NavalHowtoGetRich

jpeg) *(without getting lucky)* by **Naval Ravikant** and **Babak Nivi** Transcript of a collection of interviews based on Naval's May 2018 tweetstorm. ©2019 Naval Ravikant, Babak Nivi Formatted for PDF by *Guustaaf Damave* 1. Seek Wealth, Not Money or 4 2. Make Abundance for the 8 3. Free Markets Are Intrinsic to 10 4. Making Money Isn't About 13 5. Make Luck Your 20 6. You Won't Get Rich Renting Out Your 23 7. Live Below Your Means for 25 8. Give Society What It Doesn't Know How to 35 9. The Internet Has Massively Broadened Career

37 10. Play Long-term Games With Long-term 31 11. Pick Partners With Intelligence, Energy and 35 12. Partner With Rational 39 13. Arm Yourself With Specific 43 14. Specific Knowledge Is Highly Creative or 51 15. Learn to Sell, Learn to 51 16. Read What You Love Until You Love to 55 17. The Foundations Are Math and 61 18. There's No Actual Skill Called 65 19. Embrace Accountability to Get 65 20. Take Accountability to Earn 68 21. Labor and Capital Are Old 72 22. Product and Media are New 76 23. Product Leverage is

80 24. Pick a Business Model With 84 25. Example: From Laborer to 88 26. Judgment Is the Decisive 92 27. Set an Aspirational Hourly 97 28. Work As Hard As You 100 29. Be Too Busy to "Do 104 30. Keep Redefining What You 107 31. Escape Competition Through 109 32. Play Stupid Games, Win Stupid 113 33. Eventually You Will Get What You 115 34. Reject Most 118 35. A Calm Mind, a Fit Body, a House Full of 120 36. There Are No Get Rich Quick 123 37. Productize 126 38. Finding Time to Invest in

128 1. Seek Wealth, Not Money or Status The difference between wealth, money and status. Nivi: You probably know Naval from his Twitter account. We’re going to be talking about his tweetstorm on "How to get rich (without getting lucky)." We’re going to go through most of the tweets in detail, give Naval a chance to expand on them and generally riff on the topic. He’ll probably throw in some ideas that he hasn’t even published before. Naval’s the co-founder of AngelList and Epinions. He’s also a prolific tech investor in companies like Twitter, Uber, and many more.

I’m the co-founder of AngelList with Naval. And I co-authored the Venture Hacks blog with him back in the day. Naval: The How To Get Rich tweetstorm definitely hit a nerve and went viral. A lot of people say it was helpful and reached across aisles. People outside of the tech industry, people in all walks of life, people want to know how to solve their money problems. Everyone vaguely knows that they want to be wealthy, but they don’t have a good set of principles to do it by. Wealth is assets that earn while you sleep Nivi: What’s the difference between wealth, money, and status?

Naval: Wealth is the thing that you want. Wealth is assets that earn while you sleep. Wealth is the factory, the robots, that’s cranking out things. Wealth is the computer program that’s running at night, that’s serving other customers. Wealth is even money in the bank that is being reinvested into other assets, and into other businesses. 1 Even a house can be a form of wealth because you can rent it out, although that’s probably a lower use of productivity of land than doing some commercial enterprise. So, my definition of wealth is much more businesses and assets that can earn while you sleep.

Wealth buys your freedom The reason you want wealth is because it buys you your freedom. So, you don’t have to wear a tie like a collar around your neck. So, you don’t have to wake up at 7:00 AM, and rush to work, and sit in commute traffic. So, you don’t have to waste away your entire life grinding all your productive hours away into a soulless job that doesn’t fulfill you. So, the purpose of wealth is freedom. It’s nothing more than that. It’s not to buy fur coats, or drive Ferraris, or sail yachts, or jet around the world in your Gulfstream.

That stuff gets really boring and really stupid, really fast. It’s really so that you are your own sovereign individual. You’re not going to get that unless you really want it. The entire world wants it and the entire world is working hard at it. To some extent it is competitive. It’s a positive sum game, but there are competitive elements to it. Because there’s a finite amount of resources right now in society. To get the resources to do what you want, you have to stand out. Money is how we transfer wealth Money is how we transfer wealth.

