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How to Get Rich: Every Episode

Naval - see all episodes

This giant episode collects every interview we've done on “How to Get Rich.”

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Transcript

Nivi

Hi, This is Navy Now. That novel and I have finished going through his tweet storm on how to get rich without getting lucky. We've stitched together all the small episodes into one giant mega sewed, So it's easy for you to consume in its entirety, and it's easy for you to share. It's about three hours long. The sound quality of this giant episode improves a lot After the first hour. You can also find a link to a clean transcript in the show notes. Or if you go to the website, which is N a v dot es el nivel. There's no dot com at the end. Here we go. You probably know no ball from his Twitter account, and we're gonna be talking about his epic Tweetstorm on how to get rich without getting lucky. We're going to go through most of the tweets in detail, given the ball a chance to expand on them and just generally riff on the topic. He'll probably throw in some ideas that he hasn't even published before. He's also the co founder of Angel Lists and the opinions. He's a prolific tech investor in companies like Twitter, uber and many more, and I'm the co founder of Evangelist With the Ball, and I also co authored the venture hacks blood with

Naval

him back in the day. Yeah, the how to get me St Storm definitely hit a nerve in A lot of people say it was helpful. Reach cross aisles and people outside and tech industry people in all walks of life, people who want to know how to solve their money problems and everyone vaguely knows that they want to be wealthy, but they don't have a good set of principles to do it by. What's the difference between wealth, money and status? Wealth is the thing that you really want wealth, his assets that earn while you sleep Wealth is the factory that, with robots, is cranking out things. Wealth is the computer program that's running at night that's serving other customers. Wealth is even money in the bank that is being reinvested into other assets and into other businesses. Even a house can be a form of wealth because you can rent it out, although that's probably a lower use support activity but land than actually doing some commercial enterprise. So my definition of wealth is much more businesses and assets that can earn while you sleep. But really, the reason you want well, it's because it buys your freedom so you don't have to wear a tire like a collar around your neck, so you don't have to wake up at 7 a.m. and rush to work and sitting commute traffic so you don't have to waste away your entire life grinding all the productive hours into a way to a soldier's job that doesn't fulfill you. So the purpose of wealth, its freedom, it's nothing more than that. It's like two by four coats or drive Ferraris or sail yachts or jet around the world. Your Gulf Stream. That stuff gets really boring and really stupid really fast. It's really just so that you are your own sovereign individual. You're not gonna get that unless you really want it and the entire world wants it, and the entire world is working hard at it, and to some extent of this competitive, it's a positive sum game. But there are competitive elements to it because if they find that amount of resource is right now in society, and to get the resource is, do what you want, you have to stand out. Money is how we transfer wealth. Money is social credits. It is the ability to have credits and debits on other people's time. If I do my job right, if I create value for society, Society says, Oh, thank you, We owe you something in the future for the work that you did in the past. Here's a little IOU. Let's call that money and that money gets debased because people steal the IO use the government prints extra. Io used people real edge under I. O U's, but maybe what money is trying to be. It is trying to be a reliable IOU from society that you are owed something for something. You are someone who gave you the money did in the past, and we can transfer these i o. U's around. So really, money is how we transfer Well, they're fundamentally two huge games in life that people play. One is the money game because money is not gonna solve all your problems. But it's gonna solve all your buddy problems. So I think that people know that they realize that so they want to make money, but the same time, many of them deep down, believe that they can't make it. They don't want any well creation toe happen. So this virtue signal by attacking the whole enterprise. But saying, Well, making money is evil and you shouldn't do it bottle block. But what they're trying to do is they're actually playing the other game to the status game. They're trying to be high status in the eyes of other people, watching by saying, Well, I don't need money, we don't want money And then status is just your ranking in the social hierarchy. So wealth is not a zero sum game. Everybody in the world can have a house because you have a house doesn't take away from my ability to have a house. If anything, the more houses that are built, the easier it becomes to build houses. The more we know about building houses and just the more people that can have houses, so wealth is a very positive sum game. We create things together. We're starting this endeavor to create this hopefully piece of art that explains what we're doing. At the end of it, something brand new will be created to positive sum game status, on the other hand, is a zero sum game every old game. We've been playing it since monkey tribes, and it's hierarchal who's number one? Who's number two? Whose number three. And for number three to move to number two. Number two has to move out of that slot. So status zero sum game politics is an example of a status game. Even sports is an example of a status game. To be the winner, there must be a loser. I don't plan to mentally love status games. They play an important role in our society. So we figure out who's in charge. But fundamentally you play them because they're necessary evil. The problem is an evolutionary basis, like if you go back thousands of years, status is of much better predictor of survival than wealth. This you couldn't have wealth before the farming age before farmers because he couldn't store things. Hunter gatherers carried everything on their backs, so 100 gatherers lived entirely in status based societies. Farmer started going toe. Wealth based societies and the modern industrial economies are much more heavily wealth based societies. But there's always a subtle competition going on between status and wealth, for example, when journalists attack which people or they attack the technology industry, they're really bidding for status. They're saying, No, the people are more important. And I the journalist, represents the people, and therefore I am more important. The problem is that by playing these status games to win that a status game, you have to put somebody else down. That's why you should avoid status games in your life because they make you into an angry, combative person. You're always fighting to put other people down, to put yourself in the people that you like up and they're always gonna exist. There's no way around it. But just realize that most of times when you're trying to create wealth, you're actually getting attacked by someone else, and they're trying to look like a goody two shoes. But really, what they're doing is they're tryingto up their own status at your expense. They're just playing a different game, and it's the worst game it 07 game instead of a positive sum game.

Nivi

One thing you mentioned before the interview that stuck with me was the idea that you think everyone can become rich and that perhaps some of the ways of getting rich or the idea of wealth is vilified by some people in other countries. Say you want expand on that a little bit.

