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  • Yug Jain

Summary of "How to Get Rich" by Naval Ravikant - Part 1

Hello Everyone today I will be sharing the insights and strategies I've learned from listening to Naval Ravikant's podcast, "How to Get Rich." In this series, Naval shares his journey and the principles he's used to achieving financial success. Today, I will be diving into the first title. "Seek Wealth Not Status"

Through this blog, I hope to provide a comprehensive summary of the Naval's teachings and offer actionable tips for anyone looking to improve their financial situation. So, sit back, relax and get ready to learn about the strategies that have helped the Naval and many others build wealth and achieve financial freedom.

Seek Wealth Not Money or Status Wealth is assets that earn while you sleep. It’s the factory of robots cranking out things. Wealth is the computer program running at night that’s serving other customers. Wealth is money in the bank that is reinvested into other assets and businesses. A house can be a form of wealth because you can rent it out; although that’s a less productive use of land than running a commercial enterprise. You want wealth because it buys you the freedom you don’t have to wear a tie like a collar around your neck; so you don’t have to wake up at 7:00 a.m. to rush to work and sit in commute traffic. Status is your rank in the social hierarchy There are fundamentally two huge games in life that people play. One is the money game. Money is not going to solve all of your problems, but it’s going to solve all of your money problems. Many people believe they can’t make it; so they don’t want any wealth creation to happen. They virtue signal by attacking the whole enterprise, saying, “Well, making money is evil. You shouldn’t do it.” But they’re playing the other game, which is the status game. They’re trying to be high status in the eyes of others by saying, “Well, I don’t need money. We don’t want money.” Status is a very old game and a zero-sum game. We’ve been playing it since monkey tribes. It’s hierarchical. Who’s number one? Who’s number two? Who’s number three? And for number three to move to number two, number two has to move out of that slot. So, status is a zero-sum game. Politics is an example of a status game. They play an important role in our society, so we can figure out who’s in charge. But you play them because they’re a necessary evil. To win at a status game you have to put somebody else down. That’s why you should avoid status games in your life because they make you into an angry combative person Make Abundance for the World Wealth isn’t about taking something from somebody else Ethical wealth creation makes abundance for the world. Most of the wealth in civilization, in fact, all of it, has been created. It got created somewhere. It got created by people. It got created from technology. It got created from productivity. It got created from hard work. This idea that it’s stolen is this horrible zero-sum game that people who are trying to gain status play. Everyone can be rich We can see that by seeing, that in the First World, everyone is richer than almost anyone alive 200 years ago. The engine of technology is the science that is applied to create abundance. So, I think fundamentally everybody can be wealthy. Imagine if everybody knew a good software engineer and a good hardware engineer. If you could go out there, and you could build robots, and computers, and bridges, and program them. Let’s say every human knew how to do that. We would all be then living in massive abundance. Free Markets Are Intrinsic to Humans Capitalism is not something we invented. It is in us in every exchange that we have. When you and I exchange information, I want some information back from you. I will give you the information. You give me the information. If we weren’t having a good information exchange, you’d go talk to somebody else. So, the notion of exchange, and keeping track of credits and debits, is built into us as flexible social animals. It is innate to the human species, and we are going to create more and more wealth and abundance for everybody. Too many takers and not enough makers will plunge society into ruin There are countries, groups, and political parties that overtly despise wealth. In the process to destroy wealth creation, they drag everybody down to their level. Groups that despise it will essentially bring the entire group to that level. If you get too many takers and not enough makers, society falls apart. You end up in a communist country. Another way to think about it is to imagine an organism that has too many parasites. You need a small number of parasites to stay healthy. Any organism can only withstand a small number of parasites. When the parasitic element gets out of control, you die. There are 4 kinds of luck

  1. Blind Luck: It's where you just got lucky because something completely out of your control happened. That’s fortune, that’s fate.

  2. Luck from Hustling: When you’re running around creating lots of opportunities, you’re generating a lot of energy, enough energy that luck will find you.

  3. Luck from preparation: If you are very skilled in a field, you will notice when a lucky break happens in that field. So you become sensitive to luck and that’s through skill and knowledge and work.

And the 4th type of luck is... Luck from your unique character This is where you build a unique character, a unique brand, a unique mindset, where then luck finds you. Let’s say that you’re the best person in the world at deep-sea underwater diving. You’re known to take on deep-sea underwater dives that nobody else will even attempt to dare. By sheer luck, somebody finds a sunken treasure ship off the coast. They can’t get it. Well, their luck just became your luck, because they’re going to come to you to get that treasure. You’re going to get paid for it. You created your luck. You put yourself in a position to be able to capitalize on that luck. Wealth stacks up one chip at a time, not all at once It stacks up a little bit, chips at a time. More options, more businesses, more investments, more things that you can do. It’s not like your one piece of work is going to suddenly shower you with riches overnight. It’s going to be a long lifetime of learning, of reading, of creating that’s going to compound. Thanks to the Internet these days, though, opportunities are massively abundant. There are just so many ways to create wealth, create products, create businesses, create opportunities, and, as a byproduct, get paid by society that I can’t even handle it all. Build your character so opportunity finds you. One of the things I think that is important to making money when you want is the kind of reputation that makes people do deals through you. If you’re a trusted, reliable, high-integrity, long-term thinking deal maker, then when other people want to do deals but they don’t know how to do them in a trustworthy manner with strangers, they will approach you and give you a cut of the deal or offer you an amazing deal just because of the integrity and reputation that you have built up. You Won’t Get Rich Renting Out Your Time In almost any salaried job, even one that pays a lot per hour like a lawyer, or a doctor, you’re still putting in the hours, and every hour you get paid. What that means is when you’re sleeping, you’re not earning. When you’re retired, you’re not earning. When you’re on vacation, you’re not earning. Renting out your time means you are not creating much original for society. And so your set roles can be taught. If they can be taught like in a school, then eventually you’re gonna be competing with someone who’s got more recent knowledge and is coming in to replace you. Gain equity and find a career where your inputs don't match your outputs. Everybody who makes money owns a piece of a product, a business, or some IP. That can be through stock options, or working at a tech company. But real wealth is created by starting your own companies, or by even investors. One great engineer can for eg create bitcoin, and create billions of dollars worth of value. And an engineer who is working on the wrong thing can work for an entire year, and every piece of code they ship ends up not getting used. That is an example of a profession where the input and the outputs are disconnected. It’s not the number of hours that you put in Live Below Your Means for Freedom People who are living far below their means enjoy a freedom that people busy upgrading their lifestyles just can’t fathom. Once you make a little bit of money, you still want to be living like your old self, so that just the worry goes away. So, don’t run out to upgrade that house, and lifestyle, and all that stuff. The most dangerous things are heroin and a monthly salary. NASSIM TALEB

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