– You’re software (programming, but no coding required).
– The future of work.
– Advice for startup founders.
– Errors of commission and omission.
– The game of life.
“We all want to be successful people, but we also want to be happy people, and those run in diametrically opposite directions.” – Naval Ravikant
Much of the conversations is about how to be happy. It’s difficult to chase both happiness and success says Naval. It’s analogous to to what Nick Murray said about plans and gains. Your financial goals need to be one or the other. You can’t have a plan and chase gains. The two are mutually exclusive. Naval makes the same point for success and happiness.
Naval sounds happy because he’s developed his happiness. It’s a choice you make and skill you develop, he tells Ferriss. Like writing code or hitting a ball, you can be happier if you build up that skill.
And it’s normal to not be constantly happy. “Every great thing that’s accomplished,” says Naval, “started with something highly negative.” Tyler Cowen said he doesn’t want happiness per se. He wants good food to eat, challenges to overcome, and a stable home life.
In the book Mean Genes, Drs. Terry Burnham and Jay Phelan write that we’ve evolved from people who didn’t hunt happiness. They couldn’t.
“We’ve been built in such a way that the satisfaction game cannot be won by accomplishing goals nor lost by any setback. Allowing us to rest on our laurels or weep over spilt milk would be a genetic mistake. Our genes don’t care about our past achievements, only about continually positioning our emotional rabbits just far enough ahead to keep us panting and working to accomplish their goals….Success, not indolence (laziness), makes people happy.”
Knowing that happiness is elusive helps Naval. He’s focused on something else, presence in the moment. This idea was inspired by his love of physics.
Naval says that he grew up idolizing Richard Feynman. Ferriss adds that Feynman’s books are wonderful. So are his interviews:
The influence physics had on Naval was that things need to equate. You can’t flub physics. Naval set out to make his life more consistent, more like physics.
He tells Ferriss that one way he does that is not lying to people. He calls honesty a “core foundational value.” If you lie, Naval goes on to explain, you have multiple stories to track. Each one of those stories pulls you from the present moment, which is where he aims to be.
None of this programming was immediate, nor did Naval know how or what to program. It all came from reading, which we’ll get to in a moment.
Naval has always scratched his own itch when it comes to work. He’s founded the companies AngelList and Epinions. Each grew from a need he saw in the market. He started Venture Hacks because there wasn’t a lot of information on signing venture capital deals. He tells Ferriss those deals were like a “black box” and it was one of the biggest moments of your life.
AngelList gew from the same seed. He wanted to create a better place for founders to get funding. He saw a lack of good employees so a job board came next.
Naval guesses that work will continue to evolve. “On a long enough time scale,” he says, “almost everyone on this planet will work for themselves.” He imagines that we’ll wake up to alerts about what jobs are available that day and pick for ourselves.
Adam Davidson saw this at work in Hollywood. “Here are hundreds of people,” Davidson told Russ Roberts, “that snap into action on day one but when the lights go down they are scattered to the winds.”
Taylor Pearson argues that this process has started, but that it’s hard to see. Unlike Hollywood, where your paycheck is correlated to your skills and relationships, many people don’t get the right feedback or act correctly when they do. People tend to view things in simple contexts, I get paid, therefore I do good work. Rather they should look at things through a complicated or complex lens. This perspective would lead someone to ask, “why do I get paid?”
In his book, Thou Shall Prosper, Daniel Lapin suggests think about our employers as clients.
“The company that writes your paycheck every two weeks is not your employer; they are your customer. Adopt this mind-set and everything changes. You are free from the daily grind—free to grow your business and serve your customers, your fellow man.”
In this future of work be ready to be scored. “You’ll be ranked and graded on this work,” Naval tells Ferriss. In his book Average is Over, Tyler Cowen writes that we should expect to have “Yelp style rankings.” But, being nice still matters. Cowen writes that while empathy may not be measured, it will still matter. When Adam Davidson walked around a Hollywood set, he noted that “not being a jerk,” was important.
This change is coming, says Naval, because of the information economy. If the industrial revolution was a chance for people to team up, then the informational revolution allows the firm to shrink.
In his book, Here Comes Everybody, Clay Shirky writes about the shrinking firm:
“Most of the barriers to group action have collapsed, and without those barriers we are free to explore new ways of gathering together and getting things done.”
Before we could connect, Shirky writes, it was hard for firms to grow larger. Each additional employee created a small drag on the company, and they could only be profitable to a point. Wikipedia for example (founded by Jimmy Wales) could never run as a traditional business with managers who delegate the work. The drag exceeds the profitability. But it does succeed now because the connection costs are so small.