Money is social credits. It is the ability to have credits and debits of other people’s time. If I do my job right, if I create value for society, society says, "Oh, thank you. We owe you something in the future for the work that you did in the past. Here’s a little IOU. Let’s call that money." That money gets debased because people steal the IOUs. The government prints extra IOUs. People renege on their IOUs. But money is trying to be a reliable IOU from society that you are owed something for something you, or someone who gave you the money, did in the past.

We can transfer these IOUs around. So, money is how we transfer wealth. Status is your rank in the social hierarchy 2 There are fundamentally two huge games in life that people play. One is the money game. Because money is not going to solve all of your problems, but it’s going to solve all of your money problems. I think people know that. They realize that, so they want to make money. But at the same time, many of them deep down believe that they can’t make it. They don’t want any wealth creation to happen.

So, they virtue signal by attacking the whole enterprise by saying, "Well, making money is evil. You shouldn’t do it." But they’re actually playing the other game, which is the status game. They’re trying to be high status in the eyes of other people watching by saying, "Well, I don’t need money. We don’t want money." Status is your ranking in the social hierarchy. Wealth is not a zero-sum game. Everybody in the world can have a house. Because you have a house doesn’t take away from my ability to have a house. If anything, the more houses that are built, the easier it becomes to build houses, the more we know about building houses, and the more people that can have houses.

Wealth is a very positive sum game. We create things together. We’re starting this endeavor to create this piece of art that explains what we’re doing. At the end of it, something brand new will be created. It’s a positive sum game. Status is a very old game Status, on the other hand, is a zero-sum game. It’s a very old game. We’ve been playing it since monkey tribes. It’s hierarchical. Who’s number one? Who’s number two? Who’s number three? And for number three to move to number two, number two has to move out of that slot.

So, status is a zero-sum game. Politics is an example of a status game. Even sports is an example of a status game. To be the winner, there must be a loser. I don’t fundamentally love status games. They play an important role in our society, so we can figure out who’s in charge. But fundamentally, you play them because they’re a necessary evil. On an evolutionary basis, if you go back thousands of years, status is a much better predictor of survival than wealth is. You couldn’t have wealth before the farming age because you couldn’t store things.

Hunter-gatherers carried everything on their backs. So, hunter-gatherers lived in entirely status based societies. Farmers started going to wealth-based societies. And the modern industrial economies are much more heavily 3 wealth-based societies. People creating wealth will always be attacked by people playing status games There’s always a subtle competition going on between status and wealth. For example, when journalists attack rich people, or attack the technology industry, they’re really bidding for status. They’re saying, "No, the people are more important. And I, the journalist, represent the people, and therefore I am more important." The problem is that to win at a status game, you have to put somebody else down.

That’s why you should avoid status games in your life because 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. Status games are always going to exist. There’s no way around it, but realize that most of the time, when you’re trying to create wealth, you’re getting attacked by someone else, and they’re trying to look like a goody-two shoes. They’re trying to up their own status at your expense. They’re playing a different game. And it’s a worse game.

It’s a zero-sum game, instead of a positive sum game. 4 2. Make Abundance for the World Wealth isn’t about taking something from somebody else—it’s about creating abundance for the world. Ethical wealth creation makes abundance for the world Naval: I think there is this notion that making money is evil, right? It’s rooted all the way back down to "money is the root of all evil." People think that the bankers steal our money. 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. Even in nature, there are more parasites than there are non-parasitical organisms. You have a ton of parasites in you, who are living off of you. The better ones are symbiotic, they’re giving something back.

But there are a lot that are just taking. That’s the nature of how any complex system is built. What I am focused on is true wealth creation. It’s not about taking money. It’s not about taking something from somebody else. It’s from creating abundance. Obviously, there isn’t a finite number of jobs, or finite amount of wealth. Otherwise we would still be sitting around in caves, figuring out how to divide up pieces of fire wood, and the occasional dead deer. Most of the wealth in civilization, in fact all of it, has been created.

It got created from 5 somewhere. It got created from people. It got created from technology. It got created from productivity. It got created from hard work. This idea that it’s stolen is this horrible zero-sum game that people who are trying to gain status play. Everyone can be rich But the reality is everyone can be rich. We can see that by seeing, that in the First World, everyone is basically richer than almost anyone who was alive 200 years ago. 200 years ago nobody had antibiotics. Nobody had cars. Nobody had electricity. Nobody had the iPhone.

