Naval Ravikant wrote one of the most popular Twitter threads ever.
It completely changed how I think about building wealth.
I still have a lot to learn, but since then, I’ve built a 6-figure solo creator business and gained freedom over my time and location.
I’ve also consumed almost all of Naval’s videos and podcasts, I’ve read his book multiple times, and I’ve taken notes along the way.
In this article, I’ll share the 8 most valuable lessons I learned so that you can also get rich without getting lucky. Let’s begin.
1. Play Compounding Games
All the returns in life, whether in health, relationships, or knowledge, come from compound interest. Pick an industry where you can play long-term games with long-term people.
– Naval Ravikant
Compounding is incredibly powerful.
You don’t just get a little bit more results if you stick with something. You get a lot more results if you keep doing the same thing and keep getting better at it.
The problem with most people is that they get distracted easily.
They start something new, and they’re very excited about it. But then something else comes up, and they switch direction.
You want to avoid this by picking a path and staying on it unless you’re sure that it’s no longer the right one for you.
And you want to find the right people to work with as well.
According to Naval, these people should have three traits:
Intelligence: You want them to be smart
Energy: You want them to be energetic and disciplined
Integrity: You want them to be honest and trustworthy
Without intelligence, they’re incompetent. Without energy, they’re lazy. And without integrity, they’re not trustworthy.
You need to make sure they have all three traits.
Those are the people you can play long-term games with.
2. Develop Specific Knowledge
Specific knowledge is knowledge that you cannot be trained for. If society can train you, it can train someone else and can replace you. It’s often highly technical or creative. It cannot be outsourced or automated.
– Naval Ravikant
A great example to illustrate this is when Warren Buffett, one of the best investors in the world, asked Benjamin Graham, the author of The Intelligent Investor, if he could work for him for free.
To which Graham replied:
“You’re overpriced.”
This may sound odd, but it actually makes sense.
The time, effort, and work from Buffett would be valuable to Graham, but Graham would be giving him knowledge that would be worth a lot more than what he’d be getting in return.
That’s how valuable specific knowledge is.
Building specific knowledge will feel like play to you but will look like work to others. You generally find it by pursuing your genuine curiosity and passion instead of chasing what’s hot right now.
So look at the things you’re naturally interested in. If you dive into those interests deeply enough, you tend to develop specific knowledge.
3. Build Leverage
Give me a lever long enough and a place to stand, and I shall move the world.
– Archimedes
Leverage is basically about getting a higher output without increasing your input.
Imagine you’re trying to move a heavy object using a lever.
If you apply force close to the object, you’ll need to push very hard to move it. If you apply force farther away, you’ll need less effort. And if you apply force at the far end of the lever, the same amount of force will have a much greater effect.
This is because you have more leverage.
Leverage allows you to get more without doing more.
The difference in outcome between no leverage, low leverage, medium leverage, and high leverage is enormous.
There are four different types of leverage: labor, capital, code, and media.
Code and media are especially powerful because they’re permissionless. You don’t need anyone else’s permission to use them.
Writing content is one of the most accessible ways to build leverage.
If you want to learn how to do this, check out my free Writing Simplified eBook.
It explains how you can use writing to grow your audience and build your business.
4. Develop Your Judgment
Judgment is making decisions. Leverage magnifies the consequences of those decisions. In an age of infinite leverage, judgment becomes the most important skill.
– Naval Ravikant
If I had to simplify it, I would say that judgment is about where you push, and leverage is about how hard you push.
Let’s say you’re trying to reach a certain goal. There are multiple directions you could go in. Judgment is about figuring out which direction to take.
After that, you need to figure out what actions to take in that direction.
That’s where leverage comes in. You want to find the highest-leverage activities, meaning the activities that will give you the biggest return on your inputs.
The impact of your judgment will compound over time.
The better your judgments, the better your outcomes will be.
That’s why judgment is such a crucial skill to develop.
If you can consistently make better decisions than other people, you’ll get better results than them.
5. Escape Competition by Being Yourself
No one can compete with you on being you. Most of life is a search for who and what needs you the most. Become the best in the world at what you do. Keep redefining what you do until this is true. Escape competition through authenticity.
– Naval Ravikant
You don’t necessarily need to become the best in the world at something that already exists.
