How to Get Rich

Hey, this is Nivi. You're listening to the Naval podcast. This is one giant mega sode that collects every episode we've done on getting rich. All of it based on his tweet storm of how to get rich without getting lucky. I've collected them all here because we're going to switch topics to the new topic of happiness on the next episode. We've published one of these giant mega sodes before, but this one's even bigger. It's about three and a half hours long. It covers all the tweets from the "How to Get Rich" tweet storm, plus all the Q&A that we did after that, plus ten minutes of bonus material at the very end that we've never released. The overall sound quality of this mega sode improves a lot after the first hour. You can find a link to a clean transcript in the show notes, or if you go to the website, Naval. There's no .com at the end. I hope you enjoy.

You probably know Naval from his Twitter account, and we're going to be talking about his epic tweet storm on how to get rich without getting lucky. We're going to go through most of the tweets in detail, giving Naval a chance to expand on them and just generally riff on the topic. He'll probably throw in some ideas that he hasn't even published before. He's also the co-founder of AngelList and Opendoor. He's a prolific tech investor in companies like Twitter, Uber, and many more. And I'm the co-founder, evangelist, Naval. And I also co-authored the Venture Hacks blog with him back in the day.

Yeah, the "How to Get Rich" tweet storm definitely hit a nerve. A lot of people say it was helpful, reached across aisles and people outside of the tech industry, people in all walks of life. People do want to know how to solve their money problems, and everyone vaguely knows that they want to be wealthy, but they don't have a good set of principles to do it by.

What's the difference between wealth, money, and status? Wealth is the thing that you really want. Wealth is assets that earn while you sleep. Wealth is the factory that with the robots is cranking out things. Wealth is the computer program that's running at night that's serving other customers. Wealth is even money in the bank that is being reinvested into other assets and into other businesses. Even a house can be a form of wealth because you can rent it out, although it's probably a lower use of productivity, but land and actually doing some commercial enterprise. So my definition of wealth is much more businesses and assets that can earn while you sleep. But really, the reason you want wealth is because it buys you freedom. So you don't have to wear a tie like a collar around your neck. So you don't have to wake up at 7 a.m. and rush to work and sit in commute traffic. So you don't have to waste away your entire life grinding all the productive hours into a way into a soulless job that doesn't fulfill you. So the purpose of wealth is freedom. It's nothing more than that. It's not to buy fur coats or drive Ferraris or sail yachts or jet around the world in your Gulfstream. That stuff gets really boring and really stupid really fast. It's really just so that you are your own sovereign individual. You're not gonna get that unless you really want it, and the entire world wants it, and the entire world is working hard at it. And to some extent, it is a competitive, it's a positive-sum game, but there are competitive elements to it because there's a finite amount of resources right now in society. And to get the resources to do what you want, you have to stand out.

Money is how we transfer wealth. Money is social credit. It is the ability to have credits and debits on other people's time. If I do my job right, if I create value for society, society says, "Oh, thank you. We owe you something in the future for the work that you did in the past. Here's a little IOU. Let's call that money." And that money gets debased because people steal the IOUs, the government prints extra IOUs, people mismanage IOUs. But really, what money is trying to be, it is trying to be a reliable IOU from society that you are owed something for something you or someone who gave you that money did in the past. And we can transfer these IOUs around. So really, money is how we transfer wealth.

There are fundamentally two huge games in life that people play. One is the money game. Because money's not gonna solve all your problems, but it's gonna solve all your money problems. So I think that people know that, they realize that, so they want to make money. But at the same time, many of them deep down believe that they can't make it. They don't want any wealth creation to happen. So they virtue signal by attacking the whole enterprise by saying, "Well, making money is evil, do it, blah, blah, blah." But what they're trying to do is they're actually playing the other game, the status game. They're trying to be high status in the eyes of other people watching by saying, "Oh, I don't need money. We don't want money." And then status is just your ranking in the social hierarchy.

Wealth is not a zero-sum game. Everybody in the world can have a house. Because you have a house doesn't take away from my ability to have a house. If anything, the more houses that are built, the easier it becomes to build houses, the more we know about building houses, and just the more people that can have houses. So wealth is a very positive-sum game. We create things together. We're starting this endeavor to create this hopefully piece of art that explains what we're doing. At the end of it, something brand new will be created. It's a positive-sum game.

Status, on the other hand, is a zero-sum game. It's a very old game. We've been playing it since monkey tribes, and it's hierarchical. Who's number one? Who's number two? Who's number three? And for a number three to move to number two, number two has to move out of that slot. So status is a zero-sum game. Politics is an example of a status game. Even sports is an example of a status game. To be the winner, there must be a loser. I don't fundamentally love status games. They play an important role in our society, so we figure out who's in charge. But fundamentally, you play them because they're a necessary evil. The problem is an evolutionary basis. Like if you go back thousands of years, status is a much better predictor of survival than wealth. As you couldn't have wealth before the farming age, before farmers, because you couldn't store things. Hunter-gatherers carried everything on their backs. So hunter-gatherers lived entirely in status-based societies. Farmers started going to wealth-based societies, and the modern industrial economies are much more heavily wealth-based societies. But there's always a subtle competition going on between status and wealth. For example, when journalists attack rich people or they attack the technology industry, they're really bidding for status. They're saying, "No, the people are more important, and I, the journalist, represent the people, and therefore I am more important." The problem is that by playing these status games, to win at a status game, you have to put somebody else down. That's why you should avoid status games in your life because they make you into an angry, combative person. You're always fighting to put other people down to put yourself and the people that you like up. And they're always going to exist. No way around it. But just realize that most of the times when you're trying to create wealth, you're actually getting attacked by someone else, and they're trying to look like a goody-two-shoes, but really what they're doing is they're trying to up their own status at your expense. They're just playing a different game, and it's a worse game. It's a zero-sum game instead of a positive-sum game.

One thing you mentioned before the interview that stuck with me was the idea that you think everyone can become rich, and that perhaps some of the ways of getting rich or the idea of wealth is vilified by some people in other countries. Say, you want to expand on that a little bit?

Yeah, I think there's this notion that making money is evil, right? It's like rooted all the way back down to "money's the root of all evil." People think that bankers steal our money, and you know, it's somewhat true in that in a lot of the world, there's a lot of theft going on all the time. The history of the world, in some sense, is this predator-prey relationship between makers and takers. There are people who go out and create things and build things and work hard on things, and then there are people who come along and play with a sword or a gun or taxes or crony capitalism or communism or what have you. There's all these different methods to steal. Even in nature, there are more parasites than there are non-parasitical organisms. You have a ton of parasites in you who are living off of you, and the better ones are symbiotic, they're giving something back, but there are a lot that are just taking. That's just the nature of how any complex system is built. But what I am focused on is true wealth creation. It's not about taking money, it's not about taking something from somebody else, but it's when creating abundance. Obviously, there's not a finite number of jobs or a finite amount of wealth, otherwise we'd still be sitting around in caves figuring out how to divide pieces of firewood and, you know, the occasional dead deer. So most of the wealth and civilization, in fact, not most, all of it has been created, and it got created from somewhere. It got created from people, it got created from technology, a critical productivity got created from hard work. So this idea that it's stolen is I think this horrible zero-sum game that people who are trying to gain status play. But the reality is, everyone can be rich. And we can see that by seeing that in the first world, everyone is richer than almost anyone who was alive 200 years ago. 200 years ago, nobody had any antibiotics, nobody had cars, nobody had electricity, nobody had the iPhone. So all of these things are inventions that have made us wealthier as a species. Today, I would rather be a poor person in a first-world country than be a rich person in Louis XIV's France. I'd rather be a poor person today than an aristocrat back then. And that's just because of wealth creation, the engine of technologies, science that is applied for the purpose of creating abundance. So I think fundamentally, everybody can be wealthy. And the thought experiment I want you to think through is, imagine if everybody had the knowledge of a good software engineer and a good hardware engineer. If you could go out there and you could build robots and computers and bridges and program them, let's say every human knew how to do that. What do you think society would look like in 20 years? My guess is what would happen is we would build robots, machines, software, and hardware to do everything, and we would all be living in massive abundance. We would essentially be retired in the sense that none of us would have to work for any of the basics. We'd even have robotic nurses, we have like machine-driven hospitals, we have self-driving cars, we'd have farms that are 100% automated, we have clean energy. So at that point, we could use technology breakthroughs to get everything that we want. And if anyone is still working at that point, they're working as a form of expressing their creativity. They're working because it's in them to contribute and to build and design things. But I don't think capitalism is evil. Capitalism is actually good. It's just that it gets hijacked. It gets hijacked by improper pricing of externalities. It gets hijacked by improper deals where that you have corruption or you have monopolies. Over all, capitalism is intrinsic to the human species. Capitalism is not something we invented. Capitalism is not even something we discovered. It is innate to us. In every exchange that we have, when you and I exchange information, I want some information back from you. I give you information, you give me information. If we weren't having a good information exchange, you'd go talk to somebody else. So the notion of exchange and keeping track of credits and debits, this is built into us as flexible social animals. We are the only animal in the animal kingdom that cooperates across genetic boundaries. Most animals don't cooperate, but when they do, they cooperate only in packs where they co-evolved together and they share blood, so they have some shared interests. Humans don't have that. And what lets us cooperate is because we can keep track of debits and credits. Who put in how much work? Who contributed how much? That's all free market capitalism. So I strongly believe that it is innate to the human species, and we are going to create more and more wealth and abundance for everybody. Everybody can be wealthy, everybody can be retired, everybody can be successful. It is merely a question of education and desire. You have to want it. If you don't want it, that's fine, then you opt out of the game. But don't try and put down the people who are playing the game because that's the game that keeps you in a comfortable warm bed at night. That's the game that keeps a roof over your head. That's the game that keeps your supermarkets stocked. That's the game that keeps the iPhone buzzing in your pocket. So it is a beautiful game that is worth playing ethically, rationally, morally, socially for the human race, and it's gonna continue to make us all richer and richer until we have massive wealth creation for anybody who wants it.

And it's not just individual secretly despising wealth. Right. There's countries, groups, political parties that overtly despise wealth or at least seem to.

That's right. And so what those countries, political parties, and groups are reduced to playing is the zero-sum game of status. And in the process to destroy wealth creation, they drag everybody down to their level. Which is why the U.S. is a very popular country for immigrants because it's the American dream. Anyone can come here pretty poor and then work really hard and make money and get wealthy. But even just make some basic money for their lives. Obviously, the definition of wealth is different for different people. A first-world citizen's definition of wealth might be, "Oh, I have to make millions of dollars and I'm completely done." Whereas to a third-world poor immigrant just entering the country, and we were poor immigrants who came here when I was fairly young to the United States, wealth may just be a much lower number. It may just be that I don't have to work a manual labor job for the rest of my life that I don't want work. But groups that despise it will essentially bring the entire group down to that level. If you get too many takers and not enough makers, society falls apart. You're in a communist country, look at Venezuela, right? They were so busy taking and dividing and reallocating that people are literally starving in the streets and losing kilograms of body weight every year just due to sheer starvation. Another way to think about it, imagine an organism that has too many parasites. You actually need some small number of parasites to stay healthy, and you need a lot of symbionts, like all the mitochondria in all of our cells that help us respirate and burn oxygen. These are symbionts that help us survive. We can survive without them, but to me, those are partners in the wealth creation that creates the human body. But if you just were filled with parasites, if you've got infected with worms or a virus or bacteria that were purely parasitical, you would die. So any organism can only withstand a small number of parasites, and when the parasitic element gets too far out of control, you die. So, you know, that again, I'm talking about ethical wealth creation. And the time when monopolies and that, I'm not promoting capitalism. I'm talking about mispriced externalities like the environment. I'm talking about free minds and free markets, small, ethical exchange between humans that's voluntary and doesn't have an outsize impact on others. But I think that kind of wealth creation, if a society does not respect it, the group does not respect it, that society will plunge into ruin and darkness.

Obviously, we want to be wealthy, and we want to get there in this lifetime without having to rely on luck. A lot of people think making money is about luck. It's not. It's about becoming the kind of person that makes money. You know, I like to think that if I lost all my money and if you drop me on a random street in any English-speaking country, within five, ten years, I'd be wealthy again, right? Because it's just a skill set that I've developed, and I think anyone can develop. You know, in a thousand parallel universes, you want to be wealthy in 999 of them. You don't want to be wealthy in the 50 of them where you got lucky. So we want to factor luck out of it.

There's really four kinds of luck. That we were talking about. This came from a book P. Mark, Mark Andreessen wrote a blog post about it. But there's different kinds of luck. The first kind of luck, he might just say, is that blind luck where I just got lucky because something completely out of my control happened. You know, that's fortune, that's fate, etc. Then there's luck that comes through persistence, hard work, soeul motion, which is when you're just running around creating lots of opportunities. You're generating a lot of energy. You're doing a lot of things. Lots of things will just get stirred up in the dust. It's almost like mixing a petri dish and seeing what combines or mixing a bunch of reagents and seeing what combines. You're just generally in a force and hustle and energy that luck will find you. A third way is that you just become very good at spotting luck. So if you are very skilled in a field, you will notice when a lucky break happens in that field, and other people who aren't attuned to it won't notice. So you become sensitive to luck, and that's the skill and knowledge and work. And then the last kind of luck is the weirdest, hardest kind, but that's what we want to talk about, which is where you build a unique character, a unique brand, a unique mindset where then luck finds you. For example, let's say that you're the best person in the world at deep-sea underwater diving, and you're known to like take on deep-sea underwater dives that nobody else will even attempt to dare. And then by sheer luck, somebody finds a sunken treasure ship off the coast. They can't get at it. Well, their luck just became your luck because they're gonna come to you to get that treasure, and you're gonna get paid for it. Now, that's an extreme example, but it's just showing how like the person who got lucky and found the treasure chest, that was blind luck. But then coming to you and asking you to extract it and having to give you half, that's not luck. You created your own luck. You put yourself in a position to be able to capitalize on that luck or to attract that luck when nobody else has created that opportunity for themselves. So when we talked about without getting lucky, we want to be deterministic. We don't want to leave it to chance.

Do you want to elaborate a little bit more on the idea that in a thousand parallel universes, you want to get rich in 999 of them?

I think some people are going to see that and say, "That sounds impossible. Sounds like it's too good to be true." No, I don't think it's impossible. I think that you may have to work a little bit harder at it, given your starting circumstances. I mean, remember, I started as a poor kid in India. So if I can make it, anybody can. In that sense, now obviously I had all my limbs and I had my mental faculties and I did have an education. So there are some prerequisites you can't get past. But if you're listening to this video or podcast, you probably have the requisite means at your disposal, which is a functioning body and a functioning mind. And I have encountered plenty of bad luck along the way. First, a little fortune that I made, I instantly lost in the stock market. The second little fortune that I made, or I should have made, I got cheated by my business partners. It's only the third time around that has been a charm. And even then, it has been a slow and steady struggle. And I haven't made money in my life in one giant payout. It's always been a whole bunch of small things piling up. So it's more about consistently creating wealth by creating businesses and quitting opportunities and creating investments. It hasn't been like a giant one-off thing. My personal wealth has not been generated by one big year. It just stacks up little bits at a time. More options, more businesses, more investments, more things that can do. Same way, someone like in a nod gala service, he's building his brand online, he's building videos. It's not like any one video is going to suddenly shower him with riches overnight. It's going to be a long lifetime of learning, of reading, of creating. This is going to compound.

So we're talking about getting wealthy so you can retire, so you have your freedom. I'm not retired in the sense that you don't do anything, but in the sense that you don't have to be any place you don't want to be. You don't have to do anything you don't want to do, and you can wake up when you want, you can sleep when you want, you don't have a boss. That's freedom. So we're talking about enough wealth to get to freedom. And especially thanks to the internet these days, those opportunities are massively abundant. I, in fact, have too many ways to make money. I don't have enough time. I literally have opportunities pouring out of my ears, and the thing I keep running out of is time. There's just so many ways to create wealth, to create products, to create businesses, to create opportunities, and to, as a by-product, get paid by society that I just can't even handle it all.

I think it's pretty interesting that the first three kinds of luck that you described, there are very common cliches for them that everybody knows. And then for that last kind of luck that comes to you out of the unique way that you act, there's no real cliche for it. So for the first three kinds, there is "dumb luck" or "blind luck." That's the first kind of luck. The second kind of luck, does the cliche that "fortune favors the bold," that's a person who gets lucky just by stirring the pot and acting. The third kind of luck, people say that "chance favors the prepared mind." But for the fourth kind of luck, there is not really a common cliche out there that matches the unique character of your action, which I think is interesting and perhaps an opportunity. And it also just shows that people aren't necessarily taking advantage of that kind of luck the way they should be.

I think also at that point, it starts becoming so deterministic that it stops being luck. So the definition starts fading from luck to more destiny. So I would characterize that fourth one is you build your character in a certain way, and then your character becomes your destiny. One of the things I think that is important to making money when you want the kind of reputation that makes people do deals through you. You know, I use the example of like, if you're a great diver, then treasure hunters will come and give you a piece of the treasure for your diving skills. If you're a trusted, reliable, high-integrity, long-term thinking deal maker, then when other people want to do deals, but they don't know how to do them in a trustworthy manner with strangers, they will literally approach you and give you a cut of the deal or offer you a unique deal just because of the integrity and reputation that you've built up. Warren Buffett, he gets offered deals, and he gets to buy companies, and he gets to file warrants and bail out banks and do things that other people can't do because of his reputation. But of course, that's fragile. It has accountability on the line. It has a strong brand on the line. And as we will talk about later, that comes with accountability attached. But I would say your character, your reputation, these are things that you can build that then will let you take out advantages of opportunities that other people may characterize as lucky, but you know that it wasn't luck.

You said that this fourth kind of luck is more or less a destiny. There's a quote from that original book that was in Mark's blog post from Benjamin Disraeli, who I think was the former Prime Minister of the UK. The quote to describe the kind of luck was, "We make our fortunes and we call them fate." There were a couple of other interesting things about this kind of luck that were mentioned in the blog post. I think it'll be good for the listeners to hear about is that this fourth kind of luck can almost come out of eccentric ways that you do your things, and that eccentricity is not necessarily a bad thing in this case. In fact, it's a good thing.

Yeah, absolutely. Because the world is a very efficient place. So everyone has dug through all the obvious places to dig. And so to find something that's new and novel and uncovered, it helps to be operating on a frontier where, right there, you have to be a little eccentric to be out on the frontier by yourself. And then you just have to be willing to dig deeper than other people do, deeper than seems irrational, just because you're interested.

Yeah, the two quotes that I've seen that expressed this kind of luck, in addition to that Benjamin Disraeli one, are this one from Sam Altman, where he said, "Extreme people get extreme results." I think that's pretty nice. And then there's this other one from Jeffrey Pfeffer, who is a professor at Stanford, that "You can't be normal and expect abnormal returns." I've always enjoyed that one too.

Yeah, and one quote that I like, which is the exact opposite of that, is "Play stupid games, win stupid prizes." All right, a lot of people spend a lot of their time playing social games like on Twitter, where you're just trying to improve your social standing, and you basically win stupid social prizes, which are worthless.

I guess the last thing that I have from this blog post is just the idea that by pursuing these kinds of luck, especially the last one, basically everything but dumb luck, by pursuing them, you essentially run out of luck. So if you just keep stirring the pot and stirring the pot, that alone, you will run out of luck.

Yeah, or it could just be reversion to the mean, right? So then you at least neutralize luck so that it's your own talents that come into play.

Next, you go into more specific details on how you can actually get rich and how you can't get rich. The first point was about how you're not going to get rich renting out your time. You must own equity, a piece of the business, to gain your financial freedom.

This is probably one of the absolute most important points. People seem to think that you can create wealth and make money through work, and it's probably not going to work. There are many reasons for that, but the most basic is just that your inputs are very closely tied to your outputs. In almost any salary job, even at one that's paying a lot per hour, like a lawyer or a doctor, you're still putting in the hours, and every hour you get paid. So what that means is when you're sleeping, you're not earning. When you're retired, you're not earning. When you're on vacation, you're not earning. And you can't earn non-linearly. If you look at even doctors who get rich, like really rich, it's because they open a business. They open like a private practice, and then that private practice builds a brand, and that brand attracts people. Or they build some kind of medical device or a procedure or a process where they've intellectual property. So essentially, you're working for somebody else, and that person is taking on the risk and has the accountability and the intellectual property and the brand. So they're just not gonna pay you enough. They're gonna pay you the bare minimum that they have to to get you a good job. And that can be a high bare minimum, but it's still not gonna be true wealth where you're retired. And then finally, you're actually just not even creating that much original for society. Like I said, this tweet storm should have been called "How to Create Wealth." It's just "How to Get Rich" with a more catchy title. But you're not creating new things for society. You're just doing things over and over, and you're essentially replaceable because you're now doing a set role. Most set roles can be taught. If they can be taught, like in a school, then eventually you'll be competing with someone who's got more recent knowledge, who's been taught, and is coming in to replace you. You're much more likely to be doing a job that can be eventually replaced by a robot or by an AI. And it doesn't have to be a wholesale replacement overnight. It can replace a little bit at a time, and that eats into your wealth creation and therefore your earning capability. So fundamentally, your inputs are matched to your outputs, you are replaceable, and you're not being creative. I just don't think that that is the way that you can truly make money. So everybody who really makes money at some point owns a piece of a product or a business or some kind of IP. That can be through stock options. So if you're working at a tech company, that's a fine way to start. But usually, the real wealth is created by starting your own companies or by, you know, even investors, they're in an investment for them, and they're buying equity. So these are much more the routes to wealth. It doesn't come from the hours. You really just want a job or a career or profession where your inputs don't matter, your outputs do. So if you look at modern society, I get into later in the tweet storm, businesses that have high creativity and high leverage tend to be ones where you could do an hour of work and it can have a huge effect, or you can do a thousand hours of work and it can have no effect. For example, look at software engineering. One great engineer can, for example, create Bitcoin and create billions of dollars of value. An engineer who's working on the wrong thing or not quite as good, or just not as creative or thoughtful or whatever, can work for an entire year, and every piece of code they ship and whatnot, it's not getting used. Customers don't want it. That is an example of a profession where the input and the outputs are highly disconnected. It's not based on the number of hours that you put in. Whereas on the extreme other end, if you're a lumberjack, even the best lumberjack in the world, assuming they're not working with tools, so the inputs and outputs are really connected. They're just using an axe or a saw. The best lumberjack in the world is maybe like 3x better than one of the worst lumberjacks. It's not going to be a gigantic difference. So you want to look for professions and careers where the inputs and the outputs are highly disconnected. This is another way of saying that you want to look for things that are leveraged. And by leverage, I don't mean financial leverage alone, like Wall Street uses and that has a bad name. I'm just talking about tools. We're using tools. A computer is a tool that software engineers use. If I'm a lumberjack with bulldozers and automatic robot axes and saws, I'm gonna be using tools and have more leverage than someone who's just using his bare hand and trying to rip the trees out by their roots. Tools and leverage are what create this disconnection between inputs and outputs. Creativity. So the higher the creativity component of a profession, the more likely it is to have disconnected inputs and outputs. So I think that if you're looking at professions where your input and your outputs are highly connected, it's gonna be very, very, very hard to create wealth and make wealth for yourself in that process.

