Give Society What It Doesn’t Know How to Get

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Summary:

  • Give society what it wants, but doesn’t know how to get—at scale.
  • Figure out what new product or technology you can provide that’s natural to you.
  • Then figure out how to scale it so everyone on the planet can have your product.

Transcript

Give society what it wants, but doesn’t know how to get—at scale

Nivi: You’re not gonna get rich renting out your time. But you say that, “you will get rich by giving society what it wants, but does not yet know how to get at scale.”

Naval: That’s right. So, essentially as we talked about before, money is IOUs from society saying, “You did something good in the past. Now here’s something that we owe you for the future.” And so society will pay you for creating things that 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 big time.

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Live Below Your Means for Freedom

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Summary:

  • People living far below their means enjoy a freedom that people upgrading their lifestyles just can’t fathom.
  • Keep living like your old self once you make a little money, so the worry goes away.
  • The most dangerous things are heroin and a monthly salary—they’re both highly addictive.
  • Ideally, you’ll make your money in discrete lumps, so your lifestyle doesn’t have a chance to adapt.

Transcript

People living below their means have freedom

Nivi: Any other big things you should avoid, other than renting out your time?

Naval: Yeah, there are two tweets that I put out that are related. The first one I was talking about where someone, like, how your lifestyle has to upgrade, shouldn’t get upgraded too fast. And that one basically said, people who are living far below their means enjoy a freedom that people busy upgrading their lifestyles just can’t fathom.

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You Won’t Get Rich Renting Your Time

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Summary:

  • You won’t get rich renting out your time, because your inputs are too closely tied to your outputs. You’re not earning while you’re sleeping.
  • Renting out your time means someone else will get the wealth from your time. They’re going to pay you the bare minimum to do your job.
  • Renting out your time also mean you’re replaceable and not as creative as you could be. So you must own equity to gain your financial freedom.
  • You get equity for work where your inputs don’t match your outputs. You could do an hour of work and it could have a huge effect—or you could do 1,000 hours of work and it could have no effect.
  • You must have high creativity and leverage to decouple your inputs and outputs.

Transcript

You won’t get rich renting out your time

Nivi: Next you go into more specific details on how you can actually get rich, and how you can’t get rich. The first point was about how you’re not going to get rich: “You are not going to get rich renting out your time. You must own equity, a piece of the business to gain your financial freedom.”

Naval: This is probably one of the absolute most important points. People seem to think that you can create wealth, and make money through work. And it’s probably not going to work. There are many reasons for that.

But the most basic is just that your inputs are very closely tied to your outputs. In almost any salaried job, even at one that’s paying a lot per hour like a lawyer, or a doctor, you’re still putting in the hours, and every hour you get paid.

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Make Luck Your Destiny

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Summary:

  • Build your character in a way so luck stops being luck, and starts becoming your destiny
  • Build your character so opportunity finds you because you’re a trusted, reliable, high-integrity, long-term dealmaker
  • The world is a very efficient place, so it helps to be eccentric enough to operate on a frontier and dig deeper than other people do

Transcript

Nivi: I think it’s pretty interesting that the first three kinds of luck that you described there are very common cliches for them that everybody knows. And then for that last kind of luck that comes to you out of the unique way that you act, there’s no real cliche for it.

So, for the first three kinds, there’s “dumb luck,” or “blind luck.” That’s the first kind of luck. The second kind of luck there’s the cliché that “fortune favors the bold.” That’s a person who gets lucky just by stirring the pot and acting. The third kind of luck, people say that “chance favors the prepared mind.”

But for the fourth kind of luck, there is not really a common cliché out there that matches the unique character of your action, which I think is interesting and perhaps an opportunity and it also just shows that people aren’t necessarily taking advantage of that kind of luck the way they should be.

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Making Money Isn’t About Luck

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Summary:

  • Making money isn’t about luck. It’s about becoming the kind of person who makes money. If you lost all your money, you should be able to recreate that wealth.
  • There are 4 kinds of luck: (1) Blind luck, (2) Luck from hustling, (3) Luck from preparation, (4) Luck that comes from your unique character.
  • In 1,000 parallel universes, you want to be wealthy in 999 of them.
  • Wealth stacks up one chip at a time, not all at once.

Transcript

Naval: Obviously, we want to be wealthy, and we want to get there in this lifetime without having to rely on luck. A lot of people think making money is about luck. It’s not. It’s about becoming the kind of person that makes money.

I like to think that if I lost all my money and if you drop me on a random street in any English-speaking country, within 5, 10 years I’d be wealthy again, because it’s just a skill set that I’ve developed and I think anyone can develop.

In 1,000 parallel universes, you want to be wealthy in 999 of them. You don’t want to be wealthy in the 50 of them where you got lucky. So, we want to factor luck out of it.

There’s really four kinds of luck that we were talking about. This came from a book, and Pmarca, Marc Andreessen wrote a blog post about it. But basically, there’s different kinds of luck.

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Free Markets Are Intrinsic to Humans

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Summary:

  • Free markets are intrinsic to the human species. We’re the only animals who cooperate across genetic boundaries.
  • One way we cooperate is by keeping track of credits and debits in voluntary exchanges.
  • Free markets like this are beautiful games that keep food on our shelves—and can make us all wealthier and wealthier.
  • But too many takers and not enough makers will plunge a society into ruin.
  • Takers attack wealth creation with status games that drag everyone down to their level.

Transcript

Free markets are intrinsic to the human species

Naval: Overall capitalism [meaning free markets] is intrinsic to the human species. Capitalism is not something we invented. Capitalism is not even something we discovered. It is in it to us in every exchange that we have.

When you and I exchange information, I want some information back from you. I give you information. You give me information. If we weren’t having a good information exchange, you’d go talk to somebody else. So, the notion of exchange, and keeping track of credits and debits, this is built into us as flexible social animals.

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Ethical Wealth Creation Makes Abundance

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Summary:

  • Wealth isn’t about taking something from somebody else—it’s about creating abundance for the world.
  • Everyone can be rich: if wealth were finite, we would still be sitting around in caves.
  • In the first world, it’s better to be poor today than it was to be the richest man 200 years ago.
  • Thought experiment: if everyone today was an engineer, in 20 years, children would be retired in riches from the moment they were born.

Transcript

Ethical wealth creation makes abundance for the world

Naval: Yeah. I think there is this notion that making money is evil, right? It’s like rooted all the way back down to money is the root of all evil.

People think that the bankers steal our money. And it’s somewhat true in that in a lot of the world there’s a lot of theft going on all the time.

The history of the world in some sense is this predator/prey relationship between makers and takers. There are people who go out and create things, and build things, and work hard on things.

Then there are people who come along with a sword, or a gun, or taxes, or crony capitalism, or Communism, or what have you. There’s all these different methods to steal.

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