The Core of Passive Income?

Elon Musk on Problem Solving: Getting to The Core of the Issue

Elon Musk, founder of Paypal, SpaceX, Tesla Motors, along with other concepts and projects is a visionary. His career accomplishments are inspiring and mind blowing at the same time.

In this interview with Kevin Rose, Elon Musk gives us many nuggets of wisdom. One of those nuggets is at 22:40 in the video below. At this point, he addresses how he solves problems: rather than using analogy, he works from first principles or the underlying truth. From that point, he builds up to a solution.

Often, it is very difficult to clear away the clutter so that we can understand the exact problem. If only the symptoms are treated, the problem stays with us.

In order to operate from a foundation of truth or first principles, we must make certain that terminology is accurate and clear.

Words are critical. With words, we frame and contextualize our world.

Uber and Airbnb, two popular business services today are often used in sentences containing the words “shared economy”. If these two companies were really “sharing” services, they would not be worth billions. It is important to remember that an exchange is taking place – a service for cash. One party exchanges cash to use another party’s asset. This is a contractual exchange; it is not sharing.

Another example is “passive income.” Passive sounds easy … nothing has to be done; it just flows into the account.

In most cases, passive income requires work. Take a look at our infographic. Work through each of those terms and consider the work required to build the underlying asset and turn it into an income stream. At the core of every passive income stream is someone’s work, someone’s life energy.

The next time you run your credit card, spend your cash, or receive a dividend, consider the energy, the life energy required to produce those earnings.

Click the image for the interview.