Making it Real: Naval Ravikant’s Epic Tweetstorm “How to Get Rich (without getting lucky)”
You immediately see the wisdom in this tweetstorm. But what do we change in our lives to apply these?
For each of these tweets, I share:
- Guide questions. Some I answer here, some I answer privately. Perhaps these will help you think through your own situation.
- Suggestions. I’ve experimented with habits related to some of these. I’ll share what worked for me.
- Questions. I don’t know what to do with some of these points. I don’t understand some of these points. I don’t agree some of these points. I hope you share your thoughts.
I copy-paste them with numbers so they are easier to refer to.
1/ How to Get Rich (without getting lucky)
Probabilistic decision making I learned from Nassim Nicholas Taleb:
- With choices, don’t just imagine one outcome. For each choice, imagine 100 versions of reality. What actually happens is a roll of the dice.
- Don’t choose options which have a chance of ruining you. Even if the probability is 1/100, you will eventually be ruined with enough rolls of the dice.
- When making choices, consider both Magnitude and Probability. Probability is x/100. There is no way of measuring this, but it allows you to compare choices better.
- The future is fundamentally uncertain, with so many factors outside of our control, so get used to playing with the odds, winning some and losing some, not getting deluded by victory or defeat.
2/ 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.
Easier said than done. Evolution wired humans to seek status. You can’t will yourself to not seek status. What worked for me:
- Meditation
- Status fasting
- Peer pressure design
3/ Understand that ethical wealth creation is possible. If you secretly despise wealth, it will elude you.
The best way to understand this: create value for someone in exchange for cash. Your soul will get it. Then your brain will eventually catch up.
The opposite is also true. If you make money is some sleazy way, your soul gets it, even if you force your brain to think otherwise.
4/ Ignore people playing status games. They gain status by attacking people playing wealth creation games.
See 2/ on what I do to make this real. Could you share your own techniques?
5/ 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.
This means automating the creation of value. Naval’s categories (see 22/):
- Capital — making your money work while you sleep
- Labor — build a team that creates value while you sleep
- Code — create software that creates value while you sleep
- Media — create content that creates value while you sleep
What’s missing in this tweetstorm is getting paid for that value with cash, which is a key part in any business. Can you suggest frameworks to think about this (equivalent to what I suggest in /6)?
6/ You will get rich by giving society what it wants but does not yet know how to get. At scale.
Some ways of doing this:
Please share your frameworks or processes for figuring out what society wants but does not know how to get!
7/ Pick an industry where you can play long term games with long term people.
I’m not sure what this means. Thoughts?
8/ The Internet has massively broadened the possible space of careers. Most people haven’t figured this out yet.
Yes. Now, what do I change in my routine that will allow me to be open to this space? Suggestions?
9/ Play iterated games. All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest.
What practices should I start/stop/continue in order to:
- Investing money instead of spending money?
- Be open to starting and growing relationships with people who have high intelligence, high energy, and high integrity? (see 10/)
- Become an expert at something/s?
10/ Pick business partners with high intelligence, energy, and, above all, integrity.
“You are the average of the five people you hang out most with.”
- Who are the people I should spend more time with?
- How do I spend more time with them?
- How do I meet more people I want to spend more time with?
- Who are the people I should spend less time with?
11/ Don’t partner with cynics and pessimists. Their beliefs are self-fulfilling.
See 10/
12/ Learn to sell. Learn to build. If you can do both, you will be unstoppable.
I learned to sell through hands-on practice. I used this framework: SPIN Selling. Then just got out of the building and overcame my resistance every day. Had some failures and success. Got better after years. Selling is a super skill.
Building is also a hands-on skill. You have to jump into the pool to learn to swim. I’ve learned how to build teams (pick right people + build their skills + develop processes) by doing it.
13/ Arm yourself with specific knowledge, accountability, and leverage.
What do these mean? Naval answers below.
14/ Specific knowledge is knowledge that you cannot be trained for. If society can train you, it can train someone else, and replace you.
I don’t know what to change in my life based on this principle. Thoughts?
15/ Specific knowledge is found by pursuing your genuine curiosity and passion rather than whatever is hot right now.
- Whatever is hot right now = what excites you from social media.
- Pursuing genuine curiosity and passion = years deep into a craft or domain of knowledge
16/ Building specific knowledge will feel like play to you but will look like work to others.
Here’s my list:
- Automated persuasion (building sales and marketing systems)
- Building professionals and teams (orchestrating a business with the goal of personal, professional and financial growth for me and my team mates)
- Training people for specific skills
- Writing
- (Recent and exploratory) Nutrition
Years ago, I wrote my siblings and cousins a guide to create this list for themselves. You might find it useful for thinking about your own list.
17/ When specific knowledge is taught, it’s through apprenticeships, not schools.
As a teacher, I’ve always seen my role as an orchestrator of learning experience, and not as a transmitter of knowledge via words.
18/ Specific knowledge is often highly technical or creative. It cannot be outsourced or automated.
