Almanack of Naval

Created by Rishabh Srivastava, Founder of Loki.ai

This summary was largely done for my own note-taking, sharing it just in case it adds more value to other people.

I have no affiliation whatsoever with anyone in this note. This is a summary largely taken for my own reference, and may contain errors :)

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Almanack of Naval Ravikant

This book collects and curates Naval's wisdom from Twitter, Podcasts, and Essays over the past decade. The wisdom of Naval Ravikant, created and edited by Eric Jorgenson, with Illustrations by Jack Butcher, and a Foreword by Tim Ferriss.

http://navalmanack.com

Why is it important: It has mental models and frameworks that one can use to make better decisions

Keywords

Self Management, Productivity, Decision Making, Naval

Summary

Building wealth

Wealth = Accountability + Leverage + Specific Knowledge

Accountability

Build a personal brand

Have a personal platform where you show your work, and implicit values

Take risks publicly and show people the results of those risks

Leverage

People (people who help and and work for you)

Capital (money that you can use to accelerate your ideas)

Products with no marginal cost of reproduction (Intellectual Property)

Specific Knowledge

Knowing how to do something society cannot yet easily train people to do

General approach

Pick an industry where you can play long-term games with long-term people.

Play iterated games. All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest.

Figure out the point of maximum leverage to actually create wealth and capture some of that created wealth.

Learn to sell. Learn to build. If you can do both, you will be unstoppable.

Apply specific knowledge, with leverage, and eventually you will get what you deserve. “All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest.”

Specifics

Invest deeply. 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. What you’re trying to do is find the thing you can go all-in on to earn compound interest.

Spend more time making the big decisions. We waste our time with short-term thinking and busywork. Warren Buffett spends a year deciding and a day acting. That act lasts decades.

Build a personal brand. Figure out what you’re good at, figure out how to show your work, and start helping other people with it. Give it away. Pay it forward. Eventually, you'll get the benefits back manifold. Show your craft, practice your craft, and the right people will eventually find you.

Be patient. Great people have great outcomes. You just have to be patient. Apply specific knowledge with leverage and eventually, you will get what you deserve.

Cultivating Happiness

Make tradeoffs. Desire is a contract you make with yourself to be unhappy until you get what you want. Happiness is being satisfied with what you have. Success comes from dissatisfaction. Choose.

My number one priority is my physical health. Second, it's my mental health. Third, it's my spiritual health. Then, it's my families health. Then, it's my family's wellbeing. Then, I deal with the rest of the world.

Make time for the important things. “I don’t have time” is just another way of saying “It’s not a priority.”

Realize that we are really far up Maslow’s hierarchy of needs, and life is pretty good.

Highlights (this is mostly for my own reference – feel free to skip this)

Intro

Tweets, podcasts, and interviews quickly get buried and lost. Valuable knowledge deserves a more permanent, accessible format

My mother uniquely provided, against the background of hardship, unconditional and unfailing love. If you have nothing in your life, but you have at least one person that loves you unconditionally, it’ll do wonders for your self-esteem.

Building Wealth

Making money is not a thing you do—it’s a skill you learn.

It’s not really about hard work. You can work in a restaurant eighty hours a week, and you’re not going to get rich. 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.

Figure out the point of maximum leverage to actually create wealth and capture some of that created wealth.

Seek wealth, not money or status. Wealth is having assets that earn while you sleep. Money is how we transfer time and wealth. Status is your place in the social hierarchy.

Understand ethical wealth creation is possible. If you secretly despise wealth, it will elude you.

You’re not going to get rich renting out your time. You must own equity—a piece of a business—to gain your financial freedom. You will get rich by giving society what it wants but does not yet know how to get. At scale.

Pick an industry where you can play long-term games with long-term people.

Play iterated games. All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest.

Pick business partners with high intelligence, energy, and, above all, integrity. Don’t partner with cynics and pessimists. Their beliefs are self-fulfilling.

Learn to sell. Learn to build. If you can do both, you will be unstoppable.

Society will pay you for creating things it wants. But society doesn’t yet know how to create those things,

if you want to be wealthy, you want to figure out which one of those things you can provide for society that it does not yet know how to get but it will want and providing it is natural to you, within your skill set, and within your capabilities.

Building Skills

Arm yourself with specific knowledge, accountability, and leverage.

Specific knowledge is often highly technical or creative. It cannot be outsourced or automated.

Fortunes require leverage. Business leverage comes from capital, people, and products with no marginal cost of replication (code and media).

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.

Work as hard as you can. Even though who you work with and what you work on are more important than how hard you work.

Become the best in the world at what you do. Keep redefining what you do until this is true.

