how to get rich - naval

Seek Wealth, Not Money or Status

  • Wealth is assets that earn while you sleep
  • Wealth buys your freedom
  • Money is how we transfer wealth
  • Status is your rank in the social hierarchy
  • Status is a very old game
  • People creating wealth will always be attacked by people playing status games

Make Abundance for the World

  • Ethical wealth creation makes abundance for the world
  • Everyone can be rich

Free Markets Are Intrinsic to Humans

  • Free markets are intrinsic to the human species
  • Too many takers and not enough makers will plunge a society into ruin

Making Money Isn’t About Luck

  • Making money isn’t about luck
  • 4 Kinds of Luck:
    • 1. Blind luck
    • 2. Luck from hustling
    • 3. Luck from preparation
    • 4. Luck from your unique character
  • In 1,000 parallel universes, you want to be wealthy in 999 of them
  • Wealth stacks up one chip at a time, not all at once

Make Luck Your Destiny

  • Build your character so opportunity finds you
  • You have to be a little eccentric to be out on the frontier by yourself

You Won’t Get Rich Renting Out Your Time

  • You won’t get rich renting out your time
  • Renting out your time means you’re essentially replaceable
  • You must own equity to gain your financial freedom

Live Below Your Means for Freedom

  • People living below their means have freedom
  • The most dangerous things are heroin and a monthly salary
  • Ideally, you’ll make your money in discrete lumps

Give Society What It Doesn’t Know How to Get

  • Give society what it wants, but doesn’t know how to get—at scale
  • Figure out what product you can provide and then figure out how to scale it

The Internet Has Massively Broadened Career Possibilities

  • The Internet has massively broadened the possible space of careers
  • The Internet allows you to scale any niche obsession
  • Escape competition through authenticity

Play Long-term Games With Long-term People

  • Play long-term games with long-term people
  • When you switch industries, you’re starting over from scratch
  • Long-term players make each other rich
  • Returns come from compound interest in iterated games

Pick Partners With Intelligence, Energy and Integrity

  • Pick business partners with high intelligence, energy and integrity
  • Motivation has to come intrinsically
  • Integrity is what someone does, despite what they say they do

Partner With Rational Optimists

  • Don’t partner with pessimists
  • Partner with rational optimists
  • We’re descended from pessimists

Arm Yourself With Specific Knowledge

  • Arm yourself with specific knowledge
  • Specific knowledge can’t be trained
  • Specific knowledge is found by pursuing your curiosity
  • Building specific knowledge will feel like play to you

Specific Knowledge Is Highly Creative or Technical

  • Specific knowledge can be taught through apprenticeships
  • Specific knowledge is often highly creative or technical
  • Specific knowledge is specific to the individual and situation
  • You can’t be too deliberate about assembling specific knowledge
  • Build specific knowledge where you are a natural

Learn to Sell, Learn to Build

  • Learn to sell, learn to build
  • The Silicon Valley model is a builder and seller
  • If you can do both you will be unstoppable
  • I’d rather teach an engineer marketing than a marketer engineering
Read What You Love Until You Love to Read
  • Read what you love until you love to read
  • Read the original scientific books in a field
  • Don’t fear any book
  • The means of learning are abundant, the desire to learn is scarce

The Foundations Are Math and Logic

  • The ultimate foundations are math and logic
  • It’s better to read a great book really slowly than to fly through a hundred books quickly
  • Learn persuasion and programming

There’s No Actual Skill Called “Business”

  • There’s no actual skill called “business”
  • Doing is faster than watching
  • The number of “doing” iterations drives the learning curve
  • If you’re willing to bleed a little every day, you may win big later

Embrace Accountability to Get Leverage

  • You have to have accountability to get leverage
  • Take business risks under your own name
  • A well-functioning team has clear accountability for each position
  • People who can fail in public have a lot of power

Take Accountability to Earn Equity

  • Accountability is how you’re going to get equity
  • Taking accountability is like taking equity in all your work
  • Accountability is reputational skin in the game

Labor and Capital Are Old Leverage

  • Our brains aren’t evolved to comprehend new forms of leverage
  • Society overvalues labor leverage
  • You want the minimum amount of labor that allows you to use the other forms of leverage
  • Capital has been the dominant form of leverage in the last century
  • You need specific knowledge and accountability to obtain capital

Product and Media are New Leverage

  • Product and media are the new leverage
  • Product leverage is where the new fortunes are made
  • Combining all three forms of leverage is a magic combination
  • Product and media leverage are permissionless
  • The robot army is already here—code lets you tell them what to do

Product Leverage is Egalitarian

  • Product leverage is a positive sum game
  • Status goods are limited to a few people
  • The best products tend to be targeted at the middle class
  • Creating wealth with product leads to more ethical wealth
  • You want to use the product that is used by the most people
  • Capital and labor are becoming permissionless

Pick a Business Model With Leverage

  • Scale economies: the more you produce, the cheaper it gets
  • Zero marginal cost of reproduction: producing more is free
  • Network effect businesses are natural monopolies
  • In a network effect, each new user adds value to the existing users
  • Zero marginal cost businesses can pivot into network effect businesses

Example: From Laborer to Entrepreneur

  • Laborers get paid hourly and have low accountability
  • General contractors get equity, but they’re also taking risk
  • Property developers pocket the profit by applying capital leverage
  • Architects, large developers and REITs are even higher in the stack
  • Real estate tech companies apply the maximum leverage

Judgment Is the Decisive Skill

  • In an age of infinite leverage, judgment becomes the most important skill
  • Everything else you do is setting you up to apply judgment
  • 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

Set an Aspirational Hourly Rate

  • Set and enforce an aspirational hourly rate
  • You can’t penny pinch your way to wealth
  • My aspirational rate was $5,000/hr
  • If you can outsource something for less than your hourly rate, do it
  • Your hourly rate should seem absurdly high

Work As Hard As You Can

  • Work as hard as you can
  • 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

Be Too Busy to “Do Coffee”

  • Be too busy to “do coffee” while keeping an uncluttered calendar
  • People will meet with you when you have proof of work
  • Networking is overrated even early in your career

Keep Redefining What You Do

  • Keep redefining what you do until you’re the best at what you do
  • Find founder-product-market fit

Escape Competition Through Authenticity

  • Competition will trap you in a lesser game
  • No one can compete with you on being you
  • In entrepreneurship, the masses are never right
  • Combine your vocation and avocation

Play Stupid Games, Win Stupid Prizes

  • Businesses that seem like they’re in direct competition really aren’t
  • My first company got caught up in the wrong game

Eventually You Will Get What You Deserve

  • On a long enough time scale you will get paid
  • What are you really good at that the market values?

Reject Most Advice

  • The best founders listen to everyone but make up their own mind
  • Advice is maxims you can recall later, when you get your own experience

A Calm Mind, a Fit Body, a House Full of Love

  • When you’re wealthy, you’ll realize it wasn’t what you were seeking
  • A calm mind, a fit body and a house full of love must be earned
  • Practical advice for a calmer internal state
  • A lot of divorces happen over money, a lot of battles happen over internal anger

There Are No Get Rich Quick Schemes

  • There are no get rich quick schemes
  • We don’t have ads because it would ruin our credibility
  • Anyone giving advice on how to get rich should have made their money elsewhere

Productize Yourself

  • Figure out what you’re uniquely good at and apply as much leverage as possible
  • Find hobbies that make you rich, fit and creative