Any other big thing you should avoid other than renting out your time?

Yeah, there are two tweets that I put out that are related. So the first one is talking about beer or something like how your lifestyle, you know, has to upgrade shouldn't get upgraded too fast. And that one said, "People who are living far below their means enjoy your freedom that people busy upgrading their lifestyles just can't fathom." And I think that's very important, like just to not upgrade your lifestyle all the time to maintain your freedom. And it just gives you freedom of operation. Once you make a little bit of money, you still want to be living like your old self, so that's just the worry goes away. So don't want to upgrade that house, lifestyle, and all that stuff. Let's say you're gonna get a thousand dollars an hour. The problem is that when you go into a work lifestyle like that, you don't just suddenly go from making twenty dollars an hour to making a thousand dollars an hour. That's a progression over a long career. And as that happens, one subtle problem is that you upgrade your lifestyle as you make more and more money, and that upgrading of the lifestyle ups what you consider to be wealth, and you stay in this wage slave trap. So I forget who said it, maybe it was nothing too late, but he said, you know, the most dangerous things are heroin and a monthly salary, right? Because they're highly addictive. The way you want to get wealthy is you want to be poor and working and working and working. And this is, for example, how the tech industry works. Well, you don't make any money for ten years, and then suddenly in year 11, you might have a giant payday. Which is what, by the way, one reason why these very high marginal tax rates for the so-called wealthy are flawed, because the highest risk-taking, most creative professions literally lose money for a decade over your life while you take massive risk and you bleed and bleed and bleed, and then suddenly in year 11 or year 15, you might have one single big payday. But then of course, Uncle Sam shows up and says, "Hey, you know what? You just made a lot of money this year, therefore you're rich, therefore you're evil, and you got to hand it all over to us." So it just destroys those kinds of creative risk-taking professions. But ideally, you want to make your money in discrete lumps separated over long periods of time so that your own lifestyle does not have a chance to adapt quickly, and then you can say, "Okay, now I'm done. Now I'm retired. Now I'm free." I'm still gonna work because you got to do something with your life, but I'm gonna work on only the things that I want, when I want, and to be much more creative expression and much less about money.

You're not going to get rich renting out your time, but you say that you will get rich by giving society what it wants but does not yet know how to get at scale.

That's right. So essentially, I could we talked about before, money is IOUs from society saying, "You did something good in the past. Now here's something that we owe you for the future." And so society will pay you for creating things that it wants, but society doesn't yet know how to create those things. Because if it did, it would need you. They would already be stamped out big time. Almost everything in your house and your workplace and on the street used to be technology at one point in time. At the time when oil was technology that made J.D. Rockefeller rich. There's a time when cars were technology that made Henry Ford rich. So technology is just a set of things, as Alan Kay said, that don't quite work yet. Once something works, it's no longer technology. So society always wants new things. And if you want to be wealthy, you want to figure out which one of those things you can provide for society that it does not yet know how to get, but it will want. That's natural to you and within your skill set, within your capabilities. And then you have to figure out to scale it. Because if you just build one of it, that's not enough. You gotta build thousands or hundreds of thousands or millions or billions of them so everybody can have one. Steve Jobs and his team, of course, figured out that society would want smartphones, computers in their pocket that had all the phone capability times a hundred and be easy to use. So they figured out how to build that, and then they figured out how to scale it, and they figured out how to get one into every first-world citizen's pocket, and eventually every third-world citizen too. And so because of that, they're heavily rewarded, and Apple is the most valuable company in the world. The way I tried to put it was that the entrepreneur's job is to try to bring the high-end to the mass market. It starts as high-end first. It starts as an act of creativity first. You create just because you want it. You want it, and you know how to build it, and you need it, and so you build it for yourself. Then you figure out how to get it to other people. And then for a little while, rich people have it. Like, for example, rich people had chauffeurs, then they had black town cars, and then Uber came along, and everyone's private driver was available to everybody. And now you can even see Uber pools that are replacing shuttle buses because it's more convenient. And then you get scooters, which are even further down market of that. So you're right, it's about distributing what rich people used to have to everybody. But the entrepreneur's job starts even before that, which is creation. Entrepreneurship is essentially an act of creating something new from scratch, predicting the society will want it, and then figuring out how to scale it and get it to everybody in a profitable way, in a self-sustaining way.

Let's look at this next tweet, which I thought was cryptic and also super interesting about the kind of job or career that you might have. You said, "The Internet has massively broadened the possible space of careers. Most people haven't figured this out yet." The fundamental property of the internet, more than any other single thing, is it connects every human to each other human on the planet. You can now reach everyone, whether it's by emailing them personally, letting them broadcast into them on Twitter, whether it's by posting something on Facebook that they find, whether it's by putting up a website they come in and access. It connects everyone to everyone. So the internet is an inter-networking tool. It connects everybody. That is its superpower. So you want to use that. What that helps you figure out is that the internet means that you can find your audience for your product or your talent and skill, no matter how far away they are. For example, Mayu, who's an illustrator, if he was in these videos pre-internet, how would he get the message out there? It would just be, what would he do? He would run around where he lives in his neighborhood, showing it to people, a computer or a screen, or he would try to get it played in his local movie theater. It was impossible. It only works because he can put it on the internet. And then how many people in the world are really interested in it, or even interested in what we're talking about, really gonna absorb it? Right. It's gonna be a very small subset of humanity. The key is being able to reach them. So what the internet does is allows any niche obsession, which could be just the weirdest thing. It could be like people who collect snakes, they're like people who like to ride hot-air balloons, the people who like to sail around the world by themselves, just one person on a craft, or someone who's obsessed with miniature cooking. Like there's this whole Japanese nature cooking phenomenon, or there's a show about a woman who goes in people's houses and tidies it up, right? So whatever niche obsession you have, the internet allows it to scale now. That's not to say that what you build will be the next Facebook, reach billions of users. But if you just want to reach 50,000 passionate people, like you, there's an audience out there for you. So the beauty of this is that we have 7 billion beings on this planet. The combinatorial of human DNA are incredible. Everyone is completely different. You'll never meet any two people who are even vaguely similar to each other that can substitute for each other. It's not, you can say, "Well, maybe just left my life so I can have this other person come in and he's just like maybe, and I get the same feelings, let's say, in responses and the same ideas." No, there are no substitutes for people. People are completely unique. So given that each person has different skill sets, different interests, different obsessions, and it's that diversity that becomes a creative superpower. So each person can be creatively superb at their own unique thing. But before that, it didn't matter because if you were living in a little fishing village in Italy, like your fishing village didn't literally need your completely unique skill, and you had to conform to just a few jobs that were available. But now today, you can be completely unique. You can go out on the internet and you can find your audience, and you can build a business and create a product and build wealth and make people happy, just uniquely expressing yourself. Through the internet, the space of careers has been so broadened. Esports players, people making millions of dollars, X Fortnite, people creating videos and uploading them, YouTube broadcasters, bloggers, you know, podcasters. Joe Rogan, I read, true or false, I don't know, but I read that he's going to make about a hundred million dollars a year on his podcast, and he's had two billion downloads. Even PewDiePie, it's a hilarious tweet that he tweeted the other day, "PewDiePie is the number one trusted name in news." This is a kid, I think in Sweden, and he's got three times the distribution of the top cable news networks just on his news channel, it's not even on his entertainment channel. The internet enables any niche interest, as long as you're the best at it, to scale out. And the great news is, because every human is different, everyone is the best at something. You being yourself.

Another tweet I had that is worth weaving in, but didn't go into this tweet storm, was a very simple one. I like things from making them down because they're easy to remember, easy to hang on to. But that one was, "Escape competition through authenticity." So when you're competing with people, it's because you're copying them. It's because you're trying to do the same thing. But every human is different. Don't copy. I know we're magnetic creatures, and René Girard has a whole new message theory, but it's much easier than that. Don't imitate. Don't copy. Just do your own thing. No one can compete with you on being you. It's that simple. And so the more authentic you are to who you are and what you love to do, the less competition you're gonna have. So you can escape competition through authenticity when you realize that no one can compete with you on being you. And normally, that would have been useless advice pre-internet. Post-internet, you can turn that into a career.

Talk a little bit about what industries you should think about working in, what kind of job you should have, and who you might want to work with. So you said one should pick an industry where you can play long-term games with long-term people. Why?

Yeah, this is an insight into what makes Silicon Valley work and what makes high-trust societies work. Essentially, all the benefits in life come from compound interest, whether it's in relationships or making money or in learning. So compound interest is a marvelous force where it's like, you know, you start out with one X what you have, and then if you increase it 20% a year for 30 years, it's not that you got 30 years times 20% added on. It was compounding, so it just grew, grew, and grew until you suddenly got a massive amount of whatever it is, whether it's goodwill or love or relationships or money. So I think compound interest is a very important force. You have to go to play a long-term game, and long-term games are good matches for compound interest. They're also good for trust. If you look at prisoner's dilemma type games, the solution to prisoner's dilemma is tit-for-tat, which is I'm just gonna do to you what you did last time to me, with some forgiveness in case there was a mistake made. But that only works in an iterated prisoner's dilemma, in other words, if we play the game multiple times.

So if you're in a situation like, for example, you're in Silicon Valley where people are doing business with each other and they know each other, they trust each other, then they do right by each other because they know this person will be around for the next game. Now, of course, that doesn't always work because you can make so much money in one move in Silicon Valley. Sometimes you betray each other because they're just like, "I'm gonna get rich enough off this that I don't care." So there can be exceptions to all these circumstances.

But essentially, if you want to be successful, you have to work with other people and you have to figure out who can you trust and who can you trust over a long, long period of time that you can just keep playing the game with them. So that compound interest and high trust will make it easy to play the game and will let you collect the major rewards, which are usually at the end of the cycle.

So, for example, Warren Buffett has done really well as an investor in the US stock market. But the biggest reason he could do that was because the US stock market has been stable and around and didn't get, for example, seized by the government during a bad administration or the US didn't plunge in some war. The underlying platform didn't get destroyed. So in his case, he was playing a long-term game and the trust came from the US stock market stability. In Silicon Valley, the trust comes from the network of people in the small geographic area that you figure out over time who you can work with, who you can't.

If you keep switching locations, you keep switching groups. Let's say you started out in the woodworking industry and you build up a network there and you're working hard, you're trying to build a product in the woodworking industry. And then suddenly another industry comes along that's adjacent but different, but you don't really know anybody in it and you want to dive in and make money there. If you keep hopping from industry, you know, actually, I need to open a line of electric car stations for electric car refueling. That might make sense. It might be the best opportunity. But every time you reset, every time you wander out of where you built your network, you're gonna be starting from scratch. You're not gonna know who to trust, they're not gonna trust you.

They're also industries in which people are transient by definition. They're always coming in and going out. Politics is an example of that, right? In politics, new people are being elected. You see in politics that when you have a lot of old-timers, like the Senate, people have been around for a long time and they've been career politicians. Yeah, they love them. Downside the career politicians, that corruption. But an upside is they actually get deals done with each other because they know the other person is gonna be in the same position ten years from now and they have to keep dealing with them. So they might as well learn how to cooperate. Whereas every time you get like a new incoming freshman class in the House of Representatives, which turns over every two years, the big wave election, nothing gets done because a lot of fighting because, "I just got here, I don't know you, I don't know if you're gonna be around. Why should I work with you rather than just try and do whatever I think is right?"

So it's important to pick an industry where you can play long-term games and with long-term people. So those people have to signal that they're going to be around for a long time, that they're ethical, and their ethics are visible to their action. In a long-term game, it seems that everybody is making each other rich. And in a short-term game, it seems like everybody is making themselves rich. I think that is a brilliant formulation. Yeah, in a long-term game, it's positive sum. We're all baking a pie together, we're trying to make it as big as possible. In a short-term game, we're cutting up the pie now.

This is not to excuse the socialists, right? The socialists, those people who are not involved in baking the pie, who show up at the end and say, "I want a slice," or "I want the whole pie." They show up with the guns. But I think a good leader doesn't take credit. A good leader tries to inspire people, that the team get the job done, and then things get divided up according to fairness and who contributed how much, or as close to it as possible, and took a risk, as opposed to just whoever has the longest knife, the sharpest knives at the end.

So these next two tweets are play iterated games. All returns in life, whether in wealth, relationships, or knowledge, come from compound interest. Yeah, when you have been doing business with somebody, you've been friends with somebody for 10 years, 20 years, 30 years, it just gets better and better because you trust them. So easy. If the friction goes down, you can do bigger and bigger things together.

For example, you know, the simplest one is getting married to someone, having kids, and raising children. Like, that's compound interest, right? Investing in those relationships, those relations, would be invaluable compared to more casual relationships. It's true in health and fitness. You know, the fitter you are, the easier it is to stay fit. Whereas the more you'd deteriorate your body, the harder it is to come back and claw your way back to a baseline and requires heroic acts.

Regarding compound interest, I think I saw you retweet something awhile back, maybe it was from Ed Latimore. It went something along the lines of, "Get some traction, get purchase, and don't lose it." So the idea was to gain some initial traction and never fall back, just keep ratcheting up and up. I don't remember exactly, but I think that was right. Yeah, I was a kid. Traction, don't let go. It was a good one.

Yeah, in terms of pick people to work with that I have high intelligence, high energy, and high integrity. I find that's the three-part checklist that you cannot compromise on. You need someone who's smart, or they're heading in the wrong direction, and you're not gonna end up in the right place. You need someone high energy because the world is full of smart, lazy people. We all know people in our lives who are really smart, but, you know, can't get out of bed or lift a finger. And we also know people who have very high energy but not that smart, so they work hard but then running in the wrong direction.

And smart, it's not a pejorative. It's not meant to be like, someone smart, someone else is stupid. But it's more that everyone's smart at different things. So depending on what you want to do well, you have to find someone who's smart at that thing. And then energy. A lot of times people are unmotivated for a specific thing, but they're not motivated for other things. For example, someone might be really unmotivated to go to a job and sit in an office, but they might be really motivated to go paint. Right? Well, in that case, they should be a painter. They should be putting art up on the internet, trying to figure out how to build a career out of that, rather than wearing a collar around their neck and going to a dreary job.

And then high integrity is the most important because otherwise, it got the other two. What you have is you have a smart and hardworking crook who's eventually gonna cheat you. So you have to figure out if the person is high integrity. And as we talked about, the way you do that is through signals. And signals is what they do, not what they say. It's all the nonverbal stuff that people do when they think nobody's looking.

With respect to the energy, there was this interesting thing from Sam Altman a while back where he was talking about delegation and even saying one of the important things for delegation is delegate to people who are actually good at the thing that you want to do. It's the most obvious thing, but it seems like you want to partner with people who are naturally going to do the things that you want them to do. Yeah, I almost won't start a company or hire a person or work with somebody if I just don't think they're into what I wanted to do. When I was younger, I used to try and talk people into things. I was in this idea, you can sell someone into doing something, but you can't keep them motivated. You can get them inspired initially. It might work if you're a king like Henry the Fifth, you're trying to get them to just charge into battle and then they'll figure it out. But if you're trying to keep someone motivated for the long term, but motivation has to come intrinsically. You can't just create it, nor can you be the crutch for them if they don't have that intrinsic motivation. So you have to make sure people actually are high-energy and want to do what you want them to do, what you want to work with them.

Reading signals is very, very important. Signals are what people do despite what they say. So it's important to pay attention to subtle signals. We all know that socially, if someone treats a waiter or waitress in a restaurant badly, then it's only a matter of time until they treat you badly. If somebody screws over an enemy and is vindictive towards them, well, it's only a matter of time before they redefine you from friend to enemy and you feel their wrath. So angry, outraged, vindictive, short-term thinking people are essentially that way in many interactions in their life. People are oddly consistent. It's one of the things you learn about them.

So you want to find long-term people. You want to find people who seem irrationally ethical. For example, I had one friend of mine, it was a company I invested in, and the company failed. And he could have wiped out all the investors, but he kept putting more and more personal money in. Through three different pivots, he put personal money in until the company finally succeeded. And in the process, he never wronged the investors. And I was always grateful to him for that. I said, like, "Wow, that's amazing that you know, you were so good to your investors, you didn't wipe them out." And he got offended by that. He said, "I didn't do it for you. I didn't do it for my investors. I did it for me. It's my own self-esteem. It's what I care about. That's how I live my life." That's the kind of person you want to work with.

Another quote that I like, I would tweet on this, I think I read this somewhere else, which me said, "I'm not taking credit for this, but I modified it a little bit," which is that self-esteem is a reputation that you have with yourself. You'll always know. So good people, moral people, ethical people, easy to work with people, reliable people tend to have very high self-esteem because they have very good reputation with themselves. And they understand that it's not ego. Self-esteem and ego are different things because ego can be undeserving. But self-esteem, at least you feel like you lived up to your own internal moral code of ethics. And so it's very hard to work with people who end up being low integrity. It's hard to figure out who's high integrity and low integrity. Generally, the more someone is saying that they're moral and ethical and high integrity, the less likely they're to be that way. It's very much like status signaling. If you overtly bid for status, if you already talk about being high status, that is a low status move. If you openly talk about how honest and reliable and trustworthy you are, you're probably not that honest and trustworthy. That is a characteristic of a con man.

So yeah, picking an industry in which you can play long-term games with long-term people. Let's look at this last tweet. You said, "Don't partner with cynics and pessimists. Their beliefs are self-fulfilling." Yeah, essentially to create things, you have to be a rational optimist. Rational in the sense that you have to go see the world for what it really is, and yet you have to be optimistic about your own capabilities and your ability to get things done. We all know people who are consistently pessimistic, who will shoot down everything. Everyone in their life has like the helpful critical guy. He thinks he's being helpful, but he's actually being critical, and he's a downer on everything. That person will not only never do anything great in their lives, they'll prevent other people around them from doing something great. They think their job is to shoot holes in things. And it's okay to shoot holes in things as long as you come up with a solution. There's also the classic like military line, "I will lead, follow, or get out of the way." And these people want a fourth option. Well, they don't want to lead, they don't want to follow, but they don't want to get out of the way. They want to tell you why the thing is not going to work. And all the really successful people I know have a very strong action bias. They just do things. The easiest way to figure out if something is viable or not is by doing it. At least do the first step, and the second step, and the third, and then decide.

So if you want to be successful in life, creating wealth, or having good relationships, or being fit, or even being happy, you need to have an action bias towards getting what you want. And you have to be optimistic about it. Not irrationally. There's nothing worse than someone who's is the foolhardy and chasing. That's not work. That's that's a rational optimist. But you have to be rational. Know all the pitfalls, know the downsides, but still keep your chin up. I mean, you've got one life on this planet. Why not try to build something big?

This is the beauty of Elon Musk and why I think he inspires so many people. Is just when he takes on really, really big, audacious tasks, and he provides an example for people to think big. And it takes a lot of work to build even small things. I don't think the corner grocery store owner is working any less hard than Elon Musk, pouring any less sweat and toil into it, maybe even more. But for whatever reason, you know, education, circumstance, they didn't get the chance to think as big. So the outcomes not as big. So it's just better to think big, obviously rationally, within your means, stay optimistic. The cynics and the pessimists, what they're really saying, and fortunate, but they're saying, "I've given up. I don't think I can do anything." And so the world to me just looks like a world where nobody can do anything. And so why should you go do something? Because if you fail, then I'm right, which is great. But if you succeed, and you just make me look bad. Yeah, it's probably better to be an irrational optimist than it is to be a rational cynic.

Yeah, there's a completely rational frame on why you should be an optimist. Historically, if you go back 2,000 years, 5,000, there's 10,000 years, to people are wandering through a jungle, they hear a tiger. One's an optimist and says, "Oh, it's not headed our way." The other one says, "I'm a pessimist, I'm out of here." And the pessimist runs and survives, and the optimist gets eaten. So we descended from pessimists. We're genetically hardwired to be pessimists. But modern society is far, far safer. There are no tigers wandering down the street. It's very unlikely that you will end up in total ruin. Although you should avoid total ruin. Much more likely if the upside is unlimited and the downside is limited.

So adapting for modern society means overriding your pessimism and taking slightly irrationally optimistic bets because the upside is unlimited. If you start the next SpaceX or Tesla or Uber, you can make billions of dollars of value for society and for yourself and change the world. And if you fail, that's the big deal. You lost a few million dollars and invest your money, and they've got plenty more. And that's the bet. They take the chances that you will succeed. It made sense to be pessimistic in the past. It makes sense to be optimistic today, especially if you're educated and living in a first-world country. Even a third-world country, actually. Think the economic opportunity in third-world countries are much larger.

