How to Get Rich (without getting lucky)

How to Get Rich (without getting lucky). An essay by Naval, from December 2019.

Wealth, money and status

Naval separates three things we tend to blur. Wealth means assets that keep earning while you sleep: a business, some software, a factory of robots.

Money is how wealth moves around: an IOU from society, for value you created earlier.

Status is your rank in the social pecking order. It is zero-sum: for someone to rise, someone else has to fall.

Wealth isn't like that. Your owning a house doesn't stop me owning one. So Naval says: seek wealth, and stay out of status games.

Making, not taking

Isn't getting rich just taking from others? Naval says no. Real wealth is created. Before someone built it, it simply didn't exist.

His evidence: he'd rather be poor today in a rich country than an aristocrat in Louis XIV's France. Back then, no antibiotics, no electricity, no cars.

So in principle everyone can be rich. What drags a society down is too many takers, and too few makers.

He means ethical wealth: free people trading freely. Not monopolies, not cronyism, not costs dumped on everyone else.

Not about luck

The goal is to get rich without needing luck. Picture a thousand parallel lives: you want to be wealthy in 999, not just the few where you got lucky.

Naval borrows four kinds of luck. Blind luck. Luck stirred up by hustle. And luck you notice because you know the field well.

The fourth finds you because of who you are. Be the world's best deep-sea diver, and whoever finds a sunken treasure has to come to you.

By then it hardly counts as luck. Build that kind of character and reputation, and luck becomes destiny.

Renting out your time

Rule one: renting out your time won't make you rich. Even a well-paid lawyer or doctor is paid by the hour. Asleep or on holiday, they earn nothing.

And a role that can be taught is replaceable: by someone newly trained, or one day by a machine.

What you need is ownership: equity in a product or a business. Then your output is no longer tied to your hours.

One great engineer can write code worth billions. The best lumberjack, with just an axe, is maybe three times better than the worst.

And as you earn more, keep living below your means. A lifestyle that rises with your pay keeps you on the treadmill.

What society can't get yet

So how do you get rich? Give people something they want but have no way to get yet, and then deliver it at scale.

Oil once made Rockefeller rich; cars made Ford. Apple saw that people would want a computer in their pocket, then put one in almost every pocket.

The internet widens this. It connects everyone, so even an odd niche obsession can find its fifty thousand passionate fans.

A fishing village had a few jobs, and you fit one. Online, the range of careers is vastly wider: podcasters, YouTubers, even game players.

Long-term games

Choose a field where you can play long games, with people who stick around. Naval says almost every return in life comes from compounding.

Repeated dealings build trust. People treat you well because they will meet you again, and each round you can do bigger things together.

In a long game, everyone helps make the pie bigger. In a short game, people fight over who gets the slices.

Pick partners with intelligence, energy and integrity. Without the third, the first two just give you a clever, hardworking crook.

And skip the cynics. Naval prefers rational optimists: clear about the risks, still betting they can build something.

Specific knowledge

The first skill is specific knowledge: whatever gets you paid, rather than someone else. Naval calls it the hardest idea to get across.

If a class can train you for it, it can train everyone else too, and eventually a computer. Then you're paid the minimum.

You find it by following your genuine curiosity. Building it feels like play to you, while to others it looks like work.

His own was spotted by his mother. He planned on astrophysics, but kept critiquing how the pizza place sold its slices. Business, she said.

Learn to build, learn to sell

Two broad skills pay off everywhere: building the product, and selling it, which covers marketing, recruiting, raising money and inspiring people.

Startups often pair a builder with a seller, like Wozniak and Jobs. Someone who can do both is unstoppable.

To keep learning, read. Start with whatever you love until reading becomes a habit, then go to foundations: math, logic, original science.

And doing beats watching. Learning comes from the number of iterations, not hours, so get used to small, frequent failures.

Accountability

Next comes accountability: taking business risks under your own name. If it fails, everyone knows it was you. If it works, so does the credit.

That makes you hard to replace, which is how you earn equity. In a company, salaries are paid first, then lenders. Owners get what's left.

Owners may get nothing, but their upside has almost no ceiling. Taking accountability is like owning equity in all your work.

And today the downside is smaller than it feels. Honest failures get forgiven, so Naval thinks most people should take on far more.

Old leverage: labor and capital

Fortunes need leverage. Archimedes said that with a long enough lever, and somewhere to stand, he could move the earth.

The oldest kind is labor: people working for you. We instinctively respect it, but Naval calls it the worst kind: messy, and fiercely fought over.

Next is capital: money to invest. It scales far better. Managing more money is much easier than managing more people.

But both need someone's permission. People have to choose to follow you, and investors have to choose to trust you with their money.

New leverage: code and media

The newest leverage is products that cost nothing to copy: code and media. It began with the printing press, and the internet made it explode.

And it is permissionless. Nobody has to approve your app, your book or your podcast. Make it once, and it keeps working while you sleep.

Naval's image: the robot army is already here, packed into data centers. Code is how you give it orders.

That's where the new fortunes come from. And the products are fair: Jeff Bezos can't get a better Google search than you.

Judgment

Leverage multiplies your judgment. Once you have it, slow down: you have swapped a sailboat for an oil tanker.

Judgment means knowing the long-term consequences of a decision. Be right a little more often while steering something huge, and it adds up enormously.

It takes intellect plus experience. Intellect alone gives you confidence without much else, which can be worse than nothing.

And the best judges tend to be calm. A rule of thumb from Naval: the angrier someone gets, the worse their judgment.

What your time is worth

Set an aspirational hourly rate, and stick to it. Before he had real money, Naval used five thousand dollars an hour.

If a chore costs less than your rate, pay someone or skip it. Driving across town to return a broken speaker? Not at five thousand an hour.

Work as hard as you can. But what you choose to work on, and with whom, matter even more. Naval calls them three legs of a stool.

His motto: impatience with actions, patience with results. And decline most meetings. A packed calendar crowds out great work.

Be you, and give it time

Aim to be number one in the world at your thing. If you are not, keep redefining your thing until you are. The fastest runner? Taken.

That's easiest when your work is an extension of who you are. Competing means copying others. Authenticity is the way out.

Naval's first company, Epinions, was a review site. It got pulled into a price-comparison fight, then Amazon won and that whole field went to zero.

Then give it time. Apply specific knowledge with leverage and you will eventually be paid what you deserve. It can take ten or twenty years.

In short

Seek wealth, not money or status: assets that earn while you sleep.

Own equity. Renting out your time won't make you rich.

Build specific knowledge, take accountability, and use leverage: code and media.

Play long-term games, use good judgment, and give it time.

The original is long, and richer than this. Read it: nav.al/rich