0:00 - The Almanac of Naval Ravikant
0:58 - Permissionless Leverage
5:37 - Productize Yourself
7:46 - Skin in the Game
10:08 - Play Long-Term Games With Long-Term People
12:41 - Charge for Judgment, Not Time
14:20 - Act Immediately on Inspiration
16:27 - Master Reading
18:34 - Cut the Past to Maintain Agency
If you’re a founder or entrepreneur, you’ll get a lot of utility from this book.
This is Naval Ravikant. He is the co-founder of AngelList, an early investor in companies like Uber and Twitter, and the mind behind some of the most shared advice on wealth and happiness in the last decade.
His ideas were pulled together and structured inside The Almanack of Naval Ravikant by Eric Jorgenson.
It’s a collection of the sharpest ideas from one of the most clear-thinking minds in tech, investing, and personal freedom.
I just read this book for maybe the fifth time. I’ve noticed some recurring themes that pop up everywhere I go, so I’ve distilled down the guiding principles with the highest ROI.
Text in block quotes like this are direct quotes from the book.
Permissionless Leverage
Leverage is mentioned a ton in this book.
More specifically, the difference between permissioned and permissionless leverage.
Here’s what the book says:
There are three broad classes of leverage:
One form of leverage is labor—other humans working for you. It is the oldest form of leverage, and actually not a great one in the modern world. I would argue this is the worst form of leverage that you could possibly use. Managing other people is incredibly messy. It requires tremendous leadership skills. You’re one short hop from a mutiny or getting eaten or torn apart by the mob.
Money is good as a form of leverage. It means every time you make a decision, you multiply it with money.
Capital is a trickier form of leverage to use. It’s more modern. It’s the one that people have used to get fabulously wealthy in the last century. If you get good at managing capital, you can manage more and more capital much more easily than you can manage more and more people.
The final form of leverage is brand new—the most democratic form. It is: “products with no marginal cost of replication.” This includes books, media, movies, and code. Code is probably the most powerful form of permissionless leverage. All you need is a computer—you don’t need anyone’s permission.
Now for labor leverage, somebody has to believe in you enough to decide to follow you on that journey. For capital leverage, somebody has to be willing to bet on you and put their own money or other assets towards your mission.
But things like coding, writing books, recording podcasts, tweeting, making YouTube videos, they don’t require anyone else. That’s why Naval describes them as very egalitarian. They’re great equalizers of leverage.
Humans evolved in societies where there was no leverage. If I was chopping wood or carrying water for you, you knew eight hours put in would be equal to about eight hours of output. Now we’ve invented leverage—through capital, cooperation, technology, productivity, all these means. We live in an age of leverage. As a worker, you want to be as leveraged as possible so you have a huge impact without as much time or physical effort. A leveraged worker can out-produce a non-leveraged worker by a factor of one thousand or ten thousand. With a leveraged worker, judgment is far more important than how much time they put in or how hard they work.
This newsletter is leverage. I write it once, and then it can be read by anyone in the world, at any time. Thirty years ago, I’d have to give a lecture in a large room. Maybe I’d be able to reach a few hundred of you, once. But thanks to the leverage created by the internet, this post can be replicated anywhere, anytime, for free.
Leverage allows you to “earn with your mind, not your time.”
Productize Yourself
Naval says that if he had to summarize how to be successful in life in two words, it would be this: productize yourself.
Productize implies specific knowledge and leverage. Yourself has uniqueness and accountability.
The internet enables every niche interest to stand out and scale. And because every single human is different, every human is also the world’s best at something… being themself.
When you are competing with someone, you are essentially copying them. You’re trying to do the same thing.
But if whatever you’re marketing or building is essentially just an extension of who you are, then no one can compete with you.
Before the internet, this advice would be kind of useless, but in the age of the internet, you have a crazy new amount of leverage and therefore a massively expanded scope of potential careers.
The way to productize yourself is to first arm yourself with specific knowledge.
This is knowledge you cannot be trained for in a traditional school setting. It’s built by following your genuine curiosity and innate talents, or through an apprenticeship.
A key sign that you have specific knowledge is when the activity feels like play to you but looks like work to others.
You can also build specific knowledge by becoming “top 25%” in a few unrelated areas, creating a unique intersection where you are the only person in the world who can solve a specific problem.