The one thing you have to avoid is the risk of ruin. Ruin means to stay out of jail. So don't do anything that's illegal. It's never worth it to wear an orange jumpsuit. And stay out of total catastrophic loss. That could mean that you stay out of things that could be physically dangerous, hurt your body. You have to watch your health. And stay out of things that can cause you to lose all capital, all of your savings. It'll gamble everything at one go. But you take rationally optimistic bets with big upside.

I think there's people that will try and build up your ideas and build on your ideas, no matter how far-fetched they might seem. And then there are people who will list out all the obvious exceptions, no matter how obvious they are. And fortunately, in the startup world, I don't even really get exposed to the people that are giving you the obvious exceptions and all the reasons it's not going to work. I'd barely get exposed to that anymore.

Absolute way today's forum Scott Adams got so annoyed by this dude, he came up with the phrase, an acronym, which is "But of course, there are obvious exceptions." BOC TAE. And he used to like pin that acronym at the end of his articles for a while. But Twitterings just like overrun with nitpickers. And which exactly as you're pointing out, Silicon Valley has learned that the upside is so great that you never look down on the slavi kid who's wearing a hoodie and has like coffee on his shoes and just looks like a slob because you don't know if he's gonna be the next Mark Zuckerberg or the next Reid Hoffman. So you gotta treat everybody with respect. You gotta look up to every possibility and opportunity because the upside is so unlimited, the downside is so limited.

In the modern world, especially with financial assets and instruments, you want to talk a little bit about the skills that you need, in particular, specific knowledge, accountability, leverage, and judgment. So the first tweet in this area is, "Arm yourself with specific knowledge, accountability, and leverage." And I'll throw in judgment as well. I don't think you covered that in that particular tweet. If you want to make money, you have to get paid at scale. And why you, that's accountability at scale. That's leverage. And just you getting paid as opposed to somebody else getting paid, that's specific knowledge.

So specific knowledge is probably the hardest thing to get across in this whole tweet storm, and it's probably the thing that people get the most confused about. The thing is that we have this idea that everything can be taught. Everything can be taught in school, and it's not true. That everything can be taught. In fact, the most interesting things cannot be taught. But thing can be learned. And very often, that learning either comes from some innate characteristics in your DNA, or it could be through your childhood where you learn soft skills, which are very, very hard to teach later on in life. Or it's something that is brand-new, so nobody else knows how to do it either. Or it's true on-the-job training because you're pattern matching into highly complex environments, building judgment in a specific domain. Classically, example is investing, but it could be in anything. It could be in judgment in running a fleet of trucks. It could be a judgment in weather forecasting.

So specific knowledge is the knowledge that you care about. Especially if you're later in life, let's say you're post 20, 21, 22, you almost don't get to choose which specific knowledge you have. Rather, you get to look at what you have already built by that point in time, and then you can build on top of it. The first thing to notice about specific knowledge is that you can't be trained for it. If you can be trained for it, if you can go to a class and learn specific knowledge, then somebody else can be trained for it too. And then we can mass produce and mass train people. Heck, we can even program computers to do it. And eventually, we can program robots to walk around doing it. So if that's the case, then you're extremely replaceable. And all we have to pay you is the minimum wage that we have to pay you to get you to do it, when there are lots of other takers who can be trained to do it. So really, your returns just devolve into your cost of training plus the return on investment on that training.

So you really want to pick up specific knowledge. You need your schooling, you need your training to be able to capitalize on the best specific knowledge. But the part of it that you get paid for is the specific knowledge. For example, someone who goes and gets a degree in psychology and then becomes a salesperson. Well, if they were already a formidable salesperson, had great salesmanship to begin with, then the psychology degree is leverage. It arms them, and they do much better at sales. But if they were always an introvert, never very good at sales, and they're trying to use psychology to learn sales, they're just not gonna get that great at it.

So specific knowledge is found much more by pursuing your innate talents, your genuine curiosity, and your passion. It's not by going to school for whatever is the hottest job. It's not for going into whatever field investors the hottest. Very often, specific knowledge is at the edge of knowledge. It's also stuff that's just being figured out or is really hard to figure out. So if you're not 100% into it, somebody else who is 100% into it will outperform you. And they won't just outperform you by a little bit, they'll outperform you by a lot. Because now we're operating in the domain of ideas. Compound interest really applies, and leverage really applies. So if you're operating with a thousand times leverage, and somebody is right 80% of the time, and somebody is else right 90% of the time, the person who's right 90% of the time will literally get paid hundreds of times more by the market because of the leverage and because of the compounding factors in being correct. So you really want to make sure you're good at it.

So their genuine curiosity is very important. So very often, it's not something you sit down and you reason about. It's more found by observation. You almost have to look back on your own life and see what you're actually good at. For example, I wanted to be a scientist. And that is where a lot of my moral hierarchy comes from. I view scientists at the top of the production chain for humanity. And the group of scientists who have made real breakthroughs and contributions have probably added more to human society and I think than any single other class of human beings. Not to take away anything from art or politics or engineering or business, but without the science, you know, we'd still be scrabbling the dirt, fighting with sticks, and trying to start fires. My whole value system was built around scientists, and I wanted to be a great scientist. But when I actually look back at what I was uniquely good at and what I ended up spending my time doing, it was more around making money, tinkering with technology, and selling people on things, explaining things, talking to people. So I have some sales skills, which is a form of specific knowledge that I have. I have some analytical skills around how to make money. And I having this ability to absorb data, obsess about it, and break it down. And that is a specific skill that I have. I also just love tinkering with technology. And all of this stuff feels like play to me, but it looks like work to others. So there are other people to whom these things would be hard. They say, like, "Well, how do I get good at being pithy and selling ideas?" Well, if you're not already good at it, or they're not really into it, maybe it's not your thing. Focus on the thing that you are really into.

This is ironic, but the first person that actually pointed out my real specific knowledge was my mother. And she did it as an aside, talking from the kitchen. And she said it when I was like 15 or 16 years old. I was telling a friend of mine that I wanted to be an astrophysicist. And she said, "No, you're gonna go into business." And I was like, "What? My mom's telling me I'm gonna be in business? I'm gonna be an astrophysicist. Mom doesn't know what she's talking about." But mom knew exactly what she was talking about. She had already observed that every time we walked down the street, I would critique the local pizza parlor on why they were selling their slices a certain way with certain toppings, and why the process of ordering was this way when it should have been that way. So she knew that I was just had more of a business curious mind. But then my obsession with science combined to create technology and technology businesses where I found myself. So very often, your specific knowledge is observed, and often observed by other people who know you well, and revealed in situations rather than something that you come up with.

To the extent that specific knowledge is taught, it's on the job. It's through apprenticeships. And that's why the best businesses, the best careers are the apprenticeship careers because those are things that society still has not figured out how to train and automate yet. The classic line here is that Warren Buffett went to Benjamin Graham when he got out of school. And Benjamin Graham was the author, The Intelligent Investor, is sort of modernized or created value investing as a discipline. And Warren Buffett went to Benjamin Graham and offered to work for him for free. And Graham said, "Actually, you're overpriced. Free is overpriced." And Graham was absolutely right. That when it comes to a very valuable apprenticeship, like the type that Graham was going to give Buffett, Buffett should have been paying him a lot of money. And that right there tells you that those are skills worth knowing.

Specific knowledge also tends to be technical and creative. So on the bleeding edge of technology, on the bleeding edge of art, on the bleeding edge of communication. Even today, for example, there are probably meme lords out there on the internet who can create incredible memes that will spread the idea to millions of people or are very persuasive. Like, for example, Scott Adams is a good example of this. He's essentially becoming one of the most credible people in the world by making accurate predictions through persuasive arguments and videos. And that is specific knowledge that he has built up over the because he got obsessed with hypnosis when he was young, he learned how to communicate through cartooning, he embraced Periscope early. So he's been practicing lots of conversation, he's read all the books on the topic, he's employed it in his everyday life. If you look at his girlfriend, she's like this beautiful young Instagram model. That is an example of someone who has built up a specific knowledge over the course of his career. It's highly creative, it has elements of being technical in it, and it's something that is never gonna be automated. No one's gonna take that away from him because he's also accountable under one brand as Scott Adams, and he's operating with a leverage of media with Periscope and drawing Dilbert cartoons and writing books. He has massive leverage on top of that brand, and he can build wealth out of it if he wanted to build additional wealth beyond what he already has.

Should we be calling it unique knowledge or the specific knowledge somehow make more sense for it? You know, I came up with his framework when I was really young, and we're talking decades and decades. It's not probably over 30 years old. And so at the time, too, specific knowledge stuck with me. So that is how I think about it. The reason I didn't try and change it is because every other term that I found for it was overloaded in a different way. At least specific knowledge isn't that used. I can rebrand it. The probably unique knowledge is, yeah, maybe it's unique, but if I learn it from somebody else, it's no longer unique. Then we both know it. So it's not so much that it is unique, it's that it is highly specific to the situation. It's specific to the individual. It's specific to the problem. And it can only be built as part of a larger obsession, interest, and time spent in that domain. They can't just be read straight out of a single book, nor can be taught in a single course, nor can it be programmed into a single algorithm.

Speaking of Scott Adams, he's got a blog post on how to build your career by getting in, say, the top 25 percentile at three or more things. And by doing that, you become the only person in the world who can do those three things in the 25th percentile. So instead of trying to be the best at one thing, you just try to be very, very good at three or more things. Is that a way of building specific knowledge? You think the best way is just to follow your own obsession. And somewhere in the back of your mind, you can realize that, hey, actually, this obsession, like, I'll keep an eye out for the commercial aspects of it. But I think if you go around trying to build it a little too deliberately, if you become too goal-oriented on the money, then you won't pick the right thing. You won't actually pick the thing that you love to do, so you won't go deep enough into it.

Scott Adams' observation is a good one. It's predicated on statistics. Let's say there's 10,000 areas that are valuable to the human race today in terms of knowledge to have. And the number one in those 10,000 slots is taken, right? Someone else is likely to be the number one in each of those 10,000, unless you happen to be one of the 10,000 most obsessed people in the world at a given thing. But when you start going the combinatorics of combining, well, number 3,728 with top-notch sales skills and really good writing skills and so on, with whom understands accounting and finance really well, when the need for that intersection arrives, you've expanded now from 10,000 through combinatorics to millions or tens of millions. So it just becomes much less competitive. Also, there's diminishing returns. So it's much easier to be top 75 percentile at three or four things than it is to be literally the number one at something. I think it's a very pragmatic approach. But I think it's important that one not start assembling things too deliberately because you do want to pick things where you are a natural. Everyone is a natural at something. We're all familiar with that phrase, "unnatural," or "this person is that a natural at meeting men," or "where this person is a natural socialite," "this person is a natural programmer," "this person is a natural reader." So whatever you are a natural at, you want to double down on that. And then there are probably multiple things you are natural at because personalities and humans are very complex. So we want to be able to take the things that you are a natural at and combine them so that you automatically, just through sheer interest and enjoyment, end up top 25 or top 10 or top 5% at a number of things.

Talking about combining skills, you said that you should learn to sell, learn to build. If you can do both, you will be unstoppable. You know, this is a very broad category now, but it's two broad categories. One is building the product, which is hard, and it's a multivariate. That can include design, that can include development, that can include manufacturing, logistics, procurement. They could even be designing and operating a service. It has many, many definitions. But in every industry, there is a definition of the builder. In our tech industry, that's the CTO, as the programmer, is the software engineer, a hardware engineer. But, you know, even in like a laundry business, it could be the person who's building the laundry service, who is making the trains run on time, who's making sure all the clothes end up in the right place, the right time, and so on. Then the other side of it is the sales side. Again, selling has a very broad definition. Selling doesn't actually just mean selling individual customers, but it could mean marketing, it could mean communicating, it could mean recruiting, it could mean raising money, it could mean inspiring people. It could be doing PR. So it's a broad umbrella category.

So generally, the Silicon Valley startup model tends to work fast. It's not the only way, but it is probably the most common way. When you have two founders, one of whom is world-class at sales, and one of whom is world-class at building. An example of this, course, Steve Jobs and Steve Wozniak with Apple. Gates and Allen probably had similar responsibilities early on with Microsoft. Larry and Sergey, you know, probably broke down along those lines, although it's a little different there because that was a very technical product delivered to end-users through a simple interface. But generally, you will see this pattern repeated over and over. There's a builder and there's a seller. There's a CEO and CTO combo. And the venture and technology investors are almost trained to look for this combo whenever possible. It's the magic combination. The ultimate is when one individual can do both. That's when you get true superpowers. That's when you get people who can create entire industries. The living example is Elon Musk. He may not necessarily be building the rockets himself, but he understands enough that he actually makes technical contributions. He understands the technology well enough that no one's gonna snow him on it. And he's not running around making claims that he doesn't think he can eventually deliver. He may be optimistic in the timelines, but he thinks it's within reasonableness of delivery. Even Steve Jobs developed enough product skills and was involved enough in the product that he also operated both of these domains. Larry Ellison started as a programmer and I think wrote the first version of Oracle. Rosa actually have really involved in it. Marc Andreessen was also in this domain. He may not have had enough confidence in the sales skills, but he was the programmer who wrote Netscape Navigator, a big chunk of it. So I think the real giants in any field are the people who can both build and sell. And usually, the building is the thing that like a salesperson can't pick up building later in life. It requires too much focused time. But a builder can pick up selling a little bit later, especially if they were already inherently wired to be a good communicator. Bill Gates famously paraphrased this as, "I would rather teach an engineer marketing than a marketer engineering."

If you start out with a building mentality and you have building skills, and still early enough in your life, or you have enough focused time that you think you can learn selling, and you have some natural characteristics for your good sales person, then you can double down on those. Now, your sales skills could be in a different than traditional domain. So, for example, let's say you're a really good engineer, and then people are saying, "Well, now you need to be good at sales." Well, you may not be good at hand-to-hand sales, but you may be a really good writer, and writing is a skill that can be learned much more easily than say, in-person selling. And so you may just cultivate writing skills until you become a good online communicator, and then use that for your sales. On the other hand, it could just be that you're a good builder and you're bad at writing, and you don't like communicate to mass audiences, which are good one-on-one. So then you might use your sales skills for recruiting or for fundraising, which are more one-on-one kinds of endeavors. This is pointing out that if you're at the intersection of these two, don't despair because you're not going to be the best technologist, and you're not going to be the best salesperson. But in a weird way, that combination, back to the Scott Adams skill stack, that combination of two is unstoppable. Long term, people who understand the underlying product and how to build it and can sell it, these are catnip to investors. These people can break down walls if they have enough energy, and they can get almost anything done.

If you could only pick one to be good at, which one would you pick when you're trying to stand out from the noise? Bill is actually better because there's so many hustlers and salespeople who have nothing to back them up. When you're starting out, when you're trying to be recognized, building is better. But much later down the line, building gets exhausting because it is a focused job, and it's hard to stay current because there's always new people, new products coming up who have newer tools, and frankly, more time because it's very intense, it's very focused tasks. So sales skills actually scale better over time. Like, for example, if you have a reputation for building a great product, that's good. But when you ship your new product, I'm gonna evaluate it based on the product. But if you have a reputation for being a good person to do business with, and you're persuasive and communicative, then that reputation almost becomes self-fulfilling. So I think if you only had to pick one, you can start with building and then transition to selling. This is a cop-out answer, but I think that is actually the right answer.

Before we go and talk about accountability and leverage and judgment, you've got a few tweets further down the line that I would put in the category of continuous learning. They're essentially, "There is no skill called business. Avoid business magazines in business class. Study microeconomics, game theory, psychology, persuasion, ethics, mathematics, and computers." There's one other comment that you made in a Periscope that was, "You should be able to pick up any book in the library and read it." And the last tweet in this category was, "Reading is faster than listening. Doing is faster than watching."

Yeah, the most important tweet on this, I don't even have in here, unfortunately, which is the foundation of learning is reading. I don't know a smart person who doesn't read and read all the time. And the problem is, what do I read? How do I read? Because for most people, to struggle, it's short. So the most important thing is just to learn how to educate yourself. And the way to educate yourself is to develop a love for reading. So the tweet that is left out, the one that I was hinting at, is, "Read what you love until you love to read it." It's that simple. Everybody I know who reads a lot loves to read, and they love to read because they read books that they loved. It's a little bit of a catch-22, but you want to start off just reading wherever you are, and then keep building up from there until reading becomes a habit. And then eventually, you will just get bored of the simple stuff. So you may start off reading fiction, then you might graduate to science fiction, then you may graduate to nonfiction, then you may graduate to science or philosophy or mathematics, or whatever it is. But take your natural path and just read the things that interest you until you understand them, and then you'll naturally move to the next thing, and the next thing, and the next thing.

Now, there is an exception to this, which is where I was hinting with what things you actually do want to learn, which is at some point, there's too much out there to read. And even reading is full of junk. There are actually things you can read, especially early on, that will program your brain a certain way. And then later things that you read, you will decide whether those things were true or false based on the earlier things. So it is important that you read foundational things. And foundational things, I would say, are the original books in a given field that are very scientific in their nature. So, for example, instead of reading a business book, pick up Adam Smith's The Wealth of Nations. Instead of reading a book on biology or evolution that's written today, I would pick up Darwin's Origin of Species. Instead of reading a book on biotech right now that may be very advanced, I would just pick up The Eighth Day of Creation by Watson and Crick. Instead of reading advanced books on what cosmology and what Neil deGrasse Tyson and Stephen Hawking have been saying, you can pick up Richard Feynman's Six Easy Pieces and start with basic physics.

If you understand the basics, especially in mathematics and physics and sciences, then you will not be afraid of any book. All of us have that memory of when we were sitting in class and we're learning mathematics, and it was all logical, and all made sense until at one point the class moved too fast, and we fell behind. And then after that, we were left memorizing equations, memorizing concepts without being able to derive them from first principles. And that moment, we're lost. Because unless you're a professional mathematician, you're not gonna remember those things. All you're gonna remember are the techniques, the foundations. So you have to make sure that you're building on a steel frame of understanding because you're putting together a foundation for a skyscraper, and you're not just memorizing things. Because if you're just memorizing things, you're lost. So the foundations are all true, important. And the ultimate, the ultimate is when you walk into a library and you look at it up and down, and you don't fear any book. You know that you can take any book off the shelf, you can read it, you can understand it, you can absorb what is true, you can reject what is false, and you have a basis for even working that out. That is logical and scientific and not purely just based on opinions.

The beauty of the internet is the entire Library of Alexandria times 10 is at your fingertips at all times. It's not the means of education or the means of learning are scarce. The means of learning are abundant. It's the desire to learn that's scarce. So you really have to cultivate that desire. And it's not even cultivating, it's to not lose it. Children have a natural curiosity. If you go to a young child who's first learning language, they're pretty much always asking, "What's this? What's that? Why is this? Who's that?" They're always asking questions. But one of the problems is that schools and our educational system and even our way of raising children replaces curiosity with compliance. And once you replace the curiosity with the compliance, you get an obedient factory worker, but you no longer get a creative thinker. And you need creativity. You need that ability to feed your own brain, to learn whatever you want. And to me, foundational things are principles. There are algorithms. They're deep-seated logical understanding where you can defend it or attack it from any angle. And that's why microeconomics is important because macroeconomics, a lot of memorization. A lot of macro, as Nassim Taleb says, it is easier to macro than it is to micro. Because macroeconomics is boodoo complex. Science meets politics. You can't find two macroeconomists to agree on anything these days. And different macroeconomists get used by different politicians to peddle their different pet theories. There are even macroeconomists out there now peddling something called Modern Monetary Theory, which says, "Hey, except for this pesky thing called inflation, we can just print all the money that we want." Yes, except for this pesky thing called inflation. That's like saying, instead of limited energy, we can fire rockets off into space all day long. It's just nonsense. But the fact that there are people who have macroeconomists in their title and are peddling Modern Monetary Theory just tells you that macroeconomics, as a so-called science, has been corrupted. It's a branch of politics.

So you really want to focus on the foundations. Foundation. The ultimate foundations are mathematics and logic. If you understand logic and mathematics, then you have the basis for understanding scientific method. Once you understand the scientific method, then you can understand how to separate truth from falsehood in other fields and other things that you're reading. So be very careful about reading other people's opinions. And even be careful about reading facts, because so-called facts are often just opinions, but you know, with a veneer around them. What you really are looking for is algorithms. What you're really looking for is understanding. It's better to go through a book really slowly and struggle and stumble and rewind than it is to tick fly through it quickly and say, "Well, now I read 20 books, ever at 30 books, I've read 50 books in the field." It's like Bruce Lee said, "I don't fear the man who knows a thousand kicks and a thousand punches. I fear the man who's practiced one punch ten thousand times or one kick 10,000 times." It's the understanding that comes through repetition and three usage and through logic and foundations that really makes you a smart thinker.

To lay a foundation for learning for the rest of your life, I think you need two things. If I was gonna try and sum it up, one practical persuasion.

And two, you need to go deep in some technical category, whether it's abstract math, or you want to read Donald Knuth's books on algorithms, or you want to read Feynman's lectures on physics. If you have practical persuasion and a deep understanding of some complex topic, I think you'll have a great foundation for learning for the rest of your life.

Yeah, if I can expand it a little bit, I would say that the five most important skills are, of course, reading, writing, arithmetic. And then, as you are adding in persuasion, we're just talking. And then finally, I would add computer programming, just because it's an applied form of arithmetic that just gets you so much leverage for free in any domain that you operate in. If you're good with computers, if you're good at basic mathematics, you're good at writing, if you're good at speaking, and if you like reading, you're set for life.

