When you’re finally wealthy, you’ll realize it wasn’t what you were seeking in the first place.
When you’re wealthy, you’ll realize it wasn’t what you were seeking
Nivi: The last tweet on the topic of working for the long term is that “When you’re finally wealthy, you’ll realize it wasn’t what you were seeking in the first place. But that’s for another day.”
Naval: That’s a multi-hour topic in of itself. First of all I thought it was a really clever way to end the whole thing because it disarms a whole set of people who say, “What’s the point of getting rich?” Because there’s a lot of people who just like the status signal, virtue signal, against the idea of wealth creation or making money. So it was just a good way to disarm all of them.
But, it’s also true. In that the things that you really want in life, yes money will solve all your money problems but it doesn’t get you everywhere.
Most advice is people giving you their winning lottery ticket numbers.
The best founders listen to everyone but make up their own mind
Nivi: Regarding the guy who gets rich in five years, one of the tweets that you had on the cutting room floor was: avoid people who got rich quickly, they’re just giving you their winning lottery ticket numbers.
Naval: This is generally true of advice anyway, which is it’s back to Scott Adams, systems not goals. If you ask a specific person what worked for them very often it’s just like they’re reading out the exact set of things worked for them which might not be applicable for you. They’re just reading you out their winning lottery ticket numbers.
Nivi: We’re still talking about working for the long term, the next tweet on that topic is “Apply specific knowledge with leverage and eventually you will get what you deserve.” I would also add to that apply judgment, apply accountability and apply the skill of reading.
Naval: This one is just a glib way of saying that it takes time, even once you have all of these pieces in place, there is an indeterminate amount of time that you’re going to have to put in. And if you’re counting you’ll run out of patience before it actually arrives.
Businesses that seem like they’re in direct competition really aren’t
Nivi: I think when you’re being authentic, you don’t really mind competition that much. Yeah, it pisses you off and it inspires some fear and jealousy and all the other emotions that come along with it, but also you don’t really mind because you’re more oriented towards the goal and the mission and worst case you get some ideas from them. And there’s often ways to work with the competition in a positive way and it ends up increasing the size of the market for you.
Naval: Yeah sometimes it depends on the nature of the business. Silicon Valley tech industry businesses tend to be winner-take-all. At least the good ones. And so when you see competition it can make you fly into a rage because it really does endanger Continue reading “Play Stupid Games, Win Stupid Prizes”
Competition can lead you to playing the wrong game.
No one can compete with you on being you.
In entrepreneurship, the masses are never right.
Combine your vocation and avocation.
Competition will trap you in a lesser game
Nivi: This reminds me of your tweet about escaping competition through authenticity. It sounds like part of this is a search for who you are.
Naval: It’s both a search, and a recognition because sometimes when we search our egos, we want to be something that we are not. And our friends and family are better at telling us actually who we are, or looking back at what we’ve done is a better indicator of who we are.
Become the best in the world at what you do. Keep redefining what you do until this is true.
Find founder-product-market fit
Keep redefining what you do until you’re the best at what you do
Nivi: We just finished talking about the importance of working hard and valuing your time. Next there’s a few tweets on the topic of working for the long term. The first tweet is, “Become the best in the world at what you do. Keep redefining what you do until this is true.”
Naval: If you really want to get paid in this world, you want to be number one at whatever it is that you’re doing. And it can be niche, that’s the point. It can literally be, you’re getting paid for just being you.
You should be too busy to “do coffee”, while still keeping an uncluttered calendar.
People will meet with you when you have proof of work.
Networking is overrated even early in your career.
Be too busy to “do coffee” while keeping an uncluttered calendar
Naval: Then we squander our time with the death of 1,000 cuts. Another tweet I had was, “You should be too busy to do coffee, while still keeping an uncluttered calendar.” People who know me, know that I’m famous for simultaneously doing two things. One is having a very clean calendar. I have almost no meetings on it.
There are people that I meet with, when they see my calendar they almost weep, while at the same time, I am busy all the time. I’m always doing something. It’s usually “work-related” but it is whatever Continue reading “Be Too Busy to “do Coffee””
Work as hard as you can. Even though what you work on and who you work with are more important.
Nobody really works 80 hours a week.
Inspiration is perishable.
Impatience with actions, patience with results.
Work as hard as you can
Naval: Let’s talk about hard work. There’s this battle that happens in Twitter a lot between, should you work hard and should you not. David Hauser’s on there saying, “It’s like you’re slave driving people.” Keith Rabois is always on there saying, “No, all the great founders worked their fingers to the bone.”
They’re talking past each other. First of all, they’re talking about two different things. David is talking about employees and a lifestyle business, which is fine. Your number one thing in life, if you’re doing that, is not getting wealthy. You have a Continue reading “Work As Hard As You Can”
If you can outsource something for less than your hourly rate, do it.
Your hourly rate should seem absurdly high 3:39.
Nivi: We covered the skills that you need to get rich. That was specific knowledge, accountability, leverage, judgment, and life-long learning. Let’s talk a little bit about the importance of working hard and valuing your time.
Set and enforce an aspirational hourly rate
Naval: No one is going to value you more than you value yourself. You just have to set a very high personal hourly rate and you have to stick to it. Even since I was young, I just decided I was worth a lot more than the market though I was worth, but I started Continue reading “Set and Enforce an Aspirational Hourly Rate”
Everything else you do is setting you up to apply judgment.
In an age of infinite leverage, judgment becomes the most important skill.
Judgment is knowing the long-term consequences of your actions.
