The Almanack of Naval Ravikant: A Guide to Wealth and Happiness

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Understand ethical wealth creation is possible. If you secretly despise wealth, it will elude you.

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Ignore people playing status games. They gain status by attacking people playing wealth creation games.

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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.

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You will get rich by giving society what it wants but does not yet know how to get. At scale.

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Pick an industry where you can play long-term games with long-term people.

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The internet has massively broadened the possible space of careers. Most people haven’t figured this out yet.

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Play iterated games. All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest.

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Pick business partners with high intelligence, energy, and, above all, integrity.

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Don’t partner with cynics and pessimists. Their beliefs are self-fulfilling.

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Learn to sell. Learn to build. If you can do both, you will be unstoppable.

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Arm yourself with specific knowledge, accountability, and leverage.

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Specific knowledge is knowledge you cannot be trained for. If society can train you, it can train someone else and replace you.

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Specific knowledge is found by pursuing your genuine curiosity and passion rather than whatever is hot right now.

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Building specific knowledge will feel like play to you but will look like work to others.

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When specific knowledge is taught, it’s through apprenticeships, not schools.

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Specific knowledge is often highly technical or creative. It cannot be outsourced or automated.

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Embrace accountability, and take business risks under your own name. Society will reward you with responsibility, equity, and leverage.

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“Give me a lever long enough and a place to stand, and I will move the earth.”

—Archimedes

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Fortunes require leverage. Business leverage comes from capital, people, and products with no marginal cost of replication (code and media).

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Capital means money. To raise money, apply your specific knowledge with accountability and show resulting good judgment.

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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.

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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.

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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.

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An army of robots is freely available—it’s just packed in data centers for heat and space efficiency. Use it.

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If you can’t code, write books and blogs, record videos and podcasts.

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Leverage is a force multiplier for your judgment.

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Judgment requires experience but can be built faster by learning foundational skills.

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There is no skill called “business.” Avoid business magazines and business classes.

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Study microeconomics, game theory, psychology, persuasion, ethics, mathematics, and computers.

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Reading is faster than listening. Doing is faster than watching.

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You should be too busy to “do coffee” while still keeping an uncluttered calendar.

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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.

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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.

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Become the best in the world at what you do. Keep redefining what you do until this is true.

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There are no get-rich-quick schemes. Those are just someone else getting rich off you.

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Apply specific knowledge, with leverage, and eventually you will get what you deserve.

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When you’re finally wealthy, you’ll realize it wasn’t what you were seeking in the first place. But that is for another day. [11]

Summary: Productize Yourself

Your summary says “Productize yourself”—what does that mean?

“Productize” and “yourself.” “Yourself” has uniqueness. “Productize” has leverage. “Yourself” has accountability. “Productize” has specific knowledge. “Yourself” also has specific knowledge in there. So all of these pieces, you can combine them into these two words.

If you’re looking toward the long-term goal of getting wealthy, you should ask yourself, “Is this authentic to me? Is it myself that I am projecting?” And then, “Am I productizing it? Am I scaling it? Am I scaling with labor or with capital or with code or with media?” So it’s a very handy, simple mnemonic. [78]

This is hard. This is why I say it takes decades—I’m not saying it takes decades to execute, but the better part of a decade may be figuring out what you can uniquely provide. [10]

What’s the difference between wealth and money?

Money is how we transfer wealth. Money is social credits. It is the ability to have credits and debits of 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 you did in the past. Here’s a little IOU. Let’s call that money.” [78]

Wealth is the thing you want. Wealth is assets that earn while you sleep. Wealth is the factory, the robots, cranking out things. Wealth is the computer program that’s running at night, 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 productivity use of land than some commercial enterprise.

So, my definition of wealth is much more businesses and assets that can earn while you sleep. [78]

Technology democratizes consumption but consolidates production. The best person in the world at anything gets to do it for everyone.

Society will pay you for creating things it wants. But society doesn’t yet know how to create those things, because if it did, they wouldn’t need you. They would already be stamped out.

Almost everything in your house, in your workplace, and on the street used to be technology at one point in time. There was a time when oil was a technology that made J.D. Rockefeller rich. There was a time when cars were technology that made Henry Ford rich.

