Naval Ravikant, a start-up investor, had earned his fame early with his investments in some of the present-day marquee companies such as Uber and Twitter. He is known for his wit, wisdom, and clarity of thought.
In his 2008 blog, Ravikant had offered a framework known as algorithms for success on health, wealth and happiness, which we believe can come in very handy for many in this time of crisis.
The most interesting factor from his blog- ‘How to Get Rich, Without Getting Lucky’ was the difference between wealth and income and how we must define and try to achieve wealth:
Naval calls wealth creation a skill that anyone can learn. As an Indian immigrant, Naval grew up poor, but he’s thriving today by following the lessons he shares with the world.
Money is a tool that you exchange for products and services. It’s fixed.
Wealth, however, is something that works on itself while you’re sleeping. It could be the program you wrote that’s working for you while you’re on vacation, a business you’ve to step up, or merely a piece of content that’s being shared by robots and algorithms and circulated across the globe.
To create wealth, you have to give society value. You have to give something that society needs, but they don’t know it yet.
He said, “You’re never to get rich renting your time.”
This one sentence demonstrates the difference between being wealthy and being rich. A doctor, lawyer, or engineer, can make tons of money, but they are making money trading their time. Time is a limited commodity, it becomes harder to build wealth because you can’t work 24×7. That’s when leverage comes into the picture. In his own words — “Forget rich versus poor, white-collar versus blue. It’s now leveraged versus un-leveraged.”
Leverage is a tool you use to amplify your efforts.
Naval talks about three types of leverage — labour, capital, or money and the last one are: “products with no marginal cost of replication.” in simple terms, digital products or content.
You can have people working for you, or hold equity in a business that makes money while you’re sleeping, make money work for by investing it in stocks, funds, and bonds. The latest type of leverage is content creation and media.
If you value life and time then you must study his work and guiding principles. Who knows, it may change your life!