Modern Wisdom - #393 - Ali Abdaal - 12 Simple Ideas To Earn Passive Income

Episode Date: November 4, 2021

Ali Abdaal is a Doctor and a YouTuber. Money makes the world go round. After the last 12 months, everyone should have realised that relying on a single source of income is not a very antifragile way to construct a financial set up. Creating multiple revenue streams is a great way to de-risk yourself, and today we get to find out 12 of Ali's favourites. Expect to learn why the S&P500 almost always beats expert hedge fund managers, how Ali makes his money on YouTube, why Coinbase is great for crypto investing, the easiest way to create an online course, why houses are still a great investment idea, how to automate a business, the best and worst ways to make affiliate marketing money and much more... Sponsors: Join the Modern Wisdom Community to connect with me & other listeners - https://modernwisdom.locals.com/ Get 20% discount & free shipping on your Lawnmower 4.0 at https://www.manscaped.com/ (use code MODERNWISDOM) Get 15% discount on Craftd London’s jewellery at https://bit.ly/cdwisdom (use code MW15) Get 5 days unlimited access to Shortform for free at https://www.shortform.com/modernwisdom (discount automatically applied) Extra Stuff: Follow Ali on YouTube - https://www.youtube.com/user/Sepharoth64 Check out Ali's website - https://aliabdaal.com/  Get my free Reading List of 100 books to read before you die → https://chriswillx.com/books/ To support me on Patreon (thank you): https://www.patreon.com/modernwisdom - Get in touch. Join the discussion with me and other like minded listeners in the episode comments on the MW YouTube Channel or message me... Instagram: https://www.instagram.com/chriswillx Twitter: https://www.twitter.com/chriswillx YouTube: https://www.youtube.com/ModernWisdomPodcast Email: https://chriswillx.com/contact/  Learn more about your ad choices. Visit megaphone.fm/adchoices

What's happening people? Welcome back to the show. My guest today is Ali Abdal, he's a doctor and a YouTuber. Money makes the world go round. After the last 12 months, everyone should have realized that relying on a single source of income is not a very anti-fragile way to construct a financial setup. Creating multiple revenue streams is a great way to de-risk yourself. And today, we get to find out 12 of Ali's favorite ideas for how you can earn passive income.

Expect to learn why the S&P 500 almost always beats expert hedge fund managers. How Ali makes his money on YouTube, why Coinbase is great for crypto investing, the easiest way to create an online course, why houses are still a great investment idea, how to automate a business the best and worst ways to make affiliate marketing money and much more.

Goes without saying that this episode is not financial advice and you should take everything with a pinch of salt and if you make tons of money feel free to give me some of it and if you lose some money then don't complain. That's kind of, that's the situation we're playing with. I also appreciate getting Ali's insight because wealth creation and making tons of money and having lots of income streams is something that's always satisfied me,

but I'm not massively interested in it. I haven't done tons of research. Whereas Ali is like, he's the guy with the puppet strings above trying to control this huge Financial empire of his as he repurposes income from his online courses into other good investments I hope that you do take a lot away from today Especially if you are a content creator or someone that's got a little bit of excess cash on top of your existing job I do think there are a lot of awesome ideas, but now it's time for the wise and wonderful Ali Abdal. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there.

I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there.

I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there.

I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be up there. I'll be've just recorded on your show. Yeah. I'm going to return the favor. Fantastic. And talk about stuff on mine. And what are we talking about? I want to talk about passive income, which is another one of your specialist subjects,

I think. Yeah, I've done a lot of reading around it and dabbled with it. So let's see what the conversation goes. One of the interesting things is that for most people, income is, we're not really taught about passive income and multiple income streams. The absolute peak that most people will get is earn more than you spend and try and get a put money into a pension or some sort of ice of some kind. There's not really a very good understanding of how you spread your risk about how you can have multiple income streams.

Maybe people who are not self-employed don't think that this is the sort of thing they should be doing for people who are self-employed, they might not have the time or the understanding to actually be able to work out what they should do. So if you're talking to someone about passive income, why should someone even be bothered? Why should someone even think about it as an option?

Yeah. So the reason I think of it as being a good thing is, I think ultimately we're all trying to live a life that's like happy and meaningful and fulfilled and stuff. That's ultimately where we're all aiming at. Even with all the stuff you talk about on the show, that's our destination. Now, the reason, a big part of why we might not get to that destination, there are various hurdles that can get in the way. For example, if you have a major health problem, the end, or yeah, for example, if you have a major health

problem, that kind of gets in the way of you living your best life, and so you want to try and solve the health problem. And for example, people who have chronic back pain say that it just adds a real down into the quality of life forever Like there's not much you can do about that and I think when it comes to money We all need money to survive And the way that most of us make that money that we need to survive is by doing a thing a job that we go to for 40 hours Plus a week that we spend 80,000 hours of our lives doing Now if you could magically make everyone not need that money to survive a job that we go to for 40 hours plus a week that we spend 80,000 hours of our lives doing.

Now, if you could magically make everyone not need that money to survive, then I think we would be more free to live our best life. And though I think of it, it's almost like in board games. I don't know, have you ever played those like really long, three hour long type board games? No, but I know that you absolutely love these. Breaking love, that stuff.

Tell me about that. And so there's a game called a Grick Color, which is like, it's like Farmville, but like board game format. They used to play with my friends at uni. And in a lot of these kind of strategy board games, you need to create for yourself an economic engine of some sort,

whether that is like, I don't know, breeding sheep or getting collecting hay or collecting wood or being the person who lays brick within the context of the board game. And once you've built your economic engine, at that point you can start moving towards the victory points and winning the game. And I think in real life we all need an economic engine of some sort. And it would be really nice in a dream world if the thing that we did to make money is also the thing that brings us passion and joy and genuinely contributes to us living our best life.

But for most people, including for me, that thing is not the same as the thing that makes me money. that brings us passion and joy and genuinely contributes to us living our best life. But for most people, including for me, that thing is not the same as the thing that makes me money. And so long months of the question, like the reason I think passive income is good is because theoretically, if you could make an extra 500 pounds a month, 1000 pounds a month, 1500 dollars a month, from a thing that you didn't have to spend your own time doing, that means you can take that box of economic engine and then you can spend your time doing the stuff you actually want to do. Maybe that unenvolved, quitting your actual job and doing something different,

maybe in an involved going part time, maybe in an involved spending more time with your family and kids and stuff. But having that financial freedom is life-changing and passive income is one path on that route to financial freedom, which is ultimately on that route to living a happy, healthy, fulfilled life. How do you think about wealth? Like, let's say that you're talking to someone you want to explain to them about wealth creation, and what it is, how do you think about that? Do you think about it in terms of you have a central job, and then you try and peel cash off the top?

What's this sort of basis? I guess it's, for me, it's like, how much money do I need to live? And then how much money do I need to have a good life? I.e. good life defined as doing the things that I wanna do. For me personally, I don't think my lifestyle is particularly extravagant.

