A summary of Naval’s podcast on how to get rich (Wealthy, really)

  1. Ruining your reputation is the same as getting wiped to zero
  2. Escape competition through authenticity
  3. Learn persuasion and programming
  4. Five most important skills are of course, reading, writing, arithmetic, and then as you’re adding in, persuasion, which is talking. And then finally, I would add computer programming just because it’s an applied form of arithmetic that just gets you so much leverage for free in any domain that you operate in.
  5. You should be able to pick up any book in the library and read it — there is no skill called business. Avoid business magazines and business class, study microeconomics, game theory, psychology, persuasion, ethics, mathematics and computers.
  6. Become the kind of person who makes money. Wealth stacks up one chip at a time, not all at once
  7. On Luck — Build your character in a way that luck becomes deterministic. Build your character so opportunity finds you
  8. So, it’s much easier to be top 5 percentile at three or four things than it is to be literally the number one at something.
  9. You want a career where your inputs don’t match your outputs
  10. Society will pay you for creating what it wants and delivering it at scale. Give society what it wants, but doesn’t know how to get — at scale
  11. Essentially, all the benefits in life come from compound interests. Whether it’s in relationships, or making money, or in learning.
  12. In a long-term game, it seems that everybody is making each other rich. And in a short-term game, it seems like everybody is making themselves rich.
  13. But I think a good leader doesn’t take credit. A good leader basically tries to inspire people, so the team gets the job done.
  14. Get traction and then, don’t let go.
  15. Pick business partners with high intelligence, energy and integrity
  16. Don’t partner with cynics and pessimists; their beliefs are self-fulfilling
  17. And all the really successful people I know have a very strong action bias. They just do things. The easiest way to figure out if something is viable or not is by doing it. At least do the first step, and the second step, and the third, and then decide. So, if you want to be successful in life, creating wealth, or having good relationships, or being fit, or even being happy, you need to have an action bias towards getting what you want.
  18. The one thing you have to avoid is the risk of ruin.
  19. You have to watch your health. And stay out of things that can cause you to lose all of your capital, all of your savings. So, don’t gamble everything on one go. But take rationally optimistic bets with big upside.
  20. Arm yourself with specific knowledge — Specific knowledge can be found by pursuing your genuine curiosity
  21. On Specific knowledge — The thing is that we have this idea that everything can be taught, everything can be taught in school. And it’s not true that everything can be taught. In fact, the most interesting things cannot be taught. But everything can be learned. And very often that learning either comes from some innate characteristics in your DNA, or it could be through your childhood where you learn soft skills which are very, very hard to teach later on in life, or it’s something that is brand new so nobody else knows how to do it either, or it’s true on the job training because you’re pattern matching into highly complex environments, basically building judgment in a specific domain. Classic example is investing, but it could be in anything. It could be in judgment in running a fleet of trucks, it could be judgment in weather forecasting.
  22. Specific knowledge is found by pursuing your curiosity
  23. Play stupid games win stupid prizes. A lot of people spend a lot of their time playing social games like on Twitter where you’re trying to improve your social standing and you basically win stupid social prizes which are worthless. Same with copying competition. You’re playing a stupid game. You’re going to win a stupid prize. It’s not obvious right now because you’re blinded by competition. But three years from now, it’ll be obvious.
  24. My whole value system was built around scientists and I wanted to be a great scientist. But when I actually look back at what I was uniquely good at and what I ended up spending my time doing, it was more around making money, tinkering with technology, and selling people on things. Explaining things, talking to people.
  25. Learn to Sell, Learn to Build. If you can do both, you will be unstoppable.
  26. Long term, people who understand the underlying product and how to build it and can sell it, these are catnip to investors, these people can break down walls if they have enough energy, and they can get almost anything done.
  27. Sales skills actually scale better over time. Like for example, if you have a reputation for building a great product, that’s good, but when you ship your new product, I’m going to validate it based on the product. But if you have a reputation for being a good person to do business with and you’re persuasive and communicative then that reputation almost becomes self-fulfilling.
  28. On Reading — And the ultimate, the ultimate is when you walk into a library and you look at it up and down and you don’t fear any book. You know that you can take any book off the shelf, you can read it, you can understand it, you can absorb what is true, you can reject what is false, and you have a basis for even working that out that is logical and scientific and not purely just based on opinions.