All of these things are inventions that have made us wealthier as a species. Today, I would rather be a poor person in a First World country, than be a rich person in Louis the XIV’s France. I’d rather be a poor person today than aristocrat back then. That’s because of wealth creation. The engine of technology is science that is applied for the purpose of creating abundance. So, I think fundamentally everybody can be wealthy. This thought experiment I want you to think through is imagine if everybody had the knowledge of a good software engineer and a good hardware engineer.

If you could go out there, and you could build robots, and computers, and bridges, and program them. Let’s say every human knew how to do that. What do you think society would look like in 20 years? My guess is what would happen is we would build robots, machines, software and hardware to do everything. We would all be living in massive abundance. We would essentially be retired, in the sense that none of us would have to work for any of the basics. We’d even have robotic nurses. We’d have machine driven hospitals.

We’d have self-driving cars. We’d have farms that are 100% automated. We’d have clean energy. At that point, we could use technology breakthroughs to get everything that we wanted. If anyone is still working at that point, they’re working as a form of expressing their creativity. They’re working because it’s in them to contribute, and to build and design things. I don’t think capitalism is evil. Capitalism is actually good. It’s just that it gets hijacked. It gets hijacked by improper pricing of externalities. It gets hijacked by improper yields, where you have corruption, or you have monopolies.

6 3. Free Markets Are Intrinsic to Humans We’re the only animals who cooperate across genetic boundaries, because we can track credits and debits in voluntary exchanges. 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 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. We are the only animals in the animal kingdom that cooperate across genetic boundaries. Most animals don’t even cooperate. But when they do, they cooperate only in packs where they co-evolve together, and they share blood, so they have some shared interests. Humans don’t have that. I can cooperate with you guys. One of you is a Serbian. The other one is a Persian by origin. And I’m Indian by origin. We have very little blood in common, basically none.

But we still cooperate. What lets us cooperate? It’s because we can keep track of debits and credits. Who put in how much work? Who contributed how much? That’s all free market capitalism is. So, I strongly believe that it is innate to the human species, and we are going to create more and more wealth, and abundance for everybody. Everybody can be wealthy. Everybody can be retired. Everybody can be successful. It is merely a question of education and desire. You have to want it. If you don’t want it, that’s fine. Then you opt out of the game.

7 But don’t try to put down the people who are playing the game. Because that’s the game that keeps you in a comfortable warm bed at night. That’s the game that keeps a roof over your head. That’s the game that keeps your supermarkets stocked. That’s the game that keeps the iPhone buzzing in your pocket. So, it is a beautiful game that is worth playing ethically, rationally, morally, socially for the human race. It’s going to continue to make us all richer and richer, until we have massive wealth creation for anybody who wants it.

Too many takers and not enough makers will plunge a society into ruin Nivi: It’s not just individuals secretly despising wealth, right? There are countries, groups, political parties that overtly despise wealth. Or at least seem to. Naval: That’s right. What those countries, political parties, and groups are reduced to is playing the zero-sum game of status. In the process to destroy wealth creation, they drag everybody down to their level. Which is why the S. is a very popular country for immigrants because of the American dream. Anyone can come here, be poor, and then work really hard and make money, and get wealthy.

But even just make some basic money for their life. Obviously, the definition of wealth is different for different people. A First World citizen’s definition of wealth might be, "Oh, I have to make millions of dollars, and I’m completely done." Whereas to a Third World poor immigrant just entering the country, and we were poor immigrants who came here when I as fairly young, to the United States, wealth may just be a much lower number. It may just be, "I don’t have to work a manual labor job for the rest of my life that I don’t want to work."

But groups that despise it will essentially bring the entire group to that level. If you get too many takers, and not enough makers, society falls apart. You end up with a communist country. Look at Venezuela, right? They were so busy taking, and dividing, and reallocating, that people are literally starving in the streets, and losing kilograms of body weight every year just from sheer starvation. Another way to think about it is imagine an organism that has too many parasites. You need some small number of parasites to stay healthy. 8 You need a lot of symbiotes.

All the mitochondria in all of our cells that help us respirate and burn oxygen. These are symbiotes that help us survive. We couldn’t survive without them. But, to me, those are partners in the wealth creation that creates the human body. But if you just were filled with parasites, if you got infected with worms, or a virus, or bacteria that were purely parasitical, you would die. So, any organism can only withstand a small number of parasites. When the parasitic element gets too far out of control, you die. Again I’m talking about ethical wealth creation.

