Takeaway
- To build wealth, you need leverage. Media and technology are effective leverage.
- If you need a degree for it, it won’t make you rich.
- Specific knowledge is the best type of knowledge. It’s knowledge you acquire through experience.
- Happiness is a choice.
- The most important things in life are happiness, health, and wealth.
Table of Contents
What The Almanack of Naval Ravikant Talks About
The Almanack of Naval Ravikant is a book written by Eric Jorgenson. It talks about the philosophy of life and business of Naval Ravikant. I learned that peace of mind is extremely important for happiness, and that leverage (technology) is what enables you to make a huge amount of money in a short amount of time.
I didn’t expect much from it before reading but it was surprisingly good.
I enjoyed the part on building wealth and the insistence on leverage.
The part on happiness was less interesting because most of what it says is already known.
This book contains a lot of wisdom and will remind you of what truly matters in life.
8/10.
Summary of The Almanack of Naval Ravikant, by Eric Jorgenson
Part I: Wealth
Building Wealth
Understand How Wealth Is Created
Building wealth is a skill anyone can acquire. It has more to do with what to do than with how hard you work. Hard work is important, but it’s working hard on the right things that creates wealth.
Focus on what you can leverage, and how.
Here’s how to get rich without getting lucky:
- Seek wealth = assets that make money while you sleep.
- Ignore status, and people seeking it.
- Give society what society wants but cannot yet get. Scale it.
- Play long-term games with long-term people.
- Play iterated games, where what you do compounds over time.
- Partner with smart people with intelligence, energy, integrity, and that are not cynics or pessimists.
- Learn to sell and/or to build.
- Get accountability, and specific knowledge (SK) by following your curiosity and passion. This is knowledge you cannot be trained for. If you can be trained, you can be replaced. SK is often creative, or highly technical.
- Get leverage: leverage comes from capital, products, and people. You need permission to get people and capital. You don’t to get products (you just make them).
- Use data.
- There are no skills called “business”. Avoid magazines and classes.
- Reading > listening. Doing > watching.
- Work as hard as you can.
- Become the best in the world at what you do.
- There are no get-rich-quick schemes.
- Specific knowledge + leverage = what you desire.
Wealth are assets, “things” that make money for you while you sleep. These things serve society, and are often technology.
Why? Because technology enables society to get something it does not yet know how to get.
Once you have built something that helps society, then you need to scale it. The more you scale, the more value you provide, the richer you become.
Find and Build Specific Knowledge
These are skills that aren’t taught, but learned through practice, and for which you can be hardly replaceable.
Most of life is searching for who and what needs you the most.
Society is where it is today thanks to science, which enabled -> technology -> society, business, and money.
Specific knowledge is found in pursuing your innate talents and genuine curiosity. It is not doing what people are telling you to do.
Specific knowledge is at the edge of knowledge.
And the best specific knowledge is the one you get for being who you are – since you are nobody else.
-> Escape competition through authenticity.
The most important skill for getting rich is constant learning.
Foundations are must-haves to learn well. Always start with the basics.
Foundations are:
- Basic arithmetic
- Basic speaking and expression
- Basic persuasion
Play Long-Term Games With Long-Term People
CEOs are CEOs because people trust them, because of the way they have behaved over the years.
In this realm, intentions don’t matter. Actions do.
99% of efforts are wasted. Everything you learned at school is not things you are using again. It’s been wasted.
By this token, only about 1% of the effort that you make pays off.
-> what you should be trying to do is to find this 1%, and go all-in.
Don’t date people you wouldn’t marry. Don’t learn something you’re not going to use.
Once you find the 1%, go all-in, and forget about the rest.
Take on Accountability
Embrace accountability, and take business risks under your own name. Society will reward you with responsibility, equity, and leverage.
To get rich, you need leverage such as labor, capital, or products (code, media, a factory, etc).
Capital and labor can’t be acquired like that, you need someone else to give it to you.
-> you need to build credibility.
You need to be accountable, otherwise, you don’t have incentives.
Don’t be afraid to fail in public.
When you take risks, sometimes you fail and pay the price, but sometimes, you get big rewards.
We’re still wired to avoid risks like in the pre-historic time, but technically, the downside risk in our society isn’t that hard.
There is not so much to fear in terms of failure -> people should take on more accountability,
Build or Buy Equity in a Business
The only path towards financial freedom is to own a piece of a business.
Why?
Because wage work is selling your time -> no passive income possible.
When you are:
- Sleeping
- On holidays
- Retired
-> you are not earning any money.
