it with a limited number of people. That’s why you should hurry and click the link before the offer expires.

The only catch is the thousands of dollars they charge for access to the course.

I hate these ads because they lead people to believe one of the biggest fallacies in business. That is, if you build it, they will come.

Unfortunately, nothing could be further from the truth.

In business, building it doesn’t guarantee success. I know this because I built an amazing company that fell flat on its face. But I also built an 8-figure e-commerce business, so I know what it actually takes to be successful.

So in this article, I’ll explain why passive income courses are a scam, what actually leads to business success, and why no one signed up for my $10,000 giveaway.

A Story

I built my first business with my brother when I was 24. The lottery was only legal in 43 states then, so we built a sweepstakes business that allowed residents in all 50 states to win up to $1,000,000.

We believed our business would be the next big thing, so we kept it a secret while building it. We also thought our idea was so good that word would spread after we launched, leading to our success. But that didn’t happen.

After running the business for about a year, the writing was on the wall. We closed the doors with a couple of hundred dollars in sales—a far cry from the $10,000 we spent building the business.

Our second business was a carbon fiber bicycle wheel company. And instead of building that company behind a secret veil, we built it publicly.

I outlined our plans to build affordable carbon fiber bicycle wheels on a popular triathlon forum. I asked forum members if they’d be interested in the type of products we were planning to sell. Because the response was overwhelmingly positive, we decided to keep going.

So we started a blog and shared our story as we built the company. We shared our design process, gave people an inside look when we traveled overseas to factories, and asked our followers to vote on key product decisions. We even let our community redesign our logo when we discovered they didn’t like our first design.

It took two years to develop our first products, but thousands of people subscribed to our newsletter during that period.

This time, our opening day of sales was dramatically different.

We opened our online store at 10 am on February 23, 2012, and we had so much traffic that our site instantly crashed.

After 5-10 minutes of sheer panic, we got our store back online. Then we watched in amazement as we collected $350,000 in sales over the next 20 minutes.

This demand continued for several years. Whenever we received a new shipment of wheels, they’d instantly sell out. As a result, we sold between $250,000 to $500,000 of bicycle wheels every 6-8 weeks.

Why Our Second Business Worked

One of the reasons our second business was successful is because we learned the value of attention. Here’s why attention is important.

Broadly speaking, every sale occurs in three phases. You can illustrate these phases with a sales funnel.

The Sales Cycle Sales Funnel Chris Thornham

Phase 1: Attention: At the top of the sales funnel, you capture the attention of potential customers and let them know your products exist.

Phase 2: Offer: Once you have your customer’s attention, you ask them to buy your products.

Phase 3: Sale: Customers purchase if your offer is enticing enough.

Our first business failed because we couldn’t capture people’s attention. Consequently, we made no sales because we had no one to sell to.

However, before starting our second business, we studied marketing. That’s why we discussed our product idea on a public forum and shared our story as we built the company. In doing so, we gained the attention and trust of thousands of people we could sell to when our store went live.

Why Passive Income Businesses Fail

I’m telling you this story because a lack of attention is why most passive-income businesses fail.

The ‘gurus’ who sell passive income courses sell the dream of making money while you sleep. As a result, countless people pay thousands of dollars for programs that promise to get your business up and running in days or weeks.

Unfortunately, these gurus fail to explain the importance of attention when selling products.

Here’s what happens.

People with no money, experience, or social following buy these courses. Then they launch a product on a cookie-cutter website, hoping to become the next Amazon. But because they have no attention, they get no traffic or sales. Finally, their business fails because they don’t know how to run a company.

This problem also explains why nobody signed up for my $10,000 giveaway. Creating the offer was easy—like building a passive income business using a template. It took less than an hour to build the landing page on my site.

Additionally, I had a great offer. Giving people a chance to win $10,000 in exchange for an email address is a no-brainer. But no one entered because my offer had no attention.

Ultimately, here’s the main thing you should take away from this article.