I’m not talking about monopolies. I’m not talking about crony capitalism. I’m not talking about mispriced externalities like the environment. I’m talking about free minds, and free markets. Small-scale exchange between humans that’s voluntary, and doesn’t have an outsized impact on others. I think that kind of wealth creation, if a society does not respect it, if the group does not respect it, then society will plunge into ruin, and darkness. 9 4. Making Money Isn’t About Luck Making money isn’t about luck. It’s about becoming the kind of person who makes money. Making money isn’t about luck 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 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.

We want to factor luck out of it. There’s four kinds of luck that we’re talking about. This came from a book. @pmarca, Marc Andreessen, wrote a blog post about it. 1. Blind luck The first kind of luck you might say is blind luck. Where I just got lucky because something completely out of my control happened. That’s fortune, that’s fate. 2. Luck from hustling Then there’s luck that comes through persistence, hard work, hustle, motion. Which is when you’re running around creating lots of opportunities, you’re generating a lot of energy, you’re doing a lot of things, lots of things will get stirred up in the dust.

10 It’s almost like mixing a petri dish and seeing what combines. Or mixing a bunch of reagents and seeing what combines. You’re generating enough force and hustle and energy that luck will find you. We, as a group, you could argue, got together because of that. Nenad had put up these great videos online, I saw them on Twitter. In that sense, he generated his own luck by creating videos until people like me keep finding him. 3. Luck from preparation A third way is that you become very good at spotting luck. If you are very skilled in a field, you will notice when a lucky break happens in that field.

When other people who aren’t attuned to it won’t notice. So you become sensitive to luck and that’s through skill and knowledge and work. 4. Luck from your unique character Then the last kind of luck is the weirdest, hardest kind. But that’s what we want to talk about. Which is where you build a unique character, a unique brand, a unique mindset, where then luck finds you. For example, let’s say that you’re the best person in the world at deep sea underwater diving. You’re known to take on deep sea underwater dives that nobody else will even attempt to dare.

Then, by sheer luck, somebody finds a sunken treasure ship off the coast. They can’t get it. Well, their luck just became your luck, because they’re going to come to you to get that treasure. You’re going to get paid for it. Now, that’s an extreme example. The person who got lucky by finding the treasure chest, that was blind luck. But them coming to you and asking you to extract it and having to give you half, that’s not luck. You created your own luck. You put yourself in a position to be able to capitalize on that luck.

Or to attract that luck when nobody else has created that opportunity for themselves. When we talk about "without getting lucky," we want to be deterministic, we don’t want to leave it to chance. In 1,000 parallel universes, you want to be wealthy in 999 of them Nivi: Do you want to elaborate a little bit more on the idea that in a 1,000 parallel universes you want to get rich in 999 of them? I think some people are going to see 11 that and say, "that sounds impossible, it sounds like it’s too good to be true."

Naval: No, I don’t think it’s impossible. I think that you may have to work a little bit harder at it given your starting circumstances. I started as a poor kid in India, so if I can make it, anybody can, in that sense. Now, obviously, I had all my limbs and I had my mental faculties and I did have an education. There are some prerequisites you can’t get past. But if you’re listening to this video or podcast, you probably have the requisite means at your disposal, which is a functioning body and a functioning mind.

And I’ve encountered plenty of bad luck along the way. The first little fortune that I made, I instantly lost in the stock market. The second little fortune that I made, or I should have made, I basically got cheated by my business partners. It’s only the third time around has been a charm. And, even then, it has been in a slow and steady struggle. I haven’t made money in my life in one giant payout. It’s always been a whole bunch of small things piling up. It’s more about consistently creating wealth by creating businesses, including opportunities and creating investments.

It hasn’t been a giant one-off thing. Wealth stacks up one chip at a time, not all at once My personal wealth has not been generated by one big year. It stacks up little bit, chips at a time. More options, more businesses, more investments, more things that I can do. Same way that someone like Nenad, illacertus, he’s building his brand online. He’s building videos. It’s not like any one video is going to suddenly shower him with riches overnight. It’s going to be a long lifetime of learning, of reading, of creating that’s going to compound.

