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

by Eric Jorgenson

Getting rich is about knowing what to do, who to do it with, and when to do it. It is much more about understanding than purely hard work.

Pick an industry where you can play long-term games with long-term people. The internet has massively broadened the possible space of careers. Most people haven’t figured this out yet. Play iterated games. All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest.

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.

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.

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

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.

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.

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

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.

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.

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.

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]

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.

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]

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]

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.

The year I generated the most wealth for myself was actually the year I worked the least hard and cared the least about the future. I was mostly doing things for the sheer fun of it. I was basically telling people, “I’m retired, I’m not working.” Then, I had the time for whatever was my highest valued project in front of me. By doing things for their own sake, I did them at their best. [74]

The final form of leverage is brand new—the most democratic form. It is: “products with no marginal cost of replication.” This includes books, media, movies, and code. Code is probably the most powerful form of permissionless leverage. All you need is a computer—you don’t need anyone’s permission. [1] Forget rich versus poor, white-collar versus blue. It’s now leveraged versus un-leveraged. The most interesting and the most important form of leverage is the idea of products that have no marginal cost of replication. This is the new form of leverage. This was only invented in the last few hundred years. It started with the printing press. It accelerated with broadcast media, and now it’s really blown up with the internet and with coding. Now, you can multiply your efforts without involving other humans and without needing money from other humans.

If you have independence and you’re accountable on your output, as opposed to your input—that’s the dream. [10]

Tools and leverage create this disconnection between inputs and outputs. The higher the creativity component of a profession, the more likely it is to have disconnected inputs and outputs. If you’re looking at professions where your inputs and your outputs are highly connected, it’s going to be very hard to create wealth and make wealth for yourself in that process. [78] If you want to be part of a great tech company, then you need to be able to SELL or BUILD. If you don’t do either, learn. Learn to sell, learn to build. If you can do both, you will be unstoppable.

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.

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.

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.

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] What making money will do is solve your money problems. It will remove a set of things that could get in the way of being happy, but it is not going to make you happy. I know many very wealthy people who are unhappy. Most of the time, the person you have to become to make money is a high-anxiety, high-stress, hard-working, competitive person. When you have done that for twenty, thirty, forty, fifty years, and you suddenly make money, you can’t turn it off. You’ve trained yourself to be a high-anxiety person. Then, you have to learn how to be happy. [11]

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]

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. What we wish to be true clouds our perception of what is true.Suffering is the moment when we can no longer deny reality. Imagine we’re going through something difficult like a breakup, a job loss, a business failure, or a health problem, and our friends are advising us. When we’re advising them, the answer is obvious. It comes to us in a minute, and we tell them exactly, “Oh that girl, get over her, she wasn’t good for you anyway. You’ll be happier. Trust me. You’ll find someone.” You know the correct answer, but your friend can’t see it, because they’re in the moment of suffering and pain. They’re still wishing reality was different. The problem isn’t reality. The problem is their desire is colliding with reality and pre-venting them from seeing the truth, no matter how much you say it. The same thing happens when I make decisions.

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.

I would combine radical honesty with an old rule Warren Buffett has, which is praise specifically, criticize generally. I try to follow this. I don’t always follow it, but I think I follow it enough to have made a difference in my life. 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]

The more you know, the less you diversify.

The best mental models I have found came through evolution, game theory, and Charlie Munger. Charlie Munger is Warren Buffett’s partner. Very good investor. He has tons and tons of great mental models. Author and trader Nassim Taleb has great mental models. Benjamin Franklin had great mental models. I basically load my head full of mental models. [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]

INVERSION I don’t believe I have the ability to say what is going to work. Rather, I try to eliminate what’s not going to work. I think being successful is just about not making mistakes. It’s not about having correct judgment. It’s about avoiding incorrect judgments. [4]

In the intellectual domain, compound interest rules. When you look at a business with one hundred users growing at a compound rate of 20 percent per month, it can very, very quickly stack up to having millions of users. Sometimes, even the founders of these companies are surprised by how large the business scales. [10]

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

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

The three big ones in life are wealth, health, and happiness. We pursue them in that order, but their importance is reverse.

To me, happiness is not about positive thoughts. It’s not about negative thoughts. It’s about the absence of desire, especially the absence of desire for external things. The fewer desires I can have, the more I can accept the current state of things, the less my mind is moving, because the mind really exists in motion toward the future or the past. The more present I am, the happier and more content I will be. If I latch onto a feeling, if I say, “Oh, I’m happy now,” and I want to stay happy, then I’m going to drop out of that happiness. Now, suddenly, the mind is moving. It’s trying to attach to something. It’s trying to create a permanent situation out of a temporary situation. Happiness to me is mainly not suffering, not desiring, not thinking too much about the future or the past, really embracing the present moment and the reality of what is, and the way it is. [4]

If you ever want to have peace in your life, you have to move beyond good and evil. Nature has no concept of happiness or unhappiness.