People make millions of dollars as entrepreneurs because they offer valuable products in exchange for money. But it takes time to create value. So if you’re a new entrepreneur without experience and attention, don’t expect to create value in a weekend or a month.

For context, I recently saw an ad offering to help you build a 7-figure online course in 30 days. That’s completely absurd. If you have no experience, do you really think you can build a 7-figure course in 30 days?

Let’s think about that for a second. To build a 7-figure course in 30 days, you’d have to become an expert in a topic. Then you have to learn how to teach your subject effectively. Next, you’d have to buy video and audio equipment. After that, you’d have to learn how to film, edit, and process audio. Then you’d have to learn how to appear natural on camera. And finally, you’d have to learn how to build a website, market, and sell your course.

I’ve built an 8-figure e-commerce business. Do you know what that took?

It took years of 60-80 hour weeks, millions of dollars of debt and risk, countless sleepless nights, legal battles, tens of thousands of emails and customer service tickets, and years of marketing and product development.

To give you some context, I started my YouTube channel after I had 15 years of experience as an entrepreneur. And after 40-50 thousand hours of honing my craft, I finally felt like I had something valuable to say.

But even after I decided to start a youtube channel, it still took the better part of a year to learn about filming, editing, sound design, titles, thumbnails, and everything else it takes to run a youtube channel.

So if someone tells you they’ve unlocked the secret to making you millions while you sleep, they’re full of it.

When you think about it, the fact that they’re paying money to advertise a course is a giant red flag. Because if they truly found the secret to making millions while they sleep, why on earth would they spend time and money trying to sell a course that would only dilute their market share? It makes absolutely no sense.

How To Become A Successful Entrepreneur

I’ve harped on how hard it is to be an entrepreneur. In doing so, I’m not trying to make entrepreneurship sound terrible.

Yes, entrepreneurship is hard, but becoming an entrepreneur is one of the best decisions I’ve made. I’m just letting you know that you’re not going to become successful overnight, so you don’t get sucked into buying a course that over-promises and under-delivers.

The truth is, you don’t earn people’s trust and attention overnight.

Behind every successful entrepreneur are years of experience and struggle that earn that entrepreneur the attention and trust they need to succeed.

For example, The Rock launched a tequila brand that reached a $3.5 billion evaluation in a year. But you can’t ignore the decades he spent building a following of hundreds of millions of people.

Likewise, Ali Abdaal makes millions selling his Part-Time YouTuber Academy. But don’t forget that he has millions of followers who trust him, a staff of close to 20 people, and over 600 videos on his youtube channel.

I know it’s possible to buy attention with ads. But ads are expensive. So if you’re just getting started, you’ll unlikely have a large enough budget to pay for the attention you need.

Ultimately, the bottom line here is simple. Entrepreneurship can change your life for the better. But if you’re just getting started, know that it will likely take years to build the experience, trust, and attention you need to be successful.

In A Nutshell

Here’s a summary of this article.

  • Entrepreneurs make millions because they offer valuable products in exchange for money.
  • It takes time to create value. Don’t expect to buy a passive income course and create a valuable product overnight.
  • To become a successful entrepreneur, you must earn experience, trust, and attention. Doing so typically takes years.
  • The sales cycle can be broken down into three stages 1) attention, 2) offer, and 3) sale.
  • If your business and products don’t have attention, you will not make any sales.

Books That Influenced This Article

The following book links are Amazon affiliate links. If you purchase a book after clicking one of the links, I will receive a commission.

Your Next Five Moves
Book | Audiobook | Kindle

The New Rules Of Marketing & PR
Book | Audiobook | Kindle

The Five Dysfunctions Of A Team
Book | Audiobook | Kindle


Chris Thornham 80/20 Financial Planner
Take Control Of Your Finances

Reduce financial stress, reach financial freedom, and achieve financial goals like buying a home, paying off debt, and investing for retirement.

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