The Naval Framework: Navigating the Path to Success
Second Level Thinking · Issue 28
Why the best entrepreneurs treat life like a game of leverage. Inside: the Build vs. Buy debate and why ability alone is never enough.
Many conversations with close friends recently have been about building wealth through the acquisition or creation of companies. During these conversations I have noticed and even prompted a reoccurring question: is it better to buy or build? Or in other words, where should I put my capital and how best do I transfer this itch into action.
Building requires an idea first-and-foremost, but in today’s tech advanced economy can reduce capital outlay upfront, minimise friction, and allow you to test in-market extremely quickly, at a small scale, with less risk.
Conversely, as the great Baby Boomer wealth transfer takes effect, there are a multitude of opportunities with existing businesses, with established market share. These businesses provide the potential for younger entrepreneurs to advance them through the adoption of technology, online marketing and AI, building upon already established brands and increasing capture.
We could debate the pros and cons of each approach extensively and you could easily steel-man an argument for either side. But rather than draw conclusions on what is right for you, I thought it would be more helpful to provide a set of guiding principles for maximising your potential across both domains (buying and building).
Naval Ravikant, is an Indian-born American entrepreneur and founder of AngelList, who became an unlikely present-day philosopher for the tech community through his unfiltered and highly succinct Twitter posts and has built and invested in many successful companies, including Uber and Yammer.
I will use his wisdom throughout this newsletter to help provide some impeccable insight for each of us to draw from. One of Naval’s most notorious posts was a blueprint for success that he posted back in 2018, so let’s start with a holistic view of how to build wealth, whilst minimising the role of luck in our outcomes:
The Game
Seek wealth, not money or status.
Wealth is having assets that earn while you sleep.
Money is how we transfer time and wealth.
Status is your rank in the social hierarchy.
Seek Wealth, Not Status
You're not going to get rich renting out your time.
You must own equity — a piece of a business — to gain financial freedom.
You’ll get rich by giving society what it wants but doesn’t know how to get — at scale.
Play Long-Term Games with Long-Term People
Compound interest applies to relationships and reputation too.
Choose business partners with high integrity and energy.
All returns in life come from compound interest — whether in money, relationships, or knowledge.
Learn to Build and Sell
Learn to build (products, code, businesses).
Learn to sell (persuade, market, communicate).
If you can do both, you will be unstoppable.
Embrace Accountability
Embrace accountability and take business risks under your own name.
Society will reward you with responsibility, equity, and leverage.
Learn to Leverage
Tools of leverage: labor, capital, code, media.
Code and media are permissionless leverage — you don’t need anyone’s permission to use them.
Code scales with no marginal cost of replication.
Media allows you to multiply your message and influence.
Specific Knowledge Is Key
Specific knowledge is knowledge you can’t be trained for.
It's found by pursuing your genuine curiosity and passion.
It's often highly technical or creative.
Build specific knowledge through play, not hard work.
Become the Best in the World at What You Do
Keep redefining what you do until this is true.
The Internet allows any niche to scale.
There are no get-rich-quick schemes — those are just someone else getting rich off you.
Avoid the Trap of Status Games
Status games are zero-sum; wealth creation is positive-sum.
Ignore people playing status games — they gain status by attacking those creating wealth.
Be Patient and Learn
Learn to love to read — it's a superpower.
Study microeconomics, game theory, psychology, persuasion, ethics, mathematics, and computer science.
Clear thinker = clear communicator = clear writing.
Your Work Should Feel Like Play
The goal is to find work that feels like play to you, but looks like work to others.
Then, you’ll never tire of it, and you’ll be unstoppable.
Sit with this for a moment. Before we unpack some of the specifics, from an overarching standpoint, it’s critical to understand which game you are playing.
“Work becomes great when curiosity drives it beyond obligation.”
And remember:
“Your life is restricted by the amount of courage you are willing to deploy.”
Ask yourself: what would I do if I had three times the bravery? What decisions would you make and how would your life be different as a result of those decisions? Be specific and visualise it - write it down.
Now that we have a broad overarching framework and have got the juices flowing through some introspection, let’s break down some key elements for us to chew on.
Attention
It starts with attention. If you feel it’s your life’s purpose to be digesting several hours of media a day, that is fine. But just be sure to understand what this gives you and also what this takes away.
“The fundamental resource in your life is not time, its attention. Money doesn’t buy you time, but being present and what you choose to focus your attention on does. The real currency of life then, is attention and what you choose to focus on.”
We have talked about behaviours extensively and doing a stocktake on if your habits are helpful or hindering you. Just because a habit or behaviour has served you until this point, doesn’t mean it will continue to benefit you in a positive manner and should not be scrutinised. This can easily be done by reviewing your calendar, your contacts, your screen time and to see with who and how you are spending your time.
Remember, actions speak louder than words.
Development
As long as you are learning, iterating fast and cutting your losses quickly, you have to be optimistic you will find the right thing. At that point, you have to be willing to go all-in. The most important skill is becoming a perpetual learner. You have to know how to learn anything you want to learn.
For this Naval suggests you productise yourself. “Yourself” has uniqueness. “Productise” has leverage. “Yourself” has accountability. “Productise” has specific knowledge. Then it becomes about authenticity. Once you have identified what you are doing is authentic to you - ask, is it myself that I am projecting? Then, scale it with labour, with capital or with media. You cannot compete with someone who finds fun in the game they are playing. “No one can compete with you being you.”
In less words:
“Figure out what you naturally do that the world wants that you can spin-up into a product. Think effortless work, what is play to you that is difficult for others?”
