See book on Amazon.
I'm not sure where I ran into Naval's content for the first time - it must have been a couple of years ago. Since then one of my friends introduced me to his tweets. As I skimmed through, they made a strong impression, but nonetheless I forgot about it shortly. In a weak connection with AngelList, I then read a story about him as the founder, when young, devouring books at a library. Finally, I randomly heard him visiting the Joe Rogan podcast, which I don't follow myself.
This is why I had a careful, but curious impression of Naval when I came across a book of his compiled outbursts and thoughts gathered by Eric Jorgenson, and I wasn't disappointed. This book is available as a free read online which is great, but I went for the Kindle version costing pennies.
In this post I have compiled a set of highlights that I found most valuable for myself. For a full picture, especially if you like what you read below, I very much recommend you to experience the full thing. It is a short and densely packed book which is best consumed in bite sized chunks. I think the editors could have done a bit of a better job organizing the contents, but nonetheless, I still recommend it highly if you find the highlights interesting. Happy reading!
- General claims
Part One - Business & Learning
- - Money
- - The principal-agent problem
- - Example for leverage: From Laborer to Entrepreneur
- Finding work that feels like play
- Endless games
- Luck and reputation
- Smart people
Part Two - Happiness & Life
- A quote
Selected outtakes from the famous “tweetstorm” by Naval Ravikant:
- 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.
- Ignore people playing status games. They gain status by attacking people playing wealth creation games.
- 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.
- You will get rich by giving society what it wants but does not yet know how to get. At scale.
- Play iterated games. All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest.
- Arm yourself with specific knowledge, accountability, and leverage.
- Learn to sell. Learn to build. If you can do both, you will be unstoppable.
Part One: Business & Learning
Become the best in the world at what you do. Keep redefining what you do until this is true.
Selling has a very broad definition. It doesn’t necessarily just mean selling to individual customers, but can mean marketing, communication, recruiting, raising money, inspiring people or it could mean doing PR. It’s a broad umbrella category.
What is retirement? “Retirement is when you stop sacrificing today for an imaginary tomorrow.”
The most important skill is becoming a perpetual learner. You have to know how to learn anything you want to learn. You really care about having studied the foundations, so you’re not scared of any book. If you go to the library and there’s a book you cannot understand, you have to dig down and say, “What is the foundation required for me to learn this?” Foundations are super important.
You’re more likely to have skills society does not yet know how to train other people to do. If someone can train other people how to do something, then they can replace you. If they can replace you, then they don’t have to pay you a lot. You want to know something other people don’t know how to do at the time period when those skills are in demand.
An old boss once warned: “You’ll never be rich since you’re obviously smart, and someone will always offer you a job that’s just good enough.”
Technology democratizes consumption but consolidates production. The best person in the world at anything gets to do it for everyone.
Without ownership, your inputs are very closely tied to your outputs. In almost any salaried job, even one paying a lot per hour like a lawyer or a doctor, you’re still putting in the hours, and every hour you get paid.
Owning equity in a company basically means you own the upside. When you own debt, you own guaranteed revenue streams and you own the downside. You want to own equity. If you don’t own equity in a (good) business, your odds of making money are very slim.
You get rewarded by society for giving it what it wants and doesn’t know how to get elsewhere. A lot of people think you can go to school and study for how to make money, but the reality is there’s no skill called “business”.
Think about what product or service society wants but does not yet know how to get. You want to become the person who delivers it and delivers it at scale. That is really the challenge of how to make money.
“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…”
The punishment for the love of money is delivered at the same time as the money. As you make money, you just want even more, and you become paranoid and fearful of losing what you do have. There’s no free lunch.
You make money to solve your money and material problems. I think the best way to stay away from this constant love of money is to not upgrade your lifestyle as you make money. It’s very easy to keep upgrading your lifestyle fixed and hopefully make your money in giant lump sums as opposed to a trickle at a time, you won’t have time to upgrade your lifestyle. You may get so far ahead you actually become financially free.
People who live far below their means enjoy a freedom that people busy upgrading their lifestyles can’t fathom.
The principal-agent problem
When you are the principal, then you are the owner - you care, and you will do a great job. When you are the agent and you are doing it on somebody else’s behalf, you can do a bad job. You just don’t care. You optimize for yourself rather than for the principal’s assets.
The smaller the company, the more everyone feels like a principal. The less you feel like an agent, the better the job you’re going to do. The more closely you can tie someone’s compensation to the exact value they’re creating the more you turn them into a principal, and the less you turn them into an agent.