Apply specific knowledge, with leverage, and eventually you will get what you deserve.

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

Specific knowledge cannot be taught, but it can be learned.

No one can compete with you on being you. Most of life is a search for who and what needs you the most.

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.

Specific knowledge is found much more by pursuing your innate talents, your genuine curiosity, and your passion. It’s not by going to school for whatever is the hottest job; it’s not by going into whatever field investors say is the hottest.

If you’re not 100 percent into it, somebody else who is 100 percent into it will outperform you. And they won’t just outperform you by a little bit—they’ll outperform you by a lot because now we’re operating the domain of ideas, compound interest really applies and leverage really applies.

“Escape competition through authenticity.” Basically, when you’re competing with people, it’s because you’re copying them. It’s because you’re trying to do the same thing. But every human is different. Don’t copy.

The most important skill for getting rich is becoming a perpetual learner. You have to know how to learn anything you want to learn. The old model of making money is going to school for four years, getting your degree, and working as a professional for thirty years. But things change fast now.

“All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest.”

Building Reputation and relationships

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.

Intentions don’t matter. Actions do. That’s why being ethical is hard.

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.

what you’re trying to do is find the thing you can go all-in on to earn compound interest.

to get these things, you have to build credibility, and you have to do it under your own name as much as possible, which is risky. So, accountability is a double-edged thing. It allows you to take credit when things go well and to bear the brunt of the failure when things go badly.

Warren Buffett wins here because he has massive credibility. He’s been highly accountable. He’s been right over and over in the public domain. He’s built a reputation for very high integrity, so you can trust him. People will throw infinite leverage behind him because of his judgment. Nobody asks him how hard he works. Nobody asks him when he wakes up or when he goes to sleep. They’re like, “Warren, just do your thing.”

Building Leverage

Build or Buy Equity in a Business. If you don’t own a piece of a business, you don’t have a path towards financial freedom.

Find a Position of Leverage. We live in an age of infinite leverage, and the economic rewards for genuine intellectual curiosity have never been higher. Following your genuine intellectual curiosity is a better foundation for a career than following whatever is making money right now.

I only really want to do things for their own sake. That is one definition of art. Whether it’s business, exercise, romance, friendship, whatever, I think the meaning of life is to do things for their own sake. Ironically, when you do things for their own sake, you create your best work.

Follow your intellectual curiosity more than whatever is “hot” right now. If your curiosity ever leads you to a place where society eventually wants to go, you’ll get paid extremely well.

You build your brand in the meantime on Twitter, on YouTube, and by giving away free work. You make a name for yourself, and you take some risk in the process. When it is time to move on the opportunity, you can do so with leverage—the maximum leverage possible.

There are three broad classes of leverage: One form of leverage is labor—other humans working for you. It is the oldest form of leverage, and actually not a great one in the modern world. Money is good as a form of leverage, and is the second form. It means every time you make a decision, you multiply it with money. It scales very, very well. If you get good at managing capital, you can manage more and more capital much more easily than you can manage more and more people. 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.

Probably the most interesting thing to keep in mind about new forms of leverage is they are permissionless. They don’t require somebody else’s permission for you to use them or succeed. For labor leverage, somebody has to decide to follow you. For capital leverage, somebody has to give you money to invest or to turn into a product. Coding, writing books, recording podcasts, tweeting, YouTubing—these kinds of things are permissionless. You don’t need anyone’s permission to do them, and that’s why they are very egalitarian.

Whenever you can in life, optimize for independence rather than pay. If you have independence and you’re accountable on your output, as opposed to your input—that’s the dream.

If it entertains you now but will bore you someday, it’s a distraction. Keep looking.

Each level has increasing leverage, increasing accountability, increasingly specific knowledge. You’re adding in money-based leverage on top of labor-based leverage. Adding in code-based leverage on top of money and labor allows you to actually create something bigger and bigger and get closer and closer to owning all the upside, not just being paid a salary.

Building Judgement

The one thing you have to avoid is the risk of ruin. Avoiding ruin means stay out of jail. So, don’t do anything illegal. It’s never worth it to wear an orange jumpsuit. Stay out of total catastrophic loss. Avoiding ruin could also mean you stay out of things that could be physically dangerous or hurt your body. You have to watch your health.

I would love to be paid purely for my judgment, not for any work. I want a robot, capital, or computer to do the work, but I want to be paid for my judgment.

I think every human should aspire to being knowledgeable about certain things and being paid for our unique knowledge. We have as much leverage as is possible in our business, whether it’s through robots or computers or what have you. Then, we can be masters of our own time because we are just being tracked on outputs and not inputs.

Judgment—especially demonstrated judgment, with high accountability and a clear track record—is critical.