Naval

Yeah, I think there's this notion that making money is evil, but it's like routed all the way back down to money is the root of all evil. People think that the bankers steal our money, and you know it's somewhat true in that in a lot of the world, there's a lot of theft going on all the time. The history of the world, in some sense, is this predator prey relationship between makers and takers. There are people who go out and create things and buildings and work hard on things. And they're people who come along a tape with a sword or a gun or taxes are crony capitalism or communism or what have you. There's all these different methods to steal, even in nature, there are more parasites that there are non parasitical organisms. You have time of parasites in you who are living off of you and the better weather symbiotic giving from being black. But they're a lot that are just taking. That's just the nature of how any complex system is built. But what I am focused on is true wealth creation. It's not about taking money. It's not about taking something from somebody else, but it's when creating abundance. Obviously, there's not a final number of jobs or find that amount of wealth. Otherwise we will still be safe. Honey caves figure. Divide a piece of the firewood and you know, the occasional dead deer. So most of the wealth and civilization, in fact, not most all of it, has been created. And he got created from somewhere, got acquitted from people they got credit from technology could have productivity critic from hard work. So this idea that stolen is, I think, this horrible zero sum game that people who are trying to gain status play. But the reality is everyone can be rich, and we can see that by seeing it in the first world. Everyone is richer than almost anyone who was alive 200 years ago. 200 years ago, nobody had anybody addicts. Nobody had cars. Nobody had electricity. Nobody had the iPhone. So all of these things are inventions that have made us wealthier as a species. Today, I would rather be a poor person in the First World country. That'd be a rich person in Louis, the 14th France. I'd rather be a poor person today than aristocrat back then, And that's just because of wealth creation, the engine of technology science that is applied for the purpose of creating abundance. So I think fundamentally everybody can be wealthy. And the start experiment I want you to think through is imagine if everybody had the knowledge of a good software engineer and a good hardware engineer. If you could go out there and you could build robots and computers and bridges and program them, let's say every human knew how to do that. What do you think society would look like in 20 years? My guess is what would happen is we would build robots, machines, software and hardware to do everything, and we would all be living in massive abundance. We would essentially be retired in the sense that none of us would have to work for any of the basics. We even have robotic nurses. We have like machine driven hospitals. We have self driving cars. We'd have farm that 100% automated. We have clean energy. So at that point we could use a technology breakthroughs to get everything that we wanted. And if anyone is still working at that point, they're working as a form of expressing their creativity, their working because it's in them to contribute and to build a design things. But I don't think capitalism is evil. Capitalism is actually good. It's just that it gets hijacked. It gets hijacked by improper pricing of externalities. It gets hijacked by improper deals with that you have corruption or you have monopolies. Well, we're all capitalism is intrinsic to the human species. Capitalism is not something we invented. Capitalism is not even something we discovered. It is in it to us in every exchange that we have. When you and I exchange information, I want some information back from you. I give you information, you give me information. If we weren't having a good information exchange, you go talk to somebody else. So the notion that exchange and keeping track of credits and debits this is built into us as flexible social animals. We're the only animals in the animal kingdom that cooperate across genetic boundaries. Most animals don't cooperate, but when they do they cooperate on Lian packs where they co evolved together and this year, blood. So they have some shared interests. Humans don't have that. And what lets us cooperate? It's because we can keep track of debits and credits. Who put it, how much work, who contributed, how much that's all free market capitalism is. So I strongly believe that it is innate to the human species, and we're going to create more and more wealth and abundance for everybody. Everybody can be wealthy, everybody can be retired. Everybody could be successful. It is merely a question of education and desire. You have to want it. If you don't want it, that's fine. Then you opt out of the game. But don't try and put down the people who are playing the game, because that's the game that keeps you in a comfortable, warm bed at night. That's the game that keeps a roof over your head. That's a game that keeps your supermarket stock. That's the game that keeps the iPhone buzzing in your pocket. So it is a beautiful game that is worth playing ethically, rationally, morally, socially, for the human race, and it's gonna continue to make us all richer and richer until we have massive wealth creation for anybody who wants it.

Nivi

And it's not just individuals secretly despising wealth, right? There's countries, group political parties that overtly despise, well,