Leverage helps to exponentialize impact and returns. Today the main levers consist of:
- Products with no marginal cost of replication: media, software, books, movies, code.
Labor: This is other humans working for you. It is the oldest form of leverage, and actually not a great one in the modern world. I would argue this is the worst form of leverage that you could possibly use. Managing other people is incredibly “messy”. It requires tremendous leadership skills. You’re one short hop from a mutiny or getting eaten or torn apart by the mob.
Money: It means every time you make a decision, you multiply it with money. This is overall a good form of leverage. Capital is however still tricky. It’s more modern and the one that people have used to get fabulously wealthy in the last century. It’s probably been the dominant form of leverage in the last century. It scales very, very well. If you get good at managing capital, you can manage more and more capital much more easily than you can manage more and more people.
Code, media, writing: This form of leverage is “brand new” and the most democratic form. It was only invented in the last few hundred years and it started from the printing press and accelerated with broadcast media. Now it is really blowing up with the internet and with coding. Today, you can now multiply your efforts without involving other humans or needing their money. Products with no marginal cost of replication like books, media, movies and code are arguably the most powerful forms of “permissionless leverage”. All you need is a computer - you don’t need anyone’s permission.
Forget rich versus poor, white-collar versus blue. It’s now leveraged versus un-leveraged.
Example for leverage: From Laborer to Entrepreneur
What follows is a direct citation from here:
Look at the real estate business. You could start at the bottom, let’s say you’re a day laborer. You come in, you fix people’s houses. Someone orders you around, tells you, “Break that piece of rock. Sand that piece of wood. Put that thing over there.”
There’s just all these menial jobs that go on, on a construction site. If you’re working one of those jobs, unless you’re a skilled trade, say, a carpenter or electrician, you don’t really have specific knowledge.
Even a carpenter or an electrician is not that specific because other people can be trained how to do it. You can be replaced. You get paid your $15, $20, $25, $50, if you’re really lucky, $75 an hour, but that’s about it.
You don’t have any leverage other than from the tools that you’re using. If you’re driving a bulldozer that’s better than doing it with your hands. A day laborer in India makes a lot less because they have no tool leverage.
You don’t have much accountability. You’re a faceless cog in a construction crew and the owner of the house or the buyer of the house doesn’t know or care that you worked on it.
General contractors get equity, but they’re also taking risk
One step up from that, you might have a contractor, like a general contractor who someone hires to come and fix and repair and build up their house. That general contractor is taking accountability; they’re taking responsibility.
Now let’s say they got paid $250,000 for the job. Sorry, I’m using Bay Area prices, so maybe I’ll go rest of the world prices, $100,000 for the job to fix up a house, and it actually costs the general contractor, all said and done, $70,000. That contractor’s going to pocket that remaining $30,000.
They got the upside. They got the equity but they’re also taking accountability and risk. If the project runs over and there’s losses, then they eat the losses. But you see, just the accountability gives them some form of additional potential income.
Then, they also have labor leverage because they have a bunch of people working for them. But it probably tops out right there.
Property developers pocket the profit by applying capital leverage
You can go one level above that and you can look at a property developer. This might be someone who is a contractor who did a bunch of houses, did a really good job, then decided to go into business for themselves and they go around looking for beaten down properties that have potential.
They buy them, they either raise money from investors or front it themselves, they fix the place up, and then they sell it for twice what they bought it for. Maybe they only put in 20% more, so it’s a healthy profit.
So now a developer like that takes on more accountability, has more risk. They have more specific knowledge because now you have to know: which neighborhoods are worth buying in. Which lots are actually good or which lots are bad. What makes or breaks a specific property. You have to imagine the finished house that’s going to be there, even when the property itself might look really bad right now.
There’s more specific knowledge, there’s more accountability and risk, and now you also have capital leverage because you’re also putting in money into the project. But conceivably, you could buy a piece of land or a broken-down house for $200,000 and turn it into a million dollar mansion and pocket all the difference.
Architects, large developers and REITs are even higher in the stack
One level beyond that might be a famous architect or a developer, where just having your name on a property, because you’ve done so many great properties, increases its value.
One level up from that, you might be a person who decides, well, I understand real estate, and I now know enough of the dynamics of real estate that rather than just build and flip my own properties or improve my own properties, I’m gonna be a massive developer. I’m going to build entire communities.
