This post is by naval from Startup Boy
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This is a transcript of Seek Wealth, Not Money or Status.
Summary: Wealth is assets that earn while you sleep: businesses, products, media, robots, investments, land. Wealth is for freedom, not conspicuous consumption. Money is how we transfer wealth; it’s the social credits and debits of other people’s time. Money isn’t going to solve all your problems, but it’s going to solve your money problems. Status is your rank in a social hierarchy like politics or sports. It’s a zero-sum game: to be a winner, there must be a loser. It’s an old game that predicted survival in the hunter-gatherer days, before we had technologies for creating wealth. People creating wealth will always be attacked by people still playing status games.
Wealth is assets that earn while you sleep
Nivi: What’s the difference between wealth, money, and status?
Naval: Wealth is the thing that you really want. Wealth is assets earn while you sleep. Wealth is the factory, the robots that’s cranking out things. Wealth is the computer program that’s running at night, that’s serving other customer. Wealth is… even money in the bank that is being reinvested into other assets, and into other businesses. Even a house can be a form of wealth because you can rent it out, although that’s probably a lower use of productivity of land than actually doing some commercial enterprise. So, my definition of wealth is much more businesses and assets that can earn while you sleep.
But really the reason you want wealth is because it buys you your freedom. So, you don’t have to wear a tie like a collar around your neck. So, you don’t have to wake up at 7:00 AM, and rush to work, and sit in commute traffic. So, you don’t have to waste away your entire life grinding all the productive hours away into a soulless job that doesn’t fulfill you.
So, the purpose of wealth is freedom. It’s nothing more than that. It’s not to buy fur coats, or drive Ferraris, or sale yachts, or jet around the world in your Gulfstream. That stuff gets really boring, and really stupid really fast. It’s really just so that you are your own sovereign individual. You’re not gonna get that unless you really want it. And the entire world wants it. And the entire world is working hard at it. And to some extent it is competitive. It’s a positive sum game, but there are competitive elements to it. Because there’s a finite amount of resources right now in society. And to get the resources to do what you want, you have to stand out.
Money is how we transfer wealth
Money is how we transfer wealth. Money is social credits. It is the ability to have credits and debits of other people’s time. If I do my job right, if I create value for society, society says, “Oh, thank you. We owe you something in the future for the work that you did in the past. Here’s a little IOU. Let’s call that money.”
And that money gets debased because people steal the IOUs. The government prints extra IOUs. People renege on their IOUs. But really what money is trying to be, it is trying to be a reliable IOU from society that you are owed something for something you, or someone who gave you the money did in the past. And we can transfer these IOUs around. So, really money is how we transfer wealth.
Status is your rank in the social hierarchy
There are fundamentally two huge games in life that people play. One is the money game. Because money is not gonna solve all of your problems, but it’s gonna solve all of your money problems. So, I think that people know that. They realize that, so they want to make money.
But at the same time many of them deep down believe that they can’t make it. They don’t want any wealth creation to happen. So, they sort of virtue signal by attacking the whole enterprise by saying, “Well, making money is evil. You shouldn’t do it. Blah, blah, blah.”
But what they’re trying to do is they’re actually playing the other game, which is the status game. They’re trying to be high status in the eyes of other people watching by saying, “Well, I don’t need money. We don’t want money.”
And then status is just your ranking in the social hierarchy. So, wealth is not a zero-sum game. Everybody in the world can have a house. Because you have a house doesn’t take away from my ability to have a house. If anything the more houses that are built, the easier it becomes to build houses, the more we know about building houses, and just the more people that can have houses. So, wealth is a very positive sum game. We create things together. We’re starting this endeavor to create this hopefully piece of art that explains what we’re doing. At the end of it something brand new will be created. It’s a positive sum game.
Status on the other hand is a zero sum game. It’s a very old game. We’ve been playing it since monkey tribes. And it’s hierarchical. Who’s number one? Who’s number two? Who’s number three? And for number three to move to number two, number two has to move out of that slot. So, status is a zero-sum game.
Politics is an example of a status game. Even sports is an example of a status game. To be the winner, there must be a loser. I don’t fundamentally love status games. They play an important role in our society, so we figure out who’s in charge. But fundamentally you play them because they’re a necessary evil.
The problem is in an evolutionary basis, like if you go back thousands of years, status is a much better predictor of survival than wealth is. You couldn’t have wealth before the farming age, before farmers ’cause you couldn’t store things. Hunter-gatherers carried everything on their backs. So, hunter-gatherers lived in entirely status based societies. Farmers started going to wealth-based societies. And the modern industrial economies are much more heavily wealth-based societies.
People creating wealth will always be attacked by people playing status games
But there’s always a subtle competition going on between status and wealth. For example, when journalists attack rich people. Or like attack the technology industry, they’re really bidding for status. They’re saying, “No, the people are more important. And I the journalist represents the people, and therefore I am more important.”
The problem is that by playing these status games, to win at a status game you have to put somebody else down. That’s why you should avoid status games in your life because they make you into an angry combative person. You’re always fighting to put other people down, to put yourself and the people which you like up. And they’re always gonna exist.
There’s no way around it, but just realize that most of the times when you’re trying to create wealth, you’re actually getting attacked by someone else, and they’re trying to look like a goody-two shoes. But really what they’re doing is they’re trying to up their own status at your expense. They’re just playing a different game. And it’s a worse game. It’s a zero-sum game instead of a positive sum game.