And therefore, figure out what that amount of money is. Usually, the amount of money I need to live is different to the amount of money I would like to have in order to live a good life. And then I just think we need to figure out a way of hitting those numbers. And for most people, that's their job. But that multiple income streams is another way of hitting those numbers. And for most people, what I usually advise is don't quit your job. Like do your job. And then in the evenings and weekends, find ways to build these side hustles and projects

that can make you money. So that in the future, if you want, you can quit your job if that's what you want. But we can go part-time or you can continue doing it if you really enjoy it. But either way, it just gives you more freedom, it gives you more optionality. And certainly, we found that in the pandemic, people lost their jobs and where there's a black one event happens that people can't imagine happening since like 1919 or whatever. People lose their jobs. And you realize, oh my God, reliance on a single source of income

is not a very anti-fragile way of living life, as they say. And so multiple streams of passive income, whether it's through investments or through businesses or whatever, is a way of de-risking yourself. So that's sort of how I think about wealth. Like less, so in the sort of constructive wealth, more in the case of how much money do I need to live, how much money do I need to live a good much money do I need to live a good life?

Does anyone need to sort anything before they start thinking about passive income? Is there any, is there a step 0.5 before we start with step one? Probably not. I mean, I think the issue with passive income is actually, yeah, most people need to start off with active income before they can switch to passive income. So you need to have some money coming in through something that you're doing. It is very hard to just conjure up a stream of passive income, passive defined as, you're not really working for it. I guess we can go into definitions,

but I think active income, single stream, start with a single stream of income, and then worry about diversifying that into multiple streams. Cool. Stocks and shares. Where do you start? I don't know about stocks and shares. I don't know what to put my money in.

Yep. I don't know what trading is. Why do I start? OK. That leads us into a long conversation. So practical advice. Don't worry about it. Put money into the UK, into a stocks and shares.

Issa, which is the and shares, ISA, which is the savings account or in an America, your Roth IRA or 401K. And if you can invest money, invest it into a stock market index fund. Basically, what that means is that you are, instead of buying one company, like Apple or Microsoft or Tesla or Google,

you're buying a stake in the top 500 companies in America, which would just so happen, like if you put 100 quid in something called the S&P 500, three pounds would go to Apple and you'd own three pounds of Apple, two pounds you'd own two pounds of alphabet A and B, so Google you'd own two pounds of Microsoft, two pounds of Amazon and so on. And that means you can invest in the stock market without worrying about trying to cherry pick individual stocks, which doesn't work for anyone unless you're like a very, very, very professional hedge fund manager.

And even then, for those guys, picking stocks doesn't really work. So that would be my advice to people. But I think it does help to have a first principle's understanding of what the stock market is and how that kind of stuff works. I saw a video of Warren Buffett and Charlie Munger giving an end-of-year address a couple of years ago. And they were talking about, I think Warren had made a bet with a bunch of hedge fund managers to see if they could beat the S&P 500. Have you seen this video? Yep. So sick. So, well, can you explain what happened and why that seems to be the case? Yeah. So the thing with funds, basically, if you're a rich person, you want to, you want your money to grow. You

don't want, if your money sits in a bank account onto your mattress and deflates over time because of inflation, because the government prints more money, which gets us into a conversation about crypto and stuff, which we won't go down because I'm not very familiar with that space, trying to understand it myself. Basically, money sitting on its own reduces its value over time. And therefore, if you have money, you want it to ideally increase its value over time. And one way you can do that, you can do it in real estate, or you can do it by buying and investing in stocks and shares. So you own a percentage of a company. If you do what I recommend and what Warren Buffett and Charlie Mungo recommends,

I recommend you just invest in an index fund which tracks the whole stock market, and you don't have to worry about it. But some people invest in actively managed funds. So that's basically I would give you some money. I'd say Chris, here is a million pounds. I want you to grow my million pounds. You would say, oh shit, are these giving me a million pounds? I need to grow it. But I need to do something other than just invest in the fund, in the index fund, right?

Because I need to try and beat the market. That's what beating the market means. And so you think, you know what? I think Tesla's going to do well. I think Netflix is going to well. I think Netflix is gonna well. I think I think Pets.com is gonna do well. And I think, I don't know, for Breeze is gonna do well. I'm gonna put a quarter million of all this money

into those things. And I'm really gonna hope that it outperforms what it would have done had I put it into just the top 500 companies in the US without thinking about it. And it, apparently according to Warren Buffett, I haven't read the research in this first time myself, but Warren Buffett says, and what a lot of advice on this industry is that the funds that do well one year, like let's say Chris' fund returns 20%, so my

million goes to 1.2 million, whereas the S&P 500, the index, market only return 10%. So if I was average Joe investing in the index fund, I'd make 10%, but if I gave him one to you, Chris, I'd make 20%. But there's gave them on a tier Chris, I'd make 20% But there's no guarantee that the next year your fund is also making 20% and there's also no guarantee that in year three Your fund is still doing well and it turns out that there are very few funds if any that can actually just beat the market overall Which is what this bet was that Warren Buffett did with all these hedge fund managers and he ended up winning it And giving the money to the company. But they're actually doing something that anybody could do, pressing go all in on the S&P 500, which is in itself kind of a hedge type of investment because it's across so many different companies.

And you're talking about professional hedge fund managers that were spending time and charging commissions and doing research and looking at, is this overpriced? What's the R number on the Fibonacci sequence overtrend, all this stuff? Exactly. Just put it in the S&P 500 and the S&P be all of them. That's the one, yeah. I think there are some funds in the world, like, especially the ones that invest in early stage startups

and things where you probably do be the market, but normal people don't have access to those. You have to be like ridiculously rich to be able to invest in those sorts of funds that do that kind of thing. It's my understanding, therefore most people should just invest in the S&P 500 or a broad stock market index fund. In the UK and in the US, how would you do that?

In the UK, basically whichever country you're in, you need to get a, essentially a stock broker. So back in the day, a stock broker was some dude on Wall Street that you would ring up and say, hey, Tom, I wanna put $20 Apple. And he'd be like, all right, I'm placing that order. These days, stock brokers are online. So you have these online stock trading platforms. And it varies between different countries. In the UK and the US and a bunch of countries in Europe, Vanguard is the most trusted. It was the original kind of index fund place. So you just open the account with Vanguard and you put some money into it

like let's say you start with $10, $100,000, $1,000, whatever and then you can allocate that money to one of these funds and the one that I'm fully invested in is the S&P 500 which is just the 500 biggest companies in the US. I don't think too hard beyond it about it beyond that. So that's what I suggest is Google best online stock broker. Hard bridge line-erring. Hard bridge line-erring is quite popular in the UK. That's quite easy to set up. And you can tie that in. The allowance in the UK is £20,000 per year

that you can put in tax-free. And the returns are also not taxed on that. So over time, that 20 will be $21, $22, $23. So yes, you can also set up a standing order slash direct debit, which I think is a nice way to portion off a little bit of money. Every single month, I know that X, £100, goes into that. And it's also, that also permits you to do what's called dollar cost averaging, which is to piece into the market over time. So the market is going to do these little wiggles, wiggly wiggles up and down, hopefully trending upward, which means that you're continuing to earn money.

But by piecing in consistently over multiple months, you don't end up ever catching too many big or too many low points within the market, and you get out of it on the other side or around. Exactly. So like, I have a monthly standing order for 500 pounds into the S&P 500 and 2000 pounds into Bitcoin and Ethereum. Have you seen Coinbase has a smart investing thing? Oh, no, I haven't. What is that? So Coinbase is a trading account that you can use it also while at for crypto and they have a

dollar cost averaging service that uses the movement of the price to allocate how much of your funds should go in. So let's say that you want to put, I want to put a thousand pounds into Bitcoin and Ethereum every month. It will rate down or up how much it puts in of that thousand pounds based on the movement of the coin during that month. So, if Bitcoin is more than 10% down, it'll put 1,400 in. But if Bitcoin is more than 10% up, it'll only put 600 in. So it actually sort of smart invests based on what the recent movement of the market has been. Oh, that's very sophisticated.