Naval

thoroughly seemed Thio. That's right. And so what? Those countries, political parties and groups are reduced playing zero, some kind of status and the process to destroy wealth creation. They drag everybody down to her level, which is why the U. S. Is a very popular country for immigrants, because the American dream, anyone can come here. We poor and then work really hard and make money and get wealthy, but even just makes them basic money for their lives. Obviously, the definition of wealth is different for different people, a forkful of citizens. Definition of wealth might be all I have to make millions of dollars, and I'm completely done. Where's to 1/3 World poor immigrant just entering the country? And we were poor immigrants who came here when I was fairly young to the United States. Wealth may just be a much lower number. It may just be like I don't have to work a manual labor job for the rest of my life that I don't want to work. But groups that despise it will essentially bring the entire group down to that level. If you get too many takers and not enough maker, your society falls apart. You end up with a communist country. Look with Venezuela, right? They were so busy taking and dividing and reallocating that people were literally starving in the streets and losing kilograms of body weight every year just to share starvation another way. Think about it. Imagine an organism that has too many parasites. You actually need some small number of parasites to stay healthy, and you need a lot of SIM buyouts, like all the mitochondria in all of our cells that help us respirator and burn oxygen. These are some buyouts that help us survive. We can survive without them, but to me, those are partners in the wealth creation that creates the human body. But if you just sport filled with parasites, if you get infected with worms or a virus or bacteria that were purely parasitical, you would die so any organism can on. Lee would stand a small number of parasites, and when the parasitic element gets too far, out of control, you die. So you know that again. I'm talking about ethical wealth patient when the timer monopolies another crony capitalism. I'm not talking about Miss Price externalities like the environment. I'm talking about free minds and free markets. Small steel exchange, maybe in humans, is voluntary and doesn't have an outsized impact on others. But I think that kind of wealth creation if a society does not respect it. If a group does not respect it, that society will plunge into ruin and darkness. Obviously, we want to be wealthy, and we want to get there in this lifetime without having to rely on luck. A lot of people think making money is about luck. It's not. It's about becoming the kind of person that makes money. You know, I like to think that if I lost all my money and if you drop me on a random street in any English speaking country within 5 10 years, I'd be wealthy again, right, because it's just a skill set that I've developed. And I think anyone can develop, you know, in 1000 parallel universes you want to be wealthy in 909 9 of them you don't want to be wealthy at the 50 of them where you got lucky, so we want a factor. Luck out of it. There's really four kinds of luck that we were talking about. This came from Ah, Book P, Marca, Mark and Reese and wrote a block post about it. But there's different kinds of luck. The first kind of lucky might just say is like blind luck where I had just got lucky because something completely out of my control happened. You know, that's fortune. That's fate, et cetera. Then there's luck that comes through persistence, hard work, hustle motion, which is when you're just running around creating lots of opportunities. You're generating a lot of energy. You're doing a lot of things. Lots of things will just get stirred up in the dust. It's almost like mixing Ah petri dish in seeing what combines are mixing a bunch of free agents and seeing what combines you're just generating enough force and hustle and energy that luck will find you. The third way is that you just become very good at spotting luck, so if you are very skilled in a field, you will notice when a lucky break happens in that field, and other people who aren't attuned to it won't notice. So you become sensitive to luck investors, skill and knowledge and work, and then the last kind of luck is the weirdest, hardest kind. But that's what we want to talk about, which is where you build a unique character, a unique brand, a unique mindset where them luck finds you. For example, let's say that you're the best person in the world at deep sea underwater diving and you're known to like take on deep sea underwater dies it nobody else will even attempt to dare. And then, by sheer luck, somebody finds a sunken treasure ship off the coast they can't get at Well, their luck just became your luck because they're gonna come to you to get that treasure, and you're gonna get paid for it. Now that's an extreme example. But it's just showing how, like the person who got lucky but find the treasure chest that was blind luck. But them coming to you and asking you to extract it and having to give you half That's not Look, you created your own money. You put yourself in a position to be able to capitalize on that luck or to attract that luck when nobody else has created that opportunity for themselves. So when we talk about without getting lucky, we want to be a deterministic we don't want Leave it to chance.

Nivi

Do you want to elaborate a little bit more on the idea that in 1000 parallel universes you want to get rich in 999 of them? I think some people are going to see that and say That sounds impossible. Sounds like it's too good to be true.

Naval

No, I don't think it's impossible. I think that you may have to work a little bit harder at it, given your starting circumstances. Mean rumor. I started as a poor kid in India, right? So if I can make it, anybody can in that sense now, obviously I had all my limbs and I had my mental faculties and I did have an education so there are some pre represented can get past. But if you're listening to this video our podcast, you probably have the requisite means at your disposal, which is a functioning body in a functioning mind, and I've encountered plenty of bad luck along the way. First, little fortune that I made. I instantly lost in stock market the second little fortune that I made, what I should have made. I got cheated by my business partners. It's only the third time around has been a charm, and even then it has been a slow and steady struggle, and I haven't made money in my life. In one giant payout, it's always been a whole bunch of small things piling up. So it's more about consistently creating wealth by creating businesses, including opportunities and creating investments. It hasn't been like a giant one off thing. My personal wealth has not been generated by one a big year. It just stacks up little bit chips at a time. More options, more businesses, more investments, more things that can do. Same way. Someone like a denied bail, a service. He's building his brand on mine. He's building videos. It's not like anyone video is going to suddenly shower him with riches overnight. It's going to be a long lifetime of learning, of reading, of creating that's just gonna compound. So we're talking about getting wealthy so you can retire so you have your freedom, not retire. In a sense, you don't do anything, but in the sense that you don't have to be any place you don't want to be, you don't have to do anything you don't want to do, and you can wake up when you want. You can sleep and you want. You don't have a boss. That's freedom. So we're talking about enough well to get to freedom, especially thanks to the Internet these days. Those opportunities are massively abundant. I, in fact, have too many ways to make money. I don't have enough time. I literally have opportunities pouring out of my ears and the thing I keep running out of his time. There's just so many ways to create wealth, to create products, to create businesses, to create opportunities and to as a byproduct, get paid by society. Then I just can't even handle it all.

Nivi

I think it's pretty interesting that the 1st 3 kinds of luck that you described there are very common cliches for them that everybody knows, and then for that last kind of luck that comes to you out of the unique way that you act, there's no real cliche for it. So for the 1st 3 kinds, there is Dumb Locker. Blind luck. That's the first kind of luck. The second kind of luck does the cliche that fortune favors the bold. That's a person who gets lucky just by stirring the pot and acting the third kind of luck. People say that chance favors the prepared mind. But for the fourth kind of luck, there is not really a common cliche out there that matches the unique character of your action, which I think is interesting and perhaps an opportunity. And it also just shows that people aren't necessarily taking advantage of that kind of luck the way they should be.