Become the best in the world at whatever it is you do. Keep redefining what you do, until that’s the case
Skin in the Game
Naval encourages taking business risks under your own name. In doing so, society will reward you with responsibility, equity, and leverage.
The key distinction here is that taking risks isn’t what it used to be.
In the old days, the captain was expected to go down with the ship. If the ship was sinking, then literally the last person to get off was the captain. Accountability does come with real risks, but we’re talking about a business context.
The risk here would be you would probably be the last one to get your capital back out. You’d be the last one to get paid for your time. The time that you put in, the capital you put into the company, these are at risk.
Realize that in modern society, the downside risk is not that large. Even personal bankruptcy can wipe the debts clean in good ecosystems. I’m most familiar with Silicon Valley, but generally, people will forgive failures as long as you were honest and made a high-integrity effort.
There’s not really that much to fear in terms of failure, and so people should take on a lot more accountability than they do.
To get rich you’re going to need leverage. We know leverage comes from labor, capital, or code and media. But for most of these, somebody has to follow you. For capital, somebody has to give you money or assets. For labor, somebody has to believe in what you’re doing enough to go on that journey with you.
In order to get these things, you need to build some credibility, and the only way to do that is to take risks putting your own name, reputation, and assets on the line.
So accountability is this double-edged sword. It allows you to take credit when things go well, but you have to eat it when things go badly.
In an interview with Chris Williamson, Naval gives a specific example from Elon Musk’s career. Elon made $200 million from the sale of PayPal. Instead of sailing off into the sunset, he put $100 million into starting SpaceX, $80 million into Tesla, and $20 million into SolarCity, and then borrowed money to pay for rent.
When people see that you are taking great personal risk yourself, they will take you more seriously. They’ll believe in you, and they might even invest in you.
Play Long-Term Games with Long-Term People
This is the method for taking advantage of compound interest in every way of life.
“When you find the right thing to do, when you find the right people to work with, invest deeply. Sticking with it for decades is really how you make the big returns in your relationships and in your money. So, compound interest is very important.”
Compound interest also happens in your reputation. If you have a sterling reputation and you keep building it for decades upon decades, people will notice.
Your reputation will literally end up being thousands or tens of thousands of times more valuable than somebody else who was very talented but is not keeping the compound interest in reputation going.
This is also true when you’re working with individual people. If you’ve worked with somebody for five or ten years and you still enjoy working with them, obviously you trust them, and the little foibles are gone. All the normal negotiations in business relationships can work very simply because you trust each other—you know it will work out.
And here’s Naval giving an example from his own life.
There’s another angel investor in Silicon Valley named Elad Gil who I like to do deals with. I love working with Elad because I know when the deal is being done, he will bend over backward to give me extra. He will always round off in my favor if there’s an extra dollar being delivered here or there. If there’s some cost to pay, he will pay it out of his own pocket, and he won’t even mention it to me. Because he goes so far out of his way to treat me so well, I send him every deal I have—I try to include him in everything. Then, I go out of my way to try and pay for him. Compounding in those relationships is very valuable.
Naval says if you can’t see yourself working with someone for the rest of your life, then don’t work with them for a day.
Another little mental game he uses to illustrate this is something called the Stag Hunt.
Let’s imagine that you and I are both villagers and we’re out hunting for our own food. On our own, I can manage to kill a few rabbits, and you can manage to kill a few rabbits. But if we cooperate and we work together, we could actually take down a stag. The idea here is that we can both benefit more from cooperation. Yes, we end up splitting the pie, but we end up splitting a pie that’s way bigger than the individual pies that we could achieve on our own.
He advises cutting out cynics and pessimists because their beliefs become a self-fulfilling prophecy.
Charge for Judgment, Not Time
Charging for judgment rather than time is the strategy of disconnecting your inputs (hours) from your outputs (results) to achieve wealth.
Naval defines judgment as wisdom applied to external problems. He says that society often overvalues hard work, especially in the modern economy. In the modern economy, the direction you are heading matters far more than how fast you move.
Naval says you can’t get rich by renting out your time because your earning potential is strictly capped by the number of hours you can work. Instead, you must strive to “earn with your mind, not your time.”