I should try that out. I just use the recurring buy feature and coin base. Pretty cool. Yeah. It's kind of like a rebalancing thing, but it happens automatically within the app. Oh, it's like, see that? And it's pretty simple when you think about it. Like, has the price gone up a lot?

Okay, I'm not gonna put quite so much in. Has the price gone down a lot? Okay, I'm gonna put a little bit more in. Right, quite cool. Real estate or houses? Yes. The thing with real estate is that it's a pretty good way of making passive income. In that, let's say you own a property and you rent it out to people.

Then they're paying you however much a month. I recently bought a property Manchester, renting it out for about a thousand pounds a month, so making about 12,000 pounds a year on the property. The issue with real estate, and the other good thing about real estate is that you have a physical thing, right? Like, no one's going to argue with, depending on which country you're in, no one's going to argue with the fact that you own that house. If you need to, you can live in the house.

So whereas if you need to and you need to, you can't live in your 3% equity in Apple, like, that's not really a thing. If you actually had 3% equity in Apple, you probably would be able to live in it. Like, you're 0.003. The issue with real estate is that you have to have a lot of money to get started with actually had 3% equity in Apple, you probably would be able to live it in like your zero point zero zero zero zero zero zero three. The issue with real estate is that you have to have a lot of money to get started with it. Like you need enough money for a deposit on the house in the UK. If you want to do it as an investment, you need at least 25% of the purchase price. And if a house is 300K,

you need 75K in cash to be able to afford that along with all the fees on top of it. And it's also not a very liquid asset class, meaning that it's very hard to get your money out of it because it's a ballake to sell a house. So if you need the money for whatever reason, you can't just click a button on Vanguard or on a hoggrived lands down and click sell. You have to go through the rigmarole of trying to sell a house.

There's fees on top of it, it's a nightmare. In a way, real estate is interesting because a lot of people, like probably in our parents' generation, got wealthy off of just buying a house and then not selling it. So real estate, like, it makes a lot of people accidentally good investors. Because the problem is like when something is very liquid, like let's say your mom or let's say my mom were to invest in the S&P 500, she's probably the sort of person who'd

be looking at that number every day. And be like, oh my god, I've just lost 100 pounds, I've just lost 200. And that would affect her emotionally, and therefore she'd be tempted to hit the cell button. But obviously, all these investments that we're talking about, these are long-term investments. Your money will always go up in the stock market over time, provide you don't sell at the wrong time.

And the thing that real estate does is it forces people to not sell, because it's just too much effort. So if you could, yeah, that's kind of why real estate real estate is good and owning a house is kind of nice Because it just has all these hallmarks which accidentally make it a good investment It's so effortful that it locks you in to holding onto the trade for so long that it actually works. Yeah That's funny. Yeah, I think that you're right. What we've got at the beginning here is probably one of the easiest to put money into in terms of stocks and shares, some sort of passive stocks and shares I say in the UK with hardgreens on and down, where you could literally do 30 pounds a month.

And then the other end of the scale, which is something which is quite cash capital prohibitive, which is buying a house. In the UK, 25% down, I would budget 30% overall, which would include fees, stamp duty, solicitors, arrangements, surveys, and maybe a little bit of work, a little bit more, but you want to paint this wall, I want to get some photos done, whatever it might be. To give my experience with this, I've just completed on my fifth house, which is all the same, 25% down on a buy-to-let, an interest-donge mortgage, which means that the same 25% down on a buy to let an interest only mortgage, which means that I'm not putting any more equity into the house. However, it does mean that I get more, it's a vehicle for generating cash for me. That's what I'm concerned about.

So I don't want to pay any more into the mortgage than I need to. I don't want to put equity into the bricks of the building on top of the 25% that's already there. What I want to do is just pay off what I need to to the bank in order to keep a hold of the house. Then the rent that comes in from the tenants, I want to clear off as much of that as I can over the top. Now, I self-managed all of my properties up until this year and then moved over to going managed. This would be choosing a letting agent to be the person that the tenant ring when the boiler breaks or when they snap a chair or when they've locked themselves out or when they have a dispute about you've charged us for cleaning when we moved out and I don't want to. I think overall, if you're considering getting into property and if you're looking

to do a bite to let, I think it's a good idea to self manage at least for a year. Reason being, this is going to be a significant portion of your net worth that's tied up in these houses. You are going to have conversations with the people that manage those properties and you want to know what they're talking about. You want to know what the DPS is. You want to understand about the local licenses that occur within wherever it is that you are buying. This is also another reason for, I think, purchasing books of properties within one place, find a place that has a relatively good yield and buy everything in

that. Yeah, if you want to go and get holiday homes and sort of play around with things for Airbnb, then maybe you could do it that way. But I think that there will be individual licensing quirks. In Newcastle, there's this strange C4, C3 personal license, HMO system that the council's got in place. It doesn't exist anywhere else. One of the first cities that's got it in all of the UK. You need to learn that. If I decide to now go to Manchester and the council has a different rating system, I've

got to learn it all over again because I need to work out. I should be purchasing whatever, whatever. So you can actually reduce the skill acquisition or the knowledge acquisition overheads by choosing to learn one area once and then just digging a bunch of money into that. If you want to look at places to purchase, I would advise ideally near to where you are means you can go and deal with the letting agents one on one. You can have conversations with them if there's problems with the tenants, you can go and deal with them. Other than on one, you can have conversations with them with this problem to the tenants, you can go and deal with them.

Other than that, if you are prepared, if you're somewhere that's very expensive, like London, that doesn't have fantastic yields, just go on right move and look at the places that have the biggest yields. I think Nottingham came back as number one this year, there's places, I wanna say Bournemouth was one of them, Swansea was one of the Newcastle Manchester,

a lot of them are student towns. So that would be an overarching theme. Another thing that I would say, more bedrooms is better. Just get as many bedrooms as you can. In fact, the way that I try and look at the property purchases is how much is the cost per bedroom of this house? So I can get a Newcastle a three beds for around about 120, but I can get five beds for about 150. So I try if I can to get higher bedroom properties because they're

going to yield more. And that means that you have to wait longer until you get them. But yeah, those are the two ends of the spectrum. I think we've got stocks and shares, put as little in as you need. And then we've got houses quite a lot of capital. Yes. What is your... Well, in fact, actually capital gains is something that we haven't spoken about yet, which happens with the properties. Yeah. So if, again, it kind of varies depending on which country you're in,

but usually there is some level of tax that you get when you dispose of an asset. So if you sell a house and the house has made money, for others to have much, it was when you bought it, and it is not the house that you live in. IE, it's a rental property. Then you have to pay the government some amount of tax. I think it's like 20% of basic tax payers and what's the 10% do I can't write exactly with a number of estate changes? But that's only of the increase in the property's value, right?