Naval

I think also at that point it starts becoming so deterministic that it stops being look, so the definition starts fading from luck to more destiny. So I would characterize that 4th 1 is you build your character in a certain way, and then your character becomes your destiny. One of the things I think that is important. Two making money. You want the kind of reputation that makes people do deals through you. You know, I use the example of like if you're a great diver than treasure hunters will come and give you a piece of the treasure if we're diving skills. If you're a trusted, reliable, high integrity, long term thinking dealmaker, 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 built up Warren Buffett. He gets offered deals and you have to buy companies. And he gets to buy a warrants and bail out banks and do things that other people can't do because of his reputation. But of course, that's fragile. It has accountability on the line. It has a strong brand on the line, and as we will talk about later, that comes accountability attached. But I would say your character, your reputation, these are things that you can build that. Then we'll let you take out advantages of opportunities that other people may characterize this lucky. But you know that

Nivi

it wasn't luck. You said that this fourth kind of luck is more or less a destiny. There's a quote from that original book that was in Mark's Blawg posts from Benjamin Disraeli, who I think was the former prime minister of the U. K. The quote to describe this kind of luck was, we make our fortunes and we call them fate. There are a couple other interesting things about this kind of luck that were mentioned in the Block post. I think it'll be good for the listeners to hear about Is that this fourth kind of luck can almost come out of eccentric ways that you do your things and that East centrist city is not necessarily, ah, bad thing in this case. In fact, it's a good thing.

Naval

Yeah, absolutely. Because the world is a very efficient place. So everyone has dug through all the obvious places to dig. And so to find something that's new and novel and uncovered, it helps to be operating on a frontier where right there, you have to be a little eccentric to be out on the frontier by yourself, and then you just have to be willing to dig deeper than other people do deeper than seems irrational just because you're interested.

Nivi

Yeah, the two quotes that I've seen that expressed this kind of luck. In addition to that, Benjamin Disraeli one are this one from Sam Altman, where he said, extreme people get extreme results. I think that's pretty nice. And then there's this other one from Jeffrey Feffer, who is a professor at Stanford, that you can't be normal and expect abnormal returns. I've always enjoyed that one, too.

Naval

Yeah, and they want a quote that I like, which is the exact opposite of that is play stupid games when stupid prizes. A lot of people spend a lot of their time playing social games like on Twitter, where you just try to improve your social standing and you basically went stupid social prizes, which are worthless.

Nivi

I guess the last thing that I have from this block post is just the idea that by pursuing these kinds of luck, especially the last one, basically everything but dumb luck by pursuing them, you essentially run out of unlock. So if you just keep stirring the pot and stirring the pot, that alone you will run out of

Naval

unlock. Yeah, or it could just be reversion to the mean right? So then you at least neutralize luck so that it's your own talents that come into play.

Nivi

Next, you go into more specific details on how you can actually get rich and how you can't get rich. The first point was about how you're not going to get rid, which you're not going to get. Rich renting of your time. You must own equity, a piece of a business to gain your financial freedom.

Naval

This is probably one of the absolute, most important points. People seem to think that you can create wealth and make money through work, and it's probably not going to work. There are many reasons for that, but the most basic is just that your inputs air very closely tied to your outputs in almost any salary job, even at one that's paying a lot our like a lawyer or a doctor, you're still putting in the hours and every hour you get paid. So what that means is, when you're sleeping, you're not burning. When you're retired, you're not earning. When you're on vacation, you're not turning, and you can't earn non linearly. If you look at you and doctors who get rich like really rich, it's because they opened a business. They open like a private practice and that private practice builds a brand. And that brand attracts people. Or they build some kind of medical device or a procedure or process with intellectual property. So essentially, you're working for somebody else, and that person is taking on the risk and has the accountability and the intellectual property and the brand. So they're just not gonna pay you enough. They're gonna pay you the bare minimum that they have to to get you to do the job. And that could be a high bare minimum. But it's still not gonna be true wealth where you're retired. And then finally, you're actually just not even creating that much original for society. Like I said, this tweet storm should have been called How to create wealth. This is how to get rich was, ah, more catchy title. But you're not creating new things for society. You're just doing things over and over, and you're essentially replaceable because you're now doing a set roll. Most set rolls could be taught if they can be taught, like in a school that eventually you'll be competing with someone who's got more recent knowledge has been taught and is coming in to replace you. You're much more likely to be doing a job that could be eventually replaced by a robot or by an A I. And it doesn't have to be a wholesale replaced overnight. It could replace a little bit of a time, and that eats into your wealth creation, and therefore you're earning capability. So fundamentally the inputs are matched your outputs, you're replaceable and you're not being creative. I just don't think that that is the way that you can truly make money. So everybody who really makes money at some point owns a piece of a product for a business or some kind of I P. That could be through stock options. So if you could be working a tech company, that's a fine way to start. But usually the rial wealth is created by starting your own companies or by even investors. They're in an investment firm, and they're buying equity. Though these air much more the routes, the wealth, it doesn't come to the hours. You really just want a job, our career or profession, where your inputs don't match your outputs. So if you look at modern society against us later in the tweet storm. Businesses that have high creativity and high leverage tend to be ones where you could do an hour of work and it can have a huge effect. Or you can do 1000 hours of working. Can't no effect. For example, look at software engineering. One great engineer can, for example, create Bitcoin and created billions of dollars worth of value on engineer who's working on the wrong thing or not quite as good or just not a creative a thoughtful or whatever can work for an entire year and every piece of code the ship and with not getting used customers don't want it. That is an example of a profession where the input and the outputs are highly disconnected. It's not based on the number of hours that you put in. Where's on the extreme other end? If you're a lumberjack, even the best lumberjack in the world, assuming they're not working with tools, the inputs and outputs tree, pretty connective student axe or a saw, the best lumberjack in the world maybe like three x better than one of the worst lumberjacks, right? It's not gonna be a gigantic difference So you want to look for professions and careers with the inputs and the outputs or how they disconnected. There's another way of saying that you want to look for things that are leveraged, and by leverage, I don't mean financial leverage alone, like Wall Street uses. And that has a bad name. I'm just talking about tools were using tools. Computer is a tool that software engineers use. If I'm a lumberjack with bulldozers and automatic robot act saws, I'm gonna be using tools and have more leverage than someone who's just using his bare hands and try and rip the trees out by their roots, tools and leverage, or what create this disconnection between inputs and outputs. Creativity to the higher the creativity component of a profession, the more likely it is to have disconnected inputs and outputs. So I think that if you're looking at professions where you're inflicting, your outputs are highly connected, it's gonna be very, very, very hard to create wealth and make wealth for yourself in that process,

Nivi

any other big things you should avoid other than renting out your time.

