The Almanac of Naval Ravikant: A Guide to Wealth and Happiness
by Eric Jorgenson
About the Author:
Erik Jorgensen is a writer and blogger at Evergreen, a business blog. Naval Ravikant is one of his closest friends. He was greatly influenced by his friend Ravikant’s philosophy regarding life and career, so he decided to write this book The Almanac of Naval Ravikant. Naval Ravikant is the co-founder and CEO of Angelist, a site where people find jobs.
Introduction
What do you think makes a person successful? What is it that makes a person happy? Do you think successful people are happier?
Perhaps your childhood has also been spent hearing that focus on success. Rarely have our elders talked to us about being happy. But in this summary you will learn that you can have both success and happiness and it is not beyond your reach at all.
You will learn that when it comes to wealth, our philosophy of life plays a very important role in it.
Building Wealth:
Being rich does not mean that how many hours a day you work, nor does it mean that you become exhausted after working hard throughout the day. No, Getting Rich means that you know what to do, with whom to do it and when to do it.
So don’t you also have any idea what we have to do to become rich? So before that you have to know what is the goal of your life because until you do not know your goal, you cannot become rich in any case. Naval Ravikant is a successful entrepreneur. This summary talks about the wisdom and knowledge that Naval has got from his many years of experience.
In the beginning, Naval was also unemployed like any common man, that means he also had no goals. He had to face failure many times one after the other. But then one day he stepped into the world of business and then he realized that he could build an empire with the help of business.
Knowing what we have to do means productizing ourselves, that is, presenting ourselves as a product. You will have some specific knowledge that no one else may have. No one else can be exactly like you. So that’s why use yourself as a product.
Offer a unique mixture of your skills and knowledge. Then see how far you will go. Of course, for this you will need many years of practice and hard work. Making yourself skilled and productive is a lot of hard work. But the sooner you start, the sooner you can start creating wealth.
Naval Ravikant knew the difference between building wealth and being rich. Being rich means only earning money so that society is thankful to you for creating something valuable. Naval stresses more on the fact that we should not build money but build wealth.
Wealth means that asset which gives you earning even while sleeping and money is just the physical form of this wealth. Whereas Wealth, in whatever form it may be, works for you to earn money whether you are actively involved in it or not. Like factories, robots and computers work to create data, whether day or night. Actually another name of technology is wealth.
Today new changes are coming in the field of technology. There was a time when the car was considered a groundbreaking technology. This is how Henry Ford got rich. Then this technology made him one of the richest people in the world. If you also want to be wealthy, then you also have to introduce some new and innovative thing in the field of technology.
So find out what people want, even if they themselves do not know what they want, and for this you have to use your skill set, knowledge and abilities.
Find and Build Specific Knowledge:
Here the emphasis is on a special kind of knowledge, which is sales. Some people have the qualities of a born salesman, that is, such people can sell anything to anyone. This is such a skill set and knowledge that not everyone has. People who have the quality of natural salesmanship, it is born, hardly they have learned this skill in any school or college or maybe they become expert in this art while negotiating with their friends and family since childhood. . Whatever may be the reason, such people are natural salesmen.
But even if you were not born with such great sales skills, there is nothing to worry about. You too can become a great salesman. For this you can attend seminars and workshops. Gradually, with practice, improvement will start coming in you.
But Naval says you should consider this: What is one skill or quality that you were good at as a child? Then you might not have got that skill, but when you grow up, you can find your potential in it. Naval says that you will have to do some research. Like a specific knowledge can be your musical skill which you can increase or your writing skill can be good.
Emphasis on naval specific knowledge as it can be a great way to earn your wealth. Combine it with your unique skill set, upbringing and attitude, that means productify yourself. Sell your uniqueness.
As technology and reading always attracted Naval a lot. He was a fast learner. But he was one of those who get bored easily with anything. Because he understood himself, so he did not want to go into a profession that would bore him, that is, in other words, he did not want to enter a career where he had to do the same thing in a routine. That’s why Naval found it more appropriate to step into venture investing.
There is speed in this field and you should really have interest to get into it. In today’s time, new technologies keep coming and it is the job of Naval to find them. He was a fast learner but because he used to get bored easily, hence venture investing suits him perfectly.