We waste our time with short-term thinking and busywork. Warren Buffett spends a year deciding and a day acting. That act lasts decades.

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.

I would argue with my girlfriends, and even today it’s my wife, “I don’t do that. That’s not a problem that I solve.” I still argue that with my mother when she hands me little to-do’s. I just don’t do that. I would rather hire you an assistant. This was true even when I didn’t have money

Career Advice and Money

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. If you’re going to live in a city for ten years, if you’re going to be in a job for five years, if you’re in a relationship for a decade, you should be spending one to two years deciding these things. These are highly dominating decisions. Those three decisions really matter.

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.

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.

You make money to solve your money and material problems. I think the best way to stay away from this constant love of money is to not upgrade your lifestyle as you make money. It’s very easy to keep upgrading your lifestyle as you make money. But if you can hold your lifestyle fixed and hopefully make your money in giant lump sums as opposed to a trickle at a time, you won’t have time to upgrade your lifestyle

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.

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.

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. Let’s get you rich first. I’m very practical about it because, you know, Buddha was a prince. He started off really rich, then he got to go off in the woods.

How to get lucky

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. This is when you’re running around creating opportunities. You’re generating a lot of energy, you’re doing a lot to stir things up. It’s

A third way is you become very good at spotting luck. If you are very skilled in a field, you will notice when a lucky break happens in your field, and other people who aren’t attuned to it won’t notice. So, you become sensitive to 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’re building something interesting, you will always have more people who will want to know you. Trying to build business relationships well in advance of doing business is a complete waste of time.

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

Be Patient

One thing I figured out later in life is generally (at least in the tech business in Silicon Valley), great people have great outcomes. You just have to be patient. Apply specific knowledge with leverage and eventually, you will get what you deserve.

Building Judgement - part 2

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

Hard work is really overrated. How hard you work matters a lot less in the modern economy. What is underrated? Judgment. Judgment is underrated.

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.

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

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.

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.

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.

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.

Principal Agent Problem

Julius Caesar famously said, “If you want it done, then go. And if not, then send.” What he meant was, if you want it done right, then you have to go yourself and do it. When you are the principal, then you are the owner—you care, and you will do a great job. When you are the agent and you are doing it on somebody else’s behalf, you can do a bad job. You just don’t care. You optimize for yourself rather than for the principal’s assets.

If you can’t decide, the answer is no.

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

What are the most efficient ways to build new mental models? Read a lot—just read. Reading science, math, and philosophy one hour per day will likely put you at the upper echelon of human success within seven years.

Explain what you learned to someone else. Teaching forces learning.

If you’re a perpetual learning machine, you will never be out of options for how to make money. You can always see what’s coming up in society, what the value is, where the demand is, and you can learn to come up to speed.

On happiness

Happiness is there when you remove the sense of something missing in your life.

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,

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.

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.

I think a lot of us have this low-level pervasive feeling of anxiety. If you pay attention to your mind, sometimes you’re just running around doing your thing and you’re not feeling great, and you notice your mind is chattering and chattering about something. It’s most obvious if you ever just sit down and try and do nothing, nothing. I mean nothing, I mean not read a book, I mean not listen to music, I mean literally just sit down and do nothing. You can’t do it, because there’s anxiety always trying to make you get up and go, get up and go, get up and go.

The fundamental delusion: There is something out there that will make me happy and fulfilled forever. Desire is a contract you make with yourself to be unhappy until you get what you want.

Success Does Not Earn Happiness. Happiness is being satisfied with what you have. Success comes from dissatisfaction. Choose.

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.

If you can’t see yourself working with someone for life, don’t work with them for a day.

Choose to Care for Yourself. My number one priority in life, above my happiness, above my family, above my work, is my own health. It starts with my physical health. Second, it’s my mental health. Third, it’s my spiritual health. Then, it’s my family’s health. Then, it’s my family’s wellbeing. After that, I can go out and do whatever I need to do with the rest of the world.

“I don’t have time” is just another way of saying “It’s not a priority.” What you really have to do is say whether it is a priority or not. If something is your number one priority, then you will do it. That’s just the way life works. If you’ve got a fuzzy basket of ten or fifteen different priorities, you’re going to end up getting none of them.

If you stop talking to yourself for even ten minutes, if you stop obsessing over your own story, you’ll realize we are really far up Maslow’s hierarchy of needs, and life is pretty good.

Over time, you will resolve a lot of these deep-seated unresolved things you have in your mind. Once they’re resolved, there will come a day when you sit down to meditate, and you’ll hit a mental “inbox zero.” When you open your mental “email” and there are none, that is a pretty amazing feeling.