We’re talking about getting wealthy so you can retire, so you have your freedom. Not retire in the sense that you don’t do anything. But in the sense that you don’t have to be any place you don’t want to be, you don’t have to do anything you don’t want to do, you can wake up when you want, you can sleep when you want, you don’t have a boss. That’s freedom. We’re talking about enough wealth to get to freedom. Especially thanks to the Internet these days, though, opportunities are massively abundant. I, in fact, have too many ways to make money, I don’t have enough time.

I have opportunities pouring out of my ears and the thing I keep running out of is time. 12 There's just so many ways to create wealth, to create products, to create businesses, to create opportunities, and to, as a byproduct, get paid by society that I can't even handle it all. 13 5. Make Luck Your Destiny Build your character in a way so luck becomes deterministic. 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 isn't 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 shows that people aren’t necessarily taking advantage of that kind of luck the way they should be.

Naval: I think also at that point, it starts becoming so deterministic that it stops being luck. So, the definition starts fading from luck to more destiny. So, I would characterize that fourth one as you build your character in a certain way and then your character becomes your destiny. Build your character so opportunity finds you One of the things I think that is important to making money, when you want the kind of reputation that makes people do deals through you. I use the example of like, if you’re a great diver then treasure hunters will come and give you a piece of the treasure for your diving skills.

If you’re a trusted, reliable, high-integrity, long-term thinking deal maker, then when 14 other people want to do deals but they 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 or offer you a unique deal just because of the integrity and reputation that you have built up. Warren Buffett, he gets offered deals, and he gets to buy companies, and he gets to buy warrants, and bailout banks and do things that other people can’t do because of his reputation.

But of course that’s fragile. It has accountability on the line, it has a strong brand on the line, and as we will talk about later, that comes with accountability attached. But I would say your character, your reputation, these are things that you can build that then will let you take up advantage of opportunities that other people may characterize as lucky but you know that it wasn’t luck. Nivi: You said that this fourth kind of luck is more or less a destiny. There’s a quote from that original book that was in Marc’s blog posts from Benjamin Disraeli, who I think was the former prime minister of the UK.

The quote to describe this kind of luck was, "we make our fortunes and we call them fate." You have to be a little eccentric to be out on the frontier by yourself There were a couple other interesting things about this kind of luck that were mentioned in the blog post, I think it’ll be good for the listeners to hear about is that, this fourth kind of luck can almost come out of eccentric ways that you do your things and that eccentricity is not necessarily a bad thing in this case. In fact, it’s a good thing.

Naval: Yeah, absolutely. Because the world is a very efficient place, so, everyone has dug through all the obvious places to dig and so to find something that’s new and novel and uncovered, it helps to be operating on a frontier. Where right there you have to be a little eccentric to be out on the frontier by yourself, and then you have to be willing to dig deeper than other people do, deeper than seems rational just because you’re interested. Nivi: Yeah, the two quotes that I’ve seen that express this kind of luck in addition to that Benjamin Disraeli one, are this one from Sam Altman where he said, "extreme people get extreme results."

I think that’s pretty nice. And then there’s this other one from Jeffrey Pfeffer, who is a professor at Stanford that, "you can’t be normal and expect abnormal returns." I’ve always enjoyed that one too. 15 Naval: Yeah. And one quote that I like which is the exact opposite of that is, “play stupid games win stupid ” A lot of people spend a lot of their time playing social games like on Twitter where you’re trying to improve your social standing and you basically win stupid social prizes which are worthless. Nivi: I guess the last thing that I have from this blog post is the idea that by pursuing these kinds of luck especially the last one, basically everything but dumb luck, by pursuing them you essentially run out of unluck.

So, if you just keep stirring the pot and stirring the pot, that alone you will run out of unluck. Naval: Yeah, or it could just be reversion to the mean. So, then you at least neutralized luck so that it’s your own talents that come into play. 16 6. You Won’t Get Rich Renting Out Your Time You won’t get rich renting out your time, because you can’t earn non-linearly. 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.

So, what that means is 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 non-linearly. If you look at even doctors who get rich, like really rich, it’s because they open a business. They open like a private practice. And that private practice builds a brand, and that brand attracts people. Or they build some kind of a medical device, or a procedure, or a process with an intellectual property. So, essentially you’re working for somebody else, and that person is taking on the risk, and has the accountability, and the intellectual property, and the brand.

