Passive Income and the Hedgehog Concept

One of my favorite business books of all time is Good to Great by Jim Collins. One of the most common themes in the great businesses Collins studied is summarized in what he termed the “Hedgehog Concept.”

The Hedgehog Concept

The Hedgehog Concept is the intersection between three essential questions that you must answer with your blog or business:
1. What can you be best in the world at?
2. What are you passionate about?
3. What drives your economic engine?

If you are able to clearly articulate an answer to these three questions and take action to follow them with all that you do, you will see long-term results.

The first two are written about often in passive income spheres.

What am I passionate about?

Jonathan and Bob (Christian Personal Finance) started a blog called Blogging Your Passion, which focuses on this very topic.

James Clear over at Passive Panda has a nice article titled, “How to find your passion (the secret you need to hear)“…you gotta love that headline.

And, of course, the king of passive income, Pat Flynn, writes about the concept often: “3 Questions You Should Ask Yourself to Find that Passionate and Profitable Idea.”

What can I be best in the world at?

In the blogosphere it is tough to think of other websites as “competitors.” The key question in my mind is “what is your unique selling proposition?” Seth Godin called this the Purple Cow.

Corbett Barr’s articles on USP from are the best around right now. Read and apply his “Ultimate Guide to Finding Your Unique Selling Proposition” to your website or idea. If you cannot see a significant characteristic that sets you apart from all the other websites in your niche, then think twice before moving forward. You may not have a Hedgehog Concept.

Finding your passion and recognizing your skills and potential compared to the competition are essential when you are trying to find a niche for your website. But how does the economic engine apply to blogs (and more importantly passive income)?

What drives my economic engine?

(and how do I make sure this driver reflects passive income?)

Fill in the blank: The key measurement of my monetary success is: profit per __________.

For businesses, here are some examples of economic engine drivers:

  • profit per customer
  • profit per product/service
  • profit per employee

For bloggers, economic drivers include:

  • profit per unique visitor
  • profit per subscriber
  • profit per customer
  • profit per post (or podcast episode, video, email, etc.)
  • profit per product/service

Passive Income and the Hedgehog Concept

Passive income is raging in popularity among bloggers in every niche. Why? Blogging takes time and people are looking for the best way to put in the smallest amount of work with the biggest amount of results.

The idea is that you can create content, products, and systems online that will generate income while you sleep.

How does this figure in to the Hedgehog Concept?

In general, this is my experience of time/action:

  •  1-5 minutes: respond to a tweet, G+ comment, comment on Facebook
  • 10-15 minutes: answer an email
  • 1-2 hours: blog post
  • 1-2 hours: newsletter email
  • 1-2 hours: create and optimize a landing page
  • 30-40 hours: create a free opt-in product (ebook, ecourse)
  • 30-40 hours: create a paid product

Mileage may vary, but the concept is key: do the work that takes the least amount of time for the biggest result.

In other words: profit per hour.

It sounds like a job doesn’t it? If I get paid a salary at work, why would I spend my time focusing what I am getting paid per hour?

With passive income, we increase our profit per hour through the work that we do. We can control the amount of time we spend and we can do amazing work that results in higher income. It is very different from a job.

The key, though, is that you control the amount of money you make per hour of work based on your ability to do work that produces the greatest amount of profit.

Passive Income Case Study

I love Benny Hsu’s story. He was recently featured on Smart Passive Income for his enormous success with the Photo 365 iPhone App (which I love).

Benny has a blog in the personal development niche–a niche that many bloggers struggle to monetize. Inspired by Pat Flynn, Benny stopped doing all of the typical “make money online” strategies like niche sites and PPC campaigns and focused on something unique.

I love his realization: “When I didn’t see money coming in, or lots of traffic, I thought to myself, ‘See I knew I couldn’t do it. This was a waste of my time.'”

You can read Benny’s full reflection here: My $4,739 Weekend and 11 Lessons To Help You

I’m not sure if Benny measures his economic success as profit per hour, but if he compared the number of hours he spent trying to make money online the typical way, it would pale in comparison to the creation of his app.

Go find what you love, identify how you can be the best in the world, and develop passive income by producing the highest amount of profit per hour of work.