The increase, yeah, of how much extra money you made on it. And in the UK, you have like a 10,000 pound a year capital gains allowance. That's why if you're investing in stocks and shares, doing it through an isa, an individual savings account, I think that's what it stands for, is useful because isas are always tax free. And so for example, if you put in 20,000 like right now and 30 years down the line, it had grown to, I don't know, 120,000 pounds. But if it if it was within the context of an isa, you wouldn't pay any tax on that 120k. But if it wasn't, you'd end up being taxed on the 100,000 pounds of gain you'd made

on it, and you'd be losing 20 to 40,000 to the government in tax. So ISA is very useful for that reason. That's another thing. It's a hedge, having a property is a hedge against inflation, right? Yes. Yeah, people often say that. So the nice thing about properties is that if inflation is very high, it means actually that your mortgage is getting cheaper because you're still

paying the same amount of money back to the bank. Theoristically, unless you have a variable rate mortgage, but let's say you've got a fixed rate mortgage, which is fixed at, in America, they fixed them for like 30 years. In the UK, they fixed them for like up to five years, usually. Yeah. So let's say your mortgage is fixed at an interest rate of fixed them for like 30 years. In the UK, they fixed them for like up to five years, usually. Yeah. So let's say your mortgage is fixed at an interest rate of 2% for five years.

And then inflation goes up to 10%. God forbid, you're still paying just 2% extra, 2% each year. And so the value of the money, the money that you have borrowed to buy the house, it becomes less valuable. And therefore, you're essentially paying off the house, it becomes less valuable, and therefore you're essentially paying off your house by default because of inflation. Also, usually the price of houses, the value of the house, tends to increase greater than

the rate of inflation in any case. So you will earn money presumably on the house's value increasing over time. Housing market only goes up, someone said once. And yeah, that ends up with you hedging against inflation whilst having a capital gains vehicle that earns cash in the moment and also potentially earns you more cash when you come to sell it at the end. Yeah, that's another thing that's nice about real estate. Similar to some stocks, you make money through the value of the stock price increasing, but you also make money through some companies paying dividends to their shareholders. So I don't know if you'd invest in Coca-Cola or something,

you might make a few tens of pounds each quarter when they put out dividends. Similarly, with real estate, you could make more, you could make money when you sell it 10 years down the line because the value is increased, but you're also making money each month because people are paying your rent. So it's pretty nice. But it really is a vehicle for which the rich get richer. It's such a Matthew principal, man. Yeah, I see this within my own experience. So it's pretty nice. But it really is a vehicle for which the bridge get richer. It's such a Matthew principle man. I see this within my own experience. So it took me from finishing uni, it took me four years to buy my first house, and then it took me two years to buy my second, and then one year to buy my third, and then six

months to buy my fourth. So there is just this perfect, parabolic, is that it? Exponential, I'm sure. I'm sure. Just this perfect line coming back in. And you see, happen in front of your eyes. You really do. All right, YouTube.

How do people make money on YouTube? Oh, so many different ways. The most obvious one is YouTube AdSense. Oh, Google AdSense. There's five second ads that play before videos. Maybe like this one, if people are watching it on YouTube. And on average, people will make roughly $2,1.50 per thousand views. So if this video gets a thousand views, you'll be making two dollars, nicely done. But also there are

people, YouTubers can make money through sponsorships. So you've got a bunch of sponsorships on your show. And roughly you can expect to be making very, very roughly $15 per thousand views on a sponsorship. So again, let's say your videos on average get 100,000 views. You can probably make $1,500 through a sponsor that will pay $1,500 for you to plug there, hew or whatever, Skillshare, audible, so espace, blah, blah, blah, to your 100,000 viewers. So those are kind of the two main ways to make money off of YouTube. There's all these other extra bits, like super chat and subscription and stuff, which is a very, a very small part of it. But really, the way

YouTubers make the big bucks isn't through Google ads or through brand deals, particularly, is usually through creating their own products, which they can then sell to their audience. Yes. Before we get onto that, podcasts are pretty much the same. You've got this episode you brought to you by that happens beforehand. Now, we've gone from two very passive forms of income into podcasts and YouTube, which is significantly more active. So this is more for someone that actually wants to legit side hustle. Yeah, I think it sort of depends how you define passive income. Like, in a way, the way I view YouTube videos is that a YouTube video is also an asset. An asset is something that puts money in your pocket,

whereas a liability, or an investment is something that puts money in pocket, a liability is something that takes money away from your pocket. And so if I put in three hours into making a YouTube video, that YouTube video is sitting on the platform forever, and it's making me money while I'm sleeping. That's pretty cool. In fact, most of my YouTube videos will perform better than the house that I've just bought as a rental property because they make more money per month

than someone pays rent. Oh, I wouldn't say most. But relative to the amount of effort it was to make the video and the amount of money I put into the property, my yield on a YouTube video on online course is so much higher than my yield on buying a house, which is kind of weird. Weird when you think about it. But yeah, YouTube videos, podcast episodes, podcast episodes are not so much because you like get the money as a one off as a brand deal unless they're happy to be on YouTube where you're making the ads as well.

But it's kind of like any time you make a video, it's like you've just bought a rental property and that video is working for you and giving you rent every single month. Yes. Digital products, you've said that this is one of the ways that online creators that build up an audience can monetize more effectively. Yeah, so digital products are a subset of products generally, i.e. selling stuff. And the two broad ways you can sell stuff, and this is like, you know, it's how they phrase it in UK law, you either sell goods or you sell services.

Now, let's say I could tell you a service, Chris, I could tell you the service of, I don't know, personal training, you know, because you obviously need to, need a personal trainer, I can provide you personal training as a service. You can pay me for my time in giving you, in giving you personal training as a service. Now, if it just so happened that I built an audience based off of health and fitness content, then there are some people in my audience who might wanna pay me to be their personal trainer. That's me selling a service to someone.

Alternatively, I could sell goods, and within goods I could sell physical goods or digital goods. Physical goods would be a YouTuber saying, hey, buy my merch, buy my t-shirt, buy my mug, and they'd make 7, 10, 20, 30 pounds on a t-shirt or a mug. And some of their audiences, some of their audience would buy the physical product. I think the most interesting form is digital products.

I think it's more interesting the services and more interesting the physical goods. A digital product is someone like Peter McKinnon, a photography videographer, YouTuber, saying, hey, buy my Lightroom presets. Or it's someone like August Bradley saying, hey, buy my online course or buy my Notion template or buy my website template or buy my icon pack. And there are people that have made millions, tens of millions, hundreds of millions off the back of selling digital products. And the great thing about digital products is that generally you make it once, and then

it costs you no extra money or time to give it out to sell it to five people as a dust to sell it to five million people. Whereas Whereas if I want to sell five people a shirt, I have to manufacture, produce, and sell, you know, manage five shirts. If I want to sell five million shirts, I need to get a whole warehouse, you get a whole, it's a real nightmare selling five million shirts, and it eats into your margins. It's a big household. It's not at all a nightmare to sell five million copies of a website template. That's like free money, basically. The scalability on the internet is a site to behold.

Other things that people may have seen would be something like a workout plan, a one-off workout plan. That is different to having a course or a membership service that gives you workouts regularly. So you can write up a PDF that say that you're a PT. You decide to write up 30 days of E-MOM workouts or 30 days of high-intensity workouts, whatever it might be. That can exist on the internet. Let's say that someone has some sort of speciality and they think, I want to teach people to, they're a positive psychologist and they want to give someone a guide to the principles of positive psychology and little e-book or something like that. How would you list

it and sell it in the most frictionless way? Probably a website called Gumroad. Actually, I've got the guy who invented Gumroad, I've got his book. He'll love India. He was supposed to be on the podcast this Wednesday, we've had to rearrange. Oh, nice. I haven't read his book yet. It literally arrived earlier today as a advanced copy. So we'll see how that is. But Gumroad is great. You make an account and you can just sell stuff and they charge like a a, I don't know, 2% commission on that. But they'll host it. It'll look nice. It'll be all pre-done.

