How to Get Rich (without getting lucky)” by Naval Ravikant https://alanphan.net/how-to-get-rich-without-getting-lucky-by-naval-ravikant-summary/

Naval’s algorithm for wealth

https://skyescofield.substack.com/p/podcast-review-how-to-get-rich?utm_campaign=post&utm_medium=web

The three hour podcast is primarily devoted to laying out specific variables that Naval considers to be the building blocks of wealth. At one point, Naval’s co-host conveniently summarizes these into the following equation:

A quick glossary of terms:

• Specific knowledge: Unique, proprietary knowledge or ability that you have in a scientific field or creative practice. The harder the knowledge is to obtain, the more you will be rewarded. The most valuable specific knowledge cannot be taught directly, either because it is so cutting edge that there is no consensus on how to teach it or because it is too complicated to distill. Apprenticeship and experience are the best ways to obtain specific knowledge.
• Judgement accuracy: Your ability to correctly predict the impact of your / other’s actions in service of your pursuits. If you correctly predict the impact of your and other’s actions, you can choose the correct actions to take.
• Social value: The potential impact created by solving the problem you’re trying to solve. ‘Consumer value’ (a la micro economics) is a good way to think about this. The bigger the problem you solve, the more you will be rewarded.
• Accountability: The ultimate responsibility you take for the success or failure of the pursuit, either through an equity stake (i.e., you only make money if the value of the pursuit is high) or reputational risk (i.e., you stake your name on the pursuit). If you have an equity stake, you will benefit financially from outsized success. If you stake your name on the project, people will give you recognition for its success.
• Leverage: A force multiplier for your actions. Leverage can be obtained through labor (i.e., people working for you), capital (i.e., other people’s money that you manage / put to use) or products that have zero or very low replication costs (e.g., software products, intellectual property, or media).
• Time: How much time you can pour into your pursuit.
• Learning: The number of iterative cycles you can go through to learn about what works in your pursuit. As you complete more cycles, you build more specific knowledge and improve your judgement. Reading and a generally curious mind also help.
• Trust: The strength of the relationships you have with the other people you’re interacting with. Stronger relationships decrease friction and increase trust which improves efficiency and willingness to take accountability. It also serves to improve judgement accuracy and learning, since people know they won’t be punished for honest assessments of what did and did not work. Trust can only be built by playing ‘long-term games’ (i.e., maintaining high-integrity, mutually beneficial relationships for a long time).

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“How to Get Rich (without getting lucky)” by Naval Ravikant (Summary & Infographic)