Arm Yourself With Specific Knowledge

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Summary

  • Arm yourself with specific knowledge. The classic example of specific knowledge is investing. But it could be anything from judgment in running a fleet of trucks to weather forecasting. Very often it is at the edge of knowledge.
  • Specific knowledge may come from your DNA. It may be soft skills learned in childhood. It could be something so new nobody but you knows how to do it. It could be true on-the-job training where you’re pattern matching in highly complex environments.
  • Specific knowledge can’t be trained. Otherwise it would be mass-produced and you will be paid the minimum possible wage to do it.

  • Specific knowledge can be learned by pursuing your genuine curiosity, talents and passion. Building specific knowledge will feel like play to you.

  • Genuine curiosity is very important. Leverage and compound interest mean someone who is just slightly better than you will get paid 10x-1000x more than you. So you must be the best.

Transcript

Nivi: Do you want to talk a little bit about the skills that you need, in particular specific knowledge, accountability, leverage and judgment? So, the first tweet in this area is “Arm yourself with specific knowledge, accountability, and leverage.” And I’ll throw in judgment as well. I don’t think you covered that in that particular tweet.

Naval: If you want to make money you have to get paid at scale. Why you, that’s accountability, at scale, that’s leverage, and just you getting paid as opposed to somebody else getting paid , that’s specific knowledge.

So, specific knowledge is probably the hardest thing to get across in this whole tweetstorm, and it’s probably the thing that people get the most confused about.

The thing is that we have this idea that everything can be taught, everything can be taught in school. And it’s not true that everything can be taught. In fact, the most interesting things cannot be taught.

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Partner With Rational Optimists

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Summary:

  • Partner with rational optimists. They know the downsides but they keep their chin up.
  • Don’t partner with cynics and pessimists, their beliefs are self-fulfilling.
  • Pessimists don’t have an action bias nor do they want to lead, follow or get out of the way.
  • It made sense to be pessimistic in the past. But modern society is far safer, with limited downside and unlimited upside. Adapting for modern society means overriding your natural pessimism.
  • Worst of all is the nitpicker.

Transcript

Don’t partner with pessimists

Nivi: Let’s do this last tweet. You said, “Don’t partner with cynics, and pessimists. Their beliefs are self-fulfilling.”

Naval: Yes. Essentially, to create things, you have to be a rational optimist. Rational in the sense that you have to see the world for what it really is. And yet you have to be optimistic about your own capabilities, and your capability to get things done.

We all know people who are consistently pessimistic, who will shoot down everything. Everyone in their life has the helpful critical guy, right? He thinks he’s being helpful, but he’s actually being critical, and he’s a downer on everything.

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Pick Partners With Intelligence, Energy and Integrity

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Summary:

  • Pick business partners with high intelligence, energy and integrity.
  • They need intelligence or they’ll head in the wrong direction. They need energy because the world is full of smart, lazy people. And they need integrity or you’ll have a smart and hard working crook, who’ll eventually cheat you.
  • People may be energetic on some tasks but not on others. Put them on the right tasks.
  • Integrity is what someone does, despite what they say they do.

Transcript

Pick business partners with high intelligence, energy and integrity

Naval: In terms of picking people to work with, pick ones that have high intelligence, high energy, and high integrity, I find that’s the three-part checklist that you cannot compromise on.

You need someone who is smart, or they’ll head in the wrong direction. And you’re not going to end up in the right place. You need someone high-energy because the world is full of smart, lazy people.

We all know people in our life who are really smart, but can’t get out of bed, or lift a finger. And we also know people who are very high energy, but not that smart. So, they work hard, but they’re sort of running in the wrong direction.

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Play Long-term Games With Long-term People

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Summary:

  • Pick an industry where you can play long-term games with long-term people. Long-term players make each other rich. Short-term players make themselves rich.
  • All returns in life come from compound interest over many turns of long-term games—and they usually come at the end.
  • People are fair with each other when they know there will be more turns of the game. Friction goes down with each turn, so you can do bigger and bigger things together.

Transcript

Play long-term games with long-term people

Nivi: Talk a little bit about what industries you should think about working in. What kind of job you should have? And who you might want to work with? So, you said, “One should pick an industry where you can play long-term games with long-term people.” Why?

Naval: Yeah, this is an insight into what makes Silicon Valley work, and what makes high trust societies work. Essentially, all the benefits in life come from compound interests. Whether it’s in relationships, or making money, or in learning.

So, compound interest is a marvelous force, where it’s like you start out with 1x what you have, and then if you increase 20% a year for 30 years, it’s not that you got 30 years times 20% added on. It was compounding, so it just grew, and grew, and grew until you suddenly got a massive amount of whatever it is. Whether it’s goodwill, or love, or relationships, or money. So, I think compound interest is a very important force.

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The Internet Has Massively Broadened Career Possibilities

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Summary:

  • The Internet has massively broadened the possible space of careers, by allowing you to scale any niche obsession.
  • Before the Internet there was no way to find all the people in the world who were interested in your obsession. Now you can.
  • Escape competition through authenticity—when you’re competing with people it’s because you’re copying them.
  • No one can compete with you on being you. Before the Internet, this was useless advice—now it’s a career.

Transcript

The Internet has massively broadened the possible space of careers

Nivi: Let’s look at this next tweet, which I thought was cryptic, and also super interesting, about the kind of job or career that you might have. You said, “The internet has massively broadened the possible space of careers. Most people haven’t figured this out yet.”

Naval: The fundamental property of the internet more than any other single thing is it connects every human to each other human on the planet. You can now reach everyone.

Whether it’s by emailing them personally, whether it’s by broadcasting to them on Twitter, whether it’s by posting something on Facebook that they find, whether it’s by putting up a website they come and access.

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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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