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

by Eric Jorgenson

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

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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]

Specific knowledge

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]

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.

Perpetual learner

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]

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.

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.

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]

Failure

If it entertains you now but will bore you someday, it’s a distraction. Keep looking.

Keep looking

I only really want to do things for their own sake. That is one definition of art. Whether it’s business, exercise, romance, friendship, whatever, I think the meaning of life is to do things for their own sake. Ironically, when you do things for their own sake, you create your best work. Even if you’re just trying to make money, you will actually be the most successful.

Follow your intellectual curiosity more than whatever is “hot” right now. If your curiosity ever leads you to a place where society eventually wants to go, you’ll get paid extremely well. [3]

Follow your intelctual curiosity

You can see this by looking for the richest people. It’s bankers, politicians in corrupt countries who print money, essentially people who move large amounts of money around. If you look at the top of very large companies, outside of technology companies, in many, many large old companies, the CEO job is really a financial job. It scales very, very well. If you get good at managing capital, you can manage more and more capital much more easily than you can manage more and more people. [78]

Whenever you can in life, optimize for independence rather than pay. If you have independence and you’re accountable on your output, as opposed to your input—that’s the dream. [10]

A leveraged worker can out-produce a non-leveraged worker by a factor of one thousand or ten thousand. With a leveraged worker, judgment is far more important than how much time they put in or how hard they work.

For example, a good software engineer, just by writing the right little piece of code and creating the right little application, can literally create half a billion dollars’ worth of value for a company. But ten engineers working ten times as hard, just because they choose the wrong model, the wrong product, wrote it the wrong way, or put in the wrong viral loop, have basically wasted their time. Inputs don’t match outputs, especially for leveraged workers.

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

Earn with your mind, not your time.

think every human should aspire to being knowledgeable about certain things and being paid for our unique knowledge. We have as much leverage as is possible in our business, whether it’s through robots or computers or what have you. Then, we can be masters of our own time because we are just being tracked on outputs and not inputs. Imagine someone comes along who demonstrably has slightly better judgment. They’re right 85 percent of the time instead of 75 percent. You will pay them $50 million, $100 million, $200 million, whatever it takes, because 10 percent better judgment steering a $100 billion ship is very valuable. CEOs are highly paid because of their leverage. Small differences in judgment and capability really get amplified. [2]

Thanks to the internet, opportunities are massively abundant. In fact, I have too many ways to make money. I don’t have enough time. I literally have opportunities pouring out of my ears, and I keep running out of time. There are so many ways to create wealth, to create products, to create businesses, and to get paid by society as a byproduct. I just can’t handle them all. [78]

Value your time at an hourly rate, and ruthlessly spend to save time at that rate. You will never be worth more than you think you’re worth.

Time

Literally, being anti-wealth will prevent you from becoming wealthy, because you will not have the right mindset for it, you won’t have the right spirit, and you won’t be dealing with people on the right level. Be optimistic, be positive. It’s important. Optimists actually do better in the long run. [10]

Wealth creation is an evolutionarily recent positive-sum game. Status is an old zero-sum game. Those attacking wealth creation are often just seeking status.

The problem is, to win at a status game, you have to put somebody else down. That’s why you should avoid status games in your life—they make you into an angry, combative person. You’re always fighting to put other people down, to put yourself and the people you like up.

You have to say no to everything and free up your time so you can solve the important problems. Those three are probably the three biggest ones. [1]

Focus

But if anything, creating businesses and making money are now more of an “art.” [74] Whether in commerce, science, or politics—history remembers the artists.

Art is creativity. Art is anything done for its own sake. What are the things that are done for their own sake, and there’s nothing behind them? Loving somebody, creating something, playing. To me, creating businesses is play. I create businesses because it’s fun, because I’m into the product. [77]

Another thing that helps: I value freedom above everything else. All kinds of freedom: freedom to do what I want, freedom from things I don’t want to do, freedom from my own emotions or things that may disturb my peace. For me, freedom is my number one value.

For someone who is early in their career (and maybe even later), the single most important thing about a company is the alumni network you’re going to build. Think about who you will work with and what those people are going on to do. [76]

It starts becoming so deterministic, it stops being luck. The definition starts fading from luck to destiny. To summarize the fourth type: build your character in a certain way, then your character becomes your destiny.

Your character and your reputation are things you can build, which will let you take advantage of opportunities other people may characterize as lucky, but you know it wasn’t luck. [78] My co-founder Nivi said, “In a long-term game, it seems that everybody is making each other rich. And in a short-term game, it seems like everybody is making themselves rich.”

Trying to build business relationships well in advance of doing business is a complete waste of time. I have a much more comfortable philosophy: “Be a maker who makes something interesting people want. Show your craft, practice your craft, and the right people will eventually find you.” [14]

Not in some cosmic, karma kind of way, but I believe deep down we all know who we are. You cannot hide anything from yourself. Your own failures are written within your psyche, and they are obvious to you. If you have too many of these moral shortcomings, you will not respect yourself. The worst outcome in this world is not having self-esteem. If you don’t love yourself, who will?