  29. The means of learning are abundant; the desire to learn is scarce
  30. Mathematics and logic are the basis for understanding everything else
  31. It’s better to read a great book slowly than to fly through a hundred books quickly
  32. Learn basic concepts — basic concepts from game theory, psychology, ethics, mathematics, computers, and logic will serve you much, much better.
  33. When it comes to your learning curve, if you want to optimize your learning curve… One of the reasons why I don’t love podcasts, even though I’m a generator of podcasts, is that I like to consume my information very quickly.
  34. The number of ‘doing’ iterations drives the learning curve — So if I was trying new marketing experiments in the store all the time, I was constantly changing up the inventory, I was constantly changing up the branding and the messaging, I was constantly changing the sign, I was constantly changing the online channels that are used to drive foot traffic in, I was experimenting with being open at different hours, I had the ability to walk around and talk to other store owners and getting their books and figure out how they run their businesses. It’s the number of iterations that drives the learning curve. So, the more iterations you can have, the more shots on goal you can have, the faster you’re going to learn. It’s not just about the hours put in.
  35. Embrace accountability and take business risks under your own name. Society will reward you with responsibility, equity, and leverage.
  36. It’s better to be anonymous and rich than to be poor and famous, but even famous and rich has a lot of downsides associated with it. You’re always in the public eye.
  37. If you have high accountability, you’re less replaceable. Accountability is how you’re going to get equity. 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.
  38. Accountability, skin in the game, these concepts go very closely hand in hand. I think of accountability as reputational skin in the game. It’s putting your personal reputation on the line as skin in the game.
  39. Accountability Means Letting People Criticize You — You have to stick your neck out and be willing to fail publicly
  40. You really want to stay out of labor-based leverage. You want the minimum amount of people working with you that are going to allow you to use the other forms of leverage, which I would argue are much more interesting.
  41. Capital as form of leverage — 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.
  42. Create software and media that work for you while you sleep — Product and media are the new leverage.
  43. Probably the most interesting thing to keep in mind about the new forms of leverage is they are permissionless. They don’t require somebody else’s permission for you to use them or succeed.
  44. The best products tend to be targeted at the middle class — Something like watching Netflix or using Google or using Facebook or YouTube or even frankly modern day cars. Rich people don’t have better cars. They just have weirder cars.
  45. People and capital as a form of leverage have a negative externality and code and product have a positive externality attached to them, if I was going to sum up your point.
  46. An ideal business model has network effects, low marginal costs and scale economies
  47. Zero marginal cost of reproduction: producing more is free — Software
  48. Network effects: value grows as the square of the customers — Then, the most subtle but the most important is this idea of network effects. It comes from computer networking. Bob Metcalfe, who created Ethernet, famously coined Metcalfe’s Law, which is the value of a network is proportional to the square of the number of nodes in the network.
  49. Network effect businesses are natural monopolies. In a network effect, each new user adds value to the existing users — What is a network effect? Let’s just define it precisely. A network effect is when each additional user adds value to the existing user base. Your users themselves are creating some value for the existing users. Example — Language? Languages are probably the oldest example of network effect.
  50. Zero marginal cost businesses can pivot into network effect businesses — Network effects are a very powerful concept, and when you’re picking a business model, it’s a really good idea to pick a model where you can benefit from network effects, low marginal costs, and scale economies; and these tend to go together.
  51. Example of leveraging up — As you layer in more and more kinds of knowledge that can only be gained on the job and aren’t common knowledge, and you layer in more and more accountability and risk-taking, and you layer in more and more great people working on it and more and more capital on it, and more and more code and media on it, you keep expanding the scope of the opportunity all the way from the day-laborer, who might just literally be scrappling on the ground with their hands, all the way up to somebody who started a real estate tech company and then took it public.
  52. In an age of infinite leverage, judgment becomes the most important skill
  53. If you’re on course 10 or 20 percent of the time more often than the other person, the compounding results on that hundreds of billions of dollars you’re managing will be so large that your CEO pay will be dwarfed in comparison.
  54. Judgment, especially demonstrated judgment, with high accountability, clear track record, is critical.
  55. Intellect without any experience is often worse than useless because you get the confidence that the intellect gives you, and you get some of the credibility, but because you had no skin in the game, and you had no real experience, and no real accountability, you’re just throwing darts.
