Renowned American investor and entrepreneur Naval Ravikant, who grew up in a modest and financially strapped single-immigrant family, has carved out a successful career in Silicon Valley through his own efforts. His Chinese book titled “Naval’s Book of Secrets: A Guide to Wealth and Happiness” has become widely popular among Chinese readers.
In the book, Naval shares insights on solving financial issues and achieving wealth, emphasizing the importance of having clear guiding principles to reach financial goals. Drawing from his years of experience, he highlights key points from his personal website articles and tweets.
Wealth is defined as businesses and assets that generate income for you while you sleep, such as a computer program providing services to customers overnight, and funds reinvested into other assets and businesses.
Houses can be considered a form of wealth because they can be rented out, although their land use efficiency is lower compared to running a business.
The pursuit of wealth aims to bring freedom – freedom from having to wake up at 7 a.m. every morning to commute to work, and freedom from spending life in a mundane and unsatisfying job. It allows you to do what you love.
The purpose of wealth is freedom, and it has nothing to do with Ferraris, yachts, or luxurious planes, as these possessions quickly become boring and senseless. Wealth is about becoming an autonomous individual.
If you don’t truly desire wealth, you won’t attain it. Pursuing wealth is a competitive game since resources in society are limited. To obtain resources to fulfill your desires, you must stand out.
However, wealth is a positive-sum game, not a zero-sum game. You don’t need to gain at the expense of others. Through cooperation, all participants can achieve a win-win situation and benefit positively.
Money is a way for people to transfer wealth and represents the ability to lend others their time, but money depreciates.
Status refers to your ranking in the social hierarchy, which is a zero-sum game. One party’s gain inevitably means another party’s loss.
Naval expresses his dislike for status games because winning requires sacrificing others. It’s advised to avoid engaging in status games in life to prevent becoming a resentful and combative individual, constantly striving to elevate oneself at the expense of others.
However, status games will always exist and are unavoidable. It’s crucial to understand that when you try to create wealth, you may face attacks from others pretending to be morally superior, playing a destructive status game to boost themselves at your expense.
Some people believe earning money is evil and subscribe to the notion that “money is the root of all evil.” Indeed, theft is rampant in many parts of the world. Some resort to stealing through various means like taxes, crony capitalism, or communism.
Naval focuses on genuinely creating wealth to generate prosperity and abundance for society, rather than taking money or other assets from others.
In essence, job positions and the amount of wealth are infinite. All wealth in human civilization is created through technology, productivity, hard work, and more. The idea that earning money is stealing from others is a notion perpetuated by individuals playing a zero-sum game in pursuit of status; these individuals should be disregarded.
Naval doesn’t view capitalism as evil; rather, it has been corrupted and monopolized. Capitalism, fundamentally, is good because the free market is inherent to human nature.
Many believe that making money is based on luck, but in reality, the key to earning money lies in becoming the kind of person capable of making money.
Naval likes to think that even if he lost all his possessions and was dropped randomly on a street in any English-speaking country, he would still become wealthy again in five or ten years. It’s a skill set he has cultivated, and he believes anyone can cultivate the skill of making money.
In an interview, Naval said, “I come from a poor family in India, so if I can make it, anyone can. Of course, I have all of my limbs, a sound mind, and education. There are some prerequisites that can’t be bypassed. But if you are watching this video or listening to this podcast, you likely have the necessary conditions, a functional body and mind.”
“I faced a lot of bad luck along the way. The first time I made some money, I lost it all in the stock market. The second time I should have made money, I was cheated by a business partner. It wasn’t until the third time that things went smoothly.”
“Nevertheless, it has been a slow and steady struggle. I have never received a massive income at once in my life. My wealth has accumulated bit by bit. I have primarily continued to create wealth through building businesses, creating opportunities, and investing.”
“Today, with the internet, there are countless opportunities to make money. In reality, I have too many ways to make money but not enough time. The opportunities overwhelm me, and what I lack most is time.”
Naval believes there is a kind of “luck” that people can deliberately cultivate, and that is shaping good character to attract opportunities proactively.
If you are a trustworthy, reliable, noble, forward-thinking dealmaker, when others want to transact but don’t know how to collaborate with strangers in a trustworthy manner, they will naturally seek you out, offering you a share of the transaction simply because of the integrity and reputation you have built.
You cannot create wealth through a 9-to-5 job because your input is directly correlated to your output. In almost all wage-paying jobs, even those with high hourly rates like lawyers or doctors, your income per hour is based on the time you invest.
This means that when you sleep, you have no income; when you retire, you have no income; when you vacation, you have no income. Furthermore, you cannot achieve nonlinear income growth.
Essentially, you are working for others, who assume risk and responsibility, own intellectual property and related brands. They will only pay you the lowest wage to do their work. This lowest wage may be high, but it isn’t genuine wealth that allows for early retirement.
Moreover, you haven’t created much original value for society; you’re merely engaged in repetitive tasks, making you replaceable by someone with updated knowledge or by robots or artificial intelligence.
All truly wealthy individuals have shares in some form of product, company, or intellectual property. This can be achieved through stock options in a company, for instance, where you work in a tech company. It’s a good starting point.
Usually, real wealth is created by starting your own company or becoming an investor.
