I have followed Naval since I came to know of him through Joe Rogan’s podcast. He is a clear and articulate thinker with a balanced view of success and making money.
Wealth stacks up one chip at a time, not all at once
And I’ve encountered plenty of bad luck along the way. The first little fortune that I made, I instantly lost in the stock market. The second little fortune that I made, or I should have made, I basically got cheated by my business partners. It’s only the third time around has been a charm.
And, even then, it has been in a slow and steady struggle. I haven’t made money in my life in one giant payout. It’s always been a whole bunch of small things piling up. It’s more about consistently creating wealth by creating businesses, including opportunities and creating investments. It hasn’t been a giant one-off thing.
Build your character so opportunity finds you
One of the things I think that is important to making money, when you want the kind of reputation that makes people do deals through you.
If you’re a trusted, reliable, high-integrity, long-term thinking deal maker, then when other people want to do deals but they 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 or offer you a unique deal just because of the integrity and reputation that you have built up.
Look for leverage
So, you want to look for professions and careers where the inputs and outputs are highly disconnected. This is another way of saying that you want to look for things that are leveraged.
Live Below Your Means for Freedom
People living far below their means enjoy a freedom that people busy upgrading their lifestyles just can’t fathom.
Give Society What It Doesn’t Know How to Get
Society will pay you for creating what it wants, but doesn’t know how to get, and delivering it at scale.
Figure out what product you can provide and then figure out how to scale it.
Escape competition through authenticity
The internet enables any niche interest, as long as you’re the best at it to scale out. And the great news is because every human is different, everyone is the best at something. Being themselves.
Play Long-term Games With Long-term People
Pick an industry where you can play long-term games with long-term people. All returns in life come from compound interest over many turns of the game.
But essentially if you want to be successful, you have to work with other people. And you have to figure out who can you trust, and who can you trust over a long, long period of time, that you can just keep playing the game with them, so that compound interest, and high trust will make it easier to play the game, and will let you collect the major rewards, which are usually at the end of the cycle.
When you have been doing business with somebody, you’ve been friends with somebody for ten years, twenty years, thirty years, it just gets better and better because you trust them so easily. The friction goes down, you can do bigger, and bigger things together.
Working with Long-Term People
if somebody screws over an enemy, and is vindictive towards them, well it’s only a matter of time before they redefine you from friend to enemy, and you feel their wrath. So, angry, outraged, vindictive, short-term thinking people are essentially that way in many interactions in real life.
You want to find long-term people. You want to find people who seem irrationally ethical.
Good people, moral people, ethical people, easy to work with people, reliable people, tend to have very high self-esteem because they have very good reputations with themselves, and they understand that.
Generally, the more someone is saying that they’re moral, ethical, and high integrity, the less likely they are to be that way.
When you switch industries, you’re starting over from scratch
But every time you reset, every time you wander out of where you built your network, you’re going to be starting from scratch. You’re not going to know who to trust. They’re not going to know to trust you.”
Pick Partners With Intelligence, Energy and Integrity
Picking partners with high intelligence, energy and integrity is the three-part checklist that you can’t compromise on.
Pick business partners with high intelligence, energy and integrity.
Train for specific knowledge
Specific knowledge can’t be trained.
The first thing to notice about specific knowledge is that you can’t be trained for it. If you can be trained for it, if you can go to a class and learn specific knowledge, then somebody else can be trained for it too, and then we can mass-produce and mass-train people.
Building specific knowledge will feel like play to you
So, very often, it’s not something you sit down and then you reason about, it’s more found by observation. You almost have to look back on your own life and see what you’re actually good at.
The Silicon Valley model is a builder and seller
So, generally, the Silicon Valley startup model tends to work best. It’s not the only way, but it is probably the most common way, when you have two founders, one of whom is world class at selling, and one of whom is world class at building.
When you’re starting out, when you’re trying to be recognized, building is better.
But much later down the line building gets exhausting because it is a focus job and it’s hard to stay current because there’s always new people, new products coming up who have newer tools, and frankly more time because it’s very intense, it’s a very focused task.
The Foundations Are Math and Logic
The ultimate foundation are mathematics and logic. If you understand logic and mathematics, then you have the basis for understanding the scientific method.
It’s that understanding that comes through repetition and through usage and through logic and foundations that really makes you a smart thinker.
I would say that the five most important skills are of course, reading, writing, arithmetic, and then as you’re adding in, persuasion, which is talking.
What is wrong with business schools
Business schools are full of “case studies.” They study other people’s businesses, but in reality, you’re going to learn a lot more about running a business by operating your own lemonade stand or equivalent.
Don’t follow the crowd
We’re evolved for small victories all the time but that becomes very expensive. That’s where the crowd is. That’s where the herd is. So, if you’re willing to bleed a little bit every day but in exchange you’ll win big later, you will do better.
Manage less people
You want the minimum amount of labor that allows you to use the other forms of leverage
I would argue that this is the worst form of leverage that you could possibly use. Managing other people is incredibly messy.
Winning businesses are natural monopolies
One of the dirty secrets of Silicon Valley is that a lot of the winning businesses are natural monopolies.
Use network effects to gain monopoly.
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.
Money is another example. We should all probably be using the same money, except for the fact that geographic and regulatory boundaries have created these artificial islands of money. But even then, the world tends to use a single currency as the reserve currency at most times; currently, the US dollar.
Don’t be limited by the tools you are using
You don’t have any leverage other than from the tools that you’re using.
Judgment is knowing the long-term consequences of your actions.
Once you have leverage, what do you do with it? Well, the first part of your career’s spent hustling to get leverage. Once you have the leverage, then you wanna slow down a bit, because your judgment really matters.
It’s like you’ve gone from steering your sailboat around to now you’re steering an ocean liner or a tanker. You have a lot more at risk, but you have a lot more to gain as well.
Judgment is very hard to build up. This is where both intellect and experience come in play.
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.
The people with the best judgment are among the least emotional
There is sort of this archetype of the passionate entrepreneur, and yeah, they have to care about what they’re doing, but they also have to see very clearly what’s actually happening. The thing that prevents you from seeing what’s actually happening are your emotions. Our emotions are constantly clouding our judgment, and in investing, or in running companies, or in building products, or being an entrepreneur, emotions really get in the way.
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.
Networking is overrated
A busy calendar and a busy mind will destroy your ability to do great things in this world. If you want to be able to do great things, whether you’re a musician, or whether you are an entrepreneur, or whether you’re an investor, you need free time and you need a free mind.
Masses are never right
Especially in entrepreneurship the masses are never right. If you see a lot of people tweeting about what a great market to enter is, or you see journalist talking about a company is terrible, they don’t know anything. If the masses knew how to build great things and create great wealth we’d all already be done. We’d all already be rich by now.
A Calm Mind, a Fit Body, a House Full of Love
When you’re finally wealthy, you’ll realize it wasn’t what you were seeking in the first place.