  56. The people with the best judgment are among the least emotional — If you are smart and you have a lot of quick iterations, and you try to keep your emotions out of it, the people with the best judgment are actually among the least emotional. A lot of the best investors are considered almost robotic in that regard, but I wouldn’t be surprised if even the best entrepreneurs often come across as unemotional.
  57. Investment books are the worst place to learn about investment, because investment is a real-world activity that is highly multi-variate, all the advantages are always being competed away. It’s always on the cutting-edge. What you actually just need is very, very broad-based judgment and thinking. The best way to do that is to study everything, including a lot of philosophy. Philosophy also makes you more stoic, makes you less emotional, and so you make better decisions; you have better judgment.
  58. If you can outsource something for less than your hourly rate, do it — Your hourly rate should seem absurdly high. People say, “What about the joy of life? What about getting it right, just your way?” Sure, you can do that. But you’re not going to be wealthy, because you’ve made something else a priority.
  59. Set a very high aspirational hourly rate for yourself, and stick to it. It should seem and feel absurdly high. If it doesn’t, it’s not high enough. Whatever you pick, my advice is to raise it.
  60. Even though what you work on and who you work with are more important — Work as hard as you can
  61. No matter how high your bar is, raise it
  62. The way people tend to work most effectively, especially in knowledge work, is to sprint as hard as they can while they feel inspired to work, and then rest. They take long breaks. It’s more like a lion hunting and less like a marathoner running. You sprint and then you rest. You reassess and then you try again. You end up building a marathon of sprints.
  63. Inspiration is perishable — Inspiration is perishable. When you have inspiration, act on it right then and there.
  64. Impatience with actions, patience with results. When you do these things, do them as quickly as you can and with your full attention so you do them well. Then be patient with the results because you’re dealing with complex systems and a lot of people.
  65. If I don’t solve a problem the moment it happens — or if I don’t move towards solving it — I have no peace. I have no rest. I have no happiness until the problem is solved. So I solve it as quickly as possible. I literally won’t sleep until it’s solved — maybe that’s just a personal characteristic. But it’s worked out well in business.
  66. Ruthlessly decline meetings — Be too busy to ‘do coffee’ while keeping an uncluttered calendar
  67. Ruthlessly cut meetings — If someone wants a meeting, see if they will do a call instead. If they want to call, see if they will email instead. If they want to email, see if they will text instead. And you probably should ignore most text messages — unless they’re true emergencies.
  68. You have to be utterly ruthless about dodging meetings. When you do meetings, make them walking meetings. Do standing meetings. Keep them short, actionable and small. Nothing is getting done in a meeting with eight people around a conference table. You are literally dying one hour at a time.
  69. Free your time and mind — If you think you’re going to “make it” by networking and attending a bunch of meetings, you’re probably wrong. Networking can be important early in your career. And you can get serendipitous with meetings. But the odds are pretty low. When you meet people hoping for that lucky break, you’re relying on Type One luck, which is blind luck, and Type Two luck, which is hustle luck.
  70. If you really want to get paid in this world, you want to be number one at whatever you do. It can be niche — that’s the point. You can literally get paid for just being you.
  71. If you want to be successful in life, you have to get comfortable managing multi-variate problems and multiple-objective functions at once.
  72. You have to be careful when you get caught up in status games. You end up competing over things that aren’t worth competing over.
  73. At least lean towards authenticity, towards getting away from competition. Competition leads to copy-catting and playing the completely wrong game.
  74. On a long enough time scale, you will get paid. Everybody wants it immediately. But the world is an efficient place. Immediate doesn’t work. You have to put in the time. You have to put in the hours. You have to put yourself in that position with specific knowledge, accountability, leverage and an authentic skill-set in order to be the best in the world at what you do.
  75. One thing that’s important in entrepreneurship: You just have to be right once. You get many, many shots on goal. You can take a shot on goal every three to five years, maybe every 10 at the slowest. Or once every year at the fastest, depending on how you’re iterating with startups. But you only have to be right once.
  76. The equation then is — Your eventual outcome will be equal to something like the distinctiveness of your specific knowledge; times how much leverage you can apply to that knowledge; times how often your judgment is correct; times how singularly accountable you are for the outcome; times how much society values what you’re doing. Then you compound that with how long you can keep doing it and how long you can keep improving it through reading and learning.
  77. Adding more complexity to your decision-making process gets you a worse answer. You’re better off picking the single biggest thing or two. Ask yourself: What am I really good at, according to observation and people I trust, that the market values? Those two variables alone are probably good enough. If you’re good at it, you’ll keep it up. You’ll develop the judgment. If you’re good at it and you like to do it, eventually people will give you the resources and you won’t be afraid to take on accountability. So the other pieces will fall into place.
  78. Product-market fit is inevitable if you’re doing something you love and the market wants it.
  79. Avoid people who got rich quickly. They’re just giving you their winning lottery ticket numbers.” Reject Most Advice. The best founders listen to everyone but make up their own mind
  80. If you survey enough people, all of the advice will cancel to zero. You have to reject most advice. But you have to listen to enough of it, and read enough of it, to know what to reject and what to accept.
  81. If you can’t see yourself working with someone for life, then don’t work with them for a day.
  82. A calm mind, a fit body and a house full of love must be earned
  83. The ultimate purpose of money is so you don’t have to be in a specific place, at a specific time, doing anything you don’t want to do.
  84. There are no get rich quick schemes. That’s just someone else getting rich off you.
  85. Anyone giving advice on how to get rich should have made their money elsewhere
  86. Productize Yourself- Figure out what you’re uniquely good at and apply as much leverage as possible
  87. Find three hobbies: One that makes you money, one that keeps you fit, and one that makes you creative. One that makes you money, one that makes you fit, and one that makes you smarter.
  88. Don’t refuse to do things just because others can’t do them — Some people believe it’s unfair to do anything with the opportunities they have because others don’t have the same opportunities. With a defeatist attitude like that, why even get out of bed in the morning? Ninety percent of people are dead. It’s an excuse to do nothing.
  89. Look up the value chain — at who’s above you and who’s above them — and see how they are taking advantage of the time and work you’re doing and how they’re applying leverage.
  90. You will do better in a small organization — You will have more accountability, and your work will be more visible. You’re more likely to be able to try different things, which can help you discover the thing you are uniquely good at. People will be more likely to give you leverage through battlefield promotions. You’ll have more flexibility. There will be more authenticity in how the company operates.
  91. The long-term goal is that we are all wealthy and working for ourselves. The people working for us are essentially robots.
  92. Being Ethical Is Long-Term Greedy — If you cut fair deals, you will get paid in the long run. Ethics isn’t something you study; it’s something you do.
  93. Trust leads to compounding relationships — Once you’ve been in business long enough, you will realize how much of it is about trust. It’s about trust because you want to compound interest. You want to work with trustworthy people for long periods of time without having to reevaluate every discussion or constantly look over your shoulder.
  94. Being ethical attracts other long-term players — Acting ethically turns out to be a selfish imperative. You want to be ethical because it attracts other long-term players in the network. They want to do business with ethical people.
  95. Being ethical is long term greedy — If you build a reputation for being ethical, people eventually will pay you just to do deals through you. Your involvement will validate deals and ensure they get done; because you wouldn’t be involved with low-quality stuff. In the long-run, being ethical pays off — but it’s the very long run. In the short-run, being unethical pays off, which is why so many people go for it. It’s short-term greedy.
  96. If you cut fair deals, you will get paid in the long run
  97. Negotiations offer another good example. If you’re the kind of person who always tries to get the best deal for yourself, you will win a lot of early deals and it will feel very good. On the other hand, a few people will recognize that you’re always scrabbling and not acting fairly, and they will tend to avoid you. Over time those are the people who end up being the dealmakers in the network. People go to them for a fair shake or to figure out what’s fair.
  98. If you cut people fair deals, you won’t get paid in the short-term. But over the long-term, everybody will want to deal with you. You end up being a market hub. You have more information. You have trust. You have a reputation. And people end up doing deals through you in the long-run.
  99. Principal-Agent Problem: Act Like an Owner. If you think and act like an owner, it’s only a matter of time until you become an owner
  100. If you want to do something right, do it yourself; because other people just don’t care enough.
  101. If you can work on incentives, don’t work on anything else. Almost all human behavior can be explained by incentives. The study of signaling is seeing what people do despite what they say. People are much more honest with their actions than they are with their words. You have to get the incentives right to get people to behave correctly. It’s
  102. No matter where you are working — Have a founder’s mentality. If you’re an employee, your most important job is to think like a principal
  103. If you align yourself with a good principal, they will promote you or empower you or give you accountability or leverage that may be way out of proportion to your relatively menial role.