Naval

Yeah, they're two tweets that I put out that are related so the first one's talking about someone like how your lifestyle, you know, has to upgrade, shouldn't get upgraded too fast. And that one said, people who are living far below their means enjoying freedom, that people busy upgrading their lifestyles just can't fathom. And I think that's very important, like Justin, not upgrade your left out all the time to maintain your freedom, and it just gives your freedom of operation. Once you make a little bit of money, you still want to be living like your old self so that just the worry goes away, too. Don't run out to upgrade that house and lifestyle and all that stuff like that you're gonna pay $2000 an hour. The problem is that when you go into a work lifestyle like that, you don't just suddenly go from making $20 an hour to making $1000 an hour. That's a progression over a long career. And as that happens, one subtle problem is that you upgrade your lifestyle as you make more and more money, and that upgrading on the lifestyle ups what you consider to be wealth and you stay in this wage slave trap so African who said it maybe was not seen Tele. But he said, You know, the most dangerous things are heroin and a monthly salary right, because they're highly addictive. The way you want to get wealthy is you want to be poor and working and working and working. And this is, for example, how the tech industry works, where you don't make any money for 10 years, and then suddenly, in your 11 you might have a giant payday. Which is what, by the way, one reason why these very high marginal tax rates with so called wealthier flawed because the highest staking, most creative professions that will be lose money for a decade of your life while you take massive risks and you bleed and bleed and bleed. And then suddenly, in your 11 or your 15 you might have one single big payday. But then, of course, Uncle Sam show up and say, Hey, you know what? You just made a lot of money this year. Therefore, you're rich. Therefore you're evil, and you gotta hand it all over to us, so it just destroys those kinds of creative risk taking professions. But ideally, you want to make your money in discreet lumps separated over long periods of time so that your own lifestyle does not have a chance to adapt quickly. And then you can say, OK, now I'm done. Now I'm retired now. I'm free. I'm still gonna work because you got to do something with your life. But I'm gonna work on only the things that I want when I want and still be much more creative expression than much less about money.

Nivi

You're not going to get rich renting out your time. But you say that you will get rich by giving society what it wants, but does not yet know how to get at scale.

Naval

That's right. So essentially actually talked about before. Money is io used from society, saying you did something good in the past. Now here's something that we owe you for the future, and so society will pay you for creating things that it wants. But society doesn't yet know how to create those things because if it did, it would need you. They would already be stamped out big time. Almost everything in your house, in your workplace and on the street used to be technology at one point in time, the time when oil was technology that made J. D. Rockefeller rich. There's a time when cars were technology that made Henry Ford rich, so technology is just a set of things, Alan Kay said. That don't quite work yet. Once something works is no longer technology. So society always wants new things. And if you want to be wealthy, you want to figure out which one of those things you can provide for society, that it does not yet know how to get, but it will want that's natural to you and within your skill set within your capabilities and then you if a guy to scale it, because if you just build one of it, that's not enough. You gotta build thousands or hundreds of thousands or millions or billions of them so everybody can have one. Steve Jobs and his team, of course, figured out that society would point smartphones computer in their pocket. That had all the phone kid Buddy Time's 100 be easy to use. So they figured out how to build that, and then they figured out how to scale it, and the figure that had to get one into every First World Citizens Pocket and eventually every third bowl citizen, too. And so because of that, they're handsomely rewarded. An apple is the most valuable company in the world.

Nivi

The way I tried to put it was that the entrepreneurs job is to try to bring the high end to the mass market.

Naval

It starts, is high end. First, it starts as an active creativity. First, you created just because you want it, you want it and you know how to build it and you need it. And so you build it for yourself. Then you figure out how to get it to other people. And then for a little while rich people have it like, for example, rich people had chauffeurs, and then they had black town cars and then uber came along and everyone's private driver. It was available to everybody. And now you can even see uber pools that are replacing shuttle buses because it's more convenient. And then you get scooters, which would even further down market of that. So you're right. It's about distributing what rich people used tohave to everybody. But the entrepreneurs job starts even before that, which is creation, entrepreneurship is essentially inactive, creating something new from scratch, predicting the society will want it and then figuring out how to scale it and get it to everybody in a profitable way and self sustaining way. Let's look

Nivi

at this next tweet, which I thought was cryptic and also super interesting about the kind of job or career that you might have, You said the Internet has massively brought in the possible space of careers. Most people haven't figured this out yet.