Employers de facto try to pay their employees minimum wage.
A business is different.
A business still works when you are on vacation -> passive income possible.
Real wealth is created by starting your own business.
Find a Position of Leverage
We live in a world with infinite leverage which rewards intellectual curiosity, which is a much better foundation than the “hot thing” of the moment.
If it entertains you now but will bore you someday, it’s a distraction.
It’s important to do things for their own sake, as this is when you do your best work and get your best result.
The year Naval made the most money was the year he worked the least hard, and the year he cared the less about the future.
The less you want something, the less you’re thinking about it, the less you are obsessing about it, the more you are going to do it in a natural way.
Society rewards you when you give it what it wants and doesn’t know where to get anywhere else.
Making money = giving society what it wants + at scale.
Problem -> you need to be good at that (usually has something to do with tech).
Three types of leverage.
- People: the worst type.
- Money: the way people became rich mainly in the 20th century (Buffett etc). It scales well.
- Products that replicate with zero costs: software, ebooks, movies
-> the world is now divided between leveraged VS unleveraged.
Products that replicate easily are the best form of leverage.
- It is where all of the rich people are made.
- It is permissionless. All you need is a computer.
-> you’re not going to get rich renting out your time.
Always optimize for independence rather than pay.
Independence + accountability to your output = dream.
Humans evolved in societies with no leverage.
Now, we have it. You want to use it as much as possible.
One engineer writing the right piece of code VS 10 engineers not writing the right piece of code.
What you’re looking through leverage is to be in control of your time and only be judged on your output.
When you do only the work itself, you’re going to be much more productive.
40 hours workweek is a relic of the industrial age. Workers now work like athletes: sprint, then rest.
You want a “job” where your input is disconnected from your output due to leverage.
If you want to be part of a great tech company, learn to sell, or learn to build -> earn with your mind, not with your time.
The more risk, accountability, specific knowledge, and leverage -> the more money.
Get Paid for Your Judgement
Judgment demonstrated with high accountability, integrity, and a clear track record is critical.
Get the work done by robots, and get paid for your judgment, your specific knowledge.
Prioritize and Focus
The author explains he never suddenly made a lot of money in his life. It’s always been slow, one small step after another.
No one is going to value you more than you value yourself.
Always factor your time into every decision. If you value your time at $500, never do anything that you’d think is worth less.
If you can outsource something for less than $500, outsource it.
Set an outrageously high hourly rate for yourself and stick to it.
People play two games in life: the money game, and the status game.
But because they’re not trained to get money, they hate it, and make it seem evil instead.
So, they’re playing the status game instead, which is a zero-sum game, and doesn’t deliver any value.
Play stupid games, win stupid prizes.
There are three big decisions you can make in your life.
- Where you live.
- Who you hang out with.
- What you do.
How to surround yourself with successful people: figure out what you are good at and help other people with it.
Find Work That Feels Like Play
We used to be hunter-gatherers. The world only became hierarchical with the invention of agriculture.
We used to have fun all day every day. Now, less. Find work that feels like play.
Most of what we do, we do it as a means to an end. We work to make money, we make money to buy stuff, we buy stuff to, etc.
What if we did things for their own sake, instead of playing these money, school, and status games?
The outcome of these games stops mattering once you see through the game.
-> what you want is freedom.
Once you’re free from making money, you create businesses for their own sake: you become an artist.
The side effect is that you just become much better at business.
Lusting for money is bad for you because it doesn’t end. You always want more, and you become afraid to lose what you have.
The way to protect yourself against that is to not upgrade your lifestyle.
If you measure money in terms of freedom, you’ll be protected.
Once money becomes more of a burden than a key to freedom, you know you have to stop.
Getting Lucky
There are four types of luck.
- Blind luck (lottery winner).
- Luck through persistence.
- Spotting luck, and hop on the ride.
- The luck that finds you thanks to your skills (be the best at what you do).
Get a reputation so that people seek you to make deals happen.
Business networking is a complete loss of time. If you are delivering value, people will want to meet you.
Be careful about doing things you won’t be proud of.
Be Patient
Great people have great outcomes.
You just need to be patient. It never happens in the timescale you want.
You just have to keep working and keep working. Don’t count the hours or you will lose your patience.
Your real resume is just a catalog of all of your suffering.
All of the interesting things you’ve made will all be around the sacrifices you have made.
First, make some money.
In the past, people that wanted to find peace gave up everything to retire in a monastery.
Today, people that want to find peace give themselves the freedom (enough money to live without working) then go find it.