Specific knowledge means that you have mastery in a field, that is, you should know the smallest detail about it, that is, do the thing about which you are passionate or curious. When you like your job then you always try to give your best in it. Also the plus point is that no one else will be able to copy you. Yes, Naval is not just a venture investor but he is unique because of his specific skill set and knowledge.
So never stop learning. The path to becoming rich starts from here. But it doesn’t just mean studying hard or getting a college degree. This is a clichéd thought. Today, when so much is changing, then we have to change our thinking too. You should keep learning something or the other. First of all start with those basic fields in which you have interest.
It is more important to have knowledge of basic maths than any complicated calculus. Similarly, you may or may not have knowledge of poetry, but it is very important to know basic English. Of course you are an expert digital marketer or not, but you should have the art of persuading or persuading anyone. Basically you should know the foundation of any field and then you can get more knowledge of the field in which you are interested.
Build or Buy Equity in Business:
Basically, your share in the value or profit of a company is called equity. If you want to be rich then you must have equity. This is where our passive income comes from, that is, even if you are on vacation, you will continue to earn.
Equity means that you keep earning continuously, that means money keeps coming in your account even when you are sleeping. But you cannot get this facility in the job. You get a fixed salary in the job. If you work, you get money, if you don’t, you don’t get it. It’s a simple thing.
Salaried job means working for someone else means the hard work you could have done for yourself, you are doing it for others. Whatever output you create, all that will go to the company. This is the custom and the company will always try to do the least payment by taking maximum work from you.
But equity is the only way that guarantees you wealth building. You can start this by becoming a share holder in a company. When there is a profit of the company, you will also get a share from it.
Naval emphasizes that ownership is important. You must have a part of a business or ownership of a product. Of course, your beginning may be small, but fit a goal in your mind. It is necessary to take equity in any case.
Find a Position of Leverage:
As mentioned earlier, your wealth is where your specific skills are. Naval wants to give one more piece of advice: Do things for their own sake.
But what does it mean?
There was also a time when Naval had earned a lot of money. This was the year when he only focused on his work. In the same year, he also did some such things which he used to enjoy. In those days he was working on a project which was both interesting and entertaining for him. Since Naval was enjoying it, he took up this project with all his heart. The less you try to forcefully make a work perfect, the more naturally you will be able to do it. The less pressure is on you, the more you will feel passionate about that work and only then you will get the best results.
It is not necessary that you start running after whatever career choice is trending in the market. Do that in which you are good, only then you will be able to give your best. Make yourself such that no one else is like you. Make yourself such that people cannot find anyone else like you and come to you themselves. Once your demand increases, you will be able to charge your right price. This is the real secret of earning money.
Of course, all this is not going to happen overnight. You have to have profession. Meanwhile, slowly you have to build your name, that is, you have to make your identity. Advertise on social media like Twitter and YouTube. For whatever you are offering, these social platforms will prove to be the best because with this you can reach maximum number of people in less time and once your name is there, you can use leverage. Leverage means having an advantage over any situation or people.
There are three types of leverage:
The first is labour. Basically this happens when other people work for you. It is one of the oldest types of labor and Naval considers it the worst as being a boss is nothing less than a headache. The beginning of becoming a boss starts with leadership skills. Being a leader means you must also have communication skills. If it is not so, then it means that the people working for you can leave the work anytime.
Second is money. You can use money as a capital like wealthy people do. This is the most used leverage of this century. Rich people, dishonest politicians and rich and upper class people manipulate a lot of money. Money is stronger than labour, you can do anything on its basis.
Third is replication without any marginal cost. Books, media etc come in this leverage. Anyone can use this leverage as you do not need any permission for this. In earlier times, only a few people could become rich because of a product or business, but today because of the Internet, anyone can earn money by creating content.
Like ‘Joe Rogan’ earns about 100 million dollars a year because of his podcast. YouTube gamer PewDiePie is one of the richest gamers in the world. Need more examples? So you can take the example of Steve Jobs, Mark Zuckerberg and Jeff Bezos.
For what these people did, they did not need permission. He simply created products and shared them with the world. In labor leverage, there is a person who takes the decision to do the work for you. In capital leverage, someone gives you money to create a product or business.