So, in that sense, business to me is bottom of the barrel. There's no actual skilled call business. It's too generic of a thing. It's like a skill called relating, like relating to humans. That's not a skill. It's too broad. So, a lot of what goes on in business schools, and there's some very intelligent stuff taught in business schools, I don't need to detract from them completely, but some of the stuff that's taught in business school is essentially just anecdotes. They call it case studies, but it's just anecdotes. And they're trying to help you pattern match by throwing lots of data points at you. But the reality is, you will never understand them fully until you're actually in that position yourself. Even then, you will find that basic concepts from game theory, and psychology, and ethics, and mathematics, and computers, and logic will serve you much, much better. So, I would focus in the foundations. I would focus with a science bent. I would develop a love for reading, including by reading so-called junk food that you're not supposed to read. You don't have to read the classics. That is the foundation for your self-education.

What did you mean when you said that doing is faster than watching? When you come to your learning curve, if you want to optimize your learning curve, one of the reasons why I don't love podcasts, even though I'm a generator of podcasts, is that I like to consume my information very quickly. And now I'm a good reader, a fast reader, and I can read very fast. But I can only listen at a certain speed. I know people listen to 2x, 3x, but everyone sounds like a chipmunk, and it's hard to go back. It's hard to highlight. It's hard to pinpoint snippets and save them in your notebook and so on.

Similarly, a lot of people think they can become really skilled at something by watching others do it, or even by reading about others doing it. And going back to business school case studies, that's a classic example. You know, they study other people's businesses. But in reality, you're going to learn a lot more about running a business by operating your own lemonade stand, or equivalent, or even opening a little retail store down the street. That is how you're going to learn on the job. Because a lot of the subtleties don't express themselves until you're actually in the business.

For example, everyone's now into mental models these days, right? You go to Farnam Street, you go to Poor Charlie's Almanac, and you can learn all the different mental models. But which ones matter more? Which ones do you apply more often? Which matter in which circumstances? That's actually the hard part. For example, my personal learning has been that the principal-agent problem drives so much in this world. It's an incentives problem. You know, I've learned that tit-for-tat, iterated prisoner's dilemma, is the piece of game theory that is worth knowing the most. You can literally almost put down the game theory book after that.

Finally, the best way to learn game theory is to play lots of games. I never even read game theory books. I consider myself extremely good at game theory. I've never opened up a game theory book and found a result in there where I was like, "Oh yeah, that's common sense to me." Because the reason is, I just grew up playing all kinds of games and I ran into all kinds of corner cases with all kinds of friends. And so it's just second nature to me. So you can always learn better by doing on the job. But the doing is a subtle thing that we're doing in capsule. It's a lot.

So, for example, let's say I want to learn how to run a business well. If I start a business where I go in every day and I'm doing the same thing, Sam running the retail store down the street, where I'm stocking the shelves with food and liquor every single day, I'm not gonna learn that much. Because I'm repeating things a lot. So I'm putting in thousands of hours, but they're thousands of hours doing the same thing. Whereas if I was putting in thousands of iterations, that would be different. So the learning curve is across iteration.

So if I was trying new marketing experiments to the store all the time, I was constantly changing out the inventory, I was constantly changing out the branding and the messaging, I was constantly changing the sign, I was constantly changing the online channels that I was used to drive foot traffic in, I was experimenting with being open at different hours. If I even had the ability to walk around and talk to other store owners and get in their books and figure out how they're running their business, it's the number of iterations that drives a learning curve. So the more iterations you can have, the more shots on goal you can have, the faster you're going to learn. It's not just about the hours put in. It's actually a combination of the two. But I think just the way we're built and the way that the world presents itself, the world offers us very easily the opportunity to do the same thing over and over and over again. But really, we'd be better served if we went off and found ways to do new things from scratch.

And doing something new the first time is painful because you're wandering into uncharted territory and high odds are that you will fail. So you just have to get very, very comfortable with frequent small failures. You know, Nassim Taleb talks about this also. He made his fortune, his wealth, by being a trader who relied upon black swans. Nassim Taleb made money by essentially losing little bits of money every day, and then once in a blue moon, he would make a lot of money when the unthinkable happened for other people. Where's most people want to make little bits of money every day, and in exchange, they'll tolerate lots of blow-up risks, they'll tolerate going completely bankrupt. We're not evolved to bleed a little bit every day. If you're out in the natural environment and you get a cut and you're literally bleeding a little bit every day, you will eventually die. You have to stop that cut. We're evolved for small victories all the time. But that becomes very expensive. That's where the crowd is. That's where the herd is. So if you're willing to bleed a little bit every day, but in exchange, you win big later, you will do better.

That is, by the way, entrepreneurship. Entrepreneurs bleed every day. They're not making money, they're losing money. They're constantly stressed out. All the responsibilities upon them. But when they win, they win big. On average, they'll make more.

So, why don't we jump into accountability, which I thought was pretty interesting, and I think you have your own unique take on it? So, the first tweet on accountability was: "Embrace accountability and take business risks under your own name. Society will reward you with responsibility, equity, and leverage." Yeah, so to get rich, you know, you're gonna need leverage. And leverage comes in labor, it comes in capital, or it can come through code or media. But most of these, like labor and capital, people have to give to you. For labor, somebody has to follow you. For capital, somebody has to give you money or assets to manage or machines. So to get these things, you have to build up credibility. And you have to do those under your own name as much as possible, which is risky.

So accountability is a double-edged thing. It allows you to take credit when things go well, and to bear the brunt of the failure when things go badly. So in that sense, you know, people who are stamping their names on things aren't foolish. They're just confident. Maybe it turns out to be foolish in the end. But if you look at a Kanye, or an Oprah, or a Trump, or an Elon, or anyone like that, these people can get rich just off their name because their name is such powerful branding. You know, regardless what you think of Trump, you have to realize that the guy was among the best in the world at just branding his name. Why would you go to Trump casino? Used to be because Trump. Why would you go to Trump Tower? Because of Trump. When it came time to vote, I think that a lot of voters just went and said, "Trump." They recognize the name. So the name recognition paid off. Same thing with Oprah. She puts her brand on something, her name on something, and it flies off the shelves. And it's like an instant validator.

But these people also take risks for putting their name out there. Obviously, Trump is now probably hated by half or more than half of the country, and by a big chunk of the world. He sticks his name out there. By putting your name out there, you become a celebrity. And fame has many, many downsides. It's better to be anonymous and rich than to be poor and famous. But even famous and rich has a lot of downsides associated with it. You're always in the public eye.

So accountability is quite important when you're working to build a product, or you're working on a team, or you're working in a business. We are constantly drummed into our heads how important it is to be part of a team. And absolutely agree with that. A lot of our training socially is telling us to not stick our necks out of the crowd. This is saying that I hear from Australian friends, "The tall poppy gets cut." Right? Don't stick your neck out. But I would say that actually, a really, really well-functioning team is small and has clear accountability for each two different portions. Like, so you can say, "Okay, this person is responsible for building the product. This person is responsible for the messaging. This person is responsible for raising money. This person is responsible for the pricing strategy." And maybe their online advertising. So if somebody screws up, you know exactly who's responsible. What? At the same time, something goes really well, you also know exactly who's responsible.

So if you have a small team and you have clearly delineated responsibilities, then you can still keep a very high level of accountability. And accountability is really important because when something succeeds or fails, if it fails, everybody points fingers at each other. And if it succeeds, everybody steps forward to take credit. And we've all had that experience when we were in school and we got like a group assignment to do, and there were people in there, there were probably a few people in there who did a lot of the work, and then there are a few people who just did a lot of grandstanding or position to do the work. So we're all familiar with this from a childhood sense. But it is uncomfortable to talk about. But clear accountability is important. Without accountability, you don't have incentives. Without accountability, you can't build credibility. But you take risk. So you take risk of failure, you take risk of humiliation, you take risk of failure under your own name. Which, you know, luckily in modern society, there's no more debtors' prison, and people don't go to jail or get executed for losing other people's money. But we're still socially hardwired to not fail in public under our own names. And the people who have the ability to fail in public under their own names actually gain a lot of power.

For example, I'll give a personal anecdote. Up until about 2013, 2014, my public persona was entirely around startups and investing. And only around 2014, 2015 did I start talking about philosophy and psychological things and broader things. And it made me a little nervous because I was doing it under my own name. And there were definitely people in the industry who sent me messages through the back channel like, "What are you doing? You're ending your career. This is stupid." And I just went with it. Took a risk. Same with crypto early on. It took a risk. But when you put your name out there, you take a risk with certain things. You also get to reap the rewards. You get the benefits. Accountability is important because that's how you're going to get leverage. That's how you're going to get credibility. It's also how you're going to get equity. You're gonna get a piece of the business. When you're negotiating with other people, ultimately, if someone else is making a decision about how to compensate you, that decision will be based on how replaceable you are. And if you have high accountability, that makes you less replaceable. And then they have to give you equity, which is a piece of the upside.

But equity itself is a good example because equity is also a risk-based instrument. Equity means you get paid everything after all the people who need guaranteed money are paid back. So if you look at the hierarchy of capital in a company, the employees get paid first. They get to pay the salary first. Like in the legal proceedings, you know, the salaries are sacrosanct. If you are a board member and the company spends too much money and has back salaries to pay, the government will go after you personally to pay back the salaries. So the employees get the most security. But in exchange for that security, they don't have as much upside. Then next in line would be the debt holders, who are maybe the bankers who lent money to the company for operations. And they need to make their fixed coupon every month or every year. But they don't get much more upside beyond that. Now, they might be making 5%, 10%, 15%, 20%, 25% a year, but that's where their upside is limited to. And then finally are the equity holders. And these people are actually gonna get most of the upside. So once the debt holders are paid off and the salaries are paid off, whatever remains goes to them. But if there isn't enough money to pay off the salaries and the debt holders, or if there's just enough to pay off the salary, the debt holders, which is what happens with most businesses most of the times, the equity holders get nothing. So the equity holders take on greater risk. But then they take on, in exchange, they get nearly unlimited upside.

And you can do the same with all of your work. So essentially, taking accountability for your actions is the same as taking an equity position in all of your work. You're essentially taking greater downside risk and greater upside risk. But realize that in modern society, the downside risk is not that large. You know, 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 are honest and made a high-integrity effort. So there's not really that much to fear in terms of failure. And so people should be taking on a lot more accountability than they actually are.

Is accountability actually fragile, or do you really just mean that we're hardwired not to fail in public? So it just feels like it's a fragile thing. I think it could actually be fragile. Like, example of accountability is, you're an airplane pilot. But as a captain, you're taking on accountability for the entire plane. Let's say that something goes wrong with the aircraft, you can't literally blame it on anyone else. You can't blame it on the steward or the stewardess. You can't blame it on the co-pilot. You're the captain. You're responsible for the ship. And if you screw up, you crash the ship. And there are immediate consequences. In the old days, you know, the captain was expected to go down with the ship. If the ship was sinking, literally the last person who got to get off was the captain. So yeah, I think accountability does come with real risks. But we're talking about in a business context. So the risk here would be that 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. So, you know, the time that you put in, the capital that you put in into the company, these are what are at risk. Even if a business fails, then your name's on it. That's not as bad as if it turns out to be an integrity issue. Like, you're Bernie Madoff, for example. Madoff Investments. That name is never going to be good again in the investment community. You could be Bernie Madoff's great-great-great-grandson, you're not gonna go into the investment business because you ruined the family name. So I think these days, the accountability risk with the name happens more around integrity rather than it does around purely economic failure.

The big takeaway for me on accountability is that you will be rewarded directly in proportion with your accountability. I also think this is why people like Taleb rail against CEOs who get rewards without accountability. Yeah, I mean, Taleb's "Skin in the Game" is required reading. If you want to get anywhere in modern life and understand how modern systems work, then "Skin in the Game" would be near the top of my list to read. But yes, accountability, skin in the game, these concepts go very closely hand-in-hand. I think of accountability as reputational skin in the game. It's putting your personal reputation on the line as skin in the game. Accountability is a simple concept. The only part of accountability that may be a little counterintuitive is that we're currently socially brainwashed to not take on accountability, not in a visible way. But I think there are ways to take on accountability where every member of a team can take on accountability for their portion. And that is how you get a well-functioning team while still putting credits and losses in the correct columns.

So, why don't we talk a little bit about leverage? The first tweet in the storm was a famous quote from Archimedes, which was: "Give me a lever long enough and a place to stand, and I will move the earth." The next tweet was: "Fortunes require leverage. Business leverage comes from capital, people, and products with no marginal cost of replication. Leverage is critical." The reason I stuck Archimedes' quote in there is normally I don't like putting other people's quotes in my Twitter. Like, that doesn't add any value. You can go look up those people's quotes. But this quote, I had to put in there because it's just so fundamental. I read it when I was very, very young, and it had a huge impression on me. And we all know what leverage is. When we use a seesaw or a lever, we understand how that works physically. But I think what our brains aren't really well evolved to comprehend is how much leverage is possible in modern society and what the newest forms of leverage are.

And so the oldest form of leverage is labor, which is people working for you. So instead of me lifting rocks, I can have 10 people lift rocks, then just by my guidance and where the rocks should go, a lot more rocks get moved than I could do myself. Everybody understands this because we're evolved to understand the labor form of leverage. And so what happens is society overvalues labor as a form of leverage. This is why your parents are impressed when you get a promotion and you have lots of people working underneath you. This is why when a lot of naive people, we tell them about your company, they'll say, "How many people work there?" They'll use that as a way to establish credibility. They're trying to measure how much leverage and impact you actually have. Or when someone starts a movement, they'll say, "How many people they have?" Or how big the army is. We just automatically assume that more people is better.

But I would argue that 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. It's incredibly competed over. Entire civilizations have been destroyed over this fight. For example, communism, Marxism, is all about the battle between capital and labor. That's capital law, and that's labor, right? So it's a trap. So you really want to stay out of labor-based leverage. You want the minimum amount of people working with you that are going to allow you to use the other forms of leverage. But HR, you are much more interesting.

The second type of leverage is capital. And this one's a little less hardwired into us because large amounts of money moving around and being saved and being invested in money markets, these are inventions of human beings, the last few hundred to few thousand years. They're not evolved with us from hundreds of thousands of years. So we understand them a little bit less well. They probably require more intelligence to use correctly. And the ways in which we use them keep changing. Management skills from a hundred years ago might still apply. But investing in the stock market skills from a hundred years ago probably don't apply to the same level today. So capital is a trickier form of leverage to use. It's poor modern. It's the one that people have used to get fabulously wealthy in the last century. It's probably been the dominant form of leverage in the last century. And you can see this by who are the richest people. It's bankers, politicians, and corrupt countries who print money, especially people who move large amounts of money around. And if you look at the top of very large companies, outside of technology companies, in many, many large, old companies, the CEO job is really a financial job. They're really financial asset managers. Now, sometimes an asset manager can put a pleasant face on it, so you get a Warren Buffett type. But deep down, I think we all dislike capital as a form of leverage because it feels unfair. Because it's this invisible thing that can be accumulated and passed across generations, and suddenly seems to result in people having gargantuan amounts of money with nobody else kind of around them or necessarily sharing in it.

That said, capital is a powerful form of leverage. It can be converted to labor, it can be converted to other things. It's very surgical, very analytical. If you are a brilliant investor and given a billion dollars, and you can make a 30% return with it, where's anybody else can only make a 20% return, you're gonna get all the money and you're gonna get paid very handsomely for it. It scales very, very well. 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. So it is a good form of leverage. But the hard part of capital is how do you obtain it? And that's why I talked about specific knowledge and accountability first. If you have specific knowledge in a domain, and if you're accountable, and you have a good name in that domain, then people are going to give you capital as a form of leverage that you can use to then go get more capital. So, but capital also is fairly well understood. And I think a lot of the knocks against capitalism come because of the accumulation of capital.

The most interesting and the most important form of leverage is this idea of products that have no marginal cost of replication. This is the new form of leverage. This was only invented in the last few hundred years. It got started with the printing press and accelerated broadcast media, and now it's really blown up with the internet, with code. So now you can multiply your efforts without having to involve other humans and without needing money from other humans. This podcast is a form of leverage. Long ago, I would have had to sit in a lecture hall and lecture each of you personally, and I would have maybe reached a few hundred people, and that would have been that. Thirty years ago, I would have to be lucky to get on TV, which is somebody else's leverage. They would have distorted the message, they would have taken the economics out of it, or charged me for it. They would have muddled the message, and I would have been lucky to get that form of leverage. But today, thanks to the internet, I can buy a cheap microphone, hook it up to a laptop or an iPad, and there you are, all listening.

So this newest form of leverage is where all the new fortunes were made. So all the new billionaires, the last generation fortunes were made by capital, that was the Warren Buffetts of the world. But the new generation fortunes are all made through code or media. Joe Rogan making 50 to 100 million bucks a year from his podcast. PewDiePie, I don't know how much money he's rolling in, but he's bigger than the news, right? The Fortnite players, of course, Jeff Bezos, and Mark Zuckerberg, and Larry Page, and Sergey Brin, and Bill Gates, and Steve Jobs. That is all code-based leverage. Now, the beauty is when you combine all of these three, that's where tech startups really excel. Where you take just the minimum but highest output labor that you can get, which are engineers and designers, product developers, and then you add in capital, use that for marketing, advertising, scaling, and you add in lots of code and media and podcasts and content to get it all out there. That is a magic combination. And that's why you see technology startups explode out of nowhere, use massive leverage, and just make huge upside returns.

Do you want to talk a little bit about permissioned versus permissionless? Probably the most interesting thing to keep in mind about the new forms of leverage is they're permissionless. They don't require somebody else's permission for you to use them or succeed. For labor leverage, somebody has to decide to follow you. For capital leverage, somebody has to give you money to invest or to turn into a product. But coding, writing books, recording podcasts, tweeting, YouTubing, these kinds of things, these are permissionless. You don't need anyone's permission to do them. And that's why they're very egalitarian. They're great equalizers of leverage. And as much as people may rail on Facebook and YouTube, they're not gonna stop using it because this permissionless leverage where everyone can be a broadcaster, it's just too good. The same way, you know, you can rail upon Apple for having a slightly closed ecosystem in the iPhone, but everyone's writing apps for it. And so as long as you can write apps for it, you can get rich or reach users doing that. Why not?

I think of all the forms of leverage, the best one in modern society, and people gonna, this is glib, this is a little overused, but and this is why I tell people, learn to code, right? It's that we have this idea that in the future, there's gonna be these robots and they're gonna be doing everything. And that may be true. But I would say the majority, the robot revolution has already happened. The robots are already here. And there are way more robots than there are humans. It's just that we packed them in data centers for heat and efficiency reasons. We put them in servers. They're inside the computers, all the circuits. It's a robot mind inside that's doing all the work. And so every great software developer, for example, now has an army of robots working for him at nighttime while he or she sleeps after they've written the code, and it's just cranking away. So the robots' army is already here. The robot revolution has already happened. We're just about halfway through it. We're just adding in much more of the hardware component these days as we get more familiar, we get more comfortable with the idea of autonomous vehicles, and autonomous airplanes, and autonomous ships, and maybe autonomous trucks, and, you know, their delivery bots, and Boston Dynamics robots, and all that. But robots who are doing web searching for you, for example, are already here. You know, the ones who are like cleaning up your video and audio and transmitting it around the world are already here. The ones who are answering many customer service queries, things that you would have had to call a human for, are already here. So an army of robots is already here. It's very cheaply available. And the bottleneck is just figuring out intelligent and interesting things to do to them. And essentially, you can order this army of robots around. Just the commands have to be issued in a computer language, in the language that they understand. So these robots aren't very smart. They have to be told very precisely what to do and how to do it. So coding is such a great superpower because now you can speak the language of the robot armies and you can tell them what to do. And I think at this point, actually, people are not only commanding the army of robots within servers through code, they're actually manipulating the movement of trucks, of other people, just ordering a package on Amazon, you're manipulating the movement of many people and many robots. They get a package delivered to you. People are doing the same things to build businesses now. So there's the army of robots within servers, and then there's also an army of actual robots and people that are being manipulated through software.

Labor and capital are much less egalitarian, not just in their inputs, but in their outputs. Let's say that I need something that humans have to provide, like if I want a massage, or if I need like someone to cook my food. The more of a human element there is in providing that service, the less egalitarian it is. Jeff Bezos probably has much better vacations than most of us, right? Because he has lots of humans running around doing whatever he needs to do. But if you look at the output of code and media, Jeff Bezos doesn't get to watch better movies and TV than we do. Jeff Bezos doesn't get to even have a better computing experience. Like, Google doesn't give him some premium special Google account where his searches are better. It's the nature of code and media output that the same product is accessible to everybody. And it turned into a positive-sum game where if Jeff Bezos is consuming the same product as a thousand other people, that product would be better than the version that Jeff would consume on his own. Whereas with other products, that's not true.

If you look at something like buying a Rolex, which is no longer about telling time, it's a signaling good. It's all about showing off. "I have a Rolex." That's a zero-sum game. If everybody in the world is wearing a Rolex, then people don't want to wear Rolexes anymore because they're no longer a signal. It's canceled out the effect. And so rich people do have an advantage in consuming that product. They'll just price it up till only they can have Rolexes, and then poor people can have Rolexes and Rolexes resume their signaling value. But something like watching Netflix, or using Google, or using Facebook, or YouTube, or even frankly, modern-day cars. Like, rich people don't have better cars. They just have weirder cars. You can't drive a Lamborghini on the street at any speed that makes sense for a Lamborghini. So it's actually a worse car on the street. It just turned into a signaling good at that point. Your sweet spot where you want to be is somewhere like a Tesla Model 3, or like a Corolla is an amazing car. A new Toyota Corolla is a really nice car. But because it's mainstream, the technology has amortized the cost of production over the largest number of consumers possible. And the best products tend to be at the center, at the sweet spot, the middle class, rather than being targeted at the upper class.