Almost everything in your home, workplace, and on the street has been new technology at some point in time. Once, oil was a technology that made John D. Rockefeller rich. Once, the automobile was a technology that made Henry Ford rich.
Hence, as Danny Hillis once said, technology is a series of incomplete things. Once a technology matures and is put to use, it ceases to be seen as technology. Consequently, society is perpetually yearning for new things.
If you want to become wealthy, you need to figure out what you can provide in areas where society doesn’t yet know how to obtain but will inevitably need in the future, something that aligns with your nature, falls within your skillset and abilities.
Then, you must find ways to scale it. Merely creating one isn’t enough. You need to build thousands, even billions, so everyone can access it.
Steve Jobs and his team envisioned society needing smartphones, essentially computers in pockets. They researched how to manufacture it and scaled the production. Consequently, they garnered substantial returns, and Apple became one of the world’s most valuable companies.
Naval sees this as a profound insight into Silicon Valley’s path to success and the operating mechanisms of a high-trust society. Essentially, all benefits we receive in life stem from the compound effect. Whether it’s wealth, knowledge, relationships, or health, the compound effect is a crucial force.
To achieve success, you must collaborate with others. You need to identify who is trustworthy over the long haul, allowing for continued cooperation and greater ease of work through compound effects and high trust, resulting in significant returns usually appearing at the end of collaboration.
Naval doesn’t recommend frequent industry-hopping because each time you enter a new industry, each time you depart from the network you’ve built, you start from scratch. You won’t know whom to trust, and they won’t know whether to trust you.
Hence, choose an industry conducive to long-term career development and collaborate with long-term partners who demonstrate commitment to staying in the industry and exhibit professional ethics in their actions.
The superpower of the internet is its ability to connect every person on Earth with others. Today, you can reach everyone. It’s essential to leverage this superpower.
The internet enables you to find buyers or audiences for your products, talents, or skills, regardless of their location. Whether you have a passionate interest in a niche area like hot air ballooning or miniature cooking, the internet allows you to scale.
This isn’t to say your product will become the next Facebook or have billions of users, but if you desire reaching 50,000 people who share your interests, there is indeed an audience for you on the internet.
With 7 billion people in the world, each person is unique. There will never be two roughly similar, interchangeable individuals.
Due to everyone possessing different skills and interests, all individuals can exhibit extraordinary creativity in their unique fields.
Before the internet, such advice was entirely ineffective. If you lived in a small fishing village in Italy, your village might not necessitate your entirely unique skills, and you would have to conform to limited job positions. However, today, you can fully showcase your uniqueness.
To evade competition, the best approach is to be yourself. When competing with others, it’s because you are imitating them, attempting to do the same things. However, everyone has different talents and abilities – don’t imitate, don’t plagiarize, just do what you love. When you are your most authentic self, no one can compete with you; it’s that simple.
You need smart collaborators; otherwise, they could lead in the wrong direction, ultimately preventing you from reaching the right destination. You require partners who are dynamic and driven because the world is full of intelligent but lazy individuals.
“Intelligence” does not mean one person is intelligent while another is foolish. Each person has their expertise in different areas. Hence, based on what you want to accomplish, find people intelligent in that field.
Character is paramount because without good character, even if your partner possesses the other two qualities, you will end up with a clever and capable fraudster who will eventually deceive you. Thus, you must assess whether this person has genuine character.
When evaluating a person’s character, interpreting signals is crucial. Signals are people’s actual behaviors beyond speech. Hence, paying attention to subtle signals is vital. If someone behaves rudely toward a server at a restaurant, sooner or later, they will treat you poorly too.
If someone harbors resentment toward enemies and seeks retribution, it’s inevitable that they will eventually redefine you from a friend to an enemy, and you will face the consequences of their anger. Individuals who harbor grievances, pursue revenge, and have short-sighted perspectives often exhibit this behavior in many real-life interactions.
Kind, ethical, professionally upright, easy-going, and reliable individuals usually possess high self-esteem, caring about their self-image and reputation in their hearts, needing to align with their intrinsic moral standards.
Differentiating between a noble and despicable person is genuinely challenging. As a rule of thumb, the more someone emphasizes their moral superiority and uprightness, the more likely it is untrue.
Essentially, to create things, you must be a rational optimist. Rationality implies seeing the world as it truly is. Simultaneously, you must believe in your capabilities and executive abilities.
We all know some perpetual pessimists who are negative about everything. Everyone has a ‘well-intentioned critic’ in their life who believes they are offering help, but, in reality, they criticize and negate everything.
Such people never accomplish anything significant in their lives and deter those around them from achieving great things. They believe their work is to critique everything. It is acceptable if you provide solutions alongside critiquing.
There’s a classic military saying, “Lead, follow, or get out of the way.” However, these individuals seek a fourth option – they don’t want to lead or follow but refuse to yield. They only want to tell you why something won’t work.
All truly successful individuals Naval has encountered display a strong bias toward action. They consistently choose to take action. The simplest way to determine whether something is feasible is by doing it. Start with the first step at least, then the second, the third, and finally decide.
Thus, if you aim to succeed in life, create wealth, foster good relationships, maintain health, or even achieve happiness, you need a strong bias toward taking action.
(To be continued)