Naval

The fundamental property of the Internet, more than any other single thing, is it connects every human to each other, human on the planet. You can now reach everyone, whether it's by emailing them personally. Let us buy broad cast into them on Twitter weddings by posting something on Facebook that they find, whether it's by putting words had become an access. It connects everyone to everyone, so the Internet is an inter networking tool. It connects everybody that isn't super power, so you want to use that. What that helps you figure out is that the Internet means that you can find your audience for your product or talent, and still, no matter how far away they are, for example, Nunan, who's ill. A service. If you look at these videos pre Internet, how would we get the message out there? It would just be, What would he do? He would run around where he lives in his neighborhood, showing it to people on a computer or a screen. Or he would try to get it played in a local movie theater. It was impossible. It only works because he can put it on the Internet. And then how many people in the world are really interested in it, or even interested? What we're talking about really gonna absorb it, right? It's gonna be a very small subset of humanity. The key is being able to reach them. So what the Internet does is allows any niche obsession, which could be just the weirdest thing. It could be like people who collect snakes like people who like the right hot air balloons to people who like the sail around the world by themselves, just one person on the craft, or someone who's obsessed with miniature cooking like there's this whole Japanese major cooking phenomenon or there's a show about a woman, goes in people's houses and tidy is it up right? So whatever Mitch obsession you have, the Internet allows of the scale Now. That's not to say that what you build will be the next Facebook to reach billions of users. But if you just want to reach 50,000 passionate people like you, there's an audience out there for you. So the beauty of this is that we have seven doing beings on this planet, the combinatorics of human DNA. Incredible. Everyone is completely different. You'll never meet any two people who have Vegas similar to each other that can substitute for each other. It's not against a well, maybe just left my life so I can have this other person come in. And he's just like, maybe, and I get the same feelings, the same responses and the same ideas. No, there are no substitutes for people. People are completely unique. So given that each person has different skill sets, different interests, different obsessions, and it's that diversity that becomes a creative superpowers, each person could be creatively superb at their own unique thing. But before that didn't matter, because if you're living a little fishing village in Italy like you're fishing, Village didn't actually need your completely unique still, and you had to conform to just a few jobs that were available. But now, today you could be completely unique. You can go out on the Internet and you can find your audience, and you can build a business and create a product and build wealth and make people happy. Just uniquely expressing yourself through the Internet space of careers have been so broaden the sports players people making millions of dollars playing fortnight, people creating videos and upload it on YouTube. Broadcasters, bloggers, You know, a podcaster Joe Rogan, I read true or false, I don't know, but everything he's gonna make about $100 million a year on his podcast and he's had two billion down boats. Even peut Pie is a hilarious tweet that I retweeted the other day. Peut pies, the number one trusted main and news. This is a kid, I think, in Sweden, and he's got three times the distribution of the top cable news networks. Something's news channels that even on his entertainment channel, the Internet enables any Mitch interest as long as you're the best at it takes scale out, and the great news is because every human is different. Everyone is the best at something you being themselves. Another tweet I have that is worth weaving in but didn't go into this tweet storm was a very simple one. I like things. Then they can compress them down because they're easy to remember it easy to hook on to. But that one was escaped competition to do authenticity. So when you're competing with people, it's because you're copying them. It's because you're trying to do the same thing, but every human is different. Don't copy. I know where my medic creatures and Rene Girard has hold my messes theory, but it's much easier than that. Don't imitate, don't copy. Just do your own thing. No one can compete with you on being you. It's that simple. And so the more authentic you are to who you are and what you love to do, the less competition you're gonna have so you can escape competition through authenticity when you realize that knowing you can be with you on being you. And normally that would have been useless. Advice. Pre Internet, post Internet. You can turn that into a career,

Nivi

talk a little bit about what industries. You should think about working in what kind of job you should have and who you might want to work with. So you said one should pick an industry where you can play long term games with long term people. Why,

Naval

yeah, this is an insight into what makes Silicon Valley work and what makes high trust societies work. Essentially, all the benefits in life come from compound interests, whether it's in relationships or making money or in learning. So compound interest is a marvelous force where it's like, you know, you start out with one ex what you have, and then if you increase 20% a year for 30 years, it's not that you got 30 years times 20% added on. It was calm pounding, so it just grew and grew and grew until you suddenly got a massive amount of whatever it is, whether it's good will or love or relationships or money. So I think compound interest is very important for so you have to go to play a long term game. And long term games are good, not just for compound interest. They're also good for trust. If you look at prisoner's dilemma, type games. A solution to prisoner dilemma is tit for tat, which is I'm just going to do to you what you did last time to me with some forgiveness in case there was a mistake made. But that only works in iterated Pistol Prisoner's Dilemma. In other words, we play the game multiple times. So if you're in a situation like, for example, you're in Silicon Valley where people doing business with each other and they know each other, they trust each other than they do right by each other because they know this person will be around for the next game. Now, of course, that doesn't always work because you could make so much money in one move in Silicon Valley. Sometimes people betray each other because they're just like, I'm gonna get rich enough of off this, that I don't care. So there can be exceptions to all the circumstances, 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 could just keep playing the game with them? so that compound interest in high trust, we'll make it easy to play the game and to collect the major rewards, which are usually at the end of the cycle. So, for example, Warren Buffett have done really well as an investor in the U. S. Stock market. But the biggest reason you could do that was because the U. S stock market has been stable and around and didn't get, for example, seized by the government during a bad administration or the U. S didn't plunge in some war. The underlying platform didn't get destroyed. So in his case, he was playing a long term game, and the trust came from the U. S. Stock market stability in Silicon Valley. The trust comes from the network of people in the small geographic area that you figure out over time who you can work with. You can't if you keep switching locations, you keep switching groups. Let's say you started out in the woodworking industry and you build up a network there and you're working hard. You're trying to build a product woodworking in the street, and suddenly a minute industry comes along. That's adjacent, but different. But you don't really know anybody in it. And you want to dive in and make money there. If you keep hopping from industry? No, actually, anything. Open a line of electric car stations for electric car refueling That might make sense. That might be the best opportunity. But every time you reset, every time you wander out of where you build your network, you're gonna be starting from scratch. You're not gonna know who to trust. They're not gonna trust you. There also industries in which people are transient. By definition, they're always coming in and going out. Politics is an example of that right in politics, new people being elected. You see in politics that when you have a lot of old timers like the Senate, people have been around for a long time and they've been career politicians. Yeah, there's a lot of downside the career politicians that corruption button upside is they actually get deals done with each other because they know the other person's gonna be in the same position 10 years from now, and they've got to keep dealing with them so they might as well learn how to cooperate where every time you get like a new incoming freshman class in the House of Representatives, which turns over every two years. The big wave election. Nothing gets done because a lot of fighting, because I just got here. I don't know you. I don't know if you're gonna be around. Why should I work with you rather than just trying to do whatever I think is right? So it's important to pick an industry where you can play long term games and with long term people. So those people have to signal that they're gonna be around for a long time that they're ethical and their ethics are visible to their actions

Nivi

in a long term game. It seems that everybody is making each other rich. And in a short term game, it seems like everybody's making themselves rich.