So I think one of the things that we don't necessarily see is as the forms of leverage have gone from being human-based, labor-based, and being capital-based, to being more product and code and media-based, that most of the goods and services that we consume are becoming much more egalitarian in their consumption. Even food is becoming that way. Like, food is becoming cheap and abundant, at least in the first world, too much so to our detriment. Jeff Bezos isn't necessarily eating better food, he's just eating different food, or he's eating like food that's prepared and served for him at his whim. So it's almost like more again, that human element performance. But the labor element out of food production has gone down massively. The capital element has gone down massively. And so even food production itself has become more technology-oriented. And so the gap between the haves and the have-nots is getting smaller. So if you care about ethics in wealth creation, it is better to create your wealth using code and media as leverage because then those products are equally available to everybody, as opposed to trying to create your wealth through labor or capital.

Because what I'm referring to here is scale economies. Technology products and media products have such amazing scale economies that you always want to use the product that is used by the most people. The one that's used by the most people ends up having the largest budget. There's no marginal cost of adding another user. And so with the largest budget, you get the highest quality. So the best TV shows are actually not gonna be some obscure ones just made for a few rich people. They're gonna be the big budget ones like "Game of Thrones," or "Breaking Bad," or "Bird Box," where they have massive, massive budgets. They can just use those budgets to get to a certain quality level. And then the rich people, to be different, they have to fly to Sundance and watch a documentary because you and I aren't gonna fly to Sundance because, you know, that's something that bored rich people do to show off. And we're not gonna watch a documentary because documentaries aren't actually even that good. Right? Again, if you're wealthy today, for large classes of things, you spend your money on signaling goods to show other people that you're wealthy, and you try and convert them to status, as opposed to actually consuming the goods for their own sake.

People and capital as a form of leverage have a negative externality. And code and product have a positive externality attached to them. If I was going to sum up your point, I think that capital and labor are also starting to become a little more permissionless, or at least the permissioning is diffuse because of the internet. So instead of labor, we have community now, which is a diffused form of labor. For example, Mark Zuckerberg has a billion people doing work for him by using Facebook. And instead of going to raise capital from someone who's rich, now we have crowdfunding. So you can raise millions and millions of dollars for a charity, for a health problem, or for a business. You can do it all online. So capital and labor are also becoming permissionless. And you don't need to necessarily do it the old-fashioned way where you have to go around and ask people for permission to use their money or their time.

One more question about leverage. Do you think a choice of business model, or our choice of product, can also bring a kind of leverage to it? For example, pursuing a business that has network effects, pursuing a business that has brand effects, or other choices of business model that people could manipulate that just give you free leverage? Yeah, there's some really good microeconomic concepts that are important to understand. One of those are scale economies, which is the more you produce of something, the cheaper it gets to make it. That's something that a lot of businesses have. Basic economics 101. And you should try and get into a business where making widget number 12 is cheaper than making widget number 5, and making widget number 10,000 is a lot cheaper than the previous ones. And this builds up an automatic sort of barrier to entry against competition and getting commoditized. So that's an important one.

Another one, this is along the same lines, but technology products, especially, and media products have this great quality where they have zero marginal cost of reproduction. So creating another copy of what you just created is free. So when somebody listens to this podcast or watches a YouTube video of this, it doesn't cost me anything. But the next person who shows up, those zero marginal cost things, they take a while to get going because you make very little money per user. But over time, they can really, really add up. So Joe Rogan is working no harder on his current podcast than he was on podcast number one. But on podcast number 1100, he's making a million dollars for the podcast, where's for the previous one, he probably lost money. For the first one, that's an example of zero marginal cost.

And then the most subtle, but the most important, is this idea of network effects. And it comes from computer networking. Bob Metcalfe, who created Ethernet, famously coined Metcalfe's Law, which is the value of a network is proportional to the square of the number of nodes in the network. So if a network of size 10 would have a value of 100, a network of a size 100 would have a value of 10,000. It's not just 10x more, it's 100x more because of the square. So the difference is the square. So you want to be in a network effects business, assuming you're not number two. If you're number one in a network effects business, you win everything. So, for example, if you look at Facebook, right? Your friends and family social networking protocol. Who's your competitor? Nobody. Because they want everything through network effects. Which is why when people say, "Well, I can just switch away from Facebook," they don't realize that network effects create natural monopolies. They're very, very powerful things. And one of the dirty secrets of Silicon Valley is that a lot of the winning businesses are natural monopolies. Even ride-sharing tends towards one winner-take-all system. Like Uber will always have better economics than Lyft, as long as it's moving more drivers and more riders around. Something like Google, there's the only one viable search engine. I do like DuckDuckGo, you know, privacy reasons, but they're just always gonna be behind because of network effects. Twitter, right? Where else would you go for microblogging? Even YouTube has weak network effects, but they're still powerful enough. There's really no number two site that you go to to consume your video on a regular basis. It even turns out in detail, Amazon Prime and convenience store credit cards and information creates a powerful network effect.

So what is the network effect? Let's define it precisely. A network effect is when each additional user adds value to the existing user base. So your users themselves are creating some value for the existing users. The classic example that I think everybody can understand is language. Let's say that there's a hundred people living in the community and speak ten different languages, and each person just speaks one of those ten. Well, you're having to translate all the time. It's incredibly painful. But if all hundred of you spoke the same language, it would add tremendous value. And so the way that community will play out is ten people start out speaking ten languages. Let's say that one extra person learns English. Well, now all of a sudden, eleven people know English. So that the next person comes in to learn a new language, probably gonna choose English. At some point, let's say English gets to twenty or twenty-five people, it's done. It's just gonna own the entire language marketplace, and the rest of the languages will get competed out. Which is why long term, the entire world is probably gonna end up speaking English and Chinese. China is closed off on the internet, but the internet itself is a great leveler. And people who want to communicate on the internet are forced to speak English because the largest community of people on the internet speaks English. I always feel bad for my colleagues who grew up speaking foreign languages in foreign countries because you don't have access to so many books. So many books just haven't been translated into other languages. So if you only spoke French, or you only spoke German, or you only spoke Hindi, for example, you would be at a severe disadvantage in a technical education. Invariably, if you go and get a technical education, you have to learn English just because you have to read these books that have this data that has not been translated. So languages are probably the oldest example of network effect. Money is another example. We should all probably be using the same money, except for the fact that geographic and regulatory boundaries have created these artificial islands of money. But even then, the world tends to use a single currency as the reserve currency at most times, currently the US dollar.

So network effects are a very powerful concept when you're picking a business model. It's really good idea to pick a model where you can benefit from network effects, low marginal costs, and scale economies. And these tend to go together. Like anything that has zero marginal cost of production, obviously has scale economies. And things that have zero marginal cost, every production, very often tend to have network effects because it doesn't cost you anything more to stamp out the thing. So then you can just create little hooks for users to add value to each other. You should always be thinking about how your users, your customers, can add value to each other. Because that is the ultimate form of leverage. You're in the beach of the Bahamas, or you're sleeping at night, and your customers are adding value to each other.

The tweet storm is very abstract. It's deliberately meant to be broadly applicable to all kinds of different domains and disciplines and time periods and places. But sometimes it's hard to work without concrete examples. So let's just go concrete for a minute. Look at the real estate business. You could start at the bottom. Let's say you're a day laborer. You come in, you fix people's houses. Someone orders you around, tells you, "Break that piece of rock, send that piece of wood, put that thing over there." There's all these menial jobs that go on in a construction site. If you're working one of those jobs, unless you're a skilled trade, like say a carpenter or electrician, you don't really have specific knowledge. And even carpenter, electrician is not that specific because other people can be trained how to do it. So you can be replaced. So you get paid your $15, $20, $25, $50, if you're really lucky, $75 an hour. But that's about it. You don't have any leverage other than from the tools that you're using. So if you're driving a bulldozer, that's better than doing it with your hands. So daily labor in India makes a lot less because they have no tool leverage. You don't have much accountability. You're a faceless cog in the construction crew, and the owner of the house or the buyer of the house doesn't know or care that you worked on it.

One step up from that, you might have a contractor, like a general contractor, who someone hires to come and fix and repair and build up their house. That general contractor is taking accountability, they're taking responsibility. So now, if let's say they got paid $250,000 for a job, so I'm using very rough prices, say $100,000 for the job to fix up a house, and it actually cost the general contractor, all said and done, $70,000. Well, that contractor's gonna pocket that remaining $30. So they got the upside, they got the equity. But they're also taking accountability and risk. So if the project runs over and there's losses, then they eat the losses. But you see, just the accountability gives them some form of additional potential income. And they also have labor leverage because they have a bunch of people working for them. But it probably tops out right there.

You can go one level above that and you can look at a property developer. This might be someone who is a contractor who did a bunch of houses, did a really good job, then decided to go into business for themselves. And they go around looking for beaten-down properties that have potential. They buy them, they either raise money from investors, they're fronted themselves, they fix the place up, and they sell it for twice what they bought it for. Maybe they only put in 20% more. So it's a healthy profit. So now a developer like that takes on more accountability, has more risk. They have more specific knowledge because now you have to know which neighborhoods are worth buying in, which lots are actually good, and which lots are bad. What makes or breaks a specific property. You have to imagine the finished house that's gonna be there, even when the property itself might look really bad right now. So there's more specific knowledge, there's more accountability and risk. And now you also have capital leverage because you're also putting money into the project. But conceivably, you could buy, you know, a piece of land or a broken-down house for $200,000 and turn it into a million-dollar mansion and pocket all the difference.

One level beyond that might be a famous architect or a developer where just having your name on a property because you've

Done so many great properties, increases its value. One level up from that, you might be a person who decides, "Well, I understand real estate, and I now know enough of the dynamics of real estate that rather than just build and flip my own properties or improve my own properties, I'm gonna be a massive developer. I'm gonna build entire communities."

Another person might say, "I like that leverage, but I don't want to manage all these people. I want to do it more through capital." So, I'm gonna start a real estate investment trust. And that requires specific knowledge, not just about investing in real estate and building real estate, but also requires specific knowledge about the financial markets and the capital markets and how real estate trusts operate.

One level beyond that might be somebody who says, "Actually, I want to bring the maximum leverage to bear in this market and the maximum specific knowledge." And so that person would say, "Well, I understand real estate, and I understand everything from basic housing construction to building properties and selling them, to how real estate markets move and thrive. And I also understand the technology business. So I understand how to recruit developers, how to write code and how to build that product. And I understand how to raise money from venture capitalists and how to return it."

Now, what that works, and obviously not a single person may know this. You may pull a team together to do it where each have different skill sets, but that combined entity would have specific knowledge in technology and in real estate. It would have massive accountability because that company's name would be a very high risk, high reward effort attached to the whole thing. And people would devote their lives to it, take on significant risk. And then it would have leverage in code with lots of developers. It would have capital with investors putting money in, and the founders' own capital. And it would have labor of some of the highest quality labor that you can find, which is high quality engineers and designers and marketers who are working on the company. And then you may end up with a Trulia or a Redfin or Zillow kind of company. And then the upside could potentially be in the billions of dollars or the hundreds of millions of dollars.

So as you layer in more and more kinds of knowledge that can only be gained on the job and aren't common knowledge, and you layer in more and more accountability and risk-taking, and you layer in more and more great people working on it, and more and more capital on it, and more and more code and media on it, you keep expanding the scope of the opportunity. All the way from the day laborer who might just literally be scrapping on the ground with their hands, all the way up to somebody who started a real estate tech company and then took it public.

We spoke about specific knowledge. We talked about accountability. We talked about leverage. The last skill that Naval talks about in his tweet storm is judgment, where he says that leverage is a force multiplier for your judgment. We are now living in an age of nearly infinite leverage, and all the great fortunes are created through leverage. So your first job is to go and obtain leverage. And you can obtain leverage through permission by taking risks and getting people to work for you, or by raising capital. Or you can get leverage permissionlessly by learning how to code, or becoming a good communicator and podcasting and broadcasting, creating videos, writing, etc. So that's how you get leverage.

But once you have leverage, what do you do with it? Well, the first part, a career spent hustling to get leverage. Once you have the leverage, then you want to slow down a bit because your judgment really matters. It's like you've gone from steering your sailboat around to now you're steering an ocean liner or a tanker. You have a lot more at risk, but you have a lot more to gain as well. You're carrying a much higher payload. So in an age of infinite leverage, judgment becomes the most important skill.

Warren Buffett is so wealthy now because of his judgment. Even if you were to take away all of Warren's money tomorrow, investors would come out of the woodwork and hand him $100 billion dollars because they know his judgment is so good. They would give him a big chunk of that $100 billion dollars to invest. So ultimately, everything else that you do is actually setting you up to apply your judgment.

One of the big things that people rail on is CEO pay. And for sure, there's crony capitalism that goes on where these CEOs control their boards, and the boards give them too much money. But there are certain CEOs who definitely earn their keep because their judgment is better. If you're steering a big ship, if you're steering Google or Apple, and your judgment is 10 or 20 percent better than the next person's, society will literally pay you hundreds of millions of dollars more because you're steering a hundred billion dollar ship. If you're on course ten or twenty percent of the time more often than the other person, the compounding results on that hundreds of billions of dollars you're managing will be so large that your CEO pay will be dwarfed in comparison.

So demonstrated judgment, credibility around the judgment, is so critical. Warren Buffett wins here because he has massive credibility. He's been highly accountable. He's been right over and over in the public domain. He's built a reputation for very high integrity, so you can trust him. So a person like that, people will throw infinite leverage behind him because of his judgment. Nobody asks him how hard he works. Nobody asks him when he wakes up or when he goes to sleep. Did like, "Warren, just do your thing." So especially demonstrated judgment with high accountability, clear track record, is critical.

Let's define judgment. I would define it as knowing the long-term effects of your decisions, or being able to predict the long-term effects of your decisions. It's funny, my definition of wisdom is knowing the long-term consequences of your actions. They're not all that different. Wisdom is just judgment on a personal domain. Wisdom applied to external problems, I think, is judgment. So they're highly linked. But yes, it's knowing the long-term consequences of your actions and then making kind of the right decision to capitalize on that.

Judgment is very hard to build up. This is where both intellect and experience come into play. There are many problems with the so-called intellectuals in the ivory tower. But one of the reasons why Naval, I think, rails against them is because they have no skin in the game. They have no real-world experience. Right? So they just apply purely intellect without any experience is often worse than useless because you get the confidence that the intellect gives you, and you get some of the credibility. But because you had no skin in the game, and you had no real experience, and no real accountability, you're just throwing darts.

The real world is always far, far more complex than we can intellectualize. And especially all the interesting, fast-moving edge domains and problems, you can't get there without experience. So if you are smart and you iterate fast, it's not even you put 10,000 hours into something, but you take 10,000 tries at something. If you are smart and you have a lot of quick iterations and you try to keep your emotions out of it, the people with the best judgment are actually among the least emotional. A lot of the best investors are considered almost robotic in that regard. But I would be surprised if even the best entrepreneurs often come across as unemotional.

There is this archetype of the passionate entrepreneur. And yeah, they have to care about what they're doing, but they also have to see very clearly what's actually happening. And the thing that prevents you from seeing what's actually happening is your emotions. Our emotions are constantly clouding our judgment. In investing, or in running companies, or in building products, or being an entrepreneur, emotions really get in the way. Emotions that were preventing you from seeing what's actually happening until you can no longer resist the truth of what's happening, until it becomes too sudden, and then you're forced into suffering, which is a breaking of this emotional fantasy that you would put together.

To try and connect some of these concepts, I would say that first, you're accountable for your judgment. Judgment is the exercise of wisdom. Wisdom comes from experience. And that experience can be accelerated through short iterations. And the reason why a lot of the top investors, a lot of the value investors, if you read Jeremy Grantham, or you read Warren Buffett, you know, you read up on Michael Burry, these people sound like philosophers, or they are philosophers, or they're reading a lot of history books or science books. Like, what are they doing? Shouldn't they be reading investment books? No, investment books are the worst place to learn about investment because investment is a real-world activity that is highly multivariate. All the advantages are always being competed away. It's always in the cutting edge.

What you actually just need is very, very broad-based judgment and thinking. And the best way to do that is to study everything, including a lot of philosophy. And philosophy also makes you more stoic, makes you less emotional, and so you make better decisions, you have better judgment.

One simple thing is I see that go ahead on Twitter, and it seems like half of Twitter is outrageous something at all times. You can go within someone's Twitter feed and get at least some semblance of what it must be like to be in their head all the time. And the more outrage somebody is, I guarantee you, the worse their judgment is. If someone's constantly tweeting political outrage and it seems like an angry person getting into fights, you don't want to hand these person the keys to your car, let alone the keys to your company.

So we covered the skills that you need to get rich. That was specific knowledge, accountability, leverage, judgment, and lifelong learning. Let's talk a little bit about the importance of working hard and valuing your time. So no one is going to value you more than you value yourself. So you just have to set a very high personal hourly rate and you have to stick to it. So even since when I was young, I just decided that I was worth a lot more than the market thought I was worth, but I started treating myself that way. So always factor your time into every decision. How much time does it take? Oh, it's gonna take me an hour to get across town to get this thing? Well, I value myself at $100 an hour. That's $100 out of my pocket. Am I gonna do that?

You buy something from Amazon, they screwed it up, you have to return it. Is it worth your time to return it? Is it worth the mental hassle? Keep in mind that you have less work hours, you have less mentally high-output hours. Do you want to use them to run errands and solve little problems, or do you want to save them for the big stuff? All the great scientists were terrible at managing their household life. None of them had a clean organized room, or, you know, made all their social events on time, or sent their thank-you cards. You can spend your life however you want, but if you want to get rich, it has to be your number one overwhelming desire. Which means that it has to come before anything else. Which means you can't be penny-pinching.

This is what people understand. You can penny-pinch your way to the basic sustenance. You can keep your expenses low, maybe retire early and not spend too much. That's perfectly valid. But we're here to talk about wealth creation. And if you're gonna do that, then that has to be your number one overwhelming priority. So fast-forward to your wealthy self and pick some intermediate hourly rate. For me, believe it or not, back when you could have hired me, which now obviously you can't, but back when you could have hired me, and this was true a decade ago or even two decades ago before I had any real money, my hourly rate, I used to say to myself over and over, is $5,000 an hour. Today, and when I look back, really, it was about $1,000 an hour. And of course, I still ended up doing stupid things like arguing with the electrician or returning the broken speaker. But I shouldn't have. And I did a lot less than any of my friends would. And I would make a theatrical show out of throwing something in the trash pile or giving to Salvation Army rather than trying to return it, or handing something to people rather than trying to fix it. I would argue with my girlfriends, and even today to my wife, like, I don't do that. That's not a problem that I solve. I still argue that with my mother when she hands me like little to-dos. I just don't do that. I would rather hire you an assistant. And this was true even when I didn't have money.

Another way of thinking about something is if you can outsource something or not do something for less than your hourly rate, outsource it or don't do it. So if you can hire someone to do it for less than your hourly rate, hire them. That even includes things like cooking. Now, if you may want to eat your healthy home-cooked meals, but if you can outsource it, do that instead. And I know some people will say, "Well, what about the joy of life and what about getting it right just your way?" Sure, you can do that, but you're not gonna be wealthy because now you've made something else a priority.

Paul Graham said it pretty well for Y Combinator startups. He said, "You should be working on your product and getting product-market fit, and you should be exercising and eating healthy. Like, that's about it. That's kind of all you have time for while you're on this mission." So set a very high hourly aspirational rate for yourself and stick to it. And it should seem and feel absurdly high. If it doesn't, it's not high enough. And whatever you picked on my advice to you would be, raise it. Like I said, for myself, even before I had money, for the longest time, I used $5,000 an hour. And if you extrapolate that out into what it looks like as an annual salary, it's multiple millions of dollars per year. Ironically, I actually think I've beaten it. But I look back because I'm not the hardest-working person. I'm actually kind of a lazy person. So I worked through bursts of energy where I'm really motivated with something. So if I actually look at how much I've earned per actual hour that I put in, it's probably quite a bit higher than that.

Let's talk about hard work. There's this battle that happens on Twitter a lot between, should you work hard and should you not? Like David Hauser's on there saying it's like your slave driving people. And Keith Rabois is always on there saying like, "No, all the great founders work their fingers to the bone." And they're talking past each other. First of all, they're talking about two different things. David is talking about employees in a lifestyle business, which is fine. Your number one thing in life if you're doing that is not getting wealthy. You have a job, you also have your family, you also have your life. But Keith is talking about the Olympics of startups. He's talking about the person going for the gold medal and trying to build a multi-billion dollar public company. That person has to get everything right. They have to have great judgment. They have to pick the right thing to work on. They have to recruit the right team. And they have to work crazy hard because they're basically engaged in a competitive sprint.

So if getting wealthy is your goal, you are going to have to work as hard as you can. But hard work is absolutely no substitute for who you work with and what you work on. What you work on is probably the most important thing. Finding product-market founder fit, to expand on Marc Andreessen's definition, he came with product-market fit, but I would add product-market founder fit, which is how well you are personally suited to that business. The combination of three that should be your overwhelming goal. And you can save yourself a lot of time if you pick the right area to work in. Picking the right people to work with is the next most important piece. And then third comes how hard you work. But they're like three legs of a stool. If you shortchange in any one of them, the whole stool is gonna fall down. So it's not like you can pick one over the other that easily.

So the order of operations when you're building a business is, or even building your career, is first, figure out what should I be doing? What is something where there is a market that is emerging? There's a product that I can build that I'm excited to work on, and something where I have specific knowledge and I'm really into it. And then second, surround yourself with the best people possible. And no matter how high your bar is, raise your bar, because you can never be working with other people who are great enough. If there's someone greater out there to work with, you should go work with them. I advise a lot of people who are looking at which startup to join in Silicon Valley. I say, basically, pick the one that's going to have the best alumni network for you in the future. Look at the PayPal Mafia. They worked with a bunch of geniuses, so they all got rich. So just try and pick based on the highest intelligence, energy, and integrity people that you can find. And then finally, once you have picked the right thing to work on and the right people to work with, then you work as hard as you can.