So, technology is the set of things, as Alan Kay said, that don’t quite work yet [correction: Danny Hillis]. Once something works, it’s no longer technology. 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 and providing it is natural to you, within your skill set, and within your capabilities.

Then, you have to figure out how to scale it because if you only build one, that’s not enough. You’ve got to 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 society would want smartphones. A computer in their pocket that had all the phone capability times one hundred and was easy to use. So, they figured out how to build it, and then they figured out how to scale it. [78]

Find and Build Specific Knowledge

Sales skills are a form of specific knowledge.

There’s such a thing as “a natural” in sales. You run into them all the time in startups and venture capital. When you meet someone who is a natural at sales, you just know they’re amazing. They’re really good at what they do. That is a form of specific knowledge.

Obviously they learned somewhere, but they didn’t learn it in a classroom setting. They learned probably in their childhood in the school yard, or they learned negotiating with their parents. Maybe some is a genetic component in the DNA.

But you can improve sales skills. You can read Robert Cialdini, you can go to a sales training seminar, you can do door-to-door sales. It is brutal but will train you very quickly. You can definitely improve your sales skills.

Specific knowledge cannot be taught, but it can be learned.

When I talk about specific knowledge, I mean figure out what you were doing as a kid or teenager almost effortlessly. Something you didn’t even consider a skill, but people around you noticed. Your mother or your best friend growing up would know.

Examples of what your specific knowledge could be:

The specific knowledge is sort of this weird combination of unique traits from your DNA, your unique upbringing, and your response to it. It’s almost baked into your personality and your identity. Then you can hone it.

No one can compete with you on being you.

Most of life is a search for who and what needs you the most.

For example, I love to read, and I love technology. I learn very quickly, and I get bored fast. If I had gone into a profession where I was required to tunnel down for twenty years into the same topic, it wouldn’t have worked. I’m in venture investing, which requires me to come up to speed very, very quickly on new technologies (and I’m rewarded for getting bored because new technologies come along). It matches up pretty well with my specific knowledge and skill sets. [10]

I wanted to be a scientist. That is where a lot of my moral hierarchy comes from. I view scientists as being at the top of the production chain for humanity. The group of scientists who have made real breakthroughs and contributions probably added more to human society, I think, than any single other class of human beings. Not to take away anything from art or politics or engineering or business, but without science, we’d still be scrambling in the dirt fighting with sticks and trying to start fires.

Society, business, & money are downstream of technology, which is itself downstream of science. Science applied is the engine of humanity.

Corollary: Applied Scientists are the most powerful people in the world. This will be more obvious in the coming years.

My whole value system was built around scientists, and I wanted to be a great scientist. But when I actually look back at what I was uniquely good at and what I ended up spending my time doing, it was more around making money, tinkering with technology, and selling people on things. Explaining things and talking to people.

I have some sales skills, which is a form of specific knowledge. I have some analytical skills on how to make money. And I have this ability to absorb data, obsess about it, and break it down—that is a specific skill that I have. I also love tinkering with technology. And all of this stuff feels like play to me, but it looks like work to others.

There are other people to whom these things would be hard, and they say, “Well, how do I get good at being pithy and selling ideas?” Well, if you’re not already good at it or if you’re not really into it, maybe it’s not your thing—focus on the thing that you are really into.

The first person to actually point out my real specific knowledge was my mother. She did it as an aside, talking from the kitchen, and she said it when I was fifteen or sixteen years old. I was telling a friend of mine that I want to be an astrophysicist, and she said, “No, you’re going to go into business.” I was like, “What, my mom’s telling me I’m going to be in business? I’m going to be an astrophysicist. Mom doesn’t know she’s talking about.” But Mom knew exactly what she was talking about. [78]

Specific knowledge is found much more by pursuing your innate talents, your genuine curiosity, and your passion. It’s not by going to school for whatever is the hottest job; it’s not by going into whatever field investors say is the hottest.

Very often, specific knowledge is at the edge of knowledge. It’s also stuff that’s only now being figured out or is really hard to figure out. If you’re not 100 percent into it, somebody else who is 100 percent into it will outperform you. And they won’t just outperform you by a little bit—they’ll outperform you by a lot because now we’re operating the domain of ideas, compound interest really applies and leverage really applies. [78]

The internet has massively broadened the possible space of careers. Most people haven’t figured this out yet.