I would love to be paid purely for my judgment, not for any work. I want a robot, capital, or computer to do the work, but I want to be paid for my judgment. I think every human should aspire to being knowledgeable about certain things and being paid for our unique knowledge. We have as much leverage as is possible in our business, whether it’s through robots or computers or what have you. Then, we can be masters of our own time because we are just being tracked on outputs and not inputs.
Now small differences in judgment can get amplified really quickly.
In fact, someone who makes decisions right 80 percent of the time instead of 70 percent of the time might be valued and compensated in the market hundreds of times more.
If I manage $1 billion and I’m right 10 percent more often than somebody else, my decision-making creates $100 million worth of value on a judgment call.
Act Immediately on Inspiration
Another one of Naval’s banger tweets
When you have something top of mind that excites you, you can easily get into the flow of it, and this is where the highest quality work emerges.
Naval says that if he hesitates when a new insight for a tweet or a blog post hits, the idea often never gets published. He also hates delaying work by putting it on a calendar. Operating off a calendar prevents him from acting on spontaneous inspiration because you have all these meetings and tasks that are sitting there waiting to get done.
Instead, he’s able to out-produce others who work on a forced 40-hour-a-week schedule because his output is higher quality and more focused.
And this approach to working is the same approach to learning. The moment curiosity hits about a subject or a book arrives, he pursues it immediately. Since it’s curiosity-driven, that’s when the best learning and the best retention happen.
How much do you actually remember from school, where you were forced to learn subjects on a specific schedule at a specific time from a specific person? Contrast this with a time you learned something because you were genuinely interested. That freedom and the ability to act on something the moment that you wanted is so liberating. So many of us go through our lives with very little of that.
So when you do have a dose of inspiration, don’t wait. Act on it immediately.
Master Reading
Naval calls reading the ultimate meta-skill because the means of learning are now abundant, while the desire to learn is scarce. When you master reading, you gain the ability to learn any subject from the ground up, which is the only skill that never becomes obsolete.
Naval’s obsession with reading began in childhood when his mother used the local library as a daycare center in a tough New York neighborhood. He spent his after-school hours there until late at night, reading everything from magazines and maps to comic books and pictographs. This immersion is where he came up with the idea that you don’t necessarily have to finish a book. You can flip through pages and get what you want, and if you lose interest, then go to the next book.
It can be easy to get caught up in the vanity metric of “books finished.” I’ve definitely been guilty of this before. But with the abundance and access to books everywhere, you can treat it as more of a search function and skim through all sorts of books, taking what you need from each one. Naval credits this habit for almost all of his material success.
Cut the Past to Maintain Agency
Cutting the past basically means: don’t let previous experiences, traumas, or identities dictate your current actions.
In short, don’t dwell on the past.
Naval uses the story of Alexander the Great and the Gordian Knot to illustrate this.
Basically, in some city in ancient Turkey, an ox-cart was tied to a post with an extremely tangled knot. An oracle declared that whoever could untie it would go on to become ruler of Asia. As you can imagine, no one who tried could untangle the knot. When Alexander the Great arrived, he struggled with it for a minute. Then he pulled out his sword and cut it.
He went on to conquer Asia.
Naval treats the past as a fiction that only exists in your head. Dwelling on it destroys presence and happiness.
Most of the time, your mind is either regretting the past or planning the future. Only a tiny fraction is actually here. That mental time-travel keeps you from seeing what’s in front of you, feeling gratitude, or experiencing the moment fully.
Don’t ruminate. Extract any useful lesson quickly, then drop it. Continuing to replay the same events only strengthens the emotional charge without adding new information.
Memory and identity are often burdens that lock us into old patterns. The stories we keep telling ourselves about who we are end up dictating who we think we are allowed to become. This makes any change feel like a betrayal of the self rather than a natural evolution.
I hope this advice has been as helpful to you as it has been for me. I’ve got to give a shout-out to Eric Jorgenson for doing an incredible job of writing this book. One of the most underrated and praiseworthy things about this book is that Naval earns no money from it. It was created as a public service. And it’s available for free download as a PDF and e-reader versions for anyone who doesn’t have the means to buy it. I find that so admirable.
Get the book: https://www.navalmanack.com
Eric actually has another book that just came out on Elon Musk, which I’ve already made an episode for.
That’s all from me. See you next time.
- Dante