This is where the mythology gets a little crazy. People will work 80, 20 hour weeks. A lot of that's just status signaling. It's showing off. Nobody really works 80, 200, 20 hours a week sustained at high output with mental clarity. Your brain breaks down. You just won't have good ideas. So really, the way people tend to work most effectively, especially in knowledge work, is they sprint as hard as they can while they're working on something and they're inspired, and they're passionate. And then they rest to take long breaks. It's more like a lion hunting and much less like a marathon running and running. So you sprint, then you rest, you reassess, and then you try again. And what you end up doing is you end up building a marathon of sprints.

Maybe just made the point to me on the side that inspiration is perishable, which is a very good point. When you have your inspiration, do it right then and there. This happens to me a lot with my tweet storms. I've actually come up with a whole bunch of additional tweets, not just the ones that are already out there. But sometimes I just hesitate or I just pause, and then it just dies. And what I've learned is if I'm inspired to write a blog post or to publish a tweet storm, I should probably do it right away, otherwise it's not gonna get out there. I won't come back to it. So inspiration is a beautiful and powerful thing, and when you have it, just seize it.

So people talk about impatience. When do you know to be impatient? When do you know to be patient? My glib tweet on this was, "Impatience with actions, patience with the results." And I think that's actually a good philosophy for life. Anything you have to do, just get it done. Why wait? You're not getting any younger. Your life is slipping away. You don't want to spend it waiting in line. You don't want to spend it traveling back and forth. You don't want to spend it doing things that you know ultimately aren't part of your mission. And when you do them, you want to do them as quickly as you can, while you do them well with your full attention. But then you just have to give up on the results. You have to be patient with the results because you deal with complex systems. You deal with lots of people. It takes a long time for markets to adopt products. It takes time for people to get comfortable working with each other. It takes time for great products to emerge as you polish away, polish away, polish away. So impatience with actions, patience with results. And as maybe said, inspiration is perishable. So when you have inspiration, act on it right then and there.

If I have a problem that I discovered in one of my businesses that needs to be solved, I won't sleep until at least the resolution is in motion. And this is just a personal failing. But if I'm on the board of a company, I'll call the CEO. If I'm running the company, I'll call my reports. If I'm responsible, I'll get on there right then and there and solve it. If I don't solve a problem the moment it happens, or I don't start moving toward solving it from when it happens, I have no peace. I have no rest. I have no happiness until that problem is solved. So solve it as quickly as possible. I literally won't sleep until it's solved. Maybe that's a personal characteristic, but it's worked out well in business. We squander our time with a death of a thousand cuts.

Another tweet ahead was, "You should be too busy to do coffee while still keeping an uncluttered calendar." People who know me know that I'm famous for simultaneously doing two things. One is having a very clean calendar. I have almost no meetings on it. And there are people that I meet with, when they see my calendar, they almost weep. Well, at the same time, I am busy all the time. I'm always doing something. And it's usually, quote unquote, work-related. But it is whatever the highest impact thing is that needs to be done at that time, and that I'm most interested, inspired about. But the only way to do that is to constantly, ruthlessly decline meetings.

People want to do coffee and build relationships, and that's fine. Early in your career, when you're still exploring. But later in your career, you're exploiting, and there are more things coming at you, and you have time for. You have to ruthlessly cut meetings out of your life. If someone wants to do a meeting, see if you can do it with a phone call instead. If they want to do a phone call, see if they can do it with an email instead. If they want to do it email, see if they can do it a text message instead. If they're text messaging you, you should probably be ignoring most text messages unless they're true emergencies. So one has to be utterly ruthless about dodging meetings. When you do do meetings, do walking meetings, do standing meetings, keep them short, keep them actionable, keep them small. Any meeting with eight people and it's sitting on a conference table, nothing is getting done in that meeting. You're literally just dying one hour at a time.

Doing coffee reminds me of an old quote. I think from Steve Jobs. When they asked him, "Hey, why does Apple come to conventions or why don't you come to my convention?" And his response was, "Well, then because we wouldn't be here working." Yeah. I used to have a tough time turning people down for meetings. But now I just tell them outright. I just say, "Look, I don't do non-transactional meetings. I don't do meetings without a strict agenda. I don't do meetings unless we absolutely have to." Maybe used to do this. He would email people when they would ask maybe and I for a meeting like a coffee meeting, to know you, he would say, "We don't do meetings unless it's life and death urgent." And then that person has to respond, "Yeah, it's life and death urgent," or there's no meeting.

When you have something important or something valuable, other busy, interesting people will meet with you. Your calling card has to be, "Hey, here's what I've done. Here's what I can show you. Let's meet, and I'll be respectful of your time if this is useful to you." And I find that there are very busy, important people who will take your meeting, but you have to come with a proper calling card. All the people who tweet and who email famous or rich people saying, "Hey, if I could just get one meeting with you," and they're vague about it, they're not gonna get anywhere in life. You have to build up the credibility.

When, for example, an investor in the tech business, in the venture business, looks at a startup, the first thing they want to see is they want to see some evidence of product progress. They don't just want to even see a slide deck. They want to see product progress because the product progress is the resume for the entrepreneur. It is the unshakable, unfaithful resume. So you have to do the work. To use a crypto analogy, you have to have proof of work. If you have proof of work, and you truly have something interesting, then you shouldn't hesitate to put it together in an email and send it to somebody. But even then, when you're asking for a meeting, you want to be super actionable about it.

But I would say, even the other side, even if you yourself haven't made it yet, if you think you're gonna make it by going out and networking and doing a whole bunch of meetings, you're probably incorrect. Yes, the networking can be important early in your career, and yes, you can get serendipitous with meetings, but the odds are pretty low. And as we spent time talking about earlier, when you are just meeting people and hoping to get that lucky break, you're relying on type 1 luck, which is blind luck, and type 2 luck, which is hustle luck. But what you're not getting is type 3 or type 4 luck, which are the better kinds, where you spend time developing a reputation, working on something, developing a unique point of view, and being able to spot opportunities that others can.

A busy calendar and a busy mind will destroy your ability to do great things in this world. If you want to be able to do great things, whether you're a musician, or whether you are an entrepreneur, or whether you're an investor, you need free time and you need a free mind. We just finished talking about the importance of working hard and valuing your time. Next, there's a few tweets on the topic of working for the long term. The first tweet is, "Become the best in the world at what you do. Keep redefining what you do until this is true." If you really want to get paid in this world, you want to be number one at whatever it is that you're doing. And it can be niche. That's the point. It can literally be, you're getting paid for just being you. You know, at this point, some of the more successful people in the world are that way. Oprah gets paid for being Oprah. Joe Rogan gets paid for being Joe Rogan. And they're being authentic to themselves.

So what this tweet is trying to say simultaneously is that you want to be number one, but you want to keep changing what you do until you're number one. You can't just pick something arbitrary. You can't say, "I'm gonna be the fastest runner in the world," and now you've got to beat Usain Bolt. That's too hard of a problem. But what you can do is you can keep changing what your objective is until it arrives to your specific knowledge, your skill sets, your position, your capabilities, your location, your interests, and then converges to making you number one. So when you're searching for what to do, you actually have two different foci that you have to keep in mind at all points. And one of those is, I want to be the best at what I do. And the second is, what I do is flexible so that I am the best at it, until you arrive at a comfortable place where you're like, "Yes, this is something I can be amazing at while still being authentic to who I am." And this is not going to be an overnight discovery. It's gonna be a long journey. But at least you know how to think about it.

The most important thing for a company is to find product-market fit. I would say the most important thing for an entrepreneur is to find founder-product-market fit, where you are naturally inclined to build the right product, which has a market. And that's a three-focus problem, which is you got to make all three of those work at once. If you want to be successful in life, you just have to get comfortable managing multivariate problems, multiple objective functions. And this is one of those cases where you have to map at least two or three at once.

This reminds me of your tweet about escaping competition through authenticity. It sounds like part of this is a search for who you are. It's both a search and a recognition, because sometimes when we search, our egos, we want to be something that we aren't. And our friends and family are better at telling us actually who we are, or looking back at what we've done is a better indicator of who we are. Peter Thiel talks a lot about how competition is besides the point. It's counterproductive. We are highly mimetic creatures. We copy what everybody else is doing around us. We copy our desires from them. Everyone around me is a great artist, I want to be an artist. If everyone around me is a great business person, I want to be a business person. Everybody around me is a social activist, I want to be a social activist. That's where my self-esteem will come from. You have to be a little careful when you get caught up into these status games that you end up competing over things that aren't worth competing over.

So Peter Thiel talks about how he was gonna be a law clerk because he was in law school. Everybody around him wanted to be a law clerk for a Supreme Court justice or some famous judge. And he got rejected. And that's what made him go into business. So it helped him break out of a lesser game into a greater game. So sometimes you just get trapped in the wrong game because you're competing. And the best way to escape competition, to get away from the specter of competition, which is not just stressful and nerve-racking, but will often drive you to just the wrong answer. The way to escape competition is to just be authentic to yourself. If you are fundamentally building and marketing something that is just an extension of who you are, no one can compete with you on that. Who's gonna compete with Joe Rogan or Scott Adams? It's impossible. Is someone else gonna come along and write a better Dilbert? No. Is someone going to compete with Bill Watterson and create a better Calvin and Hobbes? No. They're being authentic. This is easiest to see in art. Artists are by definition all naturally authentic. But even entrepreneurs are authentic. Who's gonna be Elon Musk? Who's gonna be Jack Dorsey? These people are authentic, and the businesses and products they create are authentic to their desires and their means. If somebody else came along and started launching rockets, I don't think it would phase Elon one bit. He's still gonna get to Mars because that's his mission, you know, insane as it seems, the one he set for himself, and he's gonna accomplish it.

So authenticity naturally gets you away from competition. It doesn't mean that you necessarily want to be authentic to the point where there's no product-market fit. It may turn out you're the best juggler on a unicycle, but maybe there just isn't that much of a market for that, even with YouTube videos. So you gotta adjust that somehow until you find product-market fit. But at least lean towards authenticity, towards getting away from competition. And competition automatically leads towards copycatting, and often towards just playing completely the wrong game, especially in entrepreneurship. The masses are never right. If you see a lot of people tweeting about what a great market to enter is, or you see journalists talking about a company is terrible, they don't know anything. If the masses knew how to build great things and create great wealth, we'd already be done. We'd already be rich by now. So in a sense, when you see a lot of competition, sometimes that indicates to you that the masses are already here. So it's already competed over too much, and there's nothing here, or it's in the wrong trend to begin with. On the other hand, if it's completely empty, if the whole market is empty and no one's there, that can also be a warning indicator that you've gone too authentic and not enough on the product-market fit part of founder-product-market fit. So there's a balance. You have to find it. But generally, most people will make the mistake of paying too much attention to the competition and being too much like the competition and not being authentic enough. And the great founders tend to be authentic iconoclasts.

I hate to bring up the Scott Adams skill stack one more time, but also bring it up. Do you think one way of getting to authenticity is not necessarily adding some random skills that you think might be important, but just really finding five or six various skills that you already authentically do and just stacking them on top of each other? And not even in any purposeful way. If you are expressing who you are, you're going to be expressing all these little five or six different skills anyway. That's really where life is going to lead you anyway, long term. If you are good and successful at what you do, you will find that whatever your hobbies were, you're almost doing them for a living. As Robert Frost said, you know, combine your vocation and your avocation. What you love to do and what you do. So I think you'll find yourself there anyway. And you're right about the skill stack, and that everyone's got multiple skills. We aren't all one-dimensional creatures, even though that's how we have to portray ourselves and our online profiles to get employed. You meet somebody and they say, "I'm a banker," or "I'm a bartender," or "I'm a barber," or what have you. All the B's. But people are multivariate. They have a lot of skills. One banker might be going into finance. Another one might be good at sales. The third one might be just good at macroeconomic trends and have a feel for the markets. Another one might be really good at picking individual stocks. You know, another one might just be good at maintaining relationships rather than selling new relationships. So everyone's gonna have their various niches, and you're gonna have multiple niches. It's not gonna be just one. So over time, you will find as you go through your career, both you will gravitate towards the things that you're good at, which by definition are almost the things you enjoyed doing, otherwise you wouldn't be good at them, you wouldn't have put in the time. And other people will push you towards the things that you're good at because you're smart bosses, and you're smart coworkers, and you're smart investors will realize, "Okay, you're really world-class in this thing. We can recruit somebody else for that other thing." So ideally, you want to end up specializing in being you.

I think when you're being authentic, you don't really mind competition that much. Yeah, it pisses you off, and it inspires some fear and jealousy and all the other emotions that come along with it. But also, you don't really mind because you're more oriented towards the goal and the mission. And worst case, you get some ideas from them. And there's often ways to work with the competition in a positive way, and it ends up increasing the size of the market for you. Yeah, sometimes it depends on the nature of the business. Silicon Valley tech industry businesses tend to be winner-take-all, at least the good ones. And so when you see competition, it can make you fly into a rage because it really does endanger everything you've built. Whereas if I was opening a restaurant, and a more interesting version of the same restaurant opens up in a different town, that's fantastic. I'm just gonna lift from them what's working and drop what I can see that they have already figured out is not working. So it does depend to some extent on the nature of the business. That said, even the businesses that seem like that they are often in direct competition and really aren't. They can end up adjacent or slightly different. You're one step away from a completely different business. And sometimes you need to take that one step, and you're not gonna be able to take it if you're busy fighting over a booby prize kind of you're playing a stupid game, you're gonna win a stupid prize. It's not obvious right now because you're blinded by competition. But three years from now, it'll be obvious.

To give a simple example, when I was first starting companies, one of my first ones was called Opinions, which was an online product review site for all the products out there that was independent of Amazon. And that space eventually turned into TripAdvisor and Yelp, which is where we should have gone. We should have done more local reviews because there's more value to having a review of a scarce item like in your local restaurant than there is of an item like a camera, which was gonna have a thousand reviews on Amazon. But before we could get there, we got caught up in the whole comparison shopping game. And so we ended up merging with DealTime, and we competed with MySimon and BizRate, which became Shopzilla and PriceGrabber and Nextag and a whole bunch of these price comparison engines. And we're all caught in fierce competition with each other. And that whole space went to zero because it turns out Amazon won it all. Completely. So there was no need for price comparison. Everyone just went to Amazon. But we got the booby prize because we were caught in a competition with a bunch of our peers when really we should have been looking at what the consumer really wanted and being authentic to ourselves, which was reviews in that price comparison, and gone more and more into more and more esoteric items that needed to be reviewed where customers had less and less data and wanted reviews more badly. So if we'd stayed authentic to ourselves, we would have done better.

We're still talking about working for the long term. The next tweet on that topic is, "Apply specific knowledge with leverage, and eventually you will get what you deserve." I would also add to that, apply judgment, apply accountability, and apply the skill of reading. This one is just a glib way of saying that it takes time. Even once you have all of these pieces in place, there is an indeterminate amount of time that you're gonna have to put in. And if you're counting, you will run out of patience before it actually arrives. So you just have to make sure that you give these things a proper time. Life is long. Charlie Munger had some line on this. Somebody asked him about him, money. And he reinterpreted that and he said, "What the questioner is actually asking is, how do I get rich like you, but faster, before I end up as an really old guy?" And everybody wants it immediately. But the world is an efficient place. Immediate doesn't work. You do have to put in the time. You do, if you put in the hours. And so I think you just have to put yourself in the position with the specific knowledge, with the accountability, with the leverage, with the authentic skill set that you have to be the best in the world at what you do. And then you have to enjoy it and just keep doing it and keep doing it and keep doing it. And don't keep track and don't keep count because if you do, you will run out of time.

I can look back at my career and the people two decades ago that I had identified as brilliant and hard-working, but hadn't thought much more about it, they're all successful now, almost without exception. On a long enough time scale, you do get paid. But it can easily be 10 or 20 years. Sometimes it's five. And if it's five or three, and a friend of yours got there, it can drive you insane. But those are exceptions. And for every winner, there's multiple failures.

One thing that's important in entrepreneurship is you just have to be right once. You get many, many shots on goal. You can take a shot on goal every three to five years, maybe every ten at the slowest, or once every year at the fastest, depending on how you're iterating with startups. But you really only have to be right once. My little equation is that your eventual outcome will be equal to something like the distinctiveness of your specific knowledge times how much leverage you can apply to that knowledge times how often your judgment is correct times how singularly accountable you are for the outcome times how much society values what you're doing. And then you compound all of that with how long you can keep doing it and how long you can keep improving it through reading and learning. That's actually a really good way to summarize it. It's probably worth even trying to sketch that equation out.

That said, people try to then apply mathematics. It was really philosophy. So I've seen this happen in the past where I say one thing, and then I say another thing that seemed contradictory. If you treat it as a math equation, but it's obviously in different contexts. And then people will say, "Well, you say that desire is suffering, that's the Buddhist saying. And then you say that all greatness comes from suffering. So does that mean all greatness comes from desire?" And it's like, "No, people, you can't just start carrying variables around and forming absolute logical outputs. You have to know when to apply things." So I think that is very useful to understand. But at the same time, one can't get too analytical about it. It's what a physicist would call false precision, when you take two made-up estimates and you multiply them together and you get four degrees of precision. Those decimal points don't actually count. You don't have that data. You don't have that knowledge in a model. The more estimated variables you have, the greater the error in the model. So just adding more and more complexity to your decision-making process actually gets you a worse answer. You're better off just picking the single biggest thing or two. For example, what am I really good at, according to observation and according to people that I trust, that the market values? Like that alone. Those two variables alone are probably good enough. Because if you're good at it, you'll keep it up. And if you're good at it, you develop the judgment. And if you're good at it and you like to do it, eventually people will give you the resources and you won't be afraid to take on accountability. So all the other pieces will fall in place. Product-market fit is inevitable if you're doing something you love to do and the market wants it.

Regarding the guy that gets rich in five years, one of the tweets that you had on the cutting room floor was, "Avoid people who got rich quickly. They're just giving you their winning lottery ticket numbers." This is generally true of advice anyway, which is it's back to Scott Adams, systems not goals. If you ask a specific person what worked for them, very often it's just like they're reading out the exact set of things that worked for them, which may not be applicable for you. They're just reading your winning lottery ticket numbers. It's a little glib. There is something to be learned from them, but you can't just take their exact circumstance and map it onto yours. The best founders I know, they listen and read to everyone, but then they ignore everybody and they make up their own mind. They have their own internal model of how to apply things to their situation. And they do not hesitate to discard information. If you survey enough people, all the advice will cancel to zero. So you do have to have your own point of view. And when something is sent your way, you have to very quickly decide, is that true? Is that true outside of the context of what that person applied it in? Is it true in my context? And then do I want to apply it? You have to reject most advice. But you have to listen to and read enough of it to know what to reject and what to accept. Even in this podcast, you should examine everything. If something does not feel true to you, put it down, set it aside. If too many things seem untrue, delete this podcast.

I think the most dangerous part of taking advice is that the person that gave it to you is not going to be around to tell you when it doesn't apply any longer. Yet, I view the purpose of advice as a little different than most people. I just view it as helping me have anecdotes and maxims that I can then later recall when I have my own direct experience and say, "Ah, that's what that person meant." 90% of my tweets are actually just maxims that I carve for myself. They are then little mental hooks to remind me when I'm in that situation again. Like, "Oh, I'm the one who tweeted, 'If you can't see yourself working with someone for life, then don't work with them for a day.'"

As soon as I know that this person is not gonna be someone that I'm gonna be working with 10 years from now, then I have to start extricating myself in that relationship or just not investing that much more effort into it.

So I use my tweets and other people's tweets as maxims that help compress my own learnings and be able to recall them because, you know, the brain space is finite, you have finite neurons. So you can almost think of these as pointers, addresses, mnemonics to help you remember deep-seated principles where you have the underlying experience to back it up. If you don't have the underlying experience, then it's just reads like a collection of quotes. It's like, it's cool, it's inspirational for a moment, maybe you make a nice poster out of it, but then you forget it and move on. So all of these are really just compact ways for you to recall your own knowledge.

The last tweet on the topic of working for the long term is that when you're finally wealthy, you'll realize that it wasn't what you were seeking in the first place. But that's for another day. That's a multi-hour topic in of itself. First, I thought it was a really clever way to end the whole thing because it disarms a whole set of people who'd say, well, you know what, at some point I'll get enriched. Because there are a lot of people who just like the status signal, virtue signal against the idea of wealth creation or making money. So it was just a good way to disarm all of them.

But it's also true in that the things that you really want in life, yes, money will solve all your money problems, but it doesn't get you everywhere. The first thing you'll realize when you've made a bunch of money is that you're still the same person. If you're happy, you're happy. If you're unhappy, you're unhappy. If you're calm and fulfilled and peaceful, you're still that same person. I know lots of very rich people who are extremely out of shape. I know lots of rich people who have really bad family lives. I know lots of rich people who are internally a mess.

So I would lean on another tweet that I put out, which is actually, when I think back on it, I think it's my favorite tweet of mine. It's not initially the most insightful, it's not nearly the most helpful, it's not even the one I think about the most. But I just, when I look at it, there's just such a certain truth in there that it just resonates. And that is that a calm mind, a fit body, and a house full of love, these things cannot be bought. They must be earned. Even if you have all the money in the world, you can't have those three things. Jeff Bezos still has to work out. He still has to work in his marriage or whatever his next relationship is. And his internal mental state is still gonna be very much not controlled by external events. It's gonna be based on how calm and peaceful he's inside.

So I think those three things, your health, your mental health, and your close relationships, are things that you have to cultivate and can probably bring you a lot more peace and happiness than any amount of money ever will. So that's what I meant.

Now, how to get there is actually a tweet storm that I still need to put out. I've been working on it. I have probably a hundred tweets on it. It's just very hard to say anything on the topic without getting attacked from fifty different directions, especially these days on Twitter. So I've been hesitant to do it because I want to target it for a very specific kind of person. There's a bunch of people who don't believe that working on your internal state is useful. They're too focused on the external, and that's fine. There's nothing wrong with that. They should do that, and that's who they, that's how to get rich tweet storm is for.