You can go 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. [78]

The internet enables any niche interest, as long as you’re the best person at it to scale out. And the great news is because every human is different, everyone is the best at something—being themselves.

Another tweet I had that is worth weaving in, but didn’t go into the “How to Get Rich” tweetstorm, was very simple: “Escape competition through authenticity.” Basically, 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. [78]

If you are fundamentally building and marketing something that is an extension of who you are, no one can compete with you on that. Who’s going to compete with Joe Rogan or Scott Adams? It’s impossible. Is somebody else going to come along and write a better Dilbert? No. Is someone going to compete with Bill Watterson and create a better Calvin and Hobbes? No. They’re being authentic. [78]

The best jobs are neither decreed nor degreed. They are creative expressions of continuous learners in free markets.

The most important skill for getting rich is becoming a perpetual learner. You have to know how to learn anything you want to learn. The old model of making money is going to school for four years, getting your degree, and working as a professional for thirty years. But things change fast now. Now, you have to come up to speed on a new profession within nine months, and it’s obsolete four years later. But within those three productive years, you can get very wealthy.

It’s much more important today to be able to become an expert in a brand-new field in nine to twelve months than to have studied the “right” thing a long time ago. You really care about having studied the foundations, so you’re not scared of any book. If you go to the library and there’s a book you cannot understand, you have to dig down and say, “What is the foundation required for me to learn this?” Foundations are super important. [74]

Basic arithmetic and numeracy are way more important in life than doing calculus. Similarly, being able to convey yourself simply using ordinary English words is far more important than being able to write poetry, having an extensive vocabulary, or speaking seven different foreign languages.

Knowing how to be persuasive when speaking is far more important than being an expert digital marketer or click optimizer. Foundations are key. It’s much better to be at 9/10 or 10/10 on foundations than to try and get super deep into things.

You do need to be deep in something because otherwise you’ll be a mile wide and an inch deep and you won’t get what you want out of life. You can only achieve mastery in one or two things. It’s usually things you’re obsessed about. [74]

Play Long-Term Games with Long-Term People

You said, “All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest.” How does one know if they’re earning compound interest?

Compound interest is a very powerful concept. Compound interest applies to more than just compounding capital. Compounding capital is just the beginning.

Compounding in business relationships is very important. Look at some of the top roles in society, like why someone is a CEO of a public company or managing billions of dollars. It’s because people trust them. They are trusted because the relationships they’ve built and the work they’ve done has compounded. They’ve stuck with the business and shown themselves (in a visible and accountable way) to be high-integrity people.

Compound interest also happens in your reputation. If you have a sterling reputation and you keep building it for decades upon decades, people will notice. Your reputation will literally end up being thousands or tens of thousands of times more valuable than somebody else who was very talented but is not keeping the compound interest in reputation going.

This is also true when you’re working with individual people. If you’ve worked with somebody for five or ten years and you still enjoy working with them, obviously you trust them, and the little foibles are gone. All the normal negotiations in business relationships can work very simply because you trust each other—you know it will work out.

For example, there’s another Angel in Silicon Valley named Elad Gil who I like to do deals with.

I love working with Elad because I know when the deal is being done, he will bend over backward to give me extra. He will always round off in my favor if there’s an extra dollar being delivered here or there. If there’s some cost to pay, he will pay it out of his own pocket, and he won’t even mention it to me. Because he goes so far out of his way to treat me so well, I send him every deal I have—I try to include him in everything. Then, I go out of my way to try and pay for him. Compounding in those relationships is very valuable. [10]

Intentions don’t matter. Actions do. That’s why being ethical is hard.

When you find the right thing to do, when you find the right people to work with, invest deeply. Sticking with it for decades is really how you make the big returns in your relationships and in your money. So, compound interest is very important. [10]

99% of effort is wasted.

Obviously, nothing is ever completely wasted because it’s all a learning moment. You can learn from anything. But for example, when you go back to school, 99 percent of the term papers you did, books you read, exercises you did, things you learned, they don’t really apply. You might have read geography and history you never reuse. You might have studied a language you don’t speak anymore. You might have studied a branch of mathematics you completely forgot.

Of course, these are learning experiences. You did learn. You learned the value of hard work; you might have learned something that went deep into your psyche and became a piece of what you’re doing now. But at least when it comes to the goal-oriented life, only about 1 percent of the efforts you made paid off.