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

It takes time—even once you have all of these pieces in place, there is an indeterminate amount of time you have to put in. If you’re counting, you’ll run out of patience before success actually arrives.

The most common bad advice I hear is: “You’re too young.” Most of history was built by young people. They just got credit when they were older. The only way to truly learn something is by doing it. Yes, listen to guidance. But don’t wait. [3]

Money buys you freedom in the material world. It’s not going to make you happy, it’s not going to solve your health problems, it’s not going to make your family great, it’s not going to make you fit, it’s not going to make you calm. But it will solve a lot of external problems. It’s a reasonable step to go ahead and make money. [10]

You have to put in the time, but the judgment is more important. The direction you’re heading in matters more than how fast you move, especially with leverage. Picking the direction you’re heading in for every decision is far, far more important than how much force you apply. Just pick the right direction to start walking in, and start walking. [1]

One definition of a moment of suffering is “the moment when you see things exactly the way they are.” This whole time, you’ve been convinced your business is doing great, and really, you’ve ignored the signs it’s not doing well. Then, your business fails, and you suffer because you’ve been putting off reality. You’ve been hiding it from yourself. The good news is, the moment of suffering—when you’re in pain—is a moment of truth. It is a moment where you’re forced to embrace reality the way it actually is. Then, you can make meaningful change and progress. You can only make progress when you’re starting with the truth. The hard thing is seeing the truth. To see the truth, you have to get your ego out of the way because your ego doesn’t want to face the truth. The smaller you can make your ego, the less conditioned you can make your reactions, the less desires you can have about the outcome you want, the easier it will be to see the reality.

Ego and truth

The more desire I have for something to work out a certain way, the less likely I am to see the truth. Especially in business, if something isn’t going well, I try to acknowledge it publicly and I try to acknowledge it publicly in front of my co-founders and friends and co-workers. Then, I’m not hiding it from anybody else. If I’m not hiding it from anybody, I’m not going to delude myself from what’s actually going on. [4]

I try not to have too much I’ve pre-decided. I think creating identities and labels locks you in and keeps you from seeing the truth. To be honest, speak without identity.

If you can be more right and more rational, you’re going to get nonlinear returns in your life. I love the blog Farnam Street because it really focuses on helping you be more accurate, an overall better decision-maker. Decision-making is everything. [4]

I use my tweets and other people’s tweets as maxims that help compress my own learnings and recall them. The brain space is finite—you have finite neurons—so you can almost think of these as pointers, addresses, or mnemonics to help you remember deep-seated principles where you have the underlying experience to back it up. If you don’t have the underlying experience, then it just reads like a collection of quotes. It’s cool, it’s inspirational for a moment, maybe you’ll make a nice poster out of it. But then you forget it and move on. Mental models are really just compact ways for you to recall your own knowledge. [78]

Ignore the noise. The market will decide.

If you have two choices to make, and they’re relatively equal choices, take the path more difficult and more painful in the short term. What’s actually going on is one of these paths requires short-term pain. And the other path leads to pain further out in the future. And what your brain is doing through conflict-avoidance is trying to push off the short-term pain. By definition, if the two are even and one has short-term pain, that path has long-term gain associated. With the law of compound interest, long-term gain is what you want to go toward. Your brain is overvaluing the side with the short-term happiness and trying to avoid the one with short-term pain.

What practices do you follow to internalize/organize information from reading books? Explain what you learned to someone else. Teaching forces learning. It’s not about “educated” vs. “uneducated.” It’s about “likes to read” and “doesn’t like to read.”

Put truth above social approval. [11]

Similarly, the hard sciences are a solid foundation. Microeconomics is a solid foundation. The moment you start wandering outside of these solid foundations you’re in trouble because now you don’t know what’s true and what’s false. I would focus as much as I could on having solid foundations.

If you’re trying to learn how to drive a car or fly a plane, you should read something written in the modern age because this problem was created in the modern age and the solution is great in the modern age. If you’re talking about an old problem like how to keep your body healthy, how to stay calm and peaceful, what kinds of value systems are good, how you raise a family, and those kinds of things, the older solutions are probably better. Any book that survived for two thousand years has been filtered through many people. The general principles are more likely to be correct. I wanted to get back into reading these sorts of books. [6]

Today, I believe happiness is really a default state. Happiness is there when you remove the sense of something missing in your life.

Happiness

The world just reflects your own feelings back at you. Reality is neutral. Reality has no judgments. To a tree, there is no concept of right or wrong, good or bad. You’re born, you have a whole set of sensory experiences and stimulations (lights, colors, and sounds), and then you die. How you choose to interpret them is up to you—you have that choice. This is what I mean when I say happiness is a choice. If you believe it’s a choice, you can start working on it. [77]