Naval

I think that is a brilliant formulation. Yeah, in long term game, it's positive. Some were all baking a pie together. We're trying to make it as biggest possible in a short term game. We're cutting up the pie now. This is not to excuse the Socialists, right? The socialist of people who were not involved in baking the pie who show up at the end and say I want to slice or I want the whole pie, the show but the guns. But I think a good meter doesn't take credit. The leader tries to inspire people's that the team get the job done, and then things get divided up according to fairness and who contributed how much as close to it is possible and took a risk, as opposed to just whoever has the longest night of the sharpest knives at the end.

Nivi

So these next two tweets are play iterated games. All returns in life, whether in wealth, relationships or knowledge come from compound interest.

Naval

Yeah, when you have been doing business with somebody who did friends with somebody for 10 years, 20 years, 30 years, it just gets better and better because you trust them so easy. At the friction goes down. You can do bigger and bigger things together. For example, you're the simplest. One is getting married to someone having kids and raising children like that's compound interest, right. Investing in those relationships those relations and would be invaluable compared to more casual relationships. It's true in health and fitness. You know the fitter you are, the easier it is to stay fit. Where's the morning? Deteriorate your body. The harder it is to come back and claw your way back to a baseline requires heroic acts

Nivi

regarding compound interest. I think I saw you Retweet something a while back. Maybe it was from Ed Lattimore. It went something along the lines of Get some traction, get purchase and don't lose it. So the idea was to gain some initial attraction and never fall back. Just keep ratcheting up. But, uh,

Naval

I remember exactly, but I think that was right. It was like, Get traction and don't let go. It was a good one. Yeah, in terms of pick people to work with and have high intelligence, high energy and high integrity, I find that's the three part checklist that you cannot compromise on. You need someone who's smart or they're heading in the wrong direction, and you're not gonna end up in the right place. You need someone high energy because the world is full of smart, lazy people. We all know people in our lives. We're really smart. But you know, I can't get out of bed or lift a finger. And we also know people who are very high energy, but not that smart. They work hard, but they're running in the wrong direction. And smart. It's not a pro Georgie with not meant to be like someone smart. Someone else's stupid. But it's more than everyone smarted different things. So depending on what you want to do, well, you have to find someone who's smart at that thing and then energy. A lot of times, people are unmotivated for a specific thing, but they're not motivated for other things. For example, someone might be really unmotivated, can go to a job and sit in an office. But there might be really motivated to go paint, right? Well, in that case, there should be a painter. They should be putting art up on the Internet, trying to figure out how to build a career out of act rather than wearing a collar around their neck and going to a dreary job. And then high integrity is the most important, because otherwise, if you've got the other two, what you have is you have a smart and hardworking crook was eventually gonna cheat you. So you have to figure out if the person's high integrity and as we talked about the way you do that is through signals and signals is what they do, not what they say. It's all the non verbal stuff that people do when they think nobody's looking

Nivi

with respect to the energy. There was this interesting thing from Sam Altman a while back, where he was talking about delegation and even saying One of the important things for delegation is delegate to people who are actually good at the thing that you want. T. O is the most obvious thing, but it seems like you want a partner with people who are naturally going to do the things that you want them to. D'oh!

Naval

Yeah, I almost won't start a company or higher person or work with somebody if I just don't think they're into what I wanted to do. When I was younger, I used to try and talk people into things I wasn't ideally and sell someone into doing something. But you can't. You can't keep them motivated. You can get them inspired. Initially, it might work if you're king with Henry the fifth, and try and get them to this charge into battle and then they'll figure it out. But if you're trying to keep someone motivated for the long term. That motivation has to come intrinsically. You can't just create it. Nor can you be the crutch for them if they don't have that intrinsic motivation. So you have to make sure people actually are high energy and want to do what you want them to do. What you wanna work with them. Reading signals is very, very important. Signals are what people do. Despite what they say, though, it's important to pay attention to settle signals. We all know that socially, if someone treats a waiter or waitress in a restaurant really badly, then it's only a matter of time until they treat you badly. If somebody screws over an enemy and is vindictive towards them, well, it's only a matter of time before they redefined you from friend to enemy. And you feel the raft so angry. Outrage, vindictive, short term thinking. People are essentially that way in many interactions. Little life people are oddly consistent. One things you learn about them so you want to find long term people. You want to find people who seem irrationally ethical. For example, I had one friend of mine was company I invested in and the company failed, and you could have wiped out all the investors. But he kept putting more and more personal money, and through three different pivots he put personal money. And until the company finally succeeded and in the process, he never wiped out the investors. And I was always grateful to him for that. I said, like Why? That's amazing that, you know, you were so good to investors. You didn't wipe them out and he got offended by that. He said. I didn't do it for you. I didn't do it for my message. I did it for me. It's my own self esteem. It's what I care about. That's how I live my life. That's the kind of person you want to work with. Another quote that I like. I would tweet on this thing. I read this somewhere else originally, so I'm not taking credit for this. But I modified a little bit, which is that self esteem is a reputation that you have with yourself. You'll always know. So 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 reputation with themselves, and they understand that it's not ego, self esteem and ego, different things. That ego can be undeserving but self esteem. At least you feel like you lived up to your own internal moral code of ethics. And so it's very hard to work with people who end up being low integrity, that it's hard to figure out who's high integrity and loyalty generally. The more someone is saying that their moral and ethical and high integrity, the less likely they are to be that way. It's very much like status signaling if you overly bid for status. If you overly talk about being high status, that is a low status move. If you openly talk about how honest and reliable and trustworthy you are, you're probably not that honest and trustworthy. That is a characteristic of convent. So yeah, picking an industry in which you can play long term games with long term people.