Another example is all the people you dated until you met your husband or wife. It was wasted time in the goal sense. Not wasted in the exponential sense, not wasted in the learning sense, but definitely wasted in the goal sense.

The reason I say this is not to make some glib comment about how 99 percent of your life is wasted and only 1 percent is useful. I say this because you should be very thoughtful and realize in most things (relationships, work, even in learning) what you’re trying to do is find the thing you can go all-in on to earn compound interest.

When you’re dating, the instant you know this relationship is not going to be the one that leads to marriage, you should probably move on. When you’re studying something, like a geography or history class, and you realize you are never going to use the information, drop the class. It’s a waste of time. It’s a waste of your brain energy.

I’m not saying don’t do the 99 percent, because it’s very hard to identify what the 1 percent is. What I’m saying is: when you find the 1 percent of your discipline which will not be wasted, which you’ll be able to invest in for the rest of your life and has meaning to you—go all-in and forget about the rest. [10]

Take on Accountability

Embrace accountability and take business risks under your own name. Society will reward you with responsibility, equity, and leverage.

To get rich, you need leverage. Leverage comes in labor, comes in capital, or it can come through code or media. But most of these, like labor and capital, people have to give to you. For labor, somebody has to follow you. For capital, somebody has to give you money, assets to manage, or machines.

So to get these things, you have to build credibility, and you have to do it under your own name as much as possible, which is risky. So, accountability is a double-edged thing. It allows you to take credit when things go well and to bear the brunt of the failure when things go badly. [78]

Clear accountability is important. Without accountability, you don’t have incentives. Without accountability, you can’t build credibility. But you take risks. You risk failure. You risk humiliation. You risk failure under your own name.

Luckily, in modern society, there’s no more debtors’ prison and people aren’t imprisoned or executed for losing other people’s money, but we’re still socially hardwired to not fail in public under our own names. The people who have the ability to fail in public under their own names actually gain a lot of power.

I’ll give a personal anecdote. Up until about 2013, 2014, my public persona was entirely around startups and investing. Only around 2014, 2015 did I start talking about philosophy and psychological things and broader things. It made me a little nervous because I was doing it under my own name. There were definitely people in the industry who sent me messages through the backchannel like, “What are you doing? You’re ending your career. This is stupid.”

I kind of just went with it. I took a risk. Same with crypto. Early on, I took a risk. But when you put your name out there, you take a risk with certain things. You also get to reap the rewards. You get the benefits. [78]

In the old days, the captain was expected to go down with the ship. If the ship was sinking, then literally the last person to get off was the captain. Accountability does come with real risks, but we’re talking about a business context.

The risk here would be you would probably be the last one to get your capital back out. You’d be the last one to get paid for your time. The time that you put in, the capital you put into the company, these are at risk. [78]

Realize that in modern society, the downside risk is not that large. Even personal bankruptcy can wipe the debts clean in good ecosystems. I’m most familiar with Silicon Valley, but generally, people will forgive failures as long as you were honest and made a high-integrity effort.

There’s not really that much to fear in terms of failure, and so people should take on a lot more accountability than they do. [78]

Build or Buy Equity in a Business

If you don’t own a piece of a business, you don’t have a path towards financial freedom.

Why is owning equity in a business important to becoming rich?

It’s ownership versus wage work. If you are paid for renting out your time, even lawyers and doctors, you can make some money, but you’re not going to make the money that gives you financial freedom. You’re not going to have passive income where a business is earning for you while you are on vacation. [10]

This is probably one of the most important points. People seem to think you can create wealth—make money through work. It’s probably not going to work. There are many reasons for that.

Without ownership, your inputs are very closely tied to your outputs. In almost any salaried job, even one paying a lot per hour like a lawyer or a doctor, you’re still putting in the hours, and every hour you get paid.

Without ownership, when you’re sleeping, you’re not earning. When you’re retired, you’re not earning. When you’re on vacation, you’re not earning. And you can’t earn nonlinearly.

If you look at even doctors who get rich (like really rich), it’s because they open a business. They open a private practice. The private practice builds a brand, and the brand attracts people. Or they build some kind of a medical device, a procedure, or a process with an intellectual property.