If you can’t get rich by renting out your time, is there really any other way to get rich?

Yeah if I had to summarize how to make money, at least from what I’ve learned in life, you basically get rewarded by society for giving it what it wants and it doesn’t know how to get elsewhere.

A lot of people think you can go to school and you can study for how to make money but the reality is there’s no skill called business what you’re actually trying to figure out is what product or service does society want but does not yet know how to get. You
want to become the person who delivers that and delivers it at scale so that’s really the challenge of how to make money.

Now the problem is if you can’t learn how to do it then how do you become good at it? Whatever it is… it moves around [from] generation to generation, but a lot of it happens to be in technology… and so it’s a form of what I think the Austrian economists used to call specific knowledge… Knowledge that only you know or only a small set of people know. This [knowledge] basically is going to come out of your passions and your hobbies oddly enough. So if you have hobbies around intellectual curiosity, you’re more likely to develop these passions, and you’re more likely to have skill sets that society does not yet know how to train other people how to do… because if it can train other people how to do something then it can replace them… and if it can replace them there’s no need to have to pay them a lot. [Thus], you want to know how to do something that other people don’t know how to do, at the time period when they want it.

For example, you might be interested in programming for computers and you’re into really esoteric deep learning algorithms but it doesn’t really matter until society assembles large enough data sets and has enough computing machines that the general AI revolution shows up…

Then all of a sudden your hobby turns into specific knowledge. And then you want to take that specific knowledge and you want to be known as the person who can deliver that. So you have to build a brand and a reputation. And the most powerful brands and reputations in the world are individual brands like Oprah, Trump, Cher you know single names… Naval to some extent I’m trying to build… a little bit of that brand accidentally

But if you have a unique name and if you can brand yourself in a unique way… and that branding doesn’t come for free that has accountability on the other side of it so you’re taking risks with branding. You get attacked, you can fail, you can have problems. You’re really sticking your neck out there.

You basically have to have specific knowledge, you have to take on accountability with a brand and the last piece of making money is you have to have leverage. Leverage is critical. Archimedes famously said, “give me a lever long enough and place a stand and I will move the earth.” That was a very powerful statement, what he was basically saying is it’s the power of leverage. Humans are not evolved to understand leverage. Our evolutionary past maps inputs to outputs, it’s a one-to-one ratio. For example, if I’m chopping trees and I’m harvesting wood to go start a fire then basically if I put in eight hours chopping wood that’s probably going to get me eight times the output that I would get from one hour of chopping wood.

Whereas with leverage I might have bulldozers or chainsaws or I might have Lumberjacks working with me. If I make the right decision of how to cut down the wood and how to store it and to ship and transport it I get a multiplier effect.

It’s very important to understand the different kinds of leverage that are available because if you want to make money you need that specific knowledge you need that accountability and now you’re going to need to use whichever form of leverage best
applies to your situation.

There are three broad classes of leverage: one form of leverage is going to be labor, which is the oldest form of leverage… which is other humans working for you and that’s actually not a great one in the modern world. It used to be great in the old world but in the modern world people are on to it… so everyone’s always playing a status game and trying to become the lead monkey in the tribe and so having people work for you is a difficult form of leverage.

Then there’s capital which is a more recent invention, it’s only about a few thousand years ago. It goes back to the agricultural age and so that’s money. If you have money as a form of leverage that’s a good one it means like every time you make a decision now you multiply this with money and that’s why fund managers and venture capitalists and so on seem to do well.

Then the final form of leverage is a brand new form of leverage and the most democratizing one and that is products that have no marginal cost of replication: books, media, movies, and it would include code. Code is probably the most powerful form of leverage that is permissionless. All you need is a computer. You don’t need anyone’s permission, so if you want to make the maximum amount of money possible and if you just want to get rich over your life and you want to do it in a deterministic predictable way:

What you would do is you would basically stay on the bleeding edge of trends and you’d study technology, design, art and you’d become really good at something. You would basically be waiting for your moment until something emerged in the world where they needed that skill set and you’re uniquely qualified. You would build your brand in the meantime on Twitter on YouTube by giving away free work so people have heard of you would make a name for yourself.

You would take some risk in the process and then when it was time to move in on that opportunity you would do so with leverage the maximum leverage possible. Maximum leverage would mean that you would have people working for you and it would mean you would have a fund or you would have capital it would mean that you would be writing a book it would mean that you’d be writing code and then to building a media presence.

What are you doing to make money?

