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

by Eric Jorgenson

Judgment—especially demonstrated judgment, with high accountability and a clear track record—is critical. [78] We waste our time with short-term thinking and busywork. Warren Buffett spends a year deciding and a day acting. That act lasts decades. Just from being marginally better, like running a quarter mile a fraction of a second faster, some people get paid a lot more—orders of magnitude more. Leverage magnifies those differences even more. Being at the extreme in your art is very important in the age of leverage. [2]

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.

No one is going to value you more than you value yourself. You just have to set a very high personal hourly rate and you have to stick to it. Even when I was young, I just decided I was worth a lot more than the market thought I was worth, and I started treating myself that way.

Another way of thinking about something is, if you can outsource something or not do something for less than your hourly rate, outsource it or don’t do it. If you can hire someone to do it for less than your hourly rate, hire them. That even includes things like cooking. You may want to eat your healthy home cooked meals, but if you can outsource it, do that instead. [78]

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]

The business world has many people playing zero sum games and a few playing positive sum games searching for each other in the crowd.

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.

What is the most important thing to do for younger people starting out? Spend more time making the big decisions. There are basically three really big decisions you make in your early life: where you live, who you’re with, and what you do. We spend very little time deciding which relationship to get into. We spend so much time in a job, but we spend so little time deciding which job to get into. Choosing what city to live in can almost completely determine the trajectory of your life, but we spend so little time trying to figure out what city to live in.

What are one or two steps you’d take to surround yourself with successful people? Figure out what you’re good at, and start helping other people with it. Give it away. Pay it forward. Karma works because people are consistent. On a long enough timescale, you will attract what you project. But don’t measure—your patience will run out if you count. [7] An old boss once warned: “You’ll never be rich since you’re obviously smart, and someone will always offer you a job that’s just good enough.”

What is your definition of retirement? Retirement is when you stop sacrificing today for an imaginary tomorrow. When today is complete, in and of itself, you’re retired.

How do you get there? Well, one way is to have so much money saved that your passive income (without you lifting a finger) covers your burn rate. A second is you just drive your burn rate down to zero—you become a monk. A third is you’re doing something you love. You enjoy it so much, it’s not about the money. So there are multiple ways to retirement.

If you love to do it, be authentic, and then figure out how to map that to what society actually wants. Apply some leverage and put your name on it. You take the risks, but you gain the rewards, have ownership and equity in what you’re doing, and just crank it up. [77]

can create a new business within three months: raise the money, assemble a team, and launch it. It’s fun for me. It’s really cool to see what can I put together. It makes money almost as a side effect. Creating businesses is the game I became good at. It’s just my motivation has shifted from being goal-oriented to being artistic. Ironically, I think I’m much better at it now. [74]

I got to combine my vocation and my avocation.

Lusting for money is bad for us because it is a bottomless pit. It will always occupy your mind. If you love money, and you make it, there’s never enough. There is never enough because the desire is turned on and doesn’t turn off at some number. It’s a fallacy to think it turns off at some number. The punishment for the love of money is delivered at the same time as the money. As you make money, you just want even more, and you become paranoid and fearful of losing what you do have. There’s no free lunch.

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. To the extent money buys freedom, it’s great. But to the extent it makes me less free, which it definitely does at some level as well, I don’t like it. [74]

Do I have to start a company to be successful? The most successful class of people in Silicon Valley on a consistent basis are either the venture capitalists (because they are diversified and control what used to be a scarce resource) or people who are very good at identifying companies that have just hit product/market fit. Those people have the background, expertise, and references those companies really want to help them scale. Then, they go into the latest Dropbox or the latest Airbnb.

Jim Breyer said, “Well, I have this really great head of product at this other company, and you need this person.” Those people tend to do the best, risk-adjusted over a long period of time, other than the venture investors themselves. [30]

Some of the most successful people I’ve seen in Silicon Valley had breakouts very early in their careers. They got promoted to VP, director, or CEO, or started a company that did well fairly early. If you’re not getting promoted through the ranks, it gets a lot harder to catch up later in life. It’s good to be in a smaller company early because there’s less of an infrastructure to prevent early promotion. [76] 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]

The first kind of luck is blind luck where one just gets lucky because something completely out of their control happened. This includes fortune, fate, etc.

Then, there’s luck through persistence, hard work, hustle, and motion.

A third way is you become very good at spotting luck.

The last kind of luck is the weirdest, hardest kind, where you build a unique character, a unique brand, a unique mindset, which causes luck to find you.

If you are a trusted, reliable, high-integrity, long-term-thinking dealmaker, when other people want to do deals but 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 just because of the integrity and reputation you’ve built up.

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.”

“Be a maker who makes something interesting people want. Show your craft, practice your craft, and the right people will eventually find you.” [14]

If someone is talking a lot about how honest they are, they’re probably dishonest. That is just a little telltale indicator I’ve learned. When someone spends too much time talking about their own values or they’re talking themselves up, they’re covering for something. [4]

You don’t get rich by spending your time to save money. You get rich by saving your time to make money.

