Book of the month - The Almanack of Naval Ravikant by Eric Jorgenson

Hello ladies and gents,

As promised - the entire recap of this great book that I highly recommend reading. I know this will not be the only time I will pick up this book and will stay in my book collection forever.

Without further ado, let’s jump in.

This book has been on my reading list for quite some time. It is a book about the words and wisdoms of Naval Ravikant, who is a serial investor, entrepeneur and in my opinion a great advice giver. In this book the author has curated Naval's tweets, essays, and interviews on wealth and happiness.

He starts the first chapter with this quote:

And what this skill is? You need to figure it out.

Find a skill that is unique to you and find a way to make money by using that skill. He says that you need to “productize yourself”. You need to find a specific knowledge that you cannot be trained for it, because if it can be trained, there is someone that can replace you. Think about the things that you were doing as a kid or a teenager and you did them almost effortlessly.

He lists examples of specific knowledge that many would not consider as a skill, but can be used for making money:

• an obsessive personality - this means you can dive into thing and remember them quickly

• playing a lot of games - your understand game theory pretty well

• and my favorite - gossiping, digging into your friend network - that might make you into a very interesting journalist.

The last one special skill resonated with me I have to say.

Another Twitter thread of his goes like this:

Same as Morgan Housel said in his book, he points out that being rich and having wealth is not the same thing. Wealth is the thing you want.

And like compound interest is important when investing, the same goes for all other returns in life. Compounding in business relationships is very important. Same goes for reputation that you are building on a daily basis. If you have a great reputation and you build on it throughout the years, people will notice it, they will trust you and be willing to do business with you.

This is the lesson I still need to put into action, since I am still writing this newsletter anonymously. I’ll change that in the future. And why am I still a silent partner in this writing thing?

Probably, as Naval points out, because we are still socially hardwired to not fail in public under our own name. He continues to say that people who have the ability to fail in public under their own name actually gain a lot of power.

Naval speaks about finding a leverage and using it in your advantage. He lists three classes of leverage that you can use:

• Labor - not you working, but others working for you.
  He says that this one is the worst, because managing other people is difficult and messy.

• Money - in the way that every time you make a decision, you multiply it with money. This is probably the most expensive one and also the most limiting in the sense, that you first need the money, to be able to leverage it.

• The last one and the most affordable one is a brand new one - products with no marginal cost of replication - books, media, movie and code. Newsletter certainly falls into this category.

He points out that the biggest chunk of the new generation’s fortunes are made using this leverage - content creators, influencers, podcasters, software developers.
It is a permissionless form of leverage. In what sense? Well, if you compare it to labor - someone has to decide to work for you, or money - someone has to give you the money to invest, with such products, you do not need anybody’s permission or input to use this leverage.

Naval says the following about time.

You need to define what your hourly rate is. If you can outsource something for less than your hourly rate, outsource it or don’t do it. Always factor your time into every decision. How much time does it take to do something? How much would it cost to hire someone to do it? Be wise with your time and spend it, where it actually adds value.

Spend more time making the big decisions. He says that there are only three:

• Where you live - because where you live can determine the trajectory of your life

• Who you’re with - who makes you laugh, who can be a great partner to you, a good co-parent?

• What you do - you will spend a lot of years doing a job or developing a business, so make sure you pick the right thing

And the last advice for today - be patient.

It takes time.

If you’re counting, you’ll run out of patience before success actually arrives.

In previous two parts we spoke mostly about building wealth. In the second chapter of the book Naval talks about building judgment. Very important thing in my opinion.

Judgment is not only about having opinions on things. Judgment is also a way of thinking and how, not what you think about things, can make a difference.

Another part of judgment and thinking is decision making. And what is the best way of making sound and smart decisions? By ignoring your “monkey mind”. Our monkey mind will always respond emotionally and make the decisions in line with how “the world should be”. We are not able to see the truth. For people to be able to do that, they need to ignore their ego, because the ego doesn’t want to face the truth. Our ego gets constructed by the environment we lived in for the first two decades and for the rest of our lives, we are trying to make our ego happy. We interpret anything new through our ego.

Some self reflection is needed, if you want to become a clear thinker, not driven by your ego. You need to find the root of your ego and essentially your thinking patterns. They probably started somewhere in your childhood because you wanted your parents attention for example. And by reinforcing them for years, they became part of your identity. You need to ask yourself -

Like many other successful people he says, that what we should live by a set of principles, instead of listening to our ego. Mental models. He lists many of them, but I’ll list just a couple:

• Economics - microeconomics and game theory are fundamental, especially in business and nowadays modern capitalist society

• Compound interest - not only in the financial context, but also in the intellectual domain.

• If you can’t decide, the answer is no - especially when you stumble upon important life questions such as “should I take this job?” or “should I marry this person?” - my version of this is “if it’s not a hell yes, it’s a hell no”.

And what is the best way to build new mental models? Read a lot - just read. 

He says that reading is a superpower. Read the greats in math, science and philosophy. When you read, you learn and with that you become a perpetual learning machine. You will never be out of options for how to make money, if you become that.

Next he writes about happiness. About learning happiness. Because he says that being happy is a skill.

"We constantly walk around thinking “I need this” or “I need that”, trapped in the web of desires, thinking that all those “things” will make us happy.

Happiness is not about having positive thoughts and doing positive actions, because every positive thought is essentially a contrast to something negative. If I say I am happy, that means I was sad at some point.

Naval says that for him happiness is the absence of desire, especially the absence of external things. The fewer desires you have, the less mind is moving, which is important because mind usually thinks about future or past. It’s not in the moment. The more present you are, the happier and content you’ll be.

If you think about it, that is actually true. The reality is neutral. It happens. It is. How you choose to interpret that reality is up to you - you have that choice. And if you believe it’s a choice, you can start working on it.

Happiness is built by having good habits. At the end of the day, you are a combination of your habits and the people who you spend the most time with. Which habits might bring you happiness? He lists the following:

• meditation

• being very aware in every moment

• trying to see positive interpretation of everything that happens

• not drinking coffee

• working out

• not being judgmental

• less screen time

And having self-discipline to commit to these habits.

On the other side of happiness you have desire. He says that desire is a contract you make with yourself to be unhappy until you get what you want. Majority of people go about desiring things all day long and then wonder why we’re unhappy.

The word “should” creeps up often. When it enters your minds is probably in the shape of guilt or social programming. Doing something because you “should” basically means you don’t actually want to do it. Life is a single-player game. You’re only competing against yourself. In reality we are social creatures that have been externally programmed and are competing in a multiplayer game of society.

But life is in fact a single-player game. You’re born alone, you’re gonna die alone. All the interpretations in our minds are done by ourselves and in complete solitude. Before you showed up, nobody cared. We are all gonna be gone in three generations and then definitely nobody will care.

What is not a good option is to sit around wishing you would change it but not changing it, wishing you could leave it but not leaving it and not accepting it. This is approach is probably responsible for most of our misery.

I highly recommend reading this book. It is a very easy read and if you want to read it yourself, you can find a free version of an e-book here.