Building Judgment
There is no shortcut to smart.
Judgment
If you want to make the maximum amount of money possible, stay on the bleeding edge of trends and study technology, design, and art.
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 overrated. Judgment is underrated.
Wisdom is knowing the long-term consequences of your actions.
Wisdom applied to external problems is judgment.
Leverage + the right decision = great results.
While you do need to work hard, working hard on the right thing is much better. Working hard on the wrong thing will lead you nowhere.
How to Think Clearly
Real knowledge is intrinsic and is built from the ground up. People that use big concepts and big words don’t understand what they are talking about.
-> if you can’t explain it to a child, then you don’t know what you are talking about.
-> really smart thinkers are clear thinkers.
Understand the basics well first before jumping on more difficult stuff.
-> clear thinkers appeal to their authority.
Take time during the week to think.
Shed Your Identity to See Reality
Any belief you got from a package, like a religion, or a political ideology, is suspect, and should be reevaluated.
Don’t label yourself from an ideology, as you may end up defending stuff you don’t really agree on, because you need to be congruent with your self-imposed identity.
Learn the Skills of Decision-Making
Don’t lie. When you tell lies, you also lie to yourself and start believing your lie, which will disconnect you from who you are.
Decision-making everything.
If you manage 1 billion, and are right 55% of the time instead of 50%, that’s a 50 million difference.
The more you know, the less you diversify.
Collect Mental Models
You don’t want to predict based on memories.
You want principles.
Evolution, game theory, Charlie Munger, and Nassim Taleb have great mental models.
You need to understand:
- Complexity
- Compound interest
- Micro economy
- Basic math
- Black swans
- Calculus
- Falsifiability
When faced with a difficult choice such as:
- Should I marry this person?
- Should I take this job?
- Should I buy a house?
- Should I move to this city?
- Should I go into business with this person?
If you can’t decide, the answer is no.
If you start weighing pros and cons…the answer is no.
If you have two choices, an easy option, and a hard one, take the hard one in the short term.
The best way to build new mental models is to read a lot.
If you don’t like a book, or if it’s not satisfactory, skim it, speed read, or abandon it altogether. As you know more, you’ll leave more books unfinished.
Most books expose their main idea in a few chapters, then apply it to everything.
If you got the idea, not need to read the rest.
If they wrote the book to make money, don’t read it.
To have a great foundation, read math and science books. For the rest, you don’t really know what’s true, and what isn’t.
Start with the original philosopher of the discipline. Darwin before Dawkins, Adam Smith before Thomas Sowell, etc.
If you’re a perpetual learning machine, then you will never run out of options on how to make money.
Any book that has survived for long has more chances to have general principles which are true (Lindy effect). Read them.
Part II: Happiness
The most important in life are:
- Wealth
- Health
- Happiness
We pursue them in that order, but their importance is reversed.
Happiness seems to be a skill. It also depends on a lot of people.
For some, it’s a flow state. For others, it’s a satisfaction.
Happiness is a default state. It is what you feel when nothing is missing. Happiness is the absence of desire for external things.
Happiness is enjoying the present moment without realizing it we’re enjoying it.
Happiness is how you interpret the world -> happiness is a choice. If it’s a choice, it is something you can work on.
Happiness is not seeking any external validation. It is lowering expectations, lowering the ego, lowering the importance you are giving to yourself.
Your brain is naturally focused on the past or future. This keeps you from having amazing experiences.
Happiness Requires Peace
Happiness is hindered when we are not present, and always thinking about the next thing, the next place to go, etc.
If you sit down to do nothing, you can’t do it, because there is anxiety.
A happy person isn’t happy all the time.
Every Desire Is a Chosen Unhappiness
Most people think external things will make them happy. It’s a mistake to think it.
Unfortunately, we are addicted to desiring.
-> the idea that changing something in the outside world is going to bring you peace is wrong.
Because no, you won’t be happy “when you get that”.
Desire is a contract you make with yourself to be unhappy until you get what you want.
It is, by the way, much better to really perfect your desires instead of running after something you don’t really want.
Success Does not Earn Happiness
Happiness is being satisfied with what you have. Success comes from dissatisfaction. Choose.
In general, humans get used to their lifestyle, any upgrade doesn’t especially make you happier.
-> happiness comes from the inside.
Evolution put up on the work treadmill. Know when to jump off it and play instead.
The real successful are those who get out of the game entirely, and rise above it.
If you can sit in a room by yourself for 30 minutes and be at peace then you are happy.