You don't need to go to the loan out code. Exactly. You just put a link on your YouTube description. It takes three seconds to list a product in Gumroad. And then you can just literally start making money. It's great. Yeah. Online courses.

Online courses. Online courses are an interesting class of digital products, because if you're a nerd and you're teaching something to your audience, generally, okay, so if we take a step back, generally there's like the, you can split up content into entertainment content or educational content. And for people like you and me who are doing educational rather than entertainment content, no offense, our audience is primed to think of us as teachers. And therefore, if we were to make an online course teaching the same stuff that we teach on our YouTube channels,

maybe in a bit more depth, maybe with a bit more structure, then the audience of our YouTube channel is primed to be also interested in, oh, I wonder, I wanna hear Chris teaching me about passive income, I wanna hear Chris teaching me about his morning routine, I wanna hear Chris teaching me about how to launch a podcast because he's done well with the whole podcast thing. And the nice thing about an online course, again,

is that you just record it once. If it's a kind of self-paced online course, you put the videos up online on a website like Podia, which is my favorite or teachable, or there's all these different platforms, where you pay a small fee like $29 a month, but they host your product, they handle the payment, they handle the checkout page, they handle the forgot password, user login, you don't need to learn to code or anything, you just literally upload your videos, and then within a minute you can start selling an online course to your audience. And online courses are how I've made the bulk of my money over the last like 10 years. Passive online courses, but also this new class which you've capitalized so

much is cohort based online courses. What's the difference there? Yeah, so we've got passive online courses which is the the traditional thing you might expect from an online course. You sign up, you pay maybe a few tens or a few hundreds of dollars, and then you've got this library of videos that you can watch throughout your own pace. Basically, a passive online course is glorified YouTube videos

just in a structure where the pay will behind it. This is really convenient. It's very convenient for the creator because they just have to record them once. It's quite convenient for the viewer because they can watch it at their own pace. So it's based on your own. Exactly, it's like with Netflix.

You can watch a whole season in one go if you really want to. You don't have to wait for the next episodes to come out. The issue with online courses is passive online courses is that they have a famously low completion rate. Like I've signed up to dozens of online courses that I've never even once opened or watched the first two lessons and I'm like, oh, come about to do this anymore.

That's what most people are like. Like I think 2% optimistically is the completion rate of a generic passive online course. And so there are people who have been like, okay, online courses benefit from the scale of the internet. But if you're really thinking about offering a transformation to your students, they're unlikely to get it through a passive online course

unless they are particularly self-motivated. So now there's this whole new vibe of online courses that they call cohort-based courses, which is sort of actually mimicking the way that real life education is done. Like when you sign up to do a degree, you're on signing up for an online course that you can watch at your own pace.

Although depending on what degree you do, that ends up being the case and you end up teaching yourself a theory. That's just a pandemic, aren't you? Exactly, yeah. In fact, to be honest, even pre-pandemic, most of my med school teaching was through YouTube videos. But that aside, you know, you're paying a large amount of money, you're getting this

experience, you're part of a cohort, you're part of community of people, you're getting these live lectures, you're getting these workshops, these tutorials, these supervisions, and at the end of it, you get some sort of skill, some sort of qualification, some sort of, you become a doctor maybe if you're doing medicine. A live cohort online course is trying to do the same thing, just doing it over Zoom rather than in real life. So I run one called a part-time YouTuber Academy, you're thinking of maybe starting below. Yeah, thank you. Where every three months we run a new cohort, it lasts for somewhere between four and six weeks.

We change it up depending on how we're feeling. And twice a week, I rock up to Zoom call, I teach people for two hours for live sessions, and then we have a bunch of interactive things, we have a bunch of small group teaching sessions. That's a lot of work. It means we can charge more for it, so we charge at the moment between $1,500,000 per place. It's still way cheaper than a similar course would be in real life,

but it's way more expensive than a passive online course would be. But hopefully, it's good for students who can afford it because they recognize that it's sort of like you don't need a personal trainer to work out. And you definitely could get hench by yourself by following an online workout plan or just doing it yourself. But for a lot of us who don't have a lot of time on our hands who don't rate our own motivation or accountability very high, having a personal trainer is really, really helpful. Similarly, you could do a course passively online, and if you're self-motivated enough to get the value from it, then that's fantastic.

I think where live cohorts benefit is in the accountability and the community that you get around it, not so much the content, which makes people do the thing more. Because often the barrier between, you know, if you think about, so if you're listening to this and you've been wanting to start a YouTube channel or a podcast, the reason you haven't yet is not a lack of information. The information is, like, I hope my husband says, it's all freely available on the internet. The reason

you haven't is because you haven't got that push, you haven't got the accountability, you haven't got that community, so that's what you're paying for in a live cohort course. So I'd recommend you should start one. It shows, I think, the importance of compliance that if you get someone to actually comply to the things that you do, the vast majority of people are going to see results. And what you get is this feeling of discomfort when you do a cohort-based course, especially if you have tasks that are supposed to be handed in each week, so with yours, you have all I want you to do by the end of this course is

recorded a YouTube video every single week. And you see other people posting and you go, oh God, God, I haven't done my YouTube video yet. So yeah, there's an interesting, I'm sure that someone's probably created a matrix of the amount of work that it takes for the creator and the amount of money that you can get back from the customer in terms of this. It is more effortful to do a call-holt-based course significantly more, it's more time-cons consuming, but also the amount that you can charge and the results that you get for the customer. I'll hire.

If you have a single delivery digital product that is literally a one and done, if you have a passive consumption for an online course, there's usually some form of community, sometimes alongside that, like some sort of Facebook group or something or circle way you can go and do that. I think that with those particular areas of skill sets,

you really, I'm a writing thinking that you probably need to aim at building an audience organically with something like a podcast or a YouTube or Instagram before you then try and launch a course, like just launching a course off your own back, posting it on your Twitter to your thousand followers and hoping that someone buys might be a who-away to invest your time? Yeah, um, this

It's a bit of a bit of nuance here. So I think a passive online course, if you have a small audience, is not really worth very much because if you think if you have a thousand followers on Twitter, maybe if you're really lucky, 10% of them will buy your course, more realistically a 1%. So let's say 10 people, 1% of your audience buys your course, and let's say you charge, I don't know, $100 for your course.

You're making $1,000, which is good money, but it probably took you like a large amount of time to put this course together. Now let's say you have the same thousand followers on Twitter and they are following you because they know you tweet about this one very specific thing, and you create a live cohort online course on it about the thing. And let's

say, I don't know, 0.5%. So less than that, let's say 0.5% of your customers decided by the thing, but you're charging $2,000 for it instead. Now you can have this like very, the very intimate experience with these, this very small group of people that knows likes and trust you already, they want your expertise on the topic and they're happy to pay you $2,000 for it. So in fact, if you sell five of them, you've made $10,000. And if you do that a few times a year, you've made a full-time living

off the back of a thousand Twitter followers, provided the value of providing a specific enough for people what to want to pay for. So I think in the old-school model of passive stuff, passive courses, it very much is the case that you should build the audience first and monetize the audience second. But I think you actually can monetize an audience that's quite small. If you want

to through the back of a coaching program or a live, live cohort course, I still wouldn't recommend it. I still think as Gary Vanichuk would say, it's better to put your effort into growing the audience before you try and monetize it. But when do you know when you've grown the audience enough? The way I think of it is like at what what point, if I monetize my audience now, would it be an interesting amount of money that would change my life in some capacity? So if I had 100 people in my audience and I was making $10 a month, it's not worth it. If I'm making $100 a month, it's not worth it. If I'm making $1,000 a month, it depends what stage of your life you're at.