Without experience, judgment is often less than useless.
The people with the best judgment are among the least emotional.
A lot of the top investors often sound like philosophers.
The more outraged someone is, the worse their judgment.
In an age of infinite leverage, judgment becomes the most important skill
Nivi: We spoke about specific knowledge, we talked about accountability, we talked about leverage. The last skill that Naval talks about in his tweetstorm is judgment, where he says, that “Leverage is a force multiplier for your judgment.”
Day laborers get paid hourly and have low accountability
General contractors get equity, but they’re also taking risk
Property developers pocket the profit with capital leverage
Architects, large developers and REITs are even higher layers in the stack
Real estate tech companies apply the maximum leverage
Naval: The tweetstorm is very abstract. It’s deliberately meant to be broadly applicable to all kinds of different domains and disciplines and time periods and places. But sometimes it’s hard to work without a concrete example. So let’s go concrete for a minute.
Day laborers get paid hourly and have low accountability
Naval: Labor and capital are much less egalitarian, not just in the inputs, but in their outputs.
Let’s say that I need something that humans have to provide like if I want a massage or if I need someone to cook my food. The more of a human element there is in providing that service, the less egalitarian it is. Jeff Bezos probably has much better vacations than most of us because he has lots of humans running around doing whatever he needs to do.
If you look at the output of code and media, Jeff Bezos doesn’t get to watch better movies and TV than we do. Jeff Bezos doesn’t get to even have better computing experience. Google doesn’t give him some premium, special Google account where his searches are better.
Naval: The most interesting and the most important form of leverage is this idea of products that have no marginal cost of replication. This is the new form of leverage.
This was only invented in the last few hundred years. It got started with the printing press. It accelerated with broadcast media, and now it’s really blown up with the Internet and with coding.
Now, you can multiply your efforts without having to involve other humans and without needing money from other humans.
This podcast is a form of leverage. Long ago, I would have had to sit in a lecture hall and lecture each of you personally. I would have maybe reached a few hundred people and that would have been that.
Our brains aren’t evolved to comprehend new forms of leverage
Nivi: Why don’t we talk a little bit about leverage?
The first tweet in the storm was a famous quote from Archimedes, which was, “Give me a lever long enough and a place to stand and I will move the Earth.”
The next tweet was, “Fortunes require leverage. Business leverage comes from capital, people and products with no marginal costs of replication.”
Naval: Leverage is critical. The reason I stuck in Archimedes quote in there is… normally I don’t like putting other people’s quotes in my Twitter. That doesn’t add any value. You can go look up those people’s quotes. But this quote I had to put in there because it’s just so fundamental. I read it when I was very, very young and it had a huge impression Continue reading “Labor and Capital Are Old Forms of Leverage”
Naval: Accountability is important because that’s how you’re going to get leverage. That’s how you’re going to get credibility. It’s also how you’re going to get equity. You’re going to get a piece of the business.
When you’re negotiating with other people, ultimately if someone else is making a decision about how to compensate you, that decision will be based on how replaceable you are. If you have high accountability, that makes you less replaceable. Then they have to give you equity, which is a piece of the upside.
Taking accountability is like taking equity in all your work
Equity itself is a good example because equity is also a risk-based instrument. Equity means you get paid everything after all the people who need guaranteed money are paid back.
Nivi: Why don’t we jump into accountability, which I thought was pretty interesting and I think you have your own unique take on it. So the first tweet on accountability was, “Embrace accountability and take business risks under your own name. Society will reward you with responsibility, equity, and leverage.”
Naval: Yeah. So to get rich, you’re going to need leverage. Leverage comes in labor, comes in capital, or it can come through code or media. But most of these, like labor and capital, people have to give to you. For labor, somebody has to follow you. For capital, somebody has to give you money or assets to manage or machines.
Naval: So, in that sense, business to me is bottom of the barrel. There’s no actual skill called business, it’s too generic of a thing. It’s like a skill called relating. Like relating to humans. That’s not a skill, it’s too broad.
So, a lot of what goes on in business schools, and there are some very intelligent stuff taught in business schools, I don’t mean detract from them completely, but some of the stuff that’s taught in business school is essentially just anecdotes. They call it case studies.
But it’s just anecdotes, and they’re trying to help you pattern match by throwing lots of data points at you, but the reality is, you will never understand them fully until you’re actually in that position yourself.
Naval: And to me, foundational things are principles, they’re algorithms, they’re deep seated logical understanding where you can defend it or attack it from any angle. And that’s why microeconomics is important because macroeconomics is a lot of memorization, a lot of macro bullshit.
As Nassim Taleb says, it is easier to macro bullshit than it is the micro bullshit. Because macroeconomics is voodoo complex science meets politics. You can’t find two macroeconomists to agree on anything these days, and different macroeconomists get used by different politicians to peddle their different pet theories.
There are even macroeconomists out there now peddling something called Modern Monetary Theory which basically says, hey, except for this pesky thing called inflation, we can just print all the money that we want. Yes, except for this pesky thing called inflation. Continue reading “The Ultimate Foundations Are Math and Logic”
Nivi: Before we go and talk about accountability and leverage and judgment, you’ve got a few tweets further down the line that I would put in the category of continuous learning.
They’re essentially, “there is no skill called business. Avoid business magazines and business class, study microeconomics, game theory, psychology, persuasion, ethics, mathematics and computers.”
There’s one other comment that you made in a Periscope that was, “you should be able to pick up any book in the library and read it.” And the last tweet in this category was, “reading is faster than listening, doing is faster than watching.”