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In this newsletter, I'm revealing the secret of gaining passive income as an engineer (narrator: "Not a secret."), announce a whole bunch of additions to the Monospace website, and as always, round things off with interesting links for you to read and learn.
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Mentor Monologue
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Since I'm still pretty much learning how to, as an online educator, build trust in my audience, I'm consuming a lot of articles and videos about content creation and promotion. On these channels, but even more on the newsletters I'm getting from marketing services I'm interested in or using already, there's this constant talk about "passive income". This term is used for all kinds of ways how to generate income that is not directly tied to a proportional investment of time. Charging rent is a type of passive income; the amount the owner is getting paid on a regular basis is not related to the amount of work they put in.
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I am aware that many, if not most, of the stories and advice on passive income are shared with an ulterior motive. Many of these authors and businesses are pursuing an age-old strategy: The secret to getting rich in a gold rush is selling picks. And when this is your business model, it becomes a good tactic to motivate more people to join the race. In reality, there are only a few easy ways to generate passive income, and most of them require you to already have money that you invest so it will yield rental income or other capital gains.
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However, if you're a common software or systems engineer with only moderate financial means like me, there are other legitimate and practical ways to generate passive income, too. The downside is that they require another kind of investment. The investment of constant work over a long period of time. It's not going to be sufficient to simply buy a course, join a bootcamp, or start a newsletter.
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Most of us trade time for money. Employed engineers are paid a salary that is tied to the expectation that they'll put in a specific amount of hours per week on business tasks. As a freelancer, the connection between time and money might not be as direct, but in general, they'll still get paid commensurate to the skills and effort the project they agreed to deliver requires. And even for business owners, revenue often depend on the amount of service hours provided. Service business models can yield substantial profits, especially in the enterprise sector. But they'll always create active income. Growing revenue requires increasing workload, which in turn requires growing team capacity and therefore staffing and management cost.
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The way to break this cycle I had success with is to switch from offering a service to offering a product. In my case, it was a managed hosting product, but there are other models, for example "Software as a Service" (SaaS). This is a term I regard as a misnomer; "Online Software Rental" would describe the model better. Let's also not forget the classic "Application Development" model where you build an app and then sell it for a one-time or recurring license fee. This model peaked for independent developers in the 80s and 90s during the shareware era, and became popular again with the advent of smartphones. As we all know, you can even turn free software into a commercial product, with indie software like Sidekiq and corporate offers like AWS being just two of many examples. Finally, jumping to the meta level, you can also package your own engineering knowledge as a product; that's obviously what I'm aiming at with Monospace Mentor.
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All these models have in common that it takes a lot of work to build a software-based product and market it successfully. Apart from lots of preparation, the latter also requires a bit of luck. And even after a successful launch, there is a certain amount of continuous maintenance and development work that needs to be done to prevent bad surprises, and to keep up with market demand. This time investment doesn't come for free; it's opportunity cost at the very least. But the huge difference to traditional investments is that you don't have to come up with hundreds of thousands up front to get started. More importantly, software-based products have much better economies of scale than, say, rental real estate. That means that once it's running, the amount of work you have to put into your product will not grow proportionally with your customer base. That's where you want to end up.
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So don't fall for people who offer you a course, a bootcamp, or a marketing product with the promise that it'll gain you instant passive income. The most realistic way to gain passive income as a software or systems engineer is to put in the work to build a product for which customers are willing to pay. You'll need to grow your skills, know-how, reputation, personal network, discipline and resilience.
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Let me be clear: Even if you're motivated, this is not a sure-fire way to become wealthy, let alone over night. Failure looms around every corner. Been there, done that, bought the T-shirt. But if it works out, the fruits of your efforts can be sweet. And keep in mind that you don't have to walk this arduous path alone. I found that having other experts accompany me part of the way as a mentor or coach was tremendously helpful. That's why I eventually took on this role myself. And in The Server Room, the amount of experience and wisdom you can benefit from is growing steadily, too.
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Changelog
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I recently added a whole bunch of new features to the Monospace Mentor website:
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Sharing my knowledge makes me happy. I hope that it makes you happy, too!
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From the blog
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In The Server Room
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- Next week, we'll have our monthly community hangout! Join us on Tuesday for a relaxed, casual video chat.
- I'm planning a Deep Dive session on the work/life management system I built for myself last year, and that is now saving me from drowning in tasks. Stay tuned for the date announcement!
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Recommended reading
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As an online teacher, I always recommend additional material to my students with which they can expand their horizon. Here's a list of reading tips I've curated for you.
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An interesting question that unfortunately doesn't get asked in too many incident reviews.
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Or, put differently, three ingredients you need to operate a resilient application stack.
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To the surprise of hardly anyone, I agree that Ruby is a great option when you're reaching the maintainability limits of the Bash syntax.
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A glimpse into the SRE role at Big Blue.
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How the developer of Exim and PCRE got into free software — and is now getting out.
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Thanks for reading!
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I hope you found my News from The Server Room enjoyable and helpful. If you have any feedback or questions, simply reply to this email!
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Jochen, the Monospace Mentor
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