  104. If you can hack your way through the principal-agent problem, you’ll probably solve half of what it takes to run a company.
  105. If you are an agent, the best way to operate is to ask, “What would the founder do?” If you think like the owner and you act like the owner, it’s only a matter of time until you become the owner.
  106. Kelly Criterion: Avoid Ruin. Don’t ruin your reputation or get wiped to zero. Don’t bet everything on one big gamble
  107. Don’t risk everything. Stay out of jail. Don’t bet everything on one big gamble. Be careful how much you bet each time, so you don’t lose the whole kitty.
  108. The number one way people get ruined in modern business is not by betting too much; it’s by cutting corners and doing unethical or downright illegal things. Ending up in an orange jumpsuit in prison or having a reputation ruined is the same as getting wiped to zero — so never do those things.
  109. Turn Short-Term Games Into Long-Term Games . Improve your leverage by turning short-term relationships into long-term ones.
  110. Negotiations are won by whoever cares less.
  111. Convert single-move games to multi-move games.
  112. Compounding Relationships Make Life Easier — Life gets a lot easier when you know someone’s got your back. It’s better to have a few compounding relationships than many shallow ones Again, most of the benefits of compounding come at the end.
  113. The most under-recognized reason startups fail is because the founders fall apart.
  114. It takes just as much effort to create a small business as a large one
  115. Price Discrimination: Charge Some People More — You can charge people for extras based on their propensity to pay
  116. Consumer surplus and producer surplus are important concepts. Consumer surplus is the excess value you get from something when you pay less than you were willing to pay.
  117. NPV — Figure out what future income is worth today by applying a discount rate. Get very comfortable doing rough net present value calculations in your head.
  118. Pricing externalities properly is more effective than feel-good measures
  119. Chief of staff for a founder is one of the most coveted jobs for young people starting out in Silicon Valley. The brightest kids will follow an entrepreneur around and do whatever he or she needs them to do. Chief of staff for a founder is one of the most coveted jobs for young people starting out in Silicon Valley. The brightest kids will follow an entrepreneur around and do whatever he or she needs them to do.
  120. Avoid repetitive drudgery — that’s just biding time until your job is automated away.
  121. The hardest thing for any founder is finding employees with a founder mentality. This is a fancy way of saying they care enough.
  122. Accountability is something you can take on immediately. You can say, “Hey, I’ll take charge of this thing that nobody wants to take charge of.” When you take on accountability, you’re also publicly putting your neck on the chopping block — so you have to deliver.
  123. If you have a natural aptitude and take on accountability, you can put yourself in a position to learn quickly. Before long, you’ll become the heir apparent.
  124. Early on, find things that interest you and allow you to take on accountability. Don’t worry about short-term compensation. Compensation comes when you’re tired of waiting for it and have given up on it. This is the way the whole system works. If you take on accountability and solve problems on the edge of knowledge that others can’t solve, people will line up behind you. The leverage will come.
  125. If you’re good at persuading people, it’s probably a skill you picked up early on in life. It’s always going to apply, because persuading people is always going to be valuable. That’s timeless knowledge.
  126. Timeless specific knowledge usually can’t be taught, and it sticks with you forever. Timely specific knowledge comes and goes; but it tends to have a fairly long shelf life.
  127. Technology is a good place to find those timely skills sets. If you can bring in a more generic specialized knowledge skill set from the outside, then you’ve got gold.
  128. Companies don’t know how to measure outputs, so they measure inputs instead. Work in a way that your outputs are visible and measurable. If you don’t have accountability, do something different.
  129. People need to be able to tell what role you had in the company’s success. That doesn’t mean stomping all over your team — people are extremely sensitive to others taking too much credit. You always want to be giving out credit. Smart people will know who was responsible.
  130. You’ll develop thick-skin if you take on accountability. When you have accountability, you get a lot more credit when things go right. Of course, the downside is you get hurt a lot more when things go wrong. When you stick your neck out, you have to be willing to be blamed, sacrificed and even attacked.
  131. Specific knowledge comes on the job, not in a classroom
  132. Another good indicator of specific knowledge is when someone can’t give a straight answer to the question: “What do you do every day?” Or you get an answer along the lines of, “Every day is different based on what’s going on.”

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