You need to find something that’s unique to you and then get extremely good at it.
The secret is to find work that feels like play to you but looks like work to others. It will look effortful to others, but it will feel effortless to you.
This is the type of work you can do forever.
It’s very important to find work that feels like play to you because this allows you to put in more effort, stay motivated, and get better results than other people.
If work feels like a drag and you don’t really want to do it, it will take a lot of effort. Your motivation will be low, which can lead to inconsistent practice and slow progress.
But if you can find work that feels like play, it won’t take as much effort because you naturally want to do it. Your motivation will be high because you actually enjoy the activity. This leads to consistent practice, faster progress, and better results over time.
That’s why you need to keep experimenting until you find work that feels like play to you.
Once you find it, you need to embrace accountability because this is how you build your credibility and reputation. Take business risks under your own name. Do things that may go wrong or may go right in public so other people can see them.
If you fail, they see you fail. And if you win, they see you win.
When you keep taking risks, learning from your failures, and improving, you increase your chances of eventually winning.
This can lead to greater responsibility, equity, and leverage.
So stop competing with others and start competing with yourself. You only need to become better than who you were while trying to become who you could be. Nobody can compete with you at being you.
6. Don’t Try to Learn Business
There’s no skill called business. Avoid business magazines and business classes. Study microeconomics, game theory, psychology, persuasion, ethics, mathematics, and computers.
The ultimate foundations are reading, writing, arithmetic, persuasion, and computer programming.
– Naval Ravikant
These are the skills, topics, and habits you should focus on.
When we break business down to first principles, you only need two things:
Something to sell
People to sell it to
That’s literally all it is.
You have a product or service, you turn it into an offer that appeals to people, and then you need to know who to sell it to. After that, you need to get your offer in front of them and convince them to buy it.
It’s oversimplified, but this is basically what it comes down to. To do this, you need the following things according to Naval:
Learn to sell. Learn to build. If you can do both, you will be unstoppable.
– Naval Ravikant
And I would actually add writing to this.
Writing is the foundation of all content (and it’s also crucial for business).
You need to learn writing so you can create media that builds leverage.
You need to learn to build so you can create a great product or service.
And you need to learn to sell so you can actually sell your product or service to people.
Then there’s one more thing: your craft.
This is basically the thing you’re an expert in.
So if you develop your writing, sales, marketing, and craft, you’ll have the skills you need to build a successful business.
7. Stay Off the Hedonic Treadmill
People who live far below their means enjoy a freedom that people busy upgrading their lifestyles can’t fathom.
– Naval Ravikant
One thing that prevents a lot of people from getting rich is that when they make more money, they also spend more money.
This is because they have desires they want to satisfy.
But the problem with these desires is that they’re never-ending.
You have a desire
You work for it
Then you obtain it
Then you enjoy it
Then you get used to it
And then a new desire pops up.
If you’re not conscious enough to notice this, you’ll keep chasing these desires. And if you keep spending your money on them, you’ll struggle to achieve financial freedom.
That’s why you need to avoid Lifestyle Creep.
This is when your expenses keep increasing as your income increases.
I’m not saying you can’t spend any money.
But be mindful of how you spend it.
You don’t want to randomly start spending more just because you earn more.
8. Productize Yourself
Productize has specific knowledge and leverage. Yourself has uniqueness and accountability. Yourself also has specific knowledge. So you can combine all of these pieces into these two words.
– Naval Ravikant
This is basically Naval’s way of summarizing how to get rich.
Productize combines specific knowledge and leverage.
Yourself combines uniqueness and accountability. It also includes specific knowledge.
You can combine all of these principles into two words:
Productize yourself.
To get rich without getting lucky:
Build leverage
Improve your judgment
Develop the right skill set
Attain specific knowledge
Play compounding games with long-term people
Find work that feels like play
Stay off the hedonic treadmill
Pick the right business partners
Take risks under your own name
Escape competition by being authentic
That’s it. If this was helpful, please restack it so more people can read it. Also follow me for more posts like this and check out the links below.
Thanks for reading!
Stijn
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Game theory!! That's the business of living.
Building leverage before developing judgment usually just means making the wrong mistakes at a much faster speed. It is easy to spend years collecting tools like coding or content creation without taking the time to figure out which wall actually needs pushing.