My definition of wisdom is knowing the long-term consequences of your actions. Wisdom applied to external problems is judgment. They’re highly linked; knowing the long-term consequences of your actions and then making the right decision to capitalize on that. [78]

In an age of leverage, one correct decision can win everything. Without hard work, you’ll develop neither judgment nor leverage. 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]

“Clear thinker” is a better compliment than “smart.”

The really smart thinkers are clear thinkers. They understand the basics at a very, very fundamental level. I would rather understand the basics really well than memorize all kinds of complicated concepts I can’t stitch together and can’t rederive from the basics. If you can’t rederive concepts from the basics as you need them, you’re lost. You’re just memorizing. [4] The advanced concepts in a field are less proven. We use them to signal insider knowledge, but we’d be better off nailing the basics. [11]

You’re not going to be able to have good ideas for your business. You’re not going to be able to make good judgments. I also encourage taking at least one day a week (preferably two, because if you budget two, you’ll end up with one) where you just have time to think. It’s only after you’re bored you have the great ideas. It’s never going to be when you’re stressed, or busy, running around or rushed. Make the time. [7]

Very smart people tend to be weird since they insist on thinking everything through for themselves.

A contrarian isn’t one who always objects—that’s a conformist of a different sort. A contrarian reasons independently from the ground up and resists pressure to conform. Cynicism is easy. Mimicry is easy. Optimistic contrarians are the rarest breed.

Warren Buffett has, which is praise specifically, criticize generally.

If you have a criticism of someone, then don’t criticize the person—criticize the general approach or criticize the class of activities. If you have to praise somebody, then always try and find the person who is the best example of what you’re praising and praise the person, specifically. Then people’s egos and identities, which we all have, don’t work against you. They work for you. [4]

Any advice on developing capacity for instinctual blunt honesty? Tell everyone. Start now. It doesn’t have to be blunt. Charisma is the ability to project confidence and love at the same time. It’s almost always possible to be honest and positive. [71]

I think people have a hard time understanding a fundamental fact of leverage. If I manage $1 billion and I’m right 10 percent more often than somebody else, my decision-making creates $100 million worth of value on a judgment call. With modern technology and large workforces and capital, our decisions are leveraged more and more.

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]

Mental models are really just compact ways for you to recall your own knowledge. [78]

Simple heuristic: If you’re evenly split on a difficult decision, take the path more painful in the short term.

Reading a book isn’t a race—the better the book, the more slowly it should be absorbed.

A rational person can find peace by cultivating indifference to things outside of their control. I have lowered my identity. I have lowered the chattering of my mind. I don’t care about things that don’t really matter. I don’t get involved in politics. I don’t hang around unhappy people. I really value my time on this earth. I read philosophy. I meditate. I hang around with happy people. And it works. You can very slowly but steadily and methodically improve your happiness baseline, just like you can improve your fitness. [10]

Happiness Requires Presence At any given time, when you’re walking down the streets, a very small percentage of your brain is focused on the present. The rest is planning the future or regretting the past. This keeps you from having an incredible experience. It’s keeping you from seeing the beauty in everything and for being grateful for where you are. You can literally destroy your happiness if you spend all of your time living in delusions of the future. [4]

Bonus The democratization of technology allows anyone to be a creator, entrepreneur, scientist. The future is brighter.

Life Formulas I (2008) These are notes to myself. Your frame of reference, and therefore your calculations, may vary. These are not definitions—these are algorithms for success. Contributions are welcome. Happiness = Health + Wealth + Good Relationships Health = Exercise + Diet + Sleep Exercise = High Intensity Resistance Training + Sports + Rest Diet = Natural Foods + Intermittent Fasting + Plants Sleep = No alarms + 8–9 hours + Circadian rhythms Wealth = Income + Wealth * (Return on Investment) Income = Accountability + Leverage + Specific Knowledge Accountability = Personal Branding + Personal Platform + Taking Risk? Leverage = Capital + People + Intellectual Property Specific Knowledge = Knowing how to do something society cannot yet easily train other people to do Return on Investment = “Buy-and-Hold” + Valuation + Margin of Safety [72] Naval’s Rules (2016) Be present above all else. Desire is suffering. (Buddha) Anger is a hot coal you hold in your hand while waiting to throw it at someone else. (Buddha) If you can’t see yourself working with someone for life, don’t work with them for a day. Reading (learning) is the ultimate meta-skill and can be traded for anything else. All the real benefits in life come from compound interest. Earn with your mind, not your time. 99 percent of all effort is wasted. Total honesty at all times. It’s almost always possible to be honest and positive. Praise specifically, criticize generally. (Warren Buffett) Truth is that which has pr...