But when I was younger, $1,000 a month for me would have been sufficiently game-changing to warrant doing the monetization, whereas a hundred dollars a month, it means I can get an extra a few takeaways. It doesn't add anything meaningful to my life. So that's how I kind of think about it. I'm sure there are other frameworks as well. I was talking to you earlier on about fitness

and some of the ways that people monetize in the fitness industry, they really have turned this up to 11, the one thing that they haven't got a hold of yet are co-holt-based courses. So no one really in the fitness industry, they really have turned this up to 11. The one thing that they haven't got a hold of yet are cohort-based courses. So no one really in the fitness industry as far as I'm aware, apart from fit pros teaching other fit pros to make digital products, that is one that has because they're so far ahead of the curve. But no one's really got into transformation cohort-based courses in the way that I think you quite can yet. They'll bundle people together and say, begin this and in six weeks' time, we'll all post our progress photos.

It's just not quite the same because the consumption of the product that you're doing is inherently in the real world as opposed to in the digital world. So going through it together, it's like, oh, today's workout was hard, but you weren't there. I mean, it wasn't like I didn't watch you do yours and you didn't watch me do mine. But certainly, PTs that are out there, there will be a lot of people that are PTs that are

listening or working gyms. You have a captive audience, they're the people that you train, week in, week out. You have maybe 30 clients, 40 clients, perhaps that you deal with every single month. They are people that you can monetize off the back of if you want to write any Trishing Guide, if you want to do whatever, you could even offer it to new clients as a bonus for them coming on. You could sell it to old clients that have lapsed. I think that it's just a nice way, especially if you have expertise in an area. It's such a nice and easy way to just add a little bit of extra money on.

That being said, it is effortful. You're going to have to write it. Come Road for digital products. Teachable, Podia, Kajabi for online courses. Online courses, yeah. Cohort-based courses. Has anyone got that platform right yet? There's lots of companies trying to build it. There's one called Virtually,

but we sort of use another one called Coolip, which is run by some friends of mine. No one's quite got it fully right yet. People are working on it. We use a combination of Virtually Google Sheets as Appier Zoom. It's a bit of a janky setup that's duct taped. Everyone that I know that does co-hop based courses has this super village, like cottage industry, cable tied together, just using if this then that framework and Zapier to desperately try and hold the business together.

Circle and Bimeo, that kind of stuff. Yeah, disgusting. Affiliate marketing. Affiliate marketing. The idea here is that instead of selling your own product, you're selling someone else's product and you're getting a percentage commission. So the biggest affiliate program in the world is Amazon Associates. Basically, anyone can sign them to be an affiliate for Amazon. So that, let's say, you do a video reviewing, I don't know, the latest Sony camera. And you put an Amazon affiliate link in the video description. If someone buys the product through your affiliate link, you make maybe somewhere between a 1% and 3% commission,

which if they're paying $3,000 for a camera, it's actually not bad, that's, you know, $30,000, $90, I think, if my math is right. If they're paying $4.99 for a Kindle eBook, you have to sell a lot of them to make any decent money off of that. So that's how affiliate programs work. Amazon gives you very low commissions, like broadly speaking, but if you can partner up with individual brands, I work with a company called PaperLiker,

Keyboard Company called IQ Unix, at that point you can negotiate things like 10%, 20%, 30%, sometimes even 50% affiliate commissions offer the things that you sell. And it doesn't have to be just digital products or physical products that can also be online courses. So I'm an affiliate for like my friend Pat Flynn's and Tiago 40 and David Perells online courses.

We've got a bunch of affiliates for our course. It's generally like a win-win way of selling someone else's product that you believe in, that your audience will then be more likely to buy because you've recommended it and you get a percentage of, you get a commission on it. It's like being a salesman, but on the internet. Yeah, well, I mean, everyone believes in something.

There are all things that we rate. I rate my mates, Barb is shopped, because that's where I go, and I know that he'll look after your hair. I rate that club night, man. You go in that one or Thursday, you should go to this particular place. All that we're talking about here

is formalizing that agreement and getting a bit of a kickback. I think affiliate marketing in some circles kind and getting a bit of a kickback. I think affiliate marketing in some circles kind of gets a bit of a bad name because it creates a perverse incentive for someone to oversell you on what kind of sounds like a personal recommendation. But that being said, well, I mean,

that identifies why it's such a low amount of commission that Amazon sells you or it offers you because you could sell anything. The fact is that everybody needs something and they're probably going to get it on Amazon. And if you're the intermediary, what have you done? Like what were you there for? It was either the oral B diamond white or the philips sonic hair. And you just happened to direct them one way or the other. You haven't actually brought any trade here. It's funny that you talk about if you're managed to sell someone on a expensive product versus on a bunch of Kindles, I have got affiliate links in all of the e-books that I've released, so the Lifehacks list and in the reading list as well, both of which have got all tracked Amazon links, which I just thought

would be interesting and it's past income, so why not? And I looked, it took a long time to write the 100 books reading list, and the entire amount of all of that income has topped up to about 12 pounds, I think, because you're talking about three pounds, Kindles, some of them are free, some people have got audible subscriptions, so they're just using it on their audible, which means that I don't get anything. And then one guy, because you can actually track

what product brought people to Amazon on your Amazon affiliates back end. What brought people to Amazon? And then what did they buy downstream from that? And this one guy bought a PS5. So some students went on to buy the Almanac of Naval Ravacan, then bought a PS5. I was like, yes, like £10.50. And that was like the big earner for the year.

So fun. Yeah, so funny, man. But yeah, are there any other affiliate marketing, easy access, affiliate marketing platforms or sections that you think people should take advantage of? Yeah, I think if you have an audience and you have a product or an online thing that you like, the first thing I would do is Google have they got an affiliate program. So like the other day I was saying, I started watching some master classes, Malcolm Gladwell's writing master class. I was like, oh, I wonder if master class 7 affiliate program. So I typed in master class affiliate program and then I found that they've got some, it seemed like it was active some of the time and not active some of the time. The other option is if they don't

have an affiliate program you can easily sign up to is you can just email them and say, hey, have you got an affiliate program? And I've had success in companies setting up an affiliate program just for me because I emailed them because it, but I could say, look, I really like this keyboard. I'm pretty sure I can drive a lot of traffic to your keyboard. Can you please make an affiliate program here as well I'd recommend? And they're like, after a few months, yeah, all right. And then it works. So you can do surprising things like that that I want to thought about otherwise.

Yeah, it's funny. It is funny how you're able to make money online in that way by directing people around the internet. I suppose that what a lot of these are coming back to is that you need to have a trusted network of people who are coming to you, who believe what you say, you have faith in your word. Have you got any suggestions for how people creators online should improve their trust with their audience? Yeah, that's the tricky thing because what they say is it takes a lifetime to build up

and like an instant to lose. And I've certainly done it a few times where we've put out a video where it's kind of because we just had a sponsor deadline coming up and I didn't really stand by the value of the video, but we put it out anyway. And A, that always feels really bad for me, but also people can tell like, oh, this is this was a throw away video. This wasn't the usual quality.