It’s not that firms, governments, and organizations won’t exist, they always will. It’s that it’s easier than ever to create new groups. Take freelancing. When Matt Barrie hired his first freelancer, the guy lived in his town and had to hand deliver the software. Now you can find people anywhere.
Turn on some Dylan. Logon to your computer. It’s time to start a startup.
Advice for startup founders
Naval has founded and invested in many successful startups, and tells Ferriss that he looks for three things in startup founders.
- Intelligence. Talk to people, Naval says, “ask them how deeply they have thought about his idea.” Jason Calacanis says he wants people who “Know the stuff cold. There’s level of deep, deep obsessive knowledge you need to have of all your competitors. Of all the nuances of their products. Of the history.”
- Energy. “In the long run,” says Naval, “the people who succeed are those that persevere.” Trip Adler, founder of Scribd, says “the main reason companies fail is because they give up.” Jay Jay French had eleven versions of Twisted Sister before one worked. Ben Mezrich had 190 rejections before his work was accepted.
- Integrity. Naval is always on the lookout for situations where a founder may treat him better than others. This is a warning signal. “Integrity is what you do despite the money,” he tells Ferriss. The best way to create integrity is through long term relationships.
Startups are different than traditional investing says Naval, “you get paid for being right when everyone else thinks it’s wrong.” It’s why Peter Thiel asks this:
Good new companies look strange Naval says. Think of Netscape. When the browser was released, no one thought there was money in browser. So too for companies like Microsoft (there’s no money in software) and Apple (there’s no money in hardware and software). Now people say the same things for Uber.
This is where things get interesting. With Apple, Microsoft, and Netscape we look backwards, construct theories, and extrapolate. Do those theories hold for Uber?
Scott Galloway makes that case that it does. Uber he says, has created something new (looks strange), a last mile solution. Galloway says that companies like Amazon have spent a lot of money on the last mile, but Uber can do this for anyone.
Take Amazon Prime, with 2 day shipping. There’s nothing I need on Amazon (except the occasional last-minute gift) in 2 days. That said, I always choose 2 day shipping. While I can’t see a use for other delivery options, that doesn’t mean I won’t in the future. As Steve Jobs said, “people don’t know what they want until you show it to them.”
Ditto for a company like Instacart, a “last mile solution” for groceries.
One of Instacart’s investors is Sequoia Capital, and Naval points this out because they also invested in the Dot Com carwreck, Webvan. Why would Sequoia invest in the same thing? Simply, times change. (Cue Dylan again.)
Naval credits Sequoia for having this mindset. They evaluate each opportunity on its own merits he says. They don’t let past judgement errors like sunk costs, survivorship bias, or availability bias cloud their thinking.
They also recognize that timing matters.
Mark Cuban and Seth Godin both cashed out before the dot com crash and admit they got lucky. Trip Adler says that at Y-Combinator he was told his idea for a ride sharing app wouldn’t work. It was 3 years before Uber.
Luck matters. “I’ve thrown a lot of darts and I don’t necessarily take credit,” says Naval, “a lot of it was luck.” Jason Zweig said, “Anybody who has done reasonably well in any field and who doesn’t credit luck first and foremost is kidding themselves.”
Luck, chance, randomness, noise – whatever we call it, we need to call it something. Like a recipe includes ingredients, our success or failures include reasons. Luck is one of them.
Rather than blame bad luck, we can figure out how much of a role it played and make adjustments. Michael Mauboussin says that we can see how much luck and skill matter by asking if you could fail on purpose.
For example, could a business fail on purpose? Yes. Have a bad product, treat your customers poorly, and charge high prices. That business would fail.
What about a stock portfolio? Could you create a portfolio that failed?
Now that’s a bit more difficult, says Mauboussin. One year ago (September 2014), ⅓ of financial analysts had “Sell” ratings for Clorox (CLX) and Campbell Soup (CPB). If you wanted to sabotage a portfolio that seems like a good place to start. But you’d only sabotage your success, because those stock soared. Those stucks are up 26% and 18%.
On a spectrum we can say that business success is more dependent on skill than stock picking success. A spectrum works best because we don’t want to overfit our model to the data. There are some data that don’t apply, the problem is that we don’t know which.
Zach Lowe reports that NBA teams have been wearing activity monitors at practice for years (good thing you aren’t in a FitBit competition with them). “The monitors track the power behind a player’s accelerations and decelerations (i.e., cuts), the force-based impact of jumping and landing, and other data points.”
