Don’t Start With Passive Income. Start With Leverage.
People seem to be obsessed with telling you how to create passive income. However, there is something else you should prioritize before even thinking about passive income.
Passive income works. But usually for people who already have:
A) skills
B) a reputation
C) and some capital to put to work
You don’t start there.
You end there.
For most people, everything that moves the needle is Active Income:
showing up, solving hard problems, doing valuable work.
So the real question is:
“How do I turn my active effort into something with serious upside?”
If you’re an intrapreneur (inside a company)
Your job is to turn your role into a mini-business:
Own a painful problem.
Become “the person” for a revenue-critical or cost-critical area.Stack commercial skills.
Learn P&L, pricing, basic finance, leading small teams.
That’s how you move from “employee” to “internal founder”.Ask for upside, not just salary.
Push for bonuses tied to clear metrics, a share of profit on a product line, or equity/options if they exist.
You’re still earning active income, but the leverage on each hour goes up.
If you’re an entrepreneur (building your own thing)
Passive income is usually a by-product of a real business that works.
Start with an active model.
A service, product, or offer where you can get paid quickly for solving a real problem.Create unfair value, then build systems.
At the start, you are the engine.
Once you know what works, you hire (not as easy as it sounds), productise,
and automate (integral).Reinvest into assets.
Brand, audience, IP, processes. In other words, things that make the business more valuable without you in the room.
Only after that do you worry about truly passive plays: investing surplus cash, backing other businesses, or owning assets that pay you without your time.
The big swing: build and exit
The other path is to build a business you can one day sell.
Big risk.
But if it works, a single exit can be worth more than decades of salary.
And here’s the kicker:
You can build a great business and still lose a lot of value at the finish line if you get the exit wrong.
Wrong buyer.
Wrong timing.
Wrong story.
Which brings us to “Key Insights This Week”:
same brand, very different winners.
All because of when they exited and to whom they sold.
Timing Decides Who Wins on Exit
Unilever has just sold its UK snack business, Graze, to Katjes.
Reports say Katjes paid around £35m.
Unilever apparently paid The Carlyle Group around £150m for Graze.
Same brand. Very different outcomes.
The short version of the Graze story
2008 - Graze is launched by a group of friends as a D2C snack brand.
2012 - They sell a majority stake to private equity firm Carlyle.
2019 - Unilever acquires Graze (reported c. £150m).
2025 - Unilever sells Graze to Katjes for c. £35m.
From the outside, it looks like this:
The founders nailed their timing: they sold during rapid D2C growth.
Carlyle nailed their timing: they sold when Graze was a hot strategic asset for a big FMCG buyer.
Unilever bought high and sold low.
Katjes may now have picked up a good brand at a discount in a category (healthy snacking) that still has momentum.
The brand is the same.
The winner changes with timing.
What this means for you (entrepreneur or intrapreneur)
When you think about your own “exit” (selling a company, a division, or even just moving on from a role) ask:
Who is my strategic buyer?
What story am I creating for them?
“Plug-and-play growth engine”?
“Distribution in a segment they can’t reach”?
“A brand their competitors can’t buy”?Are we exiting into strength or weakness?
Are your numbers trending up, the category is hot, and there’s competitive interest?
Or are you tired and hoping someone will “rescue” you?Protect the value on the way out.
Clean financials, clear IP ownership, simple cap table, tidy contracts.
Boring work. Saves millions.
Passive income might one day be the reward.
But the real wealth for both entrepreneurs and intrapreneurs is created by
building something valuable.
This week in 1955, Rosa Parks refused to give up her bus seat in Alabama, defying state segregation laws. This led to a boycott of the bus company which lasted for over a year, concluding only when bus segregation was deemed unconstitutional
Parks and other boycott leaders faced harassment, ostracization, and legal obstacles. Her quiet act of courage propelled a young Martin Luther King Jr. onto the national stage and changed the course of American history.
Though not to equate these events, there are similarities for founders on the path of entrepreneurship.
A) When you start out, you don’t know how the story will end.
B) It is easy for us now to see how the struggle developed but for Rosa Parks, at the time she could have been detained indefinitely or even lynched.
While not usually not a matter of life and death, a similar uncertainty follows you when you set up a new business. People are quick to tell you it won’t work and slow to support you on your road to ignore the conventional wisdom. It’s only much later that you know whether having the courage of your conviction will be successful. In the end, if you have clear and justifiable customer insight supporting your view, you can rely on this prove the doubters wrong.
Rosa Parks and the boycott leaders had the confidence that they had a justifiable cause, but they had to endure a lot of abuse and uncertainty to ultimately change the law to support them.
For the new people in this newsletter, you can get my FREE startup checklist in the link below.