And really, I think trust is built up by showing up regularly and by delivering value. The way Gary Vanichock puts it is like, any time you give someone something for free, like valuable content for free, you're adding to the Goodwill bank balance with that person. And any time you try and sell them something, generally, you're withdrawing from that bank of Goodwill. And so he advocates a strategy of, he calls it jab jab jab a right hook, where a jab is giving someone really valuable content

for free, and a right hook is asking them to buy something from you. And he famously says that, like he's written a book called jab jab jab a right hook, but he says that if he could, he would have named it jab jab jab jab jab jab jab jab jab, like 20 times before the right hook. Because that is the ratio of how much you should be

helping people out with free valuable content compared to asking them for the sale. But he wasn't allowed to name it that because the publisher has done that. You end up with latent leverage, which is what Jack Butcher calls it, the fact that you have all of this goodwill that's built up and built up and built up,

and then you finally ask people for something. So when the Lifeh hacks list released last year, my convert kit got shut down because on the first day that we launched it, we did 5,000 email addresses and they presumed that I'd bugged something or I'd broken something and I had to actually get in touch with the COO on Twitter to say, dude, I'm driving a lot of people to this landing page. Can you please get them to reactivate it? to actually get in touch with the COO on Twitter to say, dude, I'm driving a lot of people to this landing page. Can you please get them to reactivate it? And he gave me a call, actually, he was really, really kind and said, I'm really, really

sorry, congratulations on the launch, it's obviously gone well. But that, what that taught me was that I'd left it too long before I'd started capturing email addresses for my audience, because if I had so much latent leverage sat there, three years, nearly 200 episodes of a podcast or more. And I only just started asking them for, even that was free, even that was me still adding value. I just wanted an email address and return. That kind of made me think, okay,

I probably could have done this a little bit sooner. And that's an interesting thing to consider, that you can wait too long to do this too. And you're jumping, finding the right balance, I think, when you've built up sufficient goodwill, a good place to start must be to build an email list because that is a halfway house. Exactly, yeah. So the way a lot of online marketing funnels work, it's like you have people coming in through your website, through your YouTube channel or Instagram or TikTok or whatever, and you want to get them onto an email list. Because you don't really own

that audience in a vertical, you don't really own that audience when it's on someone else's platform. YouTube owns the audience, or TikTok owns the audience. But you do really own that audience when you have an email list. Like when you have someone's email address, you're, they're giving you permission to show up in their inbox, assuming you don't get spam filtered by Gmail or whatever. And so really the first step and once, you know, almost from day one, it's sensible to start building an email list. And it's a very easy thing to do. You've got your email newsletter, which is fantastic.

And it's just, you know, you're delivering value week after week, where people have signed up to hear from you. And therefore, maybe once a year when you launch a product, you can email that list being like, Hey guys, I'm launching this thing. Do you want to buy? Here's a link. And those people are primed to buy from you a product, you can email that list being like, hey guys, I'm launching this thing, do you want to buy it? Here's a link. And those people are primed to buy from you because that you've been showing up in their inbox,

building up your trust with them, week after week for a long period of time. Yeah, yeah, that's a good one. What would you use? What would you advise someone to use? Let's say that they think I have a little bit of an audience, I want to start building an email list. What's the easiest, most frictionless way to do that? Ooh, a few different platforms these days. So, substack and review are free. Review is actually built into Twitter.

So I actually had my email list on review for like three years before I moved it to Convert Kit. So, review is what I'd recommend, or EVUE. Once you're ready to take email marketing a bit more seriously, you can switch to something like ConvertKit, which is very good, but it is quite expensive. So after your first thousand subscribers, which are free. So I'd start with review or sub-stack.

Yeah, the thing I like about review is it's got on your Twitter account, especially if you're big on Twitter, it's got a subscribe right there at the top of your Twitter profile. Yep. What I would say, I hope review on watching this, what I've done is I've just set up my review at the top and I just pull the emails across every day into Converter or every once a week. So you can take advantage of the frictionless sign up on Twitter,

but then pull them across and you main Converter. Yeah, that's what we do. We use a zap for that as well. Oh, you're going to have to send me that. Yeah, and you can automate it. Yeah, anytime someone signs up to review, you're gonna make a zap in three seconds that sends ads to a music convertor, get subscribed. That's sick.

Okay, I didn't know about that. Membership sites. Membership sites. So the idea here is that you get some of your audience, you charge them a monthly membership fee and bring them into some sort of premium offering. Patreon is one example of a membership site where the vibe of Patreon is, hey, support my work for $5 a month and in return, you'll

get early access to my videos or you'll get to a live Q&A with me every month. Gary Venetriak often says that if someone is your superfan, the thing they'll pay for is more access to you, so more of your content, more of your behind the scenes, that kind of stuff. That's one way of doing a membership thing. And the nice thing about membership is that people will pay you monthly, so you've got recurring income.

The annoying thing about membership is that you do then have to be showing up every single month to provide value, otherwise it's a bit unfair. And so actually, I tried to do a membership thing with my YouTuber Academy. We called it the Inner Circle, which was afterwards for alumni charging $50 to $100 a month. And we had like weekly events going on and we had that we had a lot of activities. But even with weekly events and sometimes twice weekly events, I still felt we weren't providing

enough value compared to the ridiculous amount of value we provide in the course. And so we ended up canceling it after six months and just refunding everyone any money they'd ever paid, which was like $150,000 worth of refunds that we did. But it was for the sake of that trust because I was like, no, there's no way. It wasn't fair for us to, like, I wouldn't, I didn't feel good about charging people for that value that we were offering. So Patreon is one way to do a membership.

You can build your own membership site using something like Ghost, which is what I use for my personal website, which is very good. There's a few other options like paid newsletters on Substack. You can get people in through YouTube paid subscriptions, which is built into YouTube, where you can get them into a discord community.

There's all sorts of different ways of doing membership content. But the idea is that some of your audience will be happy to pay a certain amount of money each month. But if you're going to be in kind of integrity about it, you want to give them decent amounts of value every month. Yeah, you can't just put people into a group and hope for the best So locals which is the platform that I've just started using one of the reasons that I really like that over patreon and I've Vassalated for ages and ages thinking do I want to use patreon do I want to go with locals now I ended up choosing locals mostly because it permits into community. So community members can post in there,

they can have discussions between themselves, every day the next episode goes up, there's a thread talking about it. Whereas Patreon, because it's established and there's an expected modus operandi on there, it's, here is a new piece of content for you, enjoy. Here is a new piece of content for you, watch. Here is a, whatever, like a little update or something.

It doesn't feel as organic and natural. So locals for me felt like a really, really good platform choice. There's another platform that's owned by Patreon. And it's, I think it's called Memberful. Oh, yes. Paywalls. Yeah, Paywalls WordPress sites. So let's say that you've got a WordPress site that you want to have some work behind a paywall on it. And they can integrate that. I think there's a way that they can actually integrate those member lists with some other fancy things through Zapier or through IFTTT. And yeah, that would be interesting.

Why didn't you go for Patreon plus Discord? I wanted everything to be in one site. I also think that Discord itself as a platform is a very particular portion of the internet that understands what Discord is, knows how to use it, and although most people would be adaptable, I felt like locals was just such a frictionless, it's built for conversions, it's built for creators. You click on the link, there is a big button that says join email, password, sign up, click the confirmation in your int.

