Getting Rich Without Getting Lucky

This is a summary of the framework used by Naval Ravikant to create order in chaos. Summarizing everything that I have learnt from his blogposts and podcasts:

1. Wealth vs Money vs Status

   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. Status is a zero sum game so, ignore those who enjoy playing this game.

2. Investing and Owning a Piece of a Business

   Invest in equity through public markets or through angel investment or by owning some equity in your company. The likelihood of becoming insanely rich (net worth greater than Rs. 100 Cr.) by trading your time or by earning salary is extremely low. You must own equity — a piece of a business — to gain financial freedom. A few mediums to get started with investing : AngelList, Crowdcube or Mutual Funds

   Monika Halal’s Let’s Talk Money is a good starting point. Having an active and diversified portfolio is the key to success.

3. Building Specific Knowledge

   Specific knowledge is the knowledge that you cannot be trained for. If society can train you, it can train someone else, and replace you. Specific knowledge is found by pursuing your genuine curiosity and passion rather than whatever is hot right now. Building specific knowledge will feel like play to you but will look like work to others. When specific knowledge is taught, it’s through apprenticeships, not schools. Specific knowledge is often highly technical or creative. It cannot be outsourced or automated. Arming yourself with specific knowledge gives you leverage and building a fortune requires leverage. Which takes me to the next point.

4. Building Leverage

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

   • Capital: Capital means money. To raise money, apply your specific knowledge, with accountability, and show resulting good judgment.
   • People: Labor means people working for you. It’s the oldest and most fought-over form of leverage. Labor leverage will impress your parents, but don’t waste your life chasing it.
   • Products: Code & Media. The Internet has massively broadened the possible space of careers. Most people haven’t figured this out yet.

   Types of Leverage

   • Permissioned Leverage: Capital and labor are permissioned leverage. Everyone is chasing capital, but someone has to give it to you. Everyone is trying to lead, but someone has to follow you.
   • Permissionless Leverage: Product (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. An army of robots is freely available — it’s just packed in data centers for heat and space efficiency. Use it. If you can’t code, write books and blogs, record videos and podcasts

5. 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.

6. Know when you are lucky

   More often than not, we attribute things beyond our control to “being lucky”. Naval Ravikant has bucketised luck into four different types:

   • Blind Luck/Dumb Luck : Well, this is sheer dumb luck.
   • Luck that comes to you through persistence – “fortune favors the bold”
   • Spotted luck – “chance favors the prepared mind”.
   • Luck that finds you

   The last three types of luck come from building specific knowledge. One will enjoy a greater share of dumb luck if he/she possesses specific knowledge.

   That’s it for now!