Nature follows unbroken mathematical laws and a chain of cause and effect from the Big Bang to now. Everything is perfect exactly the way it is. It is only in our particular minds we are unhappy or not happy, and things are perfect or imperfect because of what we desire. [4] 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...

I’ve also come to believe in the complete and utter insignifi-cance of the self, and I think that helps a lot. For example, if you thought you were the most important thing in the Universe, then you would have to bend the entire Universe to your will. If you’re the most important thing in the Universe, then how could it not conform to your desires. If it doesn’t conform to your desires, something is wrong. However, if you view yourself as a bacteria or an amoeba—or if you view all of your works as writing on water or building castles in the sand, then you have no expectation for how life should “actually” be. Life is just the way it is. When you accept that, you have no cause to be happy or unhappy. Those things almost don’t apply. Happiness is what’s there when you remove the sense that something is missing in your life. What you’re left with in that neutral state is not neutrality. I think people believe neutrality would be a very bland existence. No, this is the existence little children live. If you look at little children, on balance, they’re generally pretty happy because they are really immersed in the environment and the moment, without any thought of how it should be given their personal preferences and desires. I think the neutral state is actually a perfection state. One can be very happy as long as one isn’t too caught up in their own head. [4]

What it means is every second you have on this planet is very precious, and it’s your responsibility to make sure you’re happy and interpreting everything in the best possible way. [9] We think of ourselves as fixed and the world as malleable, but it’s really we who are malleable and the world is largely fixed.

It’s absolutely better than doing nothing. But when the actual moment of mental or emotional suffering arrives, it’s still never easy. [8] Real happiness only comes as a side-effect of peace. Most of it is going to come from acceptance, not from changing your external environment. [8] A rational person can find peace by cultivating indifference to things outside of their control.

Happiness, love, and passion…aren’t things you find—they’re choices you make. Happiness is a choice you make and a skill you develop.

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] We crave experiences that will make us be present, but the cravings themselves take us from the present moment. I just don’t believe in anything from my past. Anything. No memories. No regrets. No people. No trips. Nothing. A lot of our unhappiness comes from comparing things from the past to the present. [4]

Happiness is such an overloaded word, I’m not even sure what it means. For me these days, happiness is more about peace than it is about joy. I don’t think peace and purpose go together.

Happiness is being satisfied with what you have. Success comes from dissatisfaction. Choose. Confucius says you have two lives, and the second one begins when you realize you only have one.

A few years ago, I would have said Steve Jobs, because he was part of the driving force creating something that changed lives for all of humanity. I think Marc Andreessen is successful, not because of his recent incarnation as a venture capitalist, but because of the incredible work he did with Netscape. Satoshi Nakamoto is successful in that he created Bitcoin, which is this incredible technological creation that will have repercussions for decades to come. Of course, Elon Musk, because he changed everyone’s viewpoint on what is possible with modern technology and entrepreneurship. I consider those creators and commercializers successful. To me, the real winners are the ones who step out of the game entirely, who don’t even play the game, who rise above it. Those are the people who have such internal mental and self-control and self-awareness, they need nothing from anybody else. There are a couple of these characters I know in my life. Jerzy Gregorek—I would consider him successful because he doesn’t need anything from anybody. He’s at peace, he’s healthy, and whether he makes more money or less money compared to the next person has no effect on his mental state. Historically, I would say the legendary Buddha or Krishnamurti, whose stuff I like reading, they are successful in the sense that they step out of the game entirely. Winning or losing does not matter to them. There’s a line from Blaise Pascal I read. Basically, it says: “All of man’s troubles arise because he ca...

Peace is happiness at rest, and happiness is peace in motion. You can convert peace into happiness anytime you want. But peace is what you want most of the time. If you’re a peaceful person, anything you do will be a happy activity.

Whenever the word “should” creeps up in your mind, it’s guilt or social programming. Doing something because you “should” basically means you don’t actually want to do it. It’s just making you miserable, so I’m trying to eliminate as many “shoulds” from my life as possible. [1] The enemy of peace of mind is expectations drilled into you by society and other people.

The reality is life is a single-player game. You’re born alone. You’re going to die alone. All of your interpretations are alone.

Perhaps one reason why yoga and meditation are hard to sustain is they have no extrinsic value. Purely single-player games. Buffett has a great example when he asks if you want to be the world’s best lover and known as the worst, or the world’s worst lover and known as the best? [paraphrased] in reference to an inner or external scorecard. Exactly right. All the real scorecards are internal.