How To Get Rich (without getting lucky)
Hello. Welcome back to the blog! Even though I am terrible when it comes to using twitter (I am working on it), I think it is an incredible tool for communication. Today, I would like to share one of the most interesting viral tweet-storms by Naval Ravikant. In it, he breakdowns prinicples that he believes will allow more people to attain wealth in their life. For some background Naval’s the co-founder of AngelList and Epinions. He’s also a prolific tech investor in companies like Twitter, Uber and many more. So his advice is definitely biased but I think it is still interesting to share because he has such a unique perspective on wealth creation that I couldn’t resist the urge to take notes and share this. Lastly, I have divided the tweets into chunks based on my understanding and notes. If you would like to see the original tweets click here.
“Seek wealth, not money or status. Wealth is having assets that earn while you sleep. Money is how we transfer time and wealth. Status is your place in the social hierarchy.” - Naval
Learn how to acquire assets that can work for you like investing. This includes investing your time, effort, and money into assets that will help you earn more in the future.
Playing for status and money will not pay off in the long term game. This is seen numerous times when people try to play get rich quick schemes or buy followers on social media. It never ends well.
“You’re not going to get rich renting out your time. You must own equity - a piece of a business - to gain your financial freedom.” - Naval
Working a 9-5 is not going to get you rich. Yes, you can live a very comfortable life but in order to become rich you must own a piece of a business that is generating revenue on its own. In order to be financially free you need to have stake in something that is able to generate without you being there 24/7.
“You will get rich by giving society what it wants but does not yet know how to get. At scale.” - Naval
This is like owning a business. When you are able to have customers that buy your service or product at scale. The whole point of a business is to find a way to solve a problem and provide value in some way to society.
“Pick an industry where you can play long term games with long term people.” - Naval
Some of the most daunting questions that are constantly repeated to every single person goes a little like this, “What do you want to do with your life”? “What kind of career do you want?” Ultimately every person has to choose a path in how they make money and provide to society. So one way to narrow down your choices in order to attain more financial freedom is by picking an industry that you see yourself for a long period of time.
Find people that inspire you or are trying to solve similar problems to you and find a way to build connections with them.
“Play iterated games. All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest.” - Naval
Do things that you could easily do for a long period of time. Like investing or reading which over time add to your wealth. There is no such thing as an overnight success. To get the greatest return on investment in life it will require many hours, days, weeks, and years to be put in to reap the benefits.
“Pick business partners with high intelligence, energy, and, above all, integrity.” - Naval
Surround yourself with people that have ability to learn, energy to persist, and have the ability to be honest with good morals.
“Learn to sell. Learn to build. If you can do both, you will be unstoppable.” - Naval
Learn how to talk to people to learn how to market to them or learn how to create things people can use to help them. Selling is understanding human principles to know what they will want/need. Building is very similar but there are many different versions of building. Building can be extravagant like making the next social media app or can be as impactful as having 500 subscribers in a specific niche area 😏.
“Arm yourself with specific knowledge, accountability, and leverage. Specific knowledge is knowledge that you cannot be trained for. If society can train you, it can train someone else, and replace you. Specific knowledge is found by pursuing your genuine curiosity and passion rather than whatever is hot right now. Building specific knowledge will feel like play to you but will look like work to others. When specific knowledge is taught, it’s through apprenticeships, not schools. Specific knowledge is often highly technical or creative. It cannot be outsourced or automated.” - Naval
Attain knowledge through learning things over time. This is using your own time to understand principles or actions that other people will not be able to see. Pursue your genuine curiosity (here are some of mine: metabolic health, tech, healthcare, pharmacy, human behaviors, business models, and fitness). This will play out in the long term because you can spend ours doing this and it is fun.
This “professional research” cannot be outsourced and will require the 10,000 hours but what else would you be doing.
“Embrace accountability, and take business risks under your own name. Society will reward you with responsibility, equity, and leverage. The most accountable people have singular, public, and risky brands: Oprah, Trump, Kanye, Elon.” - Naval
Take on more responsibilities so you can find your edge. This edge is how you find your full capacity and make sure that by the end of the day there is nothing left in the tank. People that have taken on heavier burdens and persevered through them will learn more and gain more over the long haul.
