Published in: 2020
The author, Eric Jorgenson, compiled this book out of transcripts, Tweets, and talks by Naval Ravikant – an icon in Silicon Valley and in the start-up culture. The book covers many areas of life, but this “Brief” focus on the section of wealth creation – how to get rich without getting lucky. Briefs on other part’s of this book may appear in the future.
AVOID “ZEROS”. Stay out of things that could cause you to lose all of your capital, all of your savings. Don’t gamble everything on one go. Instead, take rationally optimistic bets with big upsides.
HOW TO RETIRE. Retirement is when you stop sacrificing today for an imaginary tomorrow. When today is complete, in and of itself, you’re retired. You get there by (1) have so much money saved that your passive income – without you lifting a finger – covers your burn rate, (2) you drive your burn rate down to zero – you become a monk, or (3) you’re doing something you love – you love it so much, it’s not about the money.
WHAT WEALTH IS, AND HOW IT IS CREATED. Wealth is having assets that earn while you sleep. Money is how we transfer time and wealth. You’re not going to get rich renting out your time. You must own equity – a piece of a business – to gain financial freedom. You could own equity as a small shareholder where you bought stock or as an owner where you started the company. Without ownership, your inputs are very closely tied to your outputs.
FORTUNES REQUIRES LEVERAGE. Business leverage comes from capital, people, code or media. Let’s begin with the first two forms of leverage. Capital means money, and to raise money, you must apply specific knowledge with accountability and show good judgement. Labor means people are working for you. It’s the oldest and most fought-over form of leverage. Labor leverage will impress your parents, but don’t waste your life chasing it.
CODE AND MEDIA LEVERAGE. You can create software and media that works for you while you sleep. An army of robots is freely available – it’s just packed in data centres for heat and space efficiency. Use it to build products with no marginal cost of replication. If you can’t code, write books and blogs, record videos and podcasts to build products and content with no marginal cost of replication.
PERMISSONED AND PERMISSIONLESS LEVERAGE. Capital and labor are permissioned leverage. Everyone is chasing capital, but someone has to give it to you. Everyone is trying to lead, but someone has to follow you. Code and media, however, are permissionless leverage and the leverage behind the newly rich.
PATIENCE AND PERSISTANCE. You wait for the moment when something emerges in the world and you’re uniquely qualified. Build your brand in the meantime on Twitter, on YouTube, and by giving away free work. You make a name for yourself, and you take some risk in the process. When it is time to move on the opportunity, you can do so with the maximum amount of leverage possible.
SPECIFIC KNOWLEDGE. You will get rich by giving society what it wants but does not yet know how to get. At scale. Learn to sell. Learn to build. Arm yourself with specific knowledge, accountability and leverage. Specific knowledge is knowledge you cannot be trained for. If society can train you, it can train someone else and replace you. Specific knowledge is often highly technical or creative. It cannot be outsourced or automated.
PRODUCTIZE YOURSELF. ”Yourself” has uniqueness. “Productize” has leverage. “Yourself” has accountability. “Productize” has specific knowledge. If you want to be wealthy, you want to figure out which of those things you can provide for society that it does not know how to get, but it will want, and providing it is natural to you, within your capabilities. Then, you have to figure out how to scale it. Escape competition through authenticity. The internet enables any niche interest, as long as you’re the best person at it to scale out. Because every human is different, everyone is the best at something – being themselves.
100% DEDICATED. Become the best in the world at what you do. Keep redefining what you do until this is true. It takes decades to execute, where the better part of a decade may be figuring out what you can uniquely provide. You can only achieve mastery in one or two things. It’s usually things you’re obsessed about. If you’re not 100% into it, somebody else who is 100% into it, they will outperform you by a lot because compound interest and leverage applies.
LEVERAGE IS A FORCE MULTIPLIER FOR YOUR JUDGEMENT. Judgement requires experience but can be built faster by learning foundational skills. 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, $100 million, $200 million, whatever it takes, because 10 percent better judgement steering a $100 billion ship is very valuable. CEOs are highly paid because of their leverage. Small differences in judgement and capability really get amplified.