I’m kind of doing it more by accident. I actually don’t really care that much honestly, I’m more of an intellectual. I learned how to make money because it was a necessity. After it stopped being a necessity I stopped caring about it.

Every time, I look at some of my colleagues in Silicon Valley who are working really really hard and have made lots of money but they continue working hard… and I see them then donating like hospitals wings. I just think oh, that person overshot. At some point it would have been logical to stop or if unless they’re enjoying it in which case, God bless you and do whatever you want.

But at least for me, work was a means to an end. Making money was a means to an end but fundamentally I’m much more interested in solving problems than I am in making money. Anyway, enough about me.

Best piece of advice for a 24 year old or a new millennial out of college?

It just depends so much on your circumstances. I would say just spend more time on making the big decisions. There’s basically three really big decisions that you make around that age: it’s where you live, who you’re with, and what you’re doing. Those are the three big decisions and we spend so much time in relationships.

An average relationship probably lasts a couple of years but we spend very little time deciding which relationships to get into. We spend so much time in a job but we spend so little time deciding which job to get into. Choosing what city to live in can almost completely determine the trajectory of your life but we spend so little time trying to figure out what city to live in. So if you’re going to live in a city for ten years and if you’re going to be in a job for five years and if you’re going to be in a relationship for a decade you should be spending one to two years deciding on these things. These are like highly dominating decisions so if you’re 24 I would say those three decisions really matter.

You literally have to free up your time because the world will assault you with its own agendas and you have to say no to everything. This will give you time to solve the important problems and those three are the biggest ones.

What do you suggest: startup while working or quitting to startup?

It really depends on the circumstances but the reality is, if you’re serious you quit and start it up. It sort of separates serious from who’s not. If you’re even asking the question it tells me you’re not quite serious enough yet.

Advice for relationships?

I’m probably no better than you are at them and probably worse so I’m not the right person to ask.

What’s worse getting rejected by a date or an ideal VC?

Neither. The good news is there are three and a half billion people of the opposite sex or the same sex depending on your preferences. If you’re bisexual there are seven billion people you can date. So there are lots of options. The same is true for VCs. There’s no such thing as the one, I think, either in relationships or in business.

If you had $100,000 spare what would you do with it?

I would invest it in my own practical education so I’d always make sure that I was able to buy whatever books I needed.

I would use it to put myself in the center of the waterfall so that means that like if you want to be an actor you would go to Hollywood if you want to be in finance you would go to New York if you want to be in tech you would go to Silicon Valley… so I’d make sure that I would use that money to learn the most from books, learn the most from people, and put myself in a situation where I can learn the most.

I’m assuming you’re asking as an investment. You were probably also thinking like you know, give me a stock tip. I don’t have a stock tip for you.

Would you agree that metrics are important in business?

They’re critical in business.

What do you look for in people?

In business its Intelligence, energy, and integrity. In relationships it’s probably honesty, which is I guess is integrity again… intelligence again… I guess the energy matters less in relationships. In relationships, I think like I like people who are calm who have good emotional self-control. Yes, that’s Buffett’s model… intelligence, energy, integrity.

If you had to liquidate all but one of your investments what would you keep?

I’d keep Bitcoin, that’s a good question.

What is your next major goal?

I don’t have goals.

Do you practice public speaking? Have you always been comfortable speaking in front of humans?

I just pretend you guys don’t exist that makes it easier to talk. You’re hearing my words as I’m hearing them, there’s no internal monologue, the internal monologue will trip you up. If you care what other people think, then you have to think of what you’re going to say before you say it. If you have to think of what you don’t say before you say it, you are going to trip up on it all the time. You just have to speak without thinking.

Graduate and experiment or go for higher studies?

Graduate and experiment. School is so overrated. Unless you’re going to be a surgeon or something you need some highly specific training knowledge for. I don’t think it makes sense to hang out in school any longer than you need to.

What is one trait that you’ve noticed in successful people

They read a lot, not always but most.

Should one be an engineer, economist, or a philosopher?

Economist is largely charlatans I agree with Messi and Talib on that, not completely. Engineering is pure and good and you learn how to use technology so that’s fantastic Everybody ends up being a philosopher when their older

What’s your favorite way to meet new people?


What is something you find overrated?

Hard work… hard work is really overrated how hard you work matters a lot less in a modern economy.

What is underrated?

Judgment is underrated.

Do you believe we’re in a simulation?

I think it’s a nonsense question it wouldn’t change anything it wouldn’t change how you behave with anyone.

1 Curated Resources

The original concept from Buffett that Naval brings up in his Periscope Q&A.