There's a bunch of people who believe that the only thing worth working on is complete liberation, like you become the Buddha. And they'll attack anything in the middle as being useless. That's fine too. But most people aren't there. So what I want to do is to create a tweet storm that is just very practical advice for everyday people who want to have a calmer internal state. Just a set of understandings, realizations, have truths and truths that if you were to imbibe them properly, and again, these are just pointers to ideas that you already have and experiences that you already have, that if you keep these top of mind, slowly but steadily, it will help you with certain realizations that will lead you to a calmer internal state. That's what I want to work on.

Fitness is another big one. I'm just not the expert there. There are plenty of good people on Twitter who are better at fitness than me. And I think loving household and relationships actually automatically falls out of the other things. If you have a calm mind, and if you've already made money, you should have good relationships. There's no reason why you shouldn't. A lot of divorces actually happen over money, unfortunately. That's just the reality of it. So having money removes that part of it. A lot of external battles happen because your internal state is not good. When you're naturally internally peaceful, you're gonna pick less fights. You're gonna be more loving without expecting anything in return, and that will take care of things on the external relationship front.

So money solves your money problems. Money buys you freedom in the material world. I think that was a tweet from your cutting room floor. And money lets you not do the things that you don't want to do. Yeah, to me, the ultimate purpose of money is so that you do not have to be in a specific place at a specific time doing anything you don't want to do.

We skipped one tweet because I wanted to cover all of the tweets on the topic of the long term. And the tweet that we skipped was, there are no get-rich-quick schemes. That's just someone else getting rich off you. This goes back to the world being an efficient place. If there's an easy way to get rich, it's already been exploited. And there are a lot of people who will sell you ideas and schemes on how to make money, but they're just always selling you some $79.95 course or some audiobook or some seminar. Which is fine. Everyone needs to eat. People need to make a living. They might actually have really good tips. But if they're giving you actionable, high-quality advice that acknowledges that it's a difficult journey and will take a lot of time, then I think that's realistic. But if they're selling you some get-rich-quick scheme, whether it's crypto or whether it's an online business or seminar, they're just making money off you. That's their get-rich-quick scheme. It's not gonna necessarily work for you.

One of the things about this whole tweet storm and podcast is that we don't have ads on here. We don't charge for anything. We don't sell anything. Not because I don't want to make more money. It's always nice to make more money. We're doing work here. But because it would completely destroy the credibility of the enterprise. If I'm saying, hey, I know how to get rich and I'm gonna sell that to you, it ruins it.

When I was young and I was kind of studying up on the topic, one of my favorite books on the topic was actually called "How to Get Rich" by Felix Dennis, the founder of Maxim magazine, billionaire who passed away. And he had a lot of crazy stuff in there, but he had some really good insights too. But whenever I read something by him or by the GoDaddy founder Bob Parsons, or say, Andrew Carnegie, now you read stuff by people who are already very wealthy and they've clearly made their wealth in other fields, not by selling the "how to get rich" line. They have a credibility. You just trust them. And they're not trying to make money off of you. They are obviously trying to win some status and some ego, right? You always have to have a motivation for doing something. But at least that is a cleaner reason why they're probably not lying. They're probably not fooling you. They're not slowing you at some level.

Every founder has to lie to every employee of the company that they have where they have to convince them that it's better for you to work for me than is to do what I did and go work for yourself. So I've always had a hard time with that, which is why the only honest way in my companies, I've recruited entrepreneurs and I tell them, you're gonna get to be entrepreneurial in this company. And the day you're ready to go start your own next thing, I'm gonna support you. I'm never gonna get in the way of you starting a company. But this can be a good place for you to learn how to build a good team and build a good culture, how to find product-market fit, to perfect your skills, and meet some amazing people while you figure out exactly what it is you're gonna do. Because positioning, timing, deliberation are very important when starting a company. But what I've never been able to do is look them in the face and say, you must be at your desk by 8:00 AM because I'm not gonna be at my desk by 8:00 AM. I want my freedom. Or say that, that you're great at being a director today and you'll be a VP tomorrow, you know, putting them into that career path track because I don't believe in it myself.

If anyone is giving advice on how to get rich and they're also making money off of it, they should have made their money elsewhere. Like, you don't learn how to be fit from a fat person. You don't wanna learn how to be happy from a depressed person. So you don't wanna learn how to be rich from a poor person. But you also don't want to learn how to be rich from somebody who makes their money by telling people how to be rich. It's suspect.

Anytime you see somebody who's actually gotten rich following some guru's advice on getting rich, just remember that in any random process, if you run it long enough and if enough people participate in it, you will always get every single possible outcome with probability one. There's a lot of random error in there. And then also, this is why you have to absolutely and completely ignore business journalists and economists, academics, when they talk about private companies. I won't even name names. But like when a famous economist rails on Bitcoin, or when a business journalist attacks the latest company that's IPOing, it's complete nonsense. Those people have never built anything. They're professional critics. They don't know anything about making money. All they know is how to criticize and get page views. And you are literally becoming Dumbo by reading them. You are burning neurons.

I'll leave you with a quote from the same Taleb that I liked, where he said, "If you want to be a philosopher king, first become a king, and then become a philosopher. Not first become a philosopher and then become a king."

I'm glad you brought up Taleb because I was gonna finish this by saying, just remember the title of his first book, which is "Fooled by Randomness." One of the reasons why we're a little vague in this podcast is because we're trying to lay down principles that are timeless as opposed to just giving you the winning lottery ticket numbers from yesterday.

You summarized this entire tweet storm with two words: productize yourself. Productize and yourself. Yourself has uniqueness. Productize has leverage. Yourself has accountability. Productize has specific knowledge. Yourself also has specific knowledge in there. So all of these pieces, you can combine them into these two words. Whenever you're doing anything in business, if you're looking towards a long term getting wealthy, you should ask yourself, is this authentic to me? Is it myself that I'm projecting? And then, am I productizing it? Am I scaling it? Am I scaling with labor or with capital or with code or with media? So it's a very handy, simple mnemonic. I mean, what is this podcast? This is a podcast called Navel Land, literally productizing myself with a podcast. You want to figure out what you're uniquely good at or what you uniquely are, and apply as much leverage as possible. So making money isn't even something you do. It's not a skill. It's who you are stamped out a million times. Making money should be a function of your identity and what you like to do.

Another tweet that I really liked was this was not mine. Somebody else put this up. They said, "Find three hobbies: one that makes you money, one that keeps you fit, and one that makes you creative." I would change that slightly. So I would say, one that makes you money, one that makes you fit, and one that makes you smarter. So in my case, my hobbies would be reading, making money as I love working with startups, either investing in them, brainstorming them, starting them. I just love that ideation and initial creation phase around startups. And then on the hobby that keeps you fit, I don't really have one. Closest thing I have is yoga, but that's where I fell apart. And I think people who early in life discover something like surfing or swimming or tennis or some sport that they continue doing throughout most of their life are very lucky because they found a hobby that'll make them fit.

We've finished discussing the tweet storm and we're going to spend some time on Q&A and discussing some of the tweets on the cutting room floor that didn't make it into the tweet storm. My first question is, do you think there are some common failure modes or typical things that people do wrong when they're trying to apply this advice?

A lot of people don't understand what specific knowledge really is or how to quote unquote obtain it. People don't understand what accountability really entails. They think that accountability means being successfully accountable. No, it means that you have to stick your neck out and fail with your name out there publicly and be willing to let people hate on you. One of the reasons I'm less active on Twitter lately is because every tweet summons an army of nitpickers and haters, and it gets exhausting. But on the other hand, you have to learn how to ignore them, otherwise you can survive on Twitter.

A lot of people try to reconcile it with like, should I quit my nine-to-five job or not? That can be a very hard decision. I don't think you need to go that extreme. You can start applying accountability and leverage and specific knowledge even within your existing career. It doesn't have to necessarily be fork off and do something else completely.

A lot of people will use it as a way to agree and disagree with their existing biases. They'll say, oh yeah, I agree with that part or that part. You're completely wrong. The most interesting part should be the ones that you disagree with because clearly that proves that I know a few things. So if you disagree with it, then maybe that is an area where you can improve your thinking. I've definitely improved my thinking all the time. But I will tell you that in this tweet storm, I put down the minimum viable principles. I did not put down the whole universe of what I know about how to make money because 90% of it is suspect. I put down the bedrock, the stuff that I'm pretty solidly sure about. And I have not yet seen a tweet that has successfully contradicted anything in this tweet storm that would cause me to say, oh yeah, I got that one wrong.

Think another place where people get a little bit off is they look at this and they say, well, this only applies to tech entrepreneurs. I disagree. The example that I gave about real estate was a good one in that regard. It's just the nature of leverage. That technology drives leverage. So I'm gonna push you in a tech direction to get the free leverage that is available in tech. And obviously, this message is being delivered through the internet, so it's going to have a pro-internet bias.

There are also people who believe that it is unfair to the people who don't have these opportunities to do anything with the opportunities that they do have. Well, that defeatist attitude. Why even get out of bed in the morning? Ninety percent of people are dead. There's a lot of people who are living on a dollar a day. Do you live on a dollar a day? No. It's up to you to play the hand that you're dealt to the best of your ability. And then you can take the winnings, the pot from that hand, and do whatever you want with it to fix the world. But saying that you should not do things just because others can't do things is living in denial. It's an excuse to not do anything.

There are also people who believe that wealth creation is fundamentally at odds with an environmentally safe and healthy, and they view the whole thing is a giant zero-sum game. That's a false narrative as well. Elon Musk is not playing a zero-sum game with the environment. And there are plenty of entrepreneurs who are not. If anything, there is a word that environmentalists love, which is sustainability. And for-profit businesses are at least financially sustainable, if nothing else. You can do a B Corp, which has a dual mission. A lot of nonprofit efforts would actually be better served by for-profit companies because then they wouldn't have to go begging for grants all the time. They would be financially sustainable. Some great founders realized their philanthropic visions by running a business.

Who is this advice targeted to? Is it for my Lyft driver? Is it for an internet entrepreneur? Is it for somebody who wants to start a YouTube channel? Because it comes from someone who's steeped in Silicon Valley and tech companies, it's always gonna have a bias towards that. But I think it's good for anybody who wants to be entrepreneurial, anybody who wants to control their own life, anybody who wants to deterministically and reliably improve their ability to create wealth over time, is patient and looking at for the long haul. It's certainly if you're 80 years old, retired, running out of energy, you should probably just stay retired. But there are 80-year-olds who haven't a lot of energy and want to do new things and live for the future. It can obviously apply very easily to a young person, I would say 9, 10 years old and up.

The most difficult one, it's probably middle-aged because when we're in our 30s, 40s, 50s, we already have a lot invested. We have a lot of obligations because those are the years where we're earning and people are relying upon us. We don't want to change because we don't want to admit defeat in what we've been doing to date. But that's where it can actually be the most fruitful. It may be the most difficult pivot. You have a 9-to-5 job, leave a family relying upon you. And so it may seem like the things in this podcast are far too idealistic. But maybe it can inform your weekend projects. Maybe it can inform your self-free education that you do at night on the internet. Maybe it can inform what roles you take on in the company that you're at, because they move you closer and closer to points of leverage, points of judgment, or points where you're naturally good at and you're authentic. It might cause you to take on more accountability.

I even applied piece-meal. These principles can directionally guide you regardless of what stage you are at in life, short of retirement. And if you're in retirement, just test them to see if they're true and then teach them to your kids or your grandkids. There's many different ways to participate. It should really apply to almost everybody who has a complete body, sound mind, and is looking to work.

I think one way to apply the advice is to look at who is getting the leverage off of the work that you're doing. Look up the value chain. Look at who's above you and who is above them and see how they are taking advantage of the time and the work that you're doing and how they're applying leverage to it. People do that naturally in that they want to move up the corporate ladder. But that's mostly about managing other people. And what you really want to be doing is managing more capital, products, media, and community. People think about moving up the ladder in their organization, but they don't think that often about moving to a different organization or creating their own organization to get more leverage in general. Ceteris paribus, fancy Latin words for all other things equal, you will do better in a smaller organization than a larger one. You will have more accountability. It'll be more visible. You are more likely to be able to try on multiple things to find out the thing that you are uniquely good at. People are more likely to give you leverage through battlefield promotions. You're gonna have more flexibility. There will be more authenticity to how the company operates.

A good progression for careers start out in a large company and then progressively move to smaller and smaller ones. It's very hard to go from a small company to work in a larger company. Larger companies tend to be more about politics and less about merit. They're more stable, but they're less innovative situations. The goal long term is, if we are all wealthy, is that we're all working for ourselves. And the people who are working for us are essentially robots. And today, that's software robots in data centers executing code. Tomorrow, it could be delivery bots, flying bots, mechanical bots that are carrying things around.

This goes back to this idea of the best relationships are peer relationships. If there's someone above you, then that's someone to learn from. If you're not learning from them and improving, then there shouldn't be anybody above you. If there's somebody below you, it's because you're teaching them and enabling them. If you're not teaching them and enabling them, then get a robot underneath you. Don't need a human being below you. This is utopian and it's long ways off. But in the not-too-distant future, anybody who wants to work for themselves will be able to work with themselves. You may have to make other sacrifices. You may have to take on more risk. You may take on more accountability. You may have less steady income. But more and more, I think the younger generation is realizing that if they're gonna work, they're gonna work for themselves.

In one of your tweets, you listed out some of the things you should study, like programming, sales, reading, writing, arithmetic. One of the items that ended up on the cutting room floor was that you should also study ethics. I was originally going to put that out there as a concession to people who believe that making money is evil and that the only way to make it is evil. But then I realized ethics is not necessarily something you study. It's something you think about, and it's something you do. Every one of us has a personal moral code, and where you got that moral code from is different for everybody. It's not like I can point you to a textbook. Sure, I could point to some Roman and Greek texts, but that's not gonna suddenly make you ethical.

There's the Golden Rule, right? Do unto others as you would have them do unto you. Or there's Taleb's silver rule, which is, don't do unto others which you don't want them doing unto you. Once you've been in business long enough, you will realize how much of business is about trust. And it's about trust because you want to compound interest. You want to be able to work for long periods of time with trustworthy people without having to reevaluate every discussion with that and re-think each time and without having to constantly look over your shoulder. And so over time, you gravitate towards working with certain kinds of people. And similarly, those people will gravitate towards working with other ethical, quote unquote, people. So being ethical turns out to be a selfish imperative. You want to be ethical because it attracts the other long-term players in the network, and then they want to do business with you. And if you build a good enough reputation for being ethical, eventually people will pay you just to do deals through you because you're the one who'll validate and ensure deals by your presence because you wouldn't be involved with low-quality stuff. So being ethical actually pays off in the long run. But it's the very long run. In the short run, being unethical pays off, which is why so many people go for it. It's a greedy algorithm. But you can be ethical simply because you're long-term greedy.

And I can even outline a framework for different parts of so-called ethics just based on the idea of long-term selfishness. For example, you want to be honest because it leaves you with a clear mind. You don't have two threads running in your head. One is the lies that you told, you have to keep track of, and the other one is what you're saying. You just have to think about one thing at a time, so you have more energy to think about that thing. So you're a clear thinker. Also, by being honest, you're rejecting the people who only want to hear the pretty lies. So you force those people out of your network. And sometimes it's painful, like friends and family. But long-term, you create room for the people who like you exactly the way that you are. So that is a selfish reason to be honest.

For example, in negotiations, if you're the kind of person who always tries to get the best deal for yourself, you will win a lot of very early deals, and it'll feel very good. But on the other hand, there are a few people who will recognize that you're always scrabbling and not acting fairly, and they will tend to avoid you over time. Those people end up being the deal makers in the network because people go to them for a fair shake or to figure out what's fair. And so if you are cutting people fair deals, you don't get paid in the short term. But in the long term, everybody wants to deal with you, and you end up being a market hub. You have more information, you have trust, you have reputation, and people end up doing deals through you. A lot of wisdom is just realized in the long-term consequences of your actions. And so the longer term you're willing to look, the wiser that you're going to seem to everybody around you.

Do you want to tell us about some of the jobs that you had as a youth and the specific job that kicked off your fanatical obsession with creating wealth?

This gets a little personal, and I don't want to do the humble brag thing. There was some thread going around Twitter about like, name five jobs you've held, and every rich person on there was trying to signal how they held like normal jobs. So I don't want to play that game. I've held a bunch of menial jobs. There are people who have had worse than me, people who had it better than me. There was one point where I was washing dishes in the school cafeteria, and I said, "F this, I hate this, I can't do this anymore." And I sweet-talked my way to a computer science prof to help TA his CS class in algorithms when I myself was completely unqualified for that. And so it forced me to learn computer science algorithms so I could TA the rest of the course. But that desire came out of the suffering of washing dishes in the college cafeteria, which is not to say there's anything wrong with that. There's nothing wrong with anything, really. But it was just not for me. I did not enjoy it. I had an active mind and I wanted to make my money and earn my living through mental activities, not through physical activities. But sometimes it takes the suffering of doing the wrong thing to motivate you enough to do the right thing.

I worked at a law firm for a while, a big prestigious law firm in New York City. I had a big internship there, and I basically got fired for surfing. Using that, back in the day, this is before the internet was a big thing, using that was the newsgroups, and it was the only way for me to stay from being completely bored. And I was an overpaid guy wearing a tie and a suit, and had to hang out in the conference room. When the lawyers needed photocopies, I would make photocopies. In the meantime, I would be bored out of my skull. This is pre-iPhone. Thank God to Steve Jobs for saving us all from unending boredom. But I used to read the Wall Street Journal or anything that I could get my hands on. I would have read the back of a brochure just to keep from going insane because listening to a bunch of corporate lawyers discuss how to optimize the minutiae in a big contract is really dull. And they got mad at me because they wanted me to sit there quietly and not read The Wall Street Journal. They said that's rude, that's misbehavior. So I got called up and reprimanded a bunch of times, and then I was finally terminated. And I was sent home in shame early from my very prestigious internship, destroying my chance of going to law school. That I was unhappy for all of an hour. But ultimately, it's one of the best things that ever happened to me because then I would have ended up as a lawyer. Not that I have anything against lawyers, but it's not what I was meant to do.

You mentioned the catering job that you had a while back that really kicked off the whole obsession. That was an envy thing. When I was in high school, I had to make some money to pay for my first semester at college, and I had to get a job. It was a summer of 1990, 1991 timeframe. So this was the Bush Sr. recession. If anyone who's alive back then remembers, it was actually really hard to get a job. So I ended up working for an Indian food catering company. And I ended up having to serve at a birthday party for a kid who, it was actually in my school. So I saw my classmates, and I was out there serving food and drinks to them. And that was incredibly embarrassing. I wanted to hide away and die right there. But, you know what, it's all part of the plan. It's all part of the motivation. If I hadn't had that happened, I probably wouldn't be as motivated and I wouldn't be as successful. So it's all fine. But it was definitely a very strong motivator in that sense. Envy can be useful, and it can also eat you alive if you let it follow you your entire life. But there are points in your life where it can be a very powerful booster rocket.

We spoke earlier about picking a business model that has leverage from scale economies, network effects, zero marginal cost of replication. There were a few other ideas on the cutting room floor that I want to go through with you. The first one was the principal-agent problem.

So mental models are all the rage. Everyone's trying to become smarter by adopting mental models. I think mental models are interesting, but I don't think explicitly in terms of a mental model checklist. I know Charlie Munger does, but that's just not how I think. Instead, I tend to focus on the few lessons that I've learned in life over and over that I think are incredibly important and seem to apply almost universally. One that keeps coming up from microeconomics, because as we've established, macroeconomics is not really worth spending time on, is what's called the principal-agent problem. Principal in this case is principal with a P-A-L, not P-R-I. So it's not a principle that you follow, it's a principal who is a person. A principal is an owner, and an agent is the person who works for the owner. So you can think of it as an employee, the difference being a founder, an employee. I can summarize this by a famous quote that either was said by Napoleon or by Julius Caesar. It's generally attributed to either one, but he said, "If you want it done, then go. If not, then send." Which is saying, if you want to do something right, do it yourself, because other people just don't care enough.

Now, the principal-agent problem is everywhere in microeconomics. The way that they try to characterize it is that the principal's incentives are different than the agent's incentives. So the owner of the business wants what is best for the business and will make the most money. The agent generally wants whatever will look good to the principal, or might make them the most friends in the neighborhood or in the business, or might make them personally the most money. You see this a lot with hired gun CEOs running public companies where the ownership of the public company is distributed so widely that there's no principal remaining. So nobody owns more than 1% of the company. The CEO takes charge, stuffs the board with their buddies, and then starts issuing themselves low-price stock options or doing a lot of stock buybacks because their compensation is based directly tied to the stock price. So agents have a way of hacking systems. This is what makes incentive design so difficult. As Charlie Munger says, "If you can be working on incentives, don't work on anything else." Almost all human behavior can be explained by incentives.

The study of signaling and signals is seeing what people do despite what they say. People are much more honest with their actions than they are with their words. You have to get the incentives right to get people to behave correctly. It's a very, very difficult problem because the good people aren't purely coin-operated. They're not just looking for money. They're also looking for other things like status or meaning in what they do. The principal-agent problem is the one that, as a business owner, you're always going to be trying to figure out, how do I make this person think like me? How do I incentivize them? How do I give them founder mentality? And I think you have to truly have been a founder to fully appreciate how important this founder mentality thing is and what a difficult and gnarly problem the principal-agent problem is.

