Can You Make a Living From Passive Income?

passive income
Pat Flynn December 12, 2011

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Is it possible to make an income from passive income, or is it all internet hype? Online entrepreneur Pat Flynn, from the Smart Passive Income blog, explains how more and more people are running successful online businesses. He also shares how he earns money from passive income and gives tips on how to begin an online business.

Follow Pat Flynn at: www.smartpassiveincome.com and on Twitter @PatFlynn.

Watch Interview with Pat Flynn on YouTube.

Read the Transcript

Interview with Pat Flynn

Online entrepreneur Pat Flynn discusses how to earn passive income by working online. How did he get into this field, and what’s the best way to create constant earnings from working online? He shares tips and advice for anyone starting an internet business.

How Pat Flynn Became an Online Entrepreneur

Pat Flynn: I went to the School for Architecture at the University of California - Berkeley. I started playing with Lego, and I thought architecture could be my whole life. It was for a while, until October 2008, when the economy here in the U.S. tanked and so did my job along with it. I was laid off, and I didn’t really know what to do. It was scary because I was about to get married too, and I didn’t know how I was going to support my family. I did try to look for another job in the architecture industry, but nobody was building anything so nobody needed any architects. Even still today, a lot of my co-workers that were laid off with me are still struggling to find a job, so I’m very fortunate to be where I’m at.

What happened was that while I was working, I had created this website, basically just a blog to keep track of my notes for an exam that I was taking that’s related to architecture called the LEED exam, which stands for Leadership, Energy, and Environmental Design. This is an exam that not all architects take, but many of them do. I created this blog basically to help keep track of my notes because I was better at typing than I was at writing notes. It was easier for me to study while I was traveling off of a computer as opposed to huge books, and I could share my notes with my co-workers and stuff to help them pass too.

I passed the exam. I had just left the site, and then I got laid off. I really got interested in internet business, and I’d heard a lot of people were having success with it, so I said “Okay, I do have this website. Let me go and check to see if anyone else is using it.” I hadn’t really checked the stats before. I didn’t have comments opened because I had no reason to have comments opened. I checked the stats and it literally blew my mind that every single day thousands of people from all around the world were visiting this website that I created. It actually scared me a little because I didn’t know any of this was happening. I didn’t know if my notes were good enough, but once I opened up the comments people had questions, and people said that they really enjoyed the content that I was putting out there. Basically, the way I was found was just because I put all the stuff online and Google was picking up my articles, posts, charts, images, and stuff that I was adding to help myself and my co-workers out and ranking it really high.

From there, I learned a little bit more about internet business and I added what’s called Google AdSense on the site, which automatically generated advertisements related to the content that I posted on there. It basically took a day, and immediately I saw $2 or $3 a day coming in just from adding a little bit of code on my site, and that was my first experience with making money online. Although it was only $2 or $3, that was a lot to me because I didn’t have any money coming in.

I knew there was something there, so from there I learned more about internet business and I decided to rent space on my site to advertisers who wanted some of the traffic that I had for their own sites and products. I did that and I was making about $200 or $300 a month renting space on my site, just basically advertisements on that site, but of course that wasn’t enough to make a living. What really helped me out was joining what’s called a Mastermind Group, a group of people who also had internet businesses, who knew a lot more than I did but who were very welcoming and allowed me to learn from them. The Mastermind Group involves getting together and helping each other out to reach our goals.

I’m not a part of this group anymore because it broke up once people moved away, but I am in two Mastermind Groups that meet via Skype and via conference call every week, and they’ve been amazingly helpful. In this face-to-face one that I was first in, a guy told me to write an eBook for my site and I said, “I don’t know how to do that. What if it doesn’t sell?” I was scared to do it, but he said, “Just trust me. What have you got to lose? It only takes time to write an eBook.” I did that and I spent about two months writing an eBook.

The first month that I launched the eBook on my site, I had made about $8,000 and it blew me away. I had no idea that any of this was possible and it literally scared me again because it just didn’t seem right. I felt like I didn’t deserve it and maybe I was doing something illegal that I shouldn’t be doing, but I was doing everything totally legally. It was nice, because when we talk about internet marketing and doing business online, a lot of people think immediately about scams and get rich quick and do this and do that type of stuff, but this is building a product that actually helps people to pass the exam. And in turn they were very happy to purchase the product that helped them and they also spread the word.

My site grew even more and the next month, I made $12,000 and $15,000 a month from a single eBook. It was ridiculous! It’s an electronic book, of course, and the nice thing about it was that everything happened automatically. The way I set it up was by using the site www.e-junkie.com, which allows you to upload your book and then it gives you a ‘buy now’ button that you can put on your site. What happens is that when people come to your site, whether from referrals from other people or Google, they find the product that they like. They buy it and it automatically gets emailed to them with the download link. I don’t even have to be there for the transaction to happen.

After I had created this book, I also created an audio guide to go along with it. I was literally spending about 10-15 hours a month maintaining the site that was making $20,000 or $30,000 a month. It just totally changed my life, and this was when I created the Smart Passive Income Blog, which is where most people know me from online. There, I talked about what happened on that site and why it was successful. I’ve been doing a lot of other sites, other experiments, and other ways to genuinely and honestly make money online without having to hide things, scam people, and feed off from people’s hopes and dreams and stuff like that, which is what normally people think about when you hear about people doing business online.