Nivi

Let's get this last tweet. You said Don't partner with cynics and pessimists. Their beliefs are self fulfilling.

Naval

Yeah, essentially, to create things, you have to be a rational optimist, rational in the sense that you have to see the world for what it really is, And yet you have to be optimistic about your own capabilities and your capability to get things done. We all know people who are consistently pessimistic who will shoot down everything. Everyone in their life was like the helpful critical guy, right? He thinks he's being helpful, but he's actually being critical and he's a downer on everything. That person will not on Lee never do anything great in their lives. They will prevent other people around them for doing something great. They think their job is to shoot holes in things, and it's okay to shoot holes in things as long as you come up with a solution. There's also the classic look military line. Either lead, follow or get out of the way, and these people want 1/4 option where they don't want to lead. They don't want to follow, but they don't want to get out of the way. They want to tell you why the things not work 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's viable or not, is by doing it, at least do the first step in the second step in 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 and you have to be optimistic about it, not irrationally. There's nothing worse than someone was this thick, foolhardy and chasing. It's not work. That's that's a rational optimist. But you have to be rational. No, all the pitfalls know the downsides, but still keep your chin up. I mean, you've got one life on this planet. Why not try to build something big? This is the beauty of Elon Musk and wife, and he inspires so many people. Assistant takes on really, really big, audacious tasks, and he provides an example for people to think big, and it takes a lot of work to build even small things. I don't think the corner grocery store owner is working any less hard than Elon Musk or pouring any less sweat and toil into it, maybe even more. But for whatever reason, education circumstance, they didn't get the chance they think as big. So the outcome's not as big. So it's just better to think big, obviously rationally, within your means, to stay optimistic. The cynics of the pessimists, what they're really saying and fortunate. But they're saying, I have given up. I don't think I can do anything. And so the world to me just looks like a world where nobody can do anything. And so why should you go do something? Because if you fail that I'm right, which is great. But if you succeed, then you just make me look bad.

Nivi

Yeah, it's probably better to be irrational optimists than it is to be irrational cynic.

Naval

Yeah, there's a completely rational frame on why you should be an optimist historically, if you go back 2000 years. 5000. There's 10,000 years to people wandering through the jungle. They hear a tiger. One's an optimist and says, Oh, it's not heading our way. The other one says, I'm a pessimist. I'm outta here and the pessimists runs and survives and the optimist gets eaten. So we descended from pessimists were genetically hardwired to be pessimists. But modern society is far, far safer. There no tigers wandering down the street. It's very unlikely that you will end up in total ruin, although you should avoid total ruin, much more likely that the upside is unlimited and the downside is is limited. So adapting for modern society means overriding your pessimism and taking slightly irrationally optimistic bets because the upside is unlimited. If you start the next space expert, Tesla or uber, you could make billions of dollars of value for society and for yourself and change the world. And if you fail, what's the big deal? You lost a few $1,000,000 invested money, and they've got plenty more, and that's the bet they take the chances that you will succeed. It made sense to be pessimistic in the past. It makes sense to be optimistic today, especially if you're educated living in a First World country. Even if you're a real country. Actually think the economic I've had an opportunity to Third World countries are much larger. The one thing you have to avoid is the risk of ruin. Ruin means to stay out of jail, so don't do anything that's illegal. It's never worth it to wear an orange jumpsuit and stay out of total catastrophic loss. That could mean that you stay out of things that could be physically dangerous, hurt your body. You have to watch your health and stay out of things that can cause you to lose all of your capital of all of your savings. Little gamble, everything at one go, but you take rationally optimistic bets with big upside.

Nivi

I think there's people that will try and build up your ideas and build on your ideas, no matter how far freshly might seem. And then there are people who will list of all the obvious exceptions, no matter how obvious they are. And fortunately in the start up world, I don't even really get exposed to the people that are giving you the obvious exceptions and all the reasons it's not going to work. I barely get exposed that anymore.

Naval

That's a Twitter is for Scott Adams got so annoyed by this dedicated with the phrase an acronym, which is. But of course, there are obvious exceptions. B o c t a l e. And he used to like pin that acronym but the end of his articles for a while. But Twitter is just like overrun with pictures. And what exactly is your pointing out? Silicon Valley has learned that the upside is so great that you never look down on the sloppy kid. He's wearing a hoody and has, like coffee on his shoes and just looked like a slob because you don't know if he's gonna be the next Mark Zuckerberg or the next rehab. You gotta treat everybody with respect. You gotta look up Thio every possibility, an opportunity, because the upside is so unlimited. The downside is so limited in the modern world, especially with financial assets and instruments,

Nivi

you want to talk a little bit about the skills that you need in particular specific knowledge, accountability, leverage and judgment. So the first tweet in this area is arm yourself with specific knowledge, accountability and leverage, and all throw in judgment as well. I don't think you covered that in that particular to you.

Naval

If you want to make money, you have to get paid at scale. And why you? That's accountability at scale. That's leverage and just you getting paid as opposed to somebody else. Getting paid that specific knowledge, so specific knowledge is probably the hardest thing to get across in this whole Tweetstorm, and it's probably the thing that people get the most confused about. The thing is that we have this idea that everything can be taught. Everything could be taught in school, and it's not true that everything could 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 D N A. 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