The third leverage promotes independence, where you are not dependent on anyone but yourself. Whatever you do, all the responsibility is on you and this is the biggest dream of every human being.
Building Judgment:
If you want to become wealthy, then you should know the art of reaching the top and for this you have to develop judgment within yourself. But why judgement? Because judgment is the result of your many years of experience and wisdom or understanding.
In Naval’s eyes, judgment means knowing the result of your action. Knowing that you are taking the right decision or wrong because only your right decision will help you earn money.
We can improve the judgment through clear thinking. But how can you think clearly?
You just have to remember the basics. When you know the foundation then you will be able to think clearly. For example, unless you know basic maths, you cannot understand trigonometry. Naval believes that the smartest people can easily explain any concept to a child because clear thinkers are smart thinkers.
So whatever you want to learn, first learn the basic foundations of it. Then gradually move towards more complex level.
And as far as taking the right decision is concerned, you can improve it when you know how to deal with the real world. You have to accept the reality. Reality is not such a thing that can be decided according to your choice or according to you. Your thinking can also lead you towards the wrong decision.
Now as you think that your business is going well. Whereas in reality it is standing on the verge of closure. But you are denying this fact. Then when the business stops, you will go mad with anger.
Actually it is difficult to accept the truth. The truth becomes more bitter when it is not in our favor. But if you want to become wealthy, then you have to adopt every truth. You cannot progress by turning away from reality and truth, you cannot take the right decision. That’s why keeping your ego and desires aside, learn to express the truth no matter how bitter it is.
Learn the Skills of Decision-Making:
Naval tries to be as honest as possible because honesty and telling the truth makes us feel free. When you are lying to someone, you become a liar in your own eyes and then your whole life becomes a web of lies. Your truth and your lie get mixed up in such a way that life remains entangled. This is such an accident that happens at some point or the other.
Of course we know the truth is bitter, that’s why Naval here takes the advice of famous entrepreneur Warren Buffett. But when it comes to praise, be specific and while doing evil, talk in a general way.
Suppose there is a problem with your employee in some work. So don’t say that he is a very bad person, rather talk about the mess in his report. Explain to him his mistake that perhaps he might have prepared the report in a hurry that is why this has happened. But if you want to praise someone, then you can point it out and say that you have done a good job.
Honesty and good decision making go hand in hand. Honesty always gives good results. Suppose you did not like the report of an employee. If you find it very boring and long, then you can tell the truth to him so that he can take the right decision to improve it. But if you lie, he will always keep making such reports, he will never get a chance to improve.
If you want to improve in decision making then collect mental model. Suppose a situation has already happened. Now you would think that the same situation will give the same result in future also. However, this does not happen because nothing can be exactly the same.
So learn to choose the mental model. This will act as a guiding principal for you. Whatever the situation may come, go to your mental model and take decision based on it.
Here are some mental models that Naval often uses-
One is inversion. By using this mental model, Naval always understands what will work or not. They cannot be accurate about this in advance. By using inversion, they avoid trying methods that will not work. Now as if the problem of logistic i.e. transport was coming in front of Naval where he expected the product to arrive the next day but it was going to arrive by next week. Naval uses inversion here. They know that shouting at the transport company will not solve the problem, instead they find a way to deal with the company.
The second is the principal agent problem. This mental model works more for problems related to business. It was developed by the famous Roman general Julius Caesar. Caesar believed that if you want a work to be done in the right way, then do that work yourself, that is, do not put the responsibility on someone else because that idea has come in your mind, then only you can do it in a better way.
However when someone else works for you then he is just an agent and this is the root of the whole problem. An agent will never be able to do a good job like you because it doesn’t matter if the job is done properly or not.
Often this problem is not much in small companies because they appreciate the value that they are giving to the company, so every employee feels like a principal or owner.
Remember this thing when you give someone to do some work. If you don’t want low-quality work or output, better do it yourself.
It’s okay if you’re still trying to find your mental model. Naval explains another method which will make it easier for you to take the decision. If you are not able to decide for some work, then do not say that work directly.
Should you move to live in another city? Should you marry that person? Should you buy the shoes you saw in the store that day? If you are finding it difficult to find the answer then simply say no.