That’s how I got to where I’m at today, and now the blog www.smartpassiveincome.com has 30,000 followers on its Facebook fan page and 50,000 Tweeter followers. It’s just been an amazing journey, and that’s why I’m always happy to come on shows and podcasts like this and share my story and inspire people, and really show people that I’m nobody special. I’m just a regular guy. I didn’t go to business school or anything like that. I just learned what’s possible, took action, and really put up my own. I really had no choice but to succeed.

Other Stories About Internet Business

Douglas Goldstein: Other than this original business, have you started any other businesses?

Pat Flynn: My friend and I heard some success stories about people doing iPhone applications. There was actually an iPhone app that was made very popular because it showed how much success it had. It was a ridiculous application called iFart. This application basically allows you to program different types of farts and you can set it like an alarm, so you can keep the tone there and when somebody moves it then it farts. It was only 99 cents, but it made millions and that was done by Joel Comm.

My friend and I thought that we had to be able to do something that’s better than that. There’s something out there as far as these types of applications are concerned, and the iPhone app market is huge, and as we all know now there are a lot of success stories on it. So my friend and I created a few applications, and now we have a total of about 27 applications on iTunes all making passive income. We just created the applications. We didn’t even program them. We don’t know how to program. We outsource that to developers who are much better than us as far as the ability to create applications. We put them on iTunes on the app store and for a while, they were making about $8,000 to $12,000 a month in total, but now the market slowed down. It’s a little bit more competitive, so now we’re making about $5,000 to $8,000 a month just from those iPhone applications that are in iTunes.

Douglas Goldstein: How do people come up with these ideas that will work?

Pat Flynn: For me and the LEED exam, that was just stuff that came from my own experience, stuff that people asked me questions about. My advice would be to look at your life and see what people are asking you about, what you have knowledge in, and what you are considered to be an expert in. The whole expert equation, that’s interesting because you don’t have to be a complete expert in order to become successful online. You just have to know more than other people and the people who are searching for that information. If you have the answers, they are depending on what it is that you’re sharing. They may be willing to pay for it, or if you give it all away, they might be happy to repay you for all the information that you’ve given them.

I actually had a lot of people who purchased my eBook after they passed the test because they just wanted to thank me for all the free information that they got to pass the exam before I had that eBook come out, which is pretty interesting.

When Should People Pay for Stuff Online?

Douglas Goldstein: How do people differentiate whether they should pay for something online or they shouldn’t?

Pat Flynn: I believe that if you can provide something of complete value that is epic and will totally help them achieve something, people would be willing to pay for it, and yes there’s free information out there but it’s hard to organize all of it.

The nice thing and the very interesting point about the eBook that I’ve created was that actually 95% of the content in that eBook could be found for free on the website, and that’s another thing that scared me about creating an eBook in the first place. I was scared that people were going to ask, “Why are you charging me for this when I can get it for free?” But people were absolutely happy to pay for it because I had already given them so much free content that they felt that they had to repay me, but secondly also because the eBook is a lot more organized. It’s not physical, but it’s more tangible than having to go from link to link on the website. It’s much more organized and streamlined, and if it has a specific purpose with an endpoint, for example that one is passing an exam, they can see the steps much easier on an eBook or in an online course or something like that as opposed to just flipping through pages on the site.

Another thing that’s interesting is when people pay for stuff they feel like there’s value in it. There might be some awesome, amazing, free content out there that can teach you the same thing, but I believe that when people pay for something, they are more invested in completing whatever it is that they’re attempting to do out there.

It’s funny because when I launched the eBook, I didn’t want to charge much at all. I charged $19.95 for it, which is much lower than any other study guides that were out there from all the big companies. I actually got an email from one of my customers, who was a business expert and he said, “You’re way underpricing your eBook. You should raise the price and then come back to me in a month and tell me what happens.” I did that and I actually sold more eBooks at the higher price because there was more perceived value in the eyes of the customer. So I emailed him back and I said, “Thank you so much. Is there anything I could do for you?” That was life changing. It was a great advice.

How to Start Your Online Business

Douglas Goldstein: What would be a good first step for people to get started on their own online business?

Pat Flynn: The first thing I would do is just do it. There are a lot of things holding us back like being scared of failure, or mistakes, or technology. Just go out there and find someone who is already doing what you want to do and learn from them. Learn as much as possible from them. A lot of people out there are successful and are willing to help those who want to be successful too. That’s why I have my site, and I know exactly where I came from. That’s why I always respond to my email, my Tweets, and Facebook comments, because I was once at that point. So I would really look for a mentor or a coach or something like that who you can really learn from and get a little bit of guidance.

For me, it was the Mastermind group, which is great, but a lot of times it’s hard to find those people. Really just find a coach or a mentor, someone to look up to who you do not copy, as you don’t want to do that, but use as inspiration or as a kind of example of where you want to be and that’s how you get there.

Douglas Goldstein: How can people find out more about what you’re doing?

Pat Flynn: You can go to my website at www.smartpassiveincome.com and I’d love to say hi to you there.



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