Now another person might say, “I like that leverage, but I don’t want to manage all these people. I want to do it more through capital. So I’m gonna start a real estate investment trust.” That requires specific knowledge not just about investing in real estate and building real estate, but it also requires specific knowledge about the financial markets, and the capital markets, and how real estate trusts operate.
Real estate tech companies apply the maximum leverage
One level beyond that might be somebody who says, “Actually, I want to bring the maximum leverage to bear in this market, and the maximum specific knowledge.” That person would say, “Well, I understand real estate, and I understand everything from basic housing construction, to building properties and selling them, to how real estate markets move and thrive, and I also understand the technology business. I understand how to recruit developers, how to write code and how to build good product, and I understand how to raise money from venture capitalists and how to return it and how all of that works.”
Obviously not a single person may know this. You may pull a team together to do it where each have different skill sets, but that combined entity would have specific knowledge in technology and in real estate.
It would have massive accountability because that company’s name would be a very high risk, high reward effort attached to the whole thing, and people would devote their lives to it and take on significant risk.
It would have leverage in code with lots of developers. It would have capital with investors putting money in and the founder’s own capital. It would have labor of some of the highest quality labor that you can find, which is high quality engineers and designers and marketers who are working on the company.
Source (Naval’s blog): https://nav.al/laborer-tech
Naval’s definition of wisdom is knowing the long-term consequences of your actions. Wisdom applied to external problems is judgement. They’re highly linked; knowing the long-term consequences of your actions and then making the right decision to capitalize on that.
I would love to be paid purely for my judgement, not for any work. I want a robot, capital or computer to do the work, but I want to be paid for my judgement.
I think every human should aspire to being knowledgeable about certain things and being paid for our unique knowledge.
Imagine someone comes along who demonstrably has slightly better judgement. They’re right 85% of the time instead of 75%. You will pay them 50 million USD, 100 million USD, 200 million USD, whatever it takes, because 10 percent better judgement steering a 100 billion USD ship is very valuable. CEOs are highly paid because of their leverage. Small differences in judgement and capability can really get amplified.
You have to put in the time, but the judgement is more important. The direction you’re heading in matters more than how fast you move, especially with leverage. Picking the direction you’re heading in for every decision is far, far more important than how much force you apply. Just pick the right direction to start walking in and start walking.
Finding work that feels like play
The way to get out of the competition trap is to be authentic, to find the thing you know how to do better than anybody. You know how to do it better because you love it and no one can compete with you. If you love to do it, be authentic, and then figure out how to map that to what society actually wants. Apply some leverage and put your name on it. You take the risks but you gain the rewards, have ownership and equity in what you’re doing, and just crank it up.
Naval: I’m always “working”. It looks like work to others, but it feels like play to me. And that’s how I know no one can compete with me on it. Because I’m just playing for sixteen hours a day. If others want to compete with me, they’re going to work, and they’re going to lose because they’re not going to do it for sixteen hours a day, seven days a week.
Any end goal will just lead to another goal, leading to another goal. We just play games in life.
When you grow up, you’re playing the school game, or you’re playing the social game. Then you’re playing the money game, and then you’re playing the status game. These games just have longer and longer and longer-lived horizons. At some point, at least Naval believes, these are all just games. These are the games where the outcome really stops mattering once you see through the game.
Then you just get tired of games. Naval says he is at the stage where he’s just tired of games. He doesn’t think there is any end goal or purpose. He just lives his life as he wants to, from one moment to another.
Luck and reputation
Ways to get lucky:
- Hope luck finds you.
- Hustle until you stumble into it.
- Prepare the mind and be sensitive to chances others miss.
- Become the best at what you do. Opportunity will seek you out. Luck becomes your destiny.
The last one is worth a deeper look:
If you are a trusted, reliable, high-integrity, long-term-thinking dealmaker, when other people want to do deals but don’t know how to do them in a trustworthy manner with strangers, they will literally approach you and give you a cut of the deal just because of the integrity and reputation you’ve built up.
Warren Buffett gets offered deals to buy companies, buy warrants, bail out banks and do things other people can’t do because of his reputation. Of course, he has accountability on the line, and he has a strong brand on the line.
Your character and your reputation are things you can build, which will let you take advantage of opportunities other people may characterize as lucky, but you know it wasn’t luck.