But you can train apprentices, to whom you can eventually outsource to.
19/ Embrace accountability, and take business risks under your own name. Society will reward you with responsibility, equity, and leverage.
Skin in the Game by Nassim Taleb.
20/ The most accountable people have singular, public, and risky brands: Oprah, Trump, Kanye, Elon.
How do we bring this back to earth?
21/ “Give me a lever long enough, and a place to stand, and I will move the earth.” — Archimedes
This becomes clearer below.
22/ Fortunes require leverage. Business leverage comes from capital, people, and products with no marginal cost of replication (code and media).
Leverage = ability to scale:
- Through capital
- By building a team
- With software
- With media
23/ Capital means money. To raise money, apply your specific knowledge, with accountability, and show resulting good judgment.
Too Silicon Valley for me.
24/ Labor means people 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.
In fact, the smaller your team is, the higher the happiness-to-stress ratio.
25/ 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.
I agree that capital has gate keepers. But I disagree that everyone is trying to lead. Lots of people are just waiting to be led. “Everyone is trying to lead” is another Silicon Valleyism.
26/ Code and media are permissionless leverage. They’re the leverage behind the newly rich. You can create software and media that works for you while you sleep.
- If you have capital, go and use it. It is the easiest to get started with, but not everyone has it. You can get a start by exchanging your time for money (eg, get a job).
- If you can lead people, go do so. It’s just harder to scale vs code and content.
- If you have neither of these, learn to code or create content. Even if you have capital and leadership, it is valuable to learn to code or create content. This is open to everyone.
27/ An army of robots is freely available — it’s just packed in data centers for heat and space efficiency. Use it.
You can automate the creation of value by commanding these robots. You have to learn a language to command them. This is the “specific skill” of writing software.
I have tried learning this specific skill several times in my life. Not easy. Good practice for humility. I found creating content easier.
Also, there are now ways to command robots without having to code:
- Zapier
- IFTTT
28/ If you can’t code, write books and blogs, record videos and podcasts.
The more you do it, the better you become at it. There are varied ways of converting the value you create to money. Like coding, it normally takes years to become good at it. It also takes years to build an audience, unless you get lucky. Also, survivorship bias. For every successful blog, YouTube channel and podcast, there are lots of hidden failures. Be aware of the odds. Think about intrinsic vs. extrinsic motivation.
29/ Leverage is a force multiplier for your judgement.
Which means that with more money, with a bigger team, with programming, with an audience — your choices make a greater impact — both good and bad.
30/ Judgement requires experience, but can be built faster by learning foundational skills.
I don’t know what these foundational skills are. Ideas?
31/ There is no skill called “business.” Avoid business magazines and business classes.
Another Silicon Valleyism. For startups — business models that don’t have existing playbooks — this is true.
But if you’re going to start a restaurant, an architecture firm, or a laundry shop, there are tried-and-tested playbooks. Best way to learn is to work inside a successful business. Business education is an option for businesses with known playbooks.
32/ Study microeconomics, game theory, psychology, persuasion, ethics, mathematics, and computers.
Books that came to mind:
- Microeconomics — ?
- Game theory — ?
- Psychology — Thinking Fast and Slow by Daniel Kahneman
- Persuasion —Influence by Cialdini
- Mathematics — Chaos by James Gleick
- Computers — ?
Could you share the best books you’ve read in these domains? Why did Naval pick these domains?
33/ Reading is faster than listening. Doing is faster than watching.
Doing is deeper than reading.
34/ You should be too busy to “do coffee,” while still keeping an uncluttered calendar.
You should try doing coffee first until you realize why it is a waste of time.
35/ Set and enforce an aspirational personal hourly rate. If fixing a problem will save less than your hourly rate, ignore it. If outsourcing a task will cost less than your hourly rate, outsource it.
Also look at:
- The joy/stress a task gives you
- How overcoming that task will change you as a person
- The hands-on knowledge you get with tasks (eg, meeting customers and handling finances)
36/ Work as hard as you can. Even though who you work with and what you work on are more important than how hard you work.
People sometimes confuse working hard with working stupid. DHH is a sane voice in the wilderness.
37/ Become the best in the world at what you do. Keep redefining what you do until this is true.
Check out this post by Scott Adams.
38/ There are no get rich quick schemes. That’s just someone else getting rich off you.
These people don’t create value. They transfer value from you (and your friends) to them.
39/ Apply specific knowledge, with leverage, and eventually you will get what you deserve.
I’m not sure I buy this. It is probably good to believe this in any case. Also, you will probably have a happier life applying these things than otherwise.
40/ When you’re finally wealthy, you’ll realize that it wasn’t what you were seeking in the first place. But that’s for another day.
Again, evolution has wired us to seek status (and, thus, wealth by default in a capitalist society). But we also seem to be wired to long for something deeper. Depending on what version of metaphysics is true, this game (and all human games) may be fundamentally meaningful, or fundamentally meaningless. My bet is the former:
