How to Get Rich
Legendary Lessons from Silicon Valley Entrepreneur & Investor Naval Ravikant
Intro
Naval Ravikant went to Dartmouth and earned degrees in Computer Science and Economics.
He then went on to found companies in Silicon Valley, including AngelList. He was as an angel investor in now giant projects like Uber, Twitter, and Substack. To put it lightly, he is a beast. He has figured out many things.
Today, he is a philosopher, and fortunately, he shared his insights on the creation of wealth. What I’ve written here is a summary of the ideas I found interesting and important. I’ll leave the link to the full transcript and video of “How to Get Rich” at the bottom of the post.
We’ll start with his definition of entrepreneurship.
Entrepreneurship is making money while you sleep
“So entrepreneurship is creating something from scratch, correctly predicting that society will want it, and getting into everybody's hands at scale.” — Naval
The key is predicting that society will want it by understanding what society needs and where the future is going. If you can predict the future and the evolution of humanity, then you can build the right products. Be a futurist. If you can predict what won’t change (no matter how much tech we get), you can also build products around that.
Another important insight here is that we need the skills to build something from scratch. We need the knowledge to be able to do so; need to be at the edge of knowledge so that we can build something that is different and great.
How to create wealth
“So essentially the way to get rich (create wealth) is to create a product, create a process, or something that will earn you money overnight while you're asleep.” — Naval
What you want is ownership.
“So, what you want to do is figure out how to give society what it wants but does not know how to yet get that fits within your skill set.” — Naval
To build a product that no one has invented yet, you need to be relatively dedicated to a field. Find a field where you can continuously compound knowledge because you’re obsessed with it. That could be software development + medicine. Stay at the cutting-edge of the field, so that you can out-innovate the products that have already been built in it.
“Continuously build products that society needs, but does not yet know how to get, do it at scale, get it into everyone’s hands quickly, and do it with the different forms of leverage: capital, labor, and objects with with no marginal cost of replication (code and media).” — Naval
When you build something that people actually need but don’t know how to get, people will pay you for it. The next step is to figure out how to scale it (do it cheaply).
A powerful way to achieve scale is by using code because there is very little costs associated with replicating code on large scales. Code will help you automate repetitive tasks and improve some of the processes involved in the problem you are solving.
Media is another way to gain leverage. With media you can create books and/or assets related to your product and you can send them anyone at zero additional cost.
Finally, getting your product into everyone’s hands is your unique marketing plan based on your understanding of people and the way they are connected.
Your unique interests will allow you to find an audience
Create content about your interests.
The internet has given us the capacity the reach anyone, anywhere. Shape the world in that particular field. Your unique skill set and your unique interests will allow you to find an audience.
In essence, rediscover your interests/obsessions and then look out for the the commercial aspects of them. Create content. Use media as leverage to build an audience that you can then distribute to.
An audience is always findable because there will always be people in the world that are interested in that particular thing. The world is a big place. Again, continue looking out for the commercial aspects of that thing you love. Play it smart.
Stay in an industry
“If you stay in an industry in a particular field for 20, 30 years, you make connections and those connections will build businesses and you will build businesses and you will trade and you will exchange. And if you maintain your integrity, people will come back to you for deals and you will continue to produce for them and for yourself.”
The more time, energy, and learning you invest into an industry, the more your connections and knowledge compound… and therefore the higher the likelihood of your success.
Specific knowledge can unlock massive opportunities
Let me start be prefacing that even Naval has a challenging time explaining specific knowledge, so I may too.
Specific knowledge is something that can be learned, but not taught. If it can be taught, then you are replaceable. It cannot be taught because specific knowledge is the combination multiple fields that are unique to you. It is the total aggregation of your knowledge, and the more attuned yours is to the problem you are solving in your industry, the better.
Specific knowledge is what allows you to see opportunities and start building. Specific knowledge exists at the edge of your field. It is often something that people are still figuring out. Specific knowledge makes you uniquely qualified to conquer certain challenges.
Your specific knowledge is the combined set of the things you know how to do. For example, your specific knowledge could be sales + engineering semiconductors + and accounting. This kind of specific knowledge could make you the CEO of a semiconductor company.
Or maybe you’re very skilled at medical procedures, you have an understanding of how the healthcare industry works, you’re very good at writing software, and you get great at digital marketing. Maybe you start a software company focused on healing people.
Naval gives the analogy of a deep sea diver that does dives that no one else can do. When you are really really good at a specific combination of things, people will seek you out for them.
Specific knowledge is something you build out over time and that will give you power in your industry.
Naval also says that specific knowledge is often something that emerges naturally. It is a mix of your interests that you had growing up as a kid plus your skills and obsessions you build on top of that as an adult.
To find our specific knowledge, we need to reflect and identify the things we are good at. A tip here: ask your family and/or close friends what they think you are good at. I did and I was surprised at some of the answers.
Specific knowledge does not necessarily have to be individual. Let’s say you’re building a video game. Well, you need to write the code, raise the capital, and sell the game to the mass markets.
This is often not something that one person can do, so you can look at specific knowledge from the perspective of a company’s aggregated specific knowledge.
When putting together a great team, specific knowledge is key. You need an team of people with the right specific knowledge to achieve the outcome. The whole is greater than the sum of its parts.
Leverage powers success
“Figure out what you’re uniquely good at, and apply as much leverage as possible.”
As you operate a business, leverage can lead you to success. Leverage is the set of assets that are force multipliers for your business. Naval defines these three types of leverage:
Labor: people that work for you. Find great people.
Capital: the money you have available to spend to magnify your decisions. Using funds to grow companies.
Products with zero marginal cost of replication: software and media that can be duplicated at little or no additional cost, allowing for potentially unlimited distribution.
“Your eventual outcome will be equal to something like the distinctiveness of your specific knowledge; times how much leverage you can apply to that knowledge; times how often your judgment is correct; times how singularly accountable you are for the outcome; times how much society values what you’re doing. Then you compound that with how long you can keep doing it and how long you can keep improving it through reading and learning.”
In essence, you need to figure out how much leverage you can apply to a specific problem. Find the right people, utilize funds to purchase the right assets, write effective code, create the right media to attract the right people… and these will become force multipliers for your success.
Be a rational optimist
Know that there are pitfalls and that you aren’t immortal… but build great things and approach life with a positive attitude. We only have one life so we might as well try to be great.
Building <—> Selling
This build-sell build-sell infinite loop is one of the most important ideas Naval has. It can simplify your perspective on business.
Everything that happens in a company is either building or selling. Therefore, you should build out your skills accordingly.
By building, I’m creating a service, building out the company structure, designing a product, architecting a bridge, engineering a data center, forming a route for logistics. I’m building. I need knowledge for that. Without products, businesses do not survive.
By the same token, selling also has many definitions. Selling ideas internally to team members, doing PR, direct sales to prospects in-person, cold calling, presenting to boards, social media… and more. Selling is multivariate and it is key. You don’t need to cold call all day, but you should pick up at least one of these. Without sales, businesses do not survive.
Naval says that if we learn to do both, we can be unstoppable. Achieve extraordinary success.
Build AND Sell.
Here’s a simpler version of the concept: learn practical persuasion and also gain deep technical expertise in a field like as data and algorithms.
Then combine that with a focus on the problems you’re solving in industry.
If I apply this to myself, I have built an ability to persuade people, communicate online, and I have have building skills as a software developer and systems architect and I am deeply interested in: computers (AI), longevity, and the planet.
Stay on the edge: create unique products and media and code that others do not yet know how to create at the edge of your field.
The art of learning
Learn the fundamentals to become great in your field.
“Reading is faster than listening. Learn persuasion, game theory, psychology, mathematics, computers, and apply those specific problems in particular industry over the course of your career.” — Naval (Paraphrased).
“Focus on the foundations and the foundational texts. Read The Origin of Species, and On the Wealth of Nations by Adam Smith. Be able to pick up any book in a library and read it.”
For me, this could be building out my sales skills, creating media, understanding the mathematical structures we use to conceptualize healing, knowing how to protect networks from hackers, and software development. All the while I could also read these powerful books and extract insights from them to help me continue to level up.
Getting customers to connect
Naval says that to make your business successful, you should create ways for your customers to constantly add value to each other.
That's a brilliant idea.
The importance of judgement
Your ability to have judgement is very powerful. You need to select the right thing to work on. Good judgement is being able to understand and predict the long term consequences of your decisions.
If you’re the CEO of Apple and you’re right 20% more of the time than someone else, you’re going to generate 20% more returns. That is billions of dollars. The more experienced and well-read you are in a particular field, the better judgement you will have.
As a creator of content and a student of code, I need to optimally select the correct things to work on. The better judgement I have, the more views and code I will have under my belt.
Satya Nadella said something along the lines of: “Success is all about pattern matching. Do more of what works and less of what doesn’t.
From the wisdom in Naval’s teachings, here’s what I’m going to do:
Paul Graham, co-founder of Y Combinator, said: “Work on finding product product market fit, exercise, and eat healthy. That's all you have time for right now.”
Here’s what I’m going to do:
Exercise and eat well.
Continue to hone my building skills and selling skills.
Keep working to create amazing, valuable content. Develop judgement on what kinds of topics work over time and in effect know how to focus my time.
Keep working on the foundations. Understand how computers are influencing everything in the world and how I can leverage them.
Continue working on my specific knowledge and getting to the cutting edge of my fields of interest: longevity, cybersecurity, data, planetary health, and software.
How to get Rich (Transcript): https://nav.al/rich
How to get Rich (Video):
This Post in Video Form:
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