There are many options available in the society in which you are living today. You can shift to any other city whenever you want. You can marry someone else. You can buy some other kind of shoes next month.
The point is that your choice is a permanent thing, with which you have to live for a long time. That’s why it is important that you should take a decision only after being 100% sure and hence refusal is your choice which can save you from taking wrong decision. It also gives you more time to think a little more.
Happiness is Learned:
Till 10 years back, Naval was not happy about anything. Rather just say that being happy was not on his list at all. If he was then asked to rate his happiness on a scale of 1-10, he would probably have given it a 2. But in today’s time Naval can say that he is a happy person. Rather, he is so happy with his life that he can give a 9 on a scale of 1 to 10.
Yes, it is true that they have achieved happiness in life by earning wealth. But Naval also learned that it is most important to be happy in life, no matter whether the wealth is less or more, because the happiness of a person matters the most.
But what is happiness in reality because happiness has different meanings for every person. What makes Naval happy may not make you happy and what makes you happy may not make Naval happy. So it is everyone’s own choice. For some people, the meaning of happiness is satisfaction, while some people cannot be happy even after getting a lot.
But Naval says that happiness should be the default setting of every human being, that is, a human being is born to be happy, unhappiness is his own search. The meaning of happiness is to remove the feeling that there is something missing in your life.
How many times have you said “I want this” or “I want that”? You will not even be able to count, probably because we repeat this thing again and again. This desire to get something or the other never lets us be happy. It keeps you in past or future but never lets you enjoy the present.
When there is no desire in the mind, then this is true happiness, that is, you are satisfied with whatever you have. This feeling of satisfaction or satisfaction gives us happiness. This is true for Naval. But you can disagree with them if you want because the meaning of happiness is different for everyone.
Happiness is not just a positive thought or feeling. Its real meaning is not to desire anything, that is, when there is no desire left in the heart to get something. The fewer your desires, the happier you will be in today. Then you will not live in past or future. You will just enjoy that moment. This is the true happiness about which Naval is telling.
Happiness can be learned from this perspective. Keep reminding yourself that you do not have to run after name, wealth and fame. You have come into the world, you are still able to breathe, you are alive, this is the biggest happiness because you never know when we will say goodbye to this world, so you should enjoy every moment.
The art of happiness can be learned and happiness is a choice. If you want, you can be happy everyday. Your happiness is not dependent on any situation or people. Those who know how to be happy, they are always happy, they are happy in every situation. There is no reason for happiness. You can always be a happy person forever and believe me it is not difficult at all to do so.
Conclusion:
First of all, you learned how the very successful entrepreneur Naval Ravikant has a vision of the world. Naval does not just talk about business, he knows that a person influences his success from every aspect.
The second thing you learned is that you have to earn a fortune for yourself, not wealth. When it comes to wealth, we only focus on money. But earning fortune means you can earn money even while sleeping. To build your wealth, product yourself i.e. make yourself a successful brand.
Third thing, find out what you are best at, what you do well. Maybe you have some specific knowledge. Combine your attitude and skills with this knowledge and become successful. This is what it means to productize yourself. Always keep improving. Your goal should be to become better than what you are today.
Fourth, you learned that building wealth requires equity. Equity means having your own share in the profits of the company. Basically you invest in business only to earn money, so you cannot earn wealth in job.
Fifth, you learned that when you specialize in a skill, it acts as a leverage for you. There are three types of leverage: labor, money and replication with no marginal cost.. The third type of leverage is the best, that is, you have the right on what you produce. You can earn a lot of money by having your own intellectual property.
Sixth, you learned that to become wealthy it is necessary to have the right judgment quality. You should know the reaction of your every action. Clear thinking is required for good judgement. But you will be able to think clearly only when you know the basics, because until you do not know maths, you will not be able to use even a simple calculator.
Seventh, you learned that happiness can be learned and happiness is a choice. When you stop running after things, only happiness comes in your life. The real meaning of happiness is to focus on your present.
Building wealth involves every aspect of your life. This is not something that you keep in your schedule. That’s why give your body, mind and wealth to your goal. The more you are involved in it, the better the results you will get. Being wealthy doesn’t just mean earning money, it also applies to your happiness and health.