Why Personal Finance Blogs Monetize with Google AdSense

I’ll admit that I am a wannabe personal finance blogger. The first domain name I ever bought was targeting the keyword phrase “personal finance.” It is a crowded niche and I couldn’t select a definitive unique selling proposition.

If you read a lot of personal finance blogs like me, you probably noticed the number of them that monetize with Google AdSense. There are ads on almost every one.

How can this be when so many “make money online” gurus tell us to avoid monetizing with ads?

Personal Finance Keywords Make Money


Where Does Google Make Its Money? [ infographic ]

As you can see the top three keywords are perfect for personal finance blogs. In fact, the majority of the top 20 keywords in this infograph are personal finance related keywords. Google must love personal finance blogs–they are making them some cash!

In most niches, the cost per click for keywords related to the content of the site is so low that it really does not make much sense to use Google AdSense. However, in the personal finance niche it makes perfect sense even with a small amount of traffic. Check out one of the popular personal finance blogs ( Get Rich Slowly, The Simple Dollar, The Consumerist) and notice the kind of advertisements that pop up in the sidebars. If the ads don’t represent the infograph above, then clear your browser’s cache and history and refresh the page (sometimes ads can be give to you based on your browsing history not the content of the page).

Personal Finance Bloggers Who Monetize with AdSense

ChristianPF Monetization with Bob Lotich

ChristianPF Google AdSense Monetization



ChristianPF is the leading personal finance blog in the Christian niche of the personal finance blogging community. He has been able to recruit additional bloggers as contributors to create content. These recruits gain credibility and visitors to their own sites, most of which have a Christian focus to personal finance as well.

One of the best ranked posts on ChristianPF is the epic article, “How to Make Money with a Blog.” It has nearly 2,000 links and 900 Facebook shares, 72 Tweets, and 52 +1s at the time of this posting. In it he shares some great tips for monetizing with Google AdSense.

Consumerism Commentary by Flexo


Consumerism Commentary Blog Monetization

Maybe best known for the Consumerism Commentary Podcast, Flexo and his crew focus their monetization on the AdSense revenue from their site. You can see the number of ads on their site. It may be a bit distracting as a reader, but you can’t deny the data in the infograph above. Personal finance keywords make money.

Who Else Uses Google AdSense?

Search around on the personal finance blogs and you’ll see how common it is. Start with the Yakezie Network, the top personal finance blog network, and do some exploring. You’ll notice that many of these blogs use AdSense, including:

Personal Finance Bloggers Who Avoid AdSense


Man vs. Debt with Adam Baker

Man vs. Debt Monetization Strategies

Maybe the best example of a personal finance blogger who avoids Google Ads is Adam Baker from Man vs. Debt. Baker has a large audience of online entrepreneurs and was able to dabble in various other niches in his young career as a blogger. He is loved by both the travel community and the minimalist bloggers. Recently he has had various successes with product launches and teamed up with Corbett Barr  to develop The Hustle Project.

His next big thing will be to open up again his membership site, You vs. Debt, which seems to be a great success.

I Will Teach You To Be Rich by Ramit Sethi

I Will Teach You To Be Rich Monetization Strategies

A the opposite end of the spectrum of personal finance strategies but in the same arena for blog monetization strategies is Ramit Sethi from I Will Teach You to Be Rich. Ramit is a popular author, but he doesn’t make his money off of the royalties from his book. His real money comes form his products: Scrooge Strategy, Earn 1k, Negotiate a Lower Rent, Find Your First Profitable Idea.

Making Money from Google AdSense

In so many ways using AdSense seems like the most effective form of passive income. You create content, get traffic, and make money on ad-clicks from your visitors. Of course, it is much more challenging than that. You need a lot of traffic to make a significant amount of money from ads on a blog. However, the advantage that personal finance bloggers is that one click might make ten or even one hundred times more per click when compared to the pennies you make in some niches.

Think strategically about whether Google AdSense is right for you and your niche. Sign up for Google AdSense yourself and get an idea of how much you would pay as an advertiser for your keywords. If you’re talking pennies, then focus your efforts on other monetization strategies.