Teams use these data to anticipate injuries and rest players. But not just the numbers. It’s a combination of the data and feedback from players about how they feel.
Be careful about excessive data says Naval, “any formula with a set of guidelines is probably going to be wrong.” Naval looks at intelligence, energy, and integrity as the big things to get right. He follows in the footsteps of Potter Stewart, I’ll know it when I see it.
Naval loves to read. Rather than dig through all the book links, check out the podcast notes at FourHourWorkWeek.com. The real takeaway is this; we can adopt Naval’s style of reading.
Fit books into your life, don’t fit your life into books.
Naval told Ferriss that he felt a craving for “dopamine snack,” like tweets and blog posts. Why not use that to our advantage?
“Blogs are an underappreciated resource,” Naval says. Think of blog posts as chapters in a book. He recommends Melting Asphalt, which is great. Shane Parrish’s Farnam Street is wonderful. Maria Popova’s Brain Pickings is fantastic. Ditto for the Scott Adams’ blog.
Also, don’t think you need to read something and immediately and completely understand it.
Naval says he’s never had a lightbulb moment of understanding. Rather it’s through decades of reading that he’s built skills. He praises books like Meditations in the interview, but he had to read it over and over again to apply it to his life.
We can flip this and read books like they were social media. Hop around books says Naval. Read one paragraph as if it’s a tweet. Feel no obligation to finish.
We have to read – and read widely – to learn. Naval says that the important things have taken him years to learn, And don’t expect to learn this in school.
“We spend too much time memorizing the capital of Rwanda or Alabama,” Naval tells Ferriss. Instead we should think about new things to learn. Here are some of Naval’s suggestions, and other people who have thought so too.
- Diet and health. Brad Feld, Scott Adams, and Dave Asprey all talked about the importance of experimentation when it comes to your health.
- Happiness. Gretchen Rubin wrote two books about it. Dan Harris found it in meditation. Chris Hadfield created win-win situations.
- Healthy relationships. Austin Kleon and Nicholas Megalis talked about being around good people. Simon Rich said he wanted to be the dumbest person in the room and to feel like he was barely keeping up.
- Persuasion. Read Influence by Robert Cialdini. Ferriss, Ramit Sethi, James Altucher and many more recommended this book.
Naval says that he regrets his errors of commission more than his errors or omission. This is a valuable thinking tool.
For Naval, the biggest mistakes are doing things he shouldn’t – like advisory roles. Usually these mean more work than expected, and he feels stretched. Other times they require almost nothing, and he’s left to worry about what is happening. “Guard your time,” he tells Tim, that’s the most valuable resource you have.
Naval does this by removing things that lead to those errors. “Habits are everything,” he says, and so if we can change our habits, we can change everything.
A good place to start with habits is to know thyself. When Gretchen Rubin began her book, Better Than Before, she realized that certain habits, like shoes, fit better. Rubin noted that it was important to know yourself. If you like to exercise alone, she writes, don’t try to build a habit in a group fitness class.
Rich Roll’s life changed when he developed a self understanding. Roll’s life had always been filled with something encompassing. During college is was swim team. During his early career it was alcohol and drugs. Then it was food. Eventually he found running, and things changed. Once Roll channeled his addictive energy into something healthy, his life got better.
We can take the lessons of Naval, Rubin, and Roll and apply them to our own lives. Take moderation and abstinence. What do you favor? Naval favors abstaining from advisory rolls, knowing that he can’t be comfortable doing a little. Rubin abstains from chocolate. Roll from alcohol.
Abstainers give up something (drink, sugars, Candy Crush) because none is better than some. Moderators can take the single rectangle of Hershey’s chocolate or “just one chip,” and not want more (no word on if moderators can watch only one episode of House of Cards). If you want to build a habit, figure out which of those you are.
You can’t win an infinite game
Naval’s entire conversation with Ferriss is very philosophical and covers a lot of ground, but it all comes down to not needing to win or lose. When he talks about the importance of being in the moment, it’s akin to an athlete in the zone. That person doesn’t notice the temperature. They don’t hear the fans. They are just in the game. It’s not about the score, it’s about them doing their best in the moment.
The Polish trainer Naval and Ferriss share is like this. Naval says that he’s successful because he doesn’t need to win or lose. He’s good just playing the game.
In Finite and Infinite Games, James Carse writes:
“There are at least two kinds of games. One could be called finite, the other infinite. A finite game is played for the purpose of winning, an infinite game for the purpose of continuing the play.
Which game do you play?