“Fortunes require leverage. Business leverage comes from capital, people, and products with no marginal cost of replication (code and media). Capital means money. To raise money, apply your specific knowledge, with accountability, and show resulting good judgment. Labor means people working for you. It's the oldest and most fought-over form of leverage. Labor leverage will impress your parents, but don’t waste your life chasing it. Capital and labor are permissioned leverage. Everyone is chasing capital, but someone has to give it to you. Everyone is trying to lead, but someone has to follow you. Code and media are permissionless leverage. They're the leverage behind the newly rich. You can create software and media that works for you while you sleep. An army of robots is freely available - it's just packed in data centers for heat and space efficiency. Use it. If you can't code, write books and blogs, record videos and podcasts.” - Naval
I would argue that this is the most important part of this tweet storm. This gives you actionable things that you can do. To amass a fortune you need to have leverage in one or multiple different categories of capital, people, code, and media. Capital equals money. With money you can make a lot of different decisions which Naval equates with freedom. Even if you do not have a lot of capital if you are able to borrow a lot of capital through credit you can make more decisions in life. People or labor is the ability to make a decision and have people follow your lead. This is very useful and why people in C-suite positions are given more capital then the average employee. In terms of labor leverage usually someone of a higher power like a CEO or manager has to allow you access to this form. Code is an interesting leverage because this is one of the new forms that allows you to create without much. Here you can have robots follow your orders just like people but you can do this without asking anyone for access to it. This is probably the most powerful kind of leverage during this time period. Media is another interesting leverage because it is generally inexpensive if not free but has unlimited potential. If you are able to create content in any form through social media (YouTube, TikTok, Instagram, Twitter) or other media (podcasts, books, website, newsletters), you can reach any human being with an internet connection. Once you have the initial equipment like a smartphone you can pretty much start from there. Most people do not know the potential that they carry with them everyday in their pockets. You can literally start a podcast by speaking to your iPhone, pressing record, and uploading. To drive this point home of why media is so important. Think about making a video on Youtube or TikTok. The same video that you make can reach 5 viewers or 5,000,000 viewers.
“Leverage is a force multiplier for your judgement. Judgement requires experience, but can be built faster by learning foundational skills. There is no skill called “business.” Avoid business magazines and business classes.” - Naval
Having the ability to create leverage allows you to make more decisions that are important. But in order to truly learn these skills you need to have actually learned the basics. Learning the basics will allow you to build compound interest. Business is the purchase or sale of a product or service. Without the product or service studying business is useless. So it is more important to learn the skill or product first and then learn the business acumen necessary to make a living off of it.
“Study microeconomics, game theory, psychology, persuasion, ethics, mathematics, and computers.” - Naval
This is my second favorite part of this tweet storm. Microeconomics is the studying of the behaviors of individuals/companies/corporations in making decisions aka biographies, autobiographies or history. To really understand microeconomics it usually starts with learning from single rational and utility maximizing individuals. When you are able to understand how people who are very successful make their decisions it allows you to make similar decisions when you are faced with these opportunities. To add to this it is also important to know what not to do. From my time reading biographies this has emerged as another crucial aspect to attaining wealth. Sometimes it is not always important to always make a right decision but to make sure you do not make the wrong decision. Game theory can be understood with learning the new forms of media/code but I will include a link that draws the association better here. I do not want to ramble on with the rest of these but I will stay understanding psychology, persuasion, and ethics is crucial for understanding people. If you can understand people you will have a greater ability to utilize the labor leverage if you are put into/attain that responsibility. Great leadership will require it. Lastly, our world is being shaped around data and computers so learning about them can be beneficial. Social media uses algorithms aka math to learn what you want to see and make you stay on the device longer. Computers are everywhere and are basically influencing every single part of our lives at scale.
“Reading is faster than listening. Doing is faster than watching.” - Naval
I would like to disagree with this one because I am a slow reader but I know that I retain more from reading than I do from listening. Doing something is also more impactful than watching. I love seeing people try to figure the best solution for some things because the time it takes to figure out what is the right decision could have been spent doing the task and learning if it was the right decision or not. Do not fall into analysis paralysis because not doing anything is often times worse than not picking the “perfect solution”. Most times you may never even know how the result of the other decision will play out in the long term. Choose progress over perfection.
“You should be too busy to “do coffee," while still keeping an uncluttered calendar. Set and enforce an aspirational personal hourly rate. If fixing a problem will save less than your hourly rate, ignore it. If outsourcing a task will cost less than your hourly rate, outsource it.”
Slight jab (I love coffee☕️), but makes sense. You should not be wasting time but should also have a schedule that makes sense. Set up your time with a money figure. Just like when you go to work they pay you a certain amount per hour. Set that up for yourself and then ask yourself is doing this really going to save me time and money.
“Work as hard as you can. Even though who you work with and what you work on are more important than how hard you work. Become the best in the world at what you do. Keep redefining what you do until this is true.” - Naval
No one that is successful did not work hard. Put in the hours everyday on learning or doing but understand that the people you work with and the tasks you work on are more important. Find ways to align yourself with highly respectable people and work on something that is equally respectable in nature. Become the best at what you do. I will talk about this in another blog but one of the best ways to become the best at what you do is to learn more than everyone else. Even if they are better than you, more talented than you or have more resources. You can always learn more than them. Once you are one of the best then redefine it. This is a great example of every single person that is successful. For example most people that are extremely successful have more than one skill or learn how to create a business around that skill. This is another reason why a lot of people that are the best in their lane start to branch out into other lanes like investing in other companies.
“There are no get rich quick schemes. That's just someone else getting rich off you. Apply specific knowledge, with leverage, and eventually you will get what you deserve.” - Naval
Once again do not look at business as making money, learn how to leverage a skill that you possess and provide value. Specific knowledge has to be knowledge that you seek on your own about how something works. Once you gain this specific knowledge use it when you make decisions and you will attain far more far faster than others in the same place as you.
Below I have included link to a collection of interviews that Naval has answered in his tweet storm. If you are not a reader you can also check out his podcast or YouTube where he also describes his point.