Nice photo view as well. Yeah, it's beautiful. Beautiful photo, the Popeye arms. Someone accused me of looking like, who was that guy from Fast and Furious that died? Oh, come on, his name. Paul Walker. Yeah. Cross between Paul Walker and Popeye, which I took as a compliment.

I took as a compliment, but it might not have been automating a business. What's that mean? Automating a business. A good reading on this is Tim Ferriss's 4-R workweek, which kind of, I guess, put this idea on the map. Basically, if you have a business, let's say, I don't know, your, let's say you're selling a physical product. Let's say I'm selling a t-shirt. That actually is more like a traditional business than an online business. Like even if I take orders online, I still have to fulfill the orders. I have to figure out a way of like, you know, getting the customer's size, getting a payment from the customer, printing the t-shirt they want printed, or getting it shipped from my

warehouse to their address, tracking the phone to the ship to their address, making sure they're happy with it, having someone monitor the support in-box because if they email me for whatever reason, I need to be able to reply to them, having someone deal with refunds for whatever reason their T-shirt didn't arrive, there's a lot of stuff associated with that. Now if you're trying to do this all yourself, it ends up taking a large amount of time and you realize, hang on, if I want to scale this business, I don't have enough hours in the day to be able to manually package up

and ship out all my orders. And therefore, you can start adding ways, you can delegate and automate aspects of your business. So bits that you can delegate is you could theoretically hire someone to manage your support in books, or you could hire someone to ship the orders from the warehouse.

A way you can automate it is you can create, you can use something like Zapier to say that, okay, whenever a customer places an order, I wanted to automatically send an email to my warehouse person to say, hey, someone has placed an order. That means I don't have to send them a WhatsApp message anymore.

When a customer emails our support inbox, I wanted to automatically send a ping to our Slack channel, which my support person is handling, so they can reply to the message immediately. If someone sends us an email with a word refund in it, I want it to automatically just refund them on Stripe or PayPal without even me having to think about it, because I don't really care. There's all these different things you can do to automate and delegate aspects of your business, which is ultimately what you need to do to scale, because your

own time as a business owner is limited to 24 hours in a day, and as a business owner, you can probably do more valuable things than reply to refund requests, or that all things like that. So this is about freeing up time around the business as opposed to particularly creating separate streams of income. Yes, generally. You probably could create separate streams of income

if you had a business with some automated elements. That would be a bit more unusual. A generally automation and delegation is to free up your own time, and then that makes your business a bit more passive. So a lot of passive income sources start out as being very active, and then you passivify them

through automation and delegation. Yeah, building an app in a web or a website. Okay, building an app is really hard. If it's a mobile-tried? Yes, have you? No, okay, yeah, sounds like a nightmare. Yeah, building a website is easier hard. If it's a mobile. You tried? Yes. Have you? No. Okay, yeah, sounds like a nightmare.

Yeah, building a website is easier. Tools for websites and stuff, HTML, CSS, fairly easy to learn. You can learn those in about a week if you find a YouTube video and do if you end up with it a little bit. There's all this stuff around like progressive web applications. There's ways of building iOS and Android apps through building a website and porting it on to Android and iOS. it all gets very complicated.

I think the thing is, if you can build a website, there's a branch of software called Software as a Service, SAS, SAS, AAS. That is where something like Patreon is actually Software as a Service. Patreon has built the software that allows memberships to work. And therefore, when creative sign up to Patreon, they are paying a subscription or paying a commission to Patreon. Something like PayPal is really software as a service. It is a piece of software that allows people to accept payments. When I was in med school, my brother and I built something called Beemat and Ucat Ninja,

which was software as a service It was a website that allowed people to subscribe for 30 pounds a pop to do Questions to prepare for their medical school entrance exams. These are all the things these are all things that you can do If you want to build a website from scratch. It's it's quite hard to do that But I mean most like Uber is an app which someone built. Twitter, Facebook, all these incredibly high-valuation, ridiculously successful apps, or ultimately someone starting off, Mark Zuckerberg building Facebook in his dorm room, or building hot or not in his dorm room.

It's an interesting skill to have, and I still recommend to this day if anyone wants to get rich on the internet. Learning to code is a really, really useful skill to have, but it's not easy. Is there anything that you've missed off? Because you did this video a while ago about different passive income streams and we've gone through some of them today. Looking back, is there anything that you've developed since then that you wish that you put in? I think one interesting passive income stream that we haven't really talked about is coaching. And we mentioned it a little bit with a personal trainer stuff, but if you can become a coach for someone, I know a lot of personal trainers do online coaching, whereby they don't even need to be on a Zoom call with someone that they can just sort of create like a workout plan.

And for example, Athlean X probably has an online coaching program. He's probably not the one actually tracking people's macros and stuff. There's probably some level of automation and delegation there. So I think that coaching is an interesting income stream because you don't need that many coaching clients to make a decent amount of money. If you have a small audience, you can monetize them pretty effectively through coaching provided you're teaching something useful, you're providing value to your audience. So that's an income stream that people can double with if they want. Chris Sparks has an interesting article about that talking, so just search Chris Sparks and consultancy, I think he called it, and it was just discussing how people don't really see service-based businesses on the internet

the same as many others. He was identifying the fact that a lot of weight lies on your shoulders if you want to be, whether that be an online coach or a mindset coach or someone that's helping someone with team work or working through relationships or dating advice, whatever it might be, it is great, but the scalability of that is inherently downturned because you, for the most part, are the person, you're the product. Exactly. One half an hour of your time equals one half an hour of your customers' time, which means that if you only want to work eight hours a day, you can only have 16 customers a day as opposed to the scalability that you get from products

and online calls. Yeah, coaching is a very, it's not passive unless you find a way to automate and delegate it, which kind of takes away from the charm of it being you as their personal coach. Yeah. So to recap, we've got differing amounts of input in terms of both time and capital that we need to use. Looking to try and have a spread of a variety of income streams as possible is good because it hedges you against different markets either moving up or moving down. It also means that you can monetize more effectively across different streams and building an

audience, going audience first, adding value first, thin end of the wedge, over delivering on the premium side. That is something that's going to help anything else. What else has been missed off from the recipe for success? I find like, well, when I'm thinking about passive income, I kind of often think of the three Cs, which is I think something that Nevolta talks about capital code and content. And you can make money through capital by investing in stocks, investing in real estate. You can make money through code by building an app, building a

website. You can make money through code by building a website. You can make money through content by creating a YouTube channel podcast, Twitter, Instagram, TikTok, writing a blog, writing a book, all that kind of stuff. And then you've got the actual traditional businesses like selling a thing or selling a service and then applying the delegation and automation processes

to that, but capital, code and content have an unfair advantage in that they benefit from the scale, from pre-existing passiveness, i.e. capital and the internet, i.e. code and content. Whereas a traditional business, you have to do a bit more extra work to make that into a passive income source by delegating and automating. And even then traditional businesses are so much lower margin, like, you know, if you're selling a physical product, it's just going to be lower margin than if you're selling

a piece of code or a piece of content. So that's sort of how I think about it in my head. I think it might be useful for people to have that framework. I like it. Ali Abdal, ladies and gentlemen, if people want to keep up to date with what you do, give us, SHILL your online wires.

SHILL my online wires. Yeah, just check out my YouTube channel. Search Ali Abdal on YouTube. It'll probably be linked in the video description. That's all good. Sick. Thanks, one. Thanks for having me on. ["Self-Fat, Get Oh Get On Fat." Thank you very much for tuning in

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