What I would say to you is, if you are a principal, you essentially want to spend a lot of your time thinking about this problem. What that means is you want to take your top lieutenants and you want to be very generous with them in terms of ownership and incentives, even if they don't necessarily realize it, because over time they will. And you want them to be aligned with you in how they operate. When you do business deals, it's better to have an aligned partnership where you both have the same incentives than a partnership where you got the advantage in the deal. You negotiate in such a way that you've got the better end of the transaction because eventually the other person will figure it out or they'll be misaligned, and the partnership will fall apart. Either way, it's not going to be one of those things that you can invest into with the benefits of compound interest over decades.

Finally, if you're in a current role where you're an agent, you're an employee, your most important job is to think like a principal. The more you can think like a principal, the better off you're going to be long-term because it's training you how to be a principal long-term, and eventually you will become a principal. It's also going to align you with the principal, and a good principal will then promote you or empower you or give you accountability or leverage way out of proportion to what might be your menial role. I'm always very impressed by founders who will promote up very, very young people through the ranks, having them skip multiple levels despite their experience. And invariably, it happens because this agent who's way deep down thinks like a principal. So if you can hack your way through the principal-agent problem, you probably solved half of what it takes to run a company.

The reason I asked about this one first is because I feel like I personally never see the principal-agent problem in my work. I tend to work in small teams where everybody is highly economically aligned, and the people have been filtered for a commitment to the mission. And everybody else who doesn't work out moves on to another role elsewhere. These are all heuristics that you have designed to avoid having to deal with the single biggest problem in management. Another example of a heuristic you can have that helps you route around the principal-agent problem is they deal with the smallest firms possible. So, for example, when I'm hiring a lawyer or a banker or even an accountant to work on my deals, one of the things that I've become very cognizant about is the bigger firms, all other things equal, are generally worse. Yes, they have more experience, yes, they have more people, yes, they have a bigger brand. But what you'll find is that the principal and the agent are highly separated, and very often the principal will sell you and convince you to work with a firm, but then all the work will be done by an agent who simply doesn't care as much, and you can end up getting substandard service. So I prefer to work with boutiques. And my ideal law firm to work with is a law firm of one. My ideal banker to work with is a solo banker. Now, you're making other sacrifices and trade-offs in terms of that person's resources, and you are betting big on that person. But you've got one throat to choke. There's no one else to point fingers to. There's nowhere to run. The accountability is extremely high. If you're an agent, the best way to operate is just say, "What wouldn't the founder do?" If you think like the owner and you act like the owner, it's only a matter of time until you become the owner.

Let's chat about the Kelly criterion. The Kelly criterion is a very popular mathematical formulation of a simple concept. And a simple concept is, don't risk everything. Stay out of jail. Don't bet everything on one big gamble. Just be very careful how much you bet each time so you don't lose the whole kitty. The Kelly criterion mathematically formulates, if you're a gambler, even when you have an edge, how much should you gamble per hand? Because even when you have an edge, you can still lose. So let's say you're a 51/49 edge. Every gambler knows not to bet the whole kitty on that 51/49 edge because you could just lose everything and you don't get to come back. To the average, Nassim Taleb famously talks about "organdy city," which is a fancy word for the simple concept that what is true for a hundred people on average isn't the same as one person averaging that same thing a hundred times. The easiest way to see that is by playing Russian roulette. Six people who play Russian roulette once each, and then each winner gets a billion dollars. One person ends up dead. Five people have a billion dollars. Versus one person who plays Russian roulette with the same one gun six times. Is never gonna end up a billion or is gonna end up worth zero. And so risk-taking, especially when the averages are calculated across large populations, is not always rational. The Kelly criterion helps you avoid ruin. The number one way in which people get ruined in modern business is not by betting too much, but it's by cutting corners and doing unethical things or downright illegal things. Ending up in an orange jumpsuit in prison or having a reputation ruined is the same as getting wiped to zero. So never do those things.

Let's talk about the Schelling point. It's a game theory concept made famous by Thomas Schelling in the book called "Strategy of Conflict," which I do recommend reading. It's about multiplayer games where other people are responding based on what they think your response is. What he came up with was the mathematical formalization of how do you get people who cannot communicate with each other to coordinate? Suppose that I want to meet with you, but I don't tell you where and I don't tell you when. We both want to meet, but we cannot communicate anymore information to each other. That would sound like an impossible problem to solve. We're done. We can't do it. Not quite, because I know that you're a rational person and smart and educated, and you know I'm a rational person who's smart. We're gonna start thinking, if we have to pick an arbitrary date, we're probably gonna pick New Year's. And what time? Midnight or 12:01 AM. And where would we meet? What is a big meeting point? Well, if we're Americans, it's probably in New York City. It's the most important city. Then we're in New York City. We'll meet at midnight. Probably Grand Central Station, under the clock. Maybe you end up at the Empire State Building, but not likely. You can just use social norms to converge onto a Schelling point.

There are many times in many games where you can look at the game itself, whether it's business or art or politics, and you can find the converging Schelling point within the context of that game. You can cooperate with the other person. Here's a simple example. Let's suppose that you have two companies that are competing heavily with each other and they hold an oligopoly. Let's say that they're competing right now, and the price fluctuates between $8 and $12 for whatever the service is. Don't be surprised if they both converge on $10 without ever talking to each other.

Do you want to talk about Pareto optimal? Pareto optimal is another concept from game theory, along with Pareto superior. Pareto superior means that something is better in some ways while being equal or better in the other ways. It's not worse off in any way. This is an important concept when you're negotiating with somebody. If you can make a solution Pareto superior to where it was before, you will always do that. Pareto optimal is when the solution is the best that it can possibly be. Then you can't change it without making it worse in at least one dimension. There is a hard trade-off from this point forward. These are important concepts to understand when you're involved in a big negotiation. In negotiation, though, I would generally say that this is a tweet that I have: negotiations are won by whoever cares less. Negotiation at the end of the day is about not wanting it too badly. If you want something too badly, then the other person will be able to extract more price from it. If you do care more about something than the other person, and they are taking advantage of you in a negotiation, then your best way to deal with that is to turn it from a short-term game into a long-term game. Try to make it into a repeat game. Try to bring reputation into line. Try to bring other people in who may have a say in the future or may want to play games of this person in the future.

An example of a very high cost, low information, single move game is having your house renovated. Contractors are notorious for overbooking, ripping people off, being unaccountable. I'm sure contractors have their own side of it. The homeowner has unreasonable demands, we found problems, the homeowner doesn't want to pay for it, they don't understand. There are low information buyers. It's a very expensive transaction. Historically, it's been very hard to find good contractors, and the contractor has no choice on what a good homeowner is. You try to go through friends, you try to go through reputation. And what you're basically doing there is you're trying to convert a single move, expensive game with a high probability of cheating on both sides into a multi-move game. One way to do that, say, "Well, actually, I need two different projects done. So the first project we'll do together, and then based on that, I'll decide if we do the second project." You can split your work up into two projects. Another way might be, "I'm gonna do this project with you, and then I have three friends who want projects done, and they're waiting to see the outcome of these projects." Another one might be the same person operating within the same community and having a reputation in the community to protect. Another one could be, you write them a Yelp or a Thumbtack review. These are all ways of turning a single move game into a longer-term game and helping get past a position of poor negotiating leverage and poor information.

We talked about compounding and compounding interest, but we didn't really dig into it that much. Relationships are a good example of compound interest. Once you've been in a good relationship with somebody for a while, whether it's business or it's romantic, life gets a lot easier because you know that person's got your back. You don't have to keep questioning. If I'm doing a deal with someone that I've dealt with for 20 years and I trust them and they trust me, we don't have to read the legal contracts. Maybe don't even need to create legal contracts. Maybe we can actually do it on handshakes. That kind of trust makes it very, very easy to do business. If Nivi and I start another company, I know that if things aren't working out, we're both gonna be extremely reasonable about how to go about it, how to exit out of it, how to shut.

It down, or even if we're scaling and how to bring in new people. At this point, we have mutual trust, and that allows us to start businesses more easily and almost compounds the effect. Especially when you're dealing with something like a startup, which is so difficult to pull off, removing these frictional mechanisms can actually often be the difference between success and failure.

I think the number one most under-recognized reason startups fail is because the founders fall apart. There are a couple of non-intuitive things about compounding. The first one is that most of the benefits of compounding comes at the end of the compounding, so you may not necessarily see the huge benefits of it upfront. There was a good quote from an article that Sam Altman wrote where he said, "I always want it to be a project that if successful, will make the rest of my career look like a footnote." Again, that just goes back to the idea that most of the benefits of compounding come at the end.

The other thing that's a little non-intuitive about compounding is that I think it's better to have a few deep compounding relationships with people instead of a large amount of non-compounding relationships.

One of the under-realized things in business is that it takes just as much effort to create a small business as it does to create a large business. Whether you're Elon Musk or whether you're the guy running three Italian restaurants in town, you're working 80 hours a week, you're sweating bullets, you're hiring and firing people, you're trying to balance the books. It's highly stressful and it takes years and years of your life. But in one case, you get companies that are worth 50, 100 billion dollars and the adulation of everybody. And in the other hand, you might make a little bit of money and you've got some nice restaurants. So, think big.

Are there any other microeconomic concepts outside of zero marginal cost of replication and scale economies that are important for people to understand? Price discrimination is an important thing to understand. What it means is that you can charge people different things based on their propensity to pay. Now, you're not allowed to charge different people different things just because you don't like them. You have to offer them a little something extra, but it has to be something that rich people care about. Business class seats will routinely cost five or ten times what an economy class seat does, but it probably cost the airline just two, maybe three acts to provide that. It's just the rich person is more willing to pay. So you have to give them the little things that they need extra to either signal they're rich or that little bit of comfort that they want.

Price discrimination gets used a lot in enterprise software where you have a freemium product. The free version will do almost everything, but then if you want the version that's a little extra secure, or hosted on your site, or has multi-user administration so the IT person can monitor everything that's going on, you're suddenly find yourself paying 10, 100, or infinite times as much as you go from a free product to a price product.

Another good concept is consumer surplus and producer surplus, which is the excess value that somebody gets even though they were willing to pay more. The product was priced the same for everybody. I get a lot of joy out of my morning coffee. Obviously, I've made some money. If my coffee cost $20, I would pay $20 for my morning coffee. But Starbucks doesn't know that. It can't price the coffee $20 just for me because it's selling the exact same product. So I'm getting a lot of consumer surplus out of the coffee. And all businesses generate consumer surplus. It's a good thing to keep in mind when someone's harping about how evil companies are. Amazon might be a trillion-dollar company, but I will bet you they're generating trillions of dollars in consumer surplus through convenience and willingness to pay. There are a lot of people who are willing to pay more than what Amazon charges them for all their services.

Let's talk about NPV. NPV is just the net present value of something. It's when you say, "That stream of payments I'm gonna get in the future, what is that worth today?" So a common example of this is you're joining a startup company and you're getting stock options. And the founder says, "Well, this company is going to be worth a billion dollars, and I'm giving you 0.1% of the company. Therefore, you're getting a million dollars with the stock." What he's or she's arguing is what's gonna be worth in the future. You have to discount that back to today. You have to figure out what is that worth today. And you have to apply a discount rate or an interest rate that takes into account the massive risk that startups face. What you end up with is the price that it's worth today. And that's the price at which a venture capitalist would invest in the company today. So if that founder just raised a round at ten million dollars, and that company's only worth 1% of what the founder's arguing, your million-dollar package is actually worth $10,000. So NPV calculations, at a very rough level, you should be very comfortable doing in your head.

What's a mispriced externality? You mentioned that at some point during our podcast. And externality is when there is an additional cost that is imposed by whatever product is being produced or consumed that is not accounted for in the price of the product. Sometimes you can fix that by putting the price back into the product. One of the most ardent ways people attack capitalism these days is that it's destroying the environment. And if you throw away capitalism because it's destroying the environment, then guess what? We're all headed back to pre-industrial times. There's not going to be a good thing. So rather, there is an externality because the environment is finite, the environment is precious, and we have to price it properly and fold it back in. If people are wasting water or putting hydrocarbons in the atmosphere or polluting things, you want to charge them what it costs to clean up that pollution, return it to a pristine state. Perhaps that price has to be very, very, very high. If you raise that price high enough, you knock out pollution. It's much better than feel-good measures where we're just gonna ban plastic bags and we're gonna say, "Don't take showers on Saturdays and Sundays." When we're having a drought, California likes to run declarations and ads to scare you into not taking showers at times when there's a drought. When it would be just much better to raise the price of fresh water. Your average consumer might pay a few pennies more for a shower, but then the almond farmers who consume a lot of the water will cut back on using fresh water, and almond farming may move to a part of the country where water is more abundant. Properly pricing externalities can save resources in a tremendous way. It's a good framework to think about how to be effective when you want to do things like save the environment, rather than feel-good things that won't actually amount to anything.

One of the most common questions we get from people is, "How do I get the time to start investing in myself? I have a job." They'll take off. The answer with one of the tweets from the cutting room floor where you said, "You will need to rent your time to get started." This is only acceptable when you are learning and saving, preferably in a business. For society does not yet know how to train people, and apprenticeship is the only model you're gonna have to work starting out, unless you happen to be born rich, in which case you probably won't have the motivation to make money in the first place. If you're gonna do the work and join a business where apprenticeship matters, you know, Warren Buffett went and tried to work for Benjamin Graham's River School to learn how to be a value investor, and he offered to work for free. And Ben Graham said, "You're overpriced." It's true in that these apprenticeship businesses, you're probably making a sacrifice in terms of short-term career work. But try to learn something where people haven't quite figured out how to teach it yet. And that can happen if you're working in a field that is brand new and quickly expanding, so no one has figured it out. Or it's a field that's very circumstantial, where the details really matter and it's always moving. For example, fund investments or investing in general is one of those skills. Entrepreneurship is one of those skills.

One of the most coveted jobs that's come up in Silicon Valley in the last half decade or so is being a chief of staff or an entrepreneur, where the brightest young kids will follow the CEO or the entrepreneur around and do whatever that person needs them to do. And in many cases, they're overqualified for the position. You may have someone who has two graduate degrees who is essentially running the CEO's laundry for that day because that's the most important thing that needs to be done. But at the same time, they're also gonna be sitting in all the highest-end staff meetings. They're gonna be privy to all the venture fundraising decks and all the stress and drama, theatrics, innovation, and knowledge that can only come from being an entrepreneur because the entrepreneur is willing to do anything and everything to make their company successful. And the chief of staff is accompanying them and learning.

Now, obviously, this is very Silicon Valley-centric, tech company advice. If you are currently stuck in a normal job and you don't have the opportunity to learn in an apprenticeship model and you need to make money, then go ahead and do that job. But even within the context of that job, try to be innovative. Sign up to take on new challenges, new responsibilities. Find the part of the job that has the steepest learning curve. What you're really trying to avoid is repetitive drudgery. Repetitive drudgery doesn't serve anybody. Then you're essentially just counting the time until your job is automated away. Even if you're a barista at the coffee shop, try to figure out how to make connections with the customers. Try to figure out how to innovate on what you're offering them on your basic service and delight the customer. And what will happen is managers, founders, owners, they notice. The hardest thing for any founder is to find people who will work with them who have founder mentality. This is a fancy way of saying they care enough. And what most people will say, "Well, I'm not the founder, I'm not being paid enough to care." Actually, you are. The knowledge and the skills that you gain by having founder mentality set you up to be a founder down the line, and it pays you in that sense. You can get a lot out of almost any position, you just have to put a lot into it.

If I'm working a job and I want to figure out if I should get accountability, judgments, specific knowledge, leverage. It sounds like you're saying the one thing to optimize for is specific knowledge out of all those things. If you can, judgment takes experience, takes a lot of time to build up. You have to put yourself in positions where you can exercise judgment. That will come from taking on accountability. Leverage is something that society gives you much later, once you've demonstrated your judgment. Unless you learn a code or you become good with media, these are permissionless leverage. Leverage kind of comes later. Judgment comes later. Accountability, you can take on immediately. You can say, "Hey, I'll take charge of this thing that nobody wants to take charge of." So accountability is where you can step up, but then you're publicly putting your neck on the chopping block. So you have to deliver.

Specific knowledge gets built up by taking on accountability for things that other people don't know how to do, and that perhaps you enjoy doing or you're naturally inclined towards doing. You can be working in a factory, and it may turn out that the hardest thing in the factory is knowing how to raise capital to keep the factory running. And that's what the owner of the factory is always stressed out about. And if you notice this, and you're like, "I'm good at balancing my checkbook, and I've got a good head for numbers, and I'm good at watching money, but I haven't really raised money before." You offer your help and become the owner's sidekick in that regard. You help solve their biggest problem. You'll become the heir apparent. Early on, find things where you have any interest and take on accountability. Don't worry about short-term compensation. If you dive into the edge of knowledge which nobody knows how to solve, and you solve the hard problems, taking accountability, people will line up behind you. The leverage will come.

There were a couple of other related tweets to this topic from the cutting room floor that I'll read up. First, "The technology industry is a great place to acquire specific knowledge. The frontier is always moving forward. If you were genuinely intellectually curious, you will acquire the knowledge ahead of others." Bread technologies around us everywhere. The spoon was technology once. Fireless technology once. But once we've figured out how to make it work, it disappeared in the background, became part of our everyday lives. So technology is by definition the intellectual frontier. It's taking the things that are recent from science or from culture that we have not yet figured out how to mass-produce, and it's pretty to know how to commercialize it, how to make it available to everybody. So technology will always be where you can pick up specific knowledge that is valuable. Society that doesn't quite understand you. For example, if I become a world-class expert in machine learning just when machine learning is starting to take off, and I got there through my genuine intellectual interest and I bet my career on it, I'm gonna do really well. But 20 years from now, machine learning may be second hat.

There are also timeless forms of specific knowledge. For example, if you're good at persuading people, it's probably a skill that you picked up early on in life. It's always going to apply because persuading people is always going to be valuable. This is one of those skills that's generic. It probably alone is not enough to build a career on. It needs to be combined, a skill stack. You might combine persuasion with accounting, combined with understanding, for example, semiconductor production lines. And now all of a sudden, you're the best semiconductor sales person. That becomes the best semiconductor company CEO. There are timeless specific knowledge skills. Those are skills I would say that can pretty much never be taught. And then there are timely specific knowledge skills, which come and go. But even those tend to have fairly long shelf lives of a decade or two decades or three decades. So technology is a good place to find those specific skillsets. And if you can bring in a more generic specialized knowledge skillsets.

The other tweet from the cutting room floor was related to accountability in companies. It said, "Companies don't know how to measure output, so they measure inputs instead. Work in a way that your outputs are visible and measurable. If you don't have accountability, do something different." The entire structure of rewarding people comes from the agricultural and industrial age, where your inputs and your outputs matched up very closely. The amount of hours that you put into doing something was a good rough proxy for what kind of output you're going to get. Today, it's extremely nonlinear. One good investment decision can make a company 10 or 100 million dollars. One good product feature can be the difference between product-market fit and complete failure. So judgment and accountability matter much, much more. And you want the accountability because sometimes the best engineers or the best salespeople are the ones who don't work very hard, but then they'll ship that one critical product at just the right time, or they'll make that one huge sale, or that one huge deal that will make the company, or at least make the numbers for the quarter. It's very important that people are able to tell that you had a role in that. That doesn't mean that you stomp all over your team. Humans are extremely sensitive to people who take too much credit. So you do want to be the kind of person that is always giving out credit, but the smart people will know who was responsible.

There are jobs where you're not customer-facing enough, where you're kind of a cog in a machine, and you sacrifice accountability to some degree. An example is when you're a consultant. As a consultant, often you're giving the best ideas and the best outcome, but it's being delivered through some person who's working within the organization. At that point, you may not have visibility to the top people in the organizations, and you may be hidden behind a screen. And that's just a trade-off that you're making in exchange for your independence. And the consultant, because you're not willing to play the corporate rat race or the corporate ladder game. Realize that with accountability, you can get a lot more credit when things go right. Of course, the downside is you get hurt a lot more when things go wrong. You stick your neck out, you have to be willing to be blamed, sacrifice, and even attacked. So if you're the kind of person that thrives in a high accountability environment, you're naturally also going to end up very thick-skinned over time. You're gonna get hurt a lot. People gonna attack you if you fail.

If you're working a job, I think you can apply a lot of the principles of the tweet storm inside the job, like we just discussed, including other ones like partnering with rational optimists. You can find people in the organization who are optimistic and rational, that have energy, integrity, and intelligence. And the flip side of this is that if you, once you get some specific knowledge, one way to scale it is to start training apprentices that you can then outsource some of your tasks to. For example, I made a bunch of good investments and I figured out a little bit here and there about the venture business. And I could keep doing that. I could keep just investing as an investor. But instead, I co-founded this project called Spearhead, where we train up-and-coming young founders to also become angel and venture investors. And we give them a checkbook, an apprenticeship model. They come to us with specific deals they're looking at, and we help them think through every unique situation. And we basically apprentice them under us to learn the venture business. And it's much more scalable. We have classes and talks where we have tell them what we know. And then there are office hours when they actually bring in the deals and they talk to us about specific deals. And it turns out the classes and talks are largely worthless. You can give all the generic advice you need to give in about an hour. And then after that, all the additional advice is so circumstantial that it essentially cancels to zero if you try to give it in some top-down fashion. But the office hours are incredibly useful. It just reinforces that this is one of those skills that can only be learned on the job. And when you find a skill that can only be learned on the job by doing it, that is a good indicator that you're dealing with specific knowledge.

Another good indicator with you're doing specific knowledge is when you ask the person doing it, "What do you do every day?" and they can't give you a straight answer, or get something on lines of, "What everyday is different based on what's going on." That's a good indicator you're learning specific knowledge. The thing is so complicated and it's so dependent upon circumstances that it can't be boiled down into a textbook form or communicated by a make-money consultant. The Mafia figured out this apprenticeship model a long time ago. The best way to end up running one of the families was to become the driver for the Don of one of the families. There's a complicated business. Tony Soprano said, "I'm a businessman who has to enforce my own contracts." Very complicated business.