The irony is that most people actually seek happiness through war (business, etc).
Envy Is the Enemy of Happiness
Society is pushing a lot of desires onto you. You should eliminate them and pursue only what makes you happy.
You should never say “I should”, because it means it doesn’t make you happy.
Life is a single-player game. You’re born alone, and you will die alone.
You should seek to get rid of jealousy, as it doesn’t bring anything positive into your life.
The key is to realize that jealousy towards somebody means you want everything they have.
It’s rarely the case. Then, there is no point in being jealous.
Happiness Is Built by Habit
Surround yourself with people more successful and happier than you.
No sugar, no alcohol, no caffeine, no social media, no video game will make you happier in the long term.
Replace your bad habits with good ones.
About relationships, only be friend or work with people you see yourself working or being friend with for life.
Happiness Habits
- Meditation
- Working towards a specific purpose
- Looking at the positive
- Getting sunlight
- Working out
The more secrets you have, the less happy you’ll be.
Screen activities lead to less happiness.
Find Happiness in Acceptance
You always have three choices: you can change things, accept, or leave them.
Choose one of them. If it’s change, make sure you can actually change it.
Saving Yourself
Doctors won’t make you healthy.
Nutritionists won’t make you slim.
Teachers won’t make you smart.
Gurus won’t make you calm.
Mentors won’t make you rich.
Trainers won’t make you fit.
All of these are your responsibility. Save yourself.
Choose to be yourself
Do what you want to do – not others.
Choosing to care for yourself
Your own health should be your priority.
Don’t mix sugar and fat together in your diet.
Make the difficult choices now so you are healthy later.
Meditation + Mental Strength
Meditation is fasting for the mind.
Take cold showers.
Most of the suffering comes from avoidance in life.
Keep an eye on your internal monologue.
Choosing to Build Yourself
The greatest superpower is the ability to change yourself.
Habits are everything we are. Change your habits, change yourself.
Anything you want to do, just get it done, and do so as quickly as possible.
Impatience with actions and patience with results.
Choosing to Grow Yourself
“Set up systems, not goals”.
Create an environment where you are statistically likely to succeed.
If there is something you want to do later, do it now. There is no later.
The best way to learn about new subjects is to get the basics.
The most important principle is read. Read math and persuasion.
Choosing to Free Yourself
The hardest thing is not doing what you want, it is knowing what you want.
There are no “adults”. Everyone is lost and tries to figure it out as they go.
Courage is not caring about what other people think.
Value your time. If you don’t want to be somewhere, leave.
Your time is the only thing you have.
Don’t spend it making other people happy.
Philosophy
The real truths are heresies. They cannot be spoken.
Only discovered. Whispered, perhaps read.
The Meanings of Life
The meaning of life has three answers.
- It’s personal. You have to find your own meaning.
- There is no meaning, nor purpose to life. You have to create your own.
- We’re just getting more towards a state where each of us, part of the same whole, will be together.
Live by Your Values
Naval has for core values.
- Honesty
- No short-term thinking
- Peer relationships only – no hierarchy
- No anger
- Find people that have similar values
Rational Buddhism
It’s Buddhism reconciled with science, the evolutionary part of it, at least.
Wisdom is understanding the long-term consequences of your actions.
The Present is All We Have
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Books Recommended by Naval Ravikant
Sapiens: A Brief History of Humankind by Yuval Noah Harari
The Rational Optimist: How Prosperity Evolves by Matt Ridley and everything else he has written.
Skin in the Game by Nassim Taleb
The Bed of Procrustes: Philosophical and Practical Aphorisms by Nassim Taleb
Six Easy Pieces: Essentials of Physics Explained by Its Most Brilliant Teacher by Richard Feynman
The Thing Explainer: Complicated Stuff in Simple Words by Randall Munroe
Thinking Physics: Understandable Practical Reality by Lewis Carroll Epstein
The Lessons of History by Will & Ariel Durant
The Sovereign Individual: Mastering the Transition to the Information Age by James Dale Davidson and Lord William Rees-Mogg
Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger by Charlie Munger (edited by Peter Kaufman)
Reality Is Not What It Seems: The Journey to Quantum Gravity by Carlo Rovelli
Seven Brief Lessons in Physics by Carlo Rovelli
The Beginning of Infinity: Explanations That Transform the World by David Deutsch
The Compleat Strategyst: Being a Primer on the Theory of Games of Strategy by J.D. Williams
The Evolution of Cooperation by Robert Axelrod.
And more that you can find here.
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