Naval thinks business networking is a complete waste of time. And he knows there are people and companies popularizing the concept because it serves them and their business model well, but the reality is if you’re building something interesting, you will always have more people who will want to know you. “Trying to build business relationships well in advance of doing business is a complete waste of time”. Naval has a much more comfortable philosophy: “Be a maker who makes something interesting people want. Show your craft, practice your craft, and the right people will eventually find you”.
One thing Naval figured out for himself was that great people have great outcomes. You just have to be patient. Every person he met at the beginning of his career twenty years ago, where he looked at them and said, “Wow that guy or gal is super capable - so smart and dedicated” …all of them, almost without exception, became extremely successful. You just had to give them a long enough timescale. It never happens in the timescale you want, or they want, but it does happen.
Very smart people tend to be weird since they insist on thinking everything through for themselves.
A contrarian isn’t the one who always objects - that’s a conformist of a different sort. A contrarian reasons independently from the ground up and resists pressure to conform.
Cynicism is easy. Mimicry is easy. Optimistic contrarians are the rarest breed.
Naval has people in his life he considers to be very well-read but aren’t very smart. The reason is because even though they’re very well-read, they read the wrong things in the wrong order. They started out reading a set of false or just weakly true things, and those formed the axioms of the foundation for their worldview. Then, when new things come, they judge the new idea based on a foundation they already build. Your foundation is critical.
Part Two - Happiness & Life
Self-discipline is a bridge to a new self-image.
First you know it, then you understand it. Then, you can explain it. Then, you can feel it. Finally, you are it.
In any situation in life, you always have three choices: you can change it, you can accept it, or you can leave it.
If you want to change it, then it is a desire. It will cause you suffering until you successfully change it. So don’t pick too many of those. Pick one big desire in your life at any given time to give yourself purpose and motivation. Why not two? You’ll be distracted. Even one is hard enough.
What is not a good option is to sit around wishing you would change it but not changing it, wishing you could leave it but not leaving it and not accepting it. That struggle or aversion is responsible for most of our misery.
I only really want to do things for their own sake. This is one definition of art.
Don’t take yourself too seriously, you’re just a monkey with a plan.
Not in some cosmic, karma kind of way, Naval believes deep down we all know who we are. You cannot hide anything from yourself. Your own failures are written within your psyche, and they are obvious to you. If you have too many of these moral shortcomings, you will not respect yourself. The worst outcome in this world is not having self-esteem. If you don’t love yourself, who will?
Your real resume is just a catalog of all your suffering. If I ask you to describe your real life to yourself, and you look back from your deathbed at the interesting things you’ve done, it’s all going to be around the sacrifices you made, the hard things you did.
What making money will do is solve your money problems. It will remove a set of things that could get in the way of being happy, but it is not going to make you happy. Naval tells he knows many very wealthy people who are unhappy. Most of the time, the person you have to become to make money is a high-anxiety, high-stress, hard-working, competitive person. When you have done that for twenty, thirty, forty, fifty years, and you suddenly make money, you can’t turn it off. You’ve trained yourself to be a high-anxiety person. Then, you have to learn how to be happy.
It’s actually really important to have empty space. If you don’t have a day or two every week in your calendar where you’re not always in meetings, and you’re not always busy, then you’re not going to be able to think. You’re not going to be able to have good ideas for your business. You’re not going to be able to make good judgements. Naval also encourages taking at least one day a week (preferably two, because if you budget two you’ll end up with one) where you just have time to think.
It’s only after you’re bored you have the great ideas. It’s never going to be when you’re stressed, or busy, running around or rushed. Make the time.
The first thing to realize is you can observe your mental state.
Meditation doesn’t mean you’re suddenly going to gain the superpower to control your internal state. The advantage of meditation is recognizing just how out of control your mind is. It is like a monkey flinging feces, running around the room, making trouble, shouting, and breaking things. It’s completely uncontrollable. It’s an out of-control madperson.
You have to see this mad creature in operation before you feel a certain distaste toward it and start separating yourself from it. In that separation is liberation. You realize, “Oh, I don't want to be that person. Why am I so out of control?” Awareness alone calms you down.
Life-hack: When in bed, meditate. Either you will have a deep meditation or fall asleep. Victory either way.
Naval believes happiness is really a default state. Happiness is there when you remove the sense of something missing in your life.
We are highly judgmental survival-and-replication machines. We constantly walk around thinking, “I need this”, or “I need that,” trapped in the web of desires. Happiness is the state when nothing is missing. When nothing is missing, your mind shuts down and stops running into the past or future to regret something or to plan something.