So, they’re just not gonna pay you enough. They’re gonna pay you the bare minimum that they have to, to get you to do their job. And that can be a high bare minimum, but it’s still 17 not gonna be true wealth where you’re retired. Renting out your time means you’re essentially replaceable And then finally you’re actually just not even creating that much original for society. Like I said, this tweetstorm should have been called "How to Create Wealth." It’s just "How to Get Rich" was a more catchy title. But you’re not creating new things for society.

You’re just doing things over and over. And you’re essentially replaceable because you’re now doing a set role. Most set roles can be taught. If they can be taught like in a school, then eventually you’re gonna be competing with someone who’s got more recent knowledge, who’s been taught, and is coming in to replace you. You’re much more likely to be doing a job that can be eventually replaced by a robot, or by an AI. And it doesn’t even have to be wholesale replaced over night. It can be replaced a little bit at a time.

And that kind of eats into your wealth creation, and therefore your earning capability. So, fundamentally your inputs are matched to your outputs. You are replaceable, and you’re not being creative. I just don’t think that, that is a way that you can truly make money. You must own equity to gain your financial freedom So everybody who really makes money at some point owns a piece of a product, or a business, or some kind of IP. That can be through stock options, so you can be working at a tech company. That’s a fine way to start.

But usually the real wealth is created by starting your own companies, or by even investors. They’re in an investment firm, and they’re buying equity. These are much more the routes to wealth. It doesn’t come through the hours. You want a career where your inputs don’t match your outputs You really just want a job, or a career, or a profession where your inputs don’t match your outputs. If you look at modern society, again this is later in the tweetstorm. Businesses that have high creativity and high leverage tends to be ones where you could do an hour of work, and it can have a huge effect.

Or you can do 1,000 hours of work, and it can have no effect. For example, look at software engineering. One great engineer can for example create 18 bitcoin, and create billions of dollars worth of value. And an engineer who is working on the wrong thing, or not quite as good, or just not as creative, or thoughtful, or whatever, can work for an entire a year, and every piece of code they ship ends up not getting used. Customers don’t want it. That is an example of a profession where the input and the outputs are highly disconnected.

It’s not based on the number of hours that you put in. Whereas on the extreme other end, if you’re a lumberjack, even the best lumberjack in the world, assuming you’re not working with tools, so the inputs and outputs are clearly connected. You’re just using an ax, or a saw. You know, the best lumberjack in the world may be like 3x better than one of the worst lumberjacks, right? It’s not gonna be a gigantic difference. So, you want to look for professions and careers where the inputs and outputs are highly disconnected.

This is another way of saying that you want to look for things that are leveraged. And by leveraged I don’t mean financial leveraged alone, like Wall Street uses, and that has a bad name. I’m just talking about tools. We’re using tools. A computer is a tool that software engineers use. If I’m a lumberjack with bulldozers, and automatic robot axes, and saws, I’m gonna be using tools, and have more leverage than someone who is just using his bare hands, and trying to rip the trees out by the roots. Tools and leverage are what create this disconnection between inputs and outputs.

Creativity, so the higher the creativity component of a profession, the more likely it is to have disconnected inputs and outputs. So, I think that if you’re looking at professions where your inputs and your outputs are highly connected, it’s gonna be very, very, hard to create wealth, and make wealth for yourself in that process. 19 7. Live Below Your Means for Freedom People living far below their means enjoy a freedom that people busy upgrading their lifestyles just can’t fathom. 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. And I think that’s very important, just to not upgrade your lifestyle all the time. To maintain your freedom. And it just gives you freedom of operation. You basically, once you make a little bit of money, you still want to be living like your old self, so that just the worry goes away.

So, don’t run out to upgrade that house, and lifestyle, and all that stuff. The most dangerous things are heroin and a monthly salary Let’s say you’re getting paid $1,000 an hour. The problem is, is that when you go into a work lifestyle like that, you don’t just suddenly go from making $20 an hour to making $1,000 an hour. That’s a progression over a long career. And as that happens, one subtle problem is that you upgrade your lifestyle as you make more, and more money. And that upgrading of the lifestyle kind of ups what you consider to be wealth, and you stay in this wage slave trap.

So, I forget who said it, maybe it was Nassim Taleb. But he said, "The most dangerous things are heroin, and a monthly salary." Right, because they are highly addictive. The 20