In that absence, for a moment, you have internal silence. When you have internal silence, then you are content, and you are happy. Naval says it is different for everybody and welcomes others to disagree.
If I say I’m happy, that means I was sad at some point. If I say he’s attractive, then somebody else is unattractive. Every positive thought even has a seed of a negative thought within it and vice versa, which is why a lot of greatness in life comes out of suffering. You have to view the negative before you can aspire to and appreciate the positive.
Happiness is not about positive thoughts. It’s not about negative thoughts. It’s about absence of desire, especially the absence of desire for external things. The fewer desires he can have, the more he can accept the current state of things, the less his mind is moving, because the mind really exists in motion toward the future or the past. The more present I am, the happier and more content I will be. If I latch onto a feeling, if I say, “Oh, I’m happy now,” and I want to stay happy, then I’m going to drop out of that happiness. Now, suddenly, the mind is moving. It’s trying to attach to something. It’s trying to create a permanent situation out of a temporary situation.
Happiness to Naval is mainly not suffering, not desiring, not thinking too much about the future or the past, really embracing the present moment and the reality of what is, and the way it is.
Nature has no concept of happiness or unhappiness. Nature follows unbroken mathematical laws and a chain of cause and effect from the Big Bang to now. Everything is perfect exactly the way it is. It is only in our particular minds we are unhappy or not happy, and things are perfect or imperfect because of what we desire.
The world just reflects your own feelings back at you. Reality is neutral. Reality has no judgements. To a tree, there is no concept of right or wrong, good or bad. You’re born, you have a whole set of sensory experiences and stimulations (lights, colors, and sounds), and then you die. How you choose to interpret them is up to you - you have that choice.
This is what Naval means when he says happiness is a choice. If you believe it’s a choice, you can start working on it.
Decrease the importance of yourself. The world does not conform to your desires, and this causes you problems.
What you’re left with in that neutral state is not neutrality. Naval thinks people believe neutrality would be a very bland existence. No, this is the existence little children live. If you look at little children, on balance, they’re generally pretty happy because they are really immersed in the environment and the moment, without any thought of how it should be given their personal preferences and desires. Naval thinks the neutral state is actually a perfection state. One can be very happy as long as one isn’t too caught up in their own head.
Our lives are a blink of a firefly in the night. You’re just barely here. You have to make the most of every minute, which doesn’t mean you chase some stupid desire for your entire life. What it means is every second you have on this planet is very precious and it’s your responsibility to make sure you’re happy and interpret everything the best possible way.
You can very slowly but steadily and methodically improve your happiness baseline, just like you can improve your fitness.
Happiness is a choice you make and a skill you develop. Happiness is being satisfied with what you have. Success comes from dissatisfaction. Choose.
A lot of us have this low-level pervasive feeling of anxiety. If you pay attention to your mind, sometimes you’re just running around doing your thing and you’re not feeling great, and you notice your mind is chattering and chattering about something. Maybe you can’t sit still… There’s this “nexting” thing where you’re sitting in one spot thinking about where you should be next.
It’s always the next thing, then the next thing, then next thing after that, then the next thing after that creating this pervasive anxiety.
It’s most obvious if you ever just sit down and try and do nothing. As long as the “monkey brain” keeps throwing us thoughts, we cannot have our peace.
A happy person isn’t someone who’s happy all the time. It’s someone who effortlessly interprets events in such a way that they don’t lose their innate peace.
The fundamental delusion: There is something out there that will make me happy and fulfilled forever.
The enemy of peace of mind is expectations drilled into you by society and other people. We’re like bees or ants. We are such social creatures, we’re externally programmed and driven. We don’t know how to play and win these single-player games anymore. We compete purely in multiplayer games.
The reality is life is a single-player game. You’re born alone. All your memories are alone. You’re gone in three generations, and nobody cares. Before you showed up, nobody cared. It’s all single player.
One day, Naval realized with all these people he was jealous of, he couldn’t just choose little aspects of their life. He couldn’t say I want his body, I want her money, I want his personality. You have to be that person. Do you want to actually be that person with all of their reactions, their desires, their family, their happiness level, their outlook on life, their self-image? If you’re not willing to do a wholesale, 24/7, 100% swap with who that person is, then there is no point in being jealous.
The Last Note
“Everything is more beautiful because we’re doomed. You will never be lovelier than you are now, and we will never be here again.” - Homer, The Iliad.