You are essentially trying to “escape competition through authenticity. Basically, 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.”
Champion your uniqueness.
Failure & Loss Aversion
Embrace accountability and take business risk under your own name. Society will reward you with responsibility, equity and leverage.
“Modern society is far more forgiving of failure. You need to realise and override that. You are much more running a search function to find the thing that works and once you find that one thing that works, it will pay off in massive compounding. Remember that. There is no point being a pessimist.”
There is also a sunk cost fallacy to this and an ability to know when to cut and run. This is why it is critical to move at pace. Very few things will work the way you visualise it and judgement - especially demonstrated judgement, with high accountability and a clear track record are critical. As is wisdom and knowing the long-term consequences of your actions and then making the right decisions to capitalise on that.
“You’re not going to find the path to the top of the mountain on the first go-around. Sometimes you get stuck and you come back down. The difference between those who are successful and those who are not, is the successful ones wanted it so badly that they are willing to start over and try again and again, whether it is their careers, relationships, or in anything else.”
Perspective
Play bigger games: “all returns in life, whether in wealth, relationships, or knowledge, come from compound interest.” If you get into a relative mindset, you’re always going to hate people who do better than you, you’re always going to be jealous or envious of them. “Leave the labels alone, centre on the problem at hand. Be objective and take yourself and your personality out of it as much as possible. Adapt to see things more clearly.”
“You will end up wherever is acceptable to you. You will get out of life whatever is acceptable to you. There are certain things to me that are very important and I will not settle for second best and there are a lot of other things that I just don’t care about - I don’t have the energy.”
Or as Homer stated in The Iliad:
“Everything is more beautiful because we’re doomed. You will never be lovelier than you are now, and we will never be here again.”
Homer’s statement may appear trite to some but it can help centre on a much larger question and help separate us from small, mental looping.
Decision Making
“If you can’t decide the answer is no. Always start with no.”
Stop trying to do everything, you will run the risk of being a mile wide and an inch deep. You can only achieve mastery in one or two things and it’s usually things you are obsessed about. Wherever you can in life, optimise for independence rather than pay. If you have independence and you’re accountable on your output, as opposed to your input - that’s the dream.
“What you want in life is to be in control of your time.”
Furthermore: “I value freedom above everything else. All kinds of freedom; freedom to do what I want, freedom from things I don’t want to do, freedom from my own emotions or things that may disturb my peace. For me, freedom is my number one value.”
Focus decision making down on the three things that matter:
Who you are with.
What you are doing.
Where you live.
“If you have two decisions (A and a B), where they seem very equal, take the option that results in more pain in the short-term. The one that will be more painful immediately is generally the better decision because your brain is always trying to avoid pain. You want to take the choice that will leave you more equanimous long term - whatever clears your mind more and will have you having less self-talk in the future.”
“We waste our time with short-term thinking and busy work. Warren Buffett spends a year deciding and a day acting and that act lasts decades.”
Stress
“Imagine how effective you would be if you weren’t anxious all the time.”
If you look at an iron beam when it’s under stress it is being bent in two different directions at the same time. When your mind is under stress it has two conflicting desires at once. E.g., you want to be liked but you want to do something selfish and you can’t reconcile the two things. Or you don’t want to go to work but you want to make money. You have two conflicting desires. One of the ways to move through stress is to acknowledge that you have two conflicting desires and either you need to pick one and be ok losing the other, or you need to decide later but be mindful of the approaching decision and the resulting conflict that is present.
“Tension is who you think you should be. Relaxation is who you are.”
Anxiety
Anxiety is this pervasive, unidentifiable stress where you are stressed out often but you are not sure why, or can identify the underlying problem. The reason generally being is you have so many unresolved problems, or stress points that have piled up and you can no longer clearly see the forest for the trees. There is this mountain of garbage in your mind, some of which is sticking up like an iceberg - that’s the anxiety.
Go through very carefully why you are anxious (“I don’t know why”), let me sit here and write down the possible causes, let me meditate on it, let me journal, let me talk to my friends. If you can identify, unravel and resolve these issues then that will help get rid of the anxiety. Often the anxiety piles up because we move through life too quickly and we don’t take enough time to understand our reactions to certain events, and they sit dormant unresolved.
“We are highly judgemental survival-and-replication machines. We constantly walk around thinking, ‘I need this,’ or ‘I need that,’ trapped in the web of desires. Happiness is the state when nothing is missing. When nothing is missing, your mind shuts down and stops running into the past or future to regret something or to plan something.”
The fundamental delusion: “there is something out there that will make me happy and fulfilled forever.” So start embracing the present moment, it’s all we have.
The world just reflects your own feelings back at you - happiness is a choice.
Own a Piece of It
Like all important decisions, it takes introspection and deeper alignment with the self, otherwise you are destined to fail.
Essentially, if you don’t own a piece of a business, you don’t have a path toward financial freedom. Without ownership, your inputs are very closely tied to your outputs. In almost all salaried jobs, even very high paying ones, you still have direct correlation between the hours you put in and the hours you get paid. In these instances when you are sleeping or on vacation, you are not earning and you can’t earn non-linearly. Everybody who makes real money at some point owns a piece of a product, a business, or some IP, even through simple stock options where they work. Although, most is through the creation of starting a company - none are through hours-based employment.
“There is nothing worse in society than a lazy man or woman. You are wasting your potential. The more you have the more is rightfully expected of you. Express and flex that capability by doing more and giving more.”
You have to do hard things to create your own meaning in life.
So why not start now.
I’m with you.
Parting Shot
“Success is a combination of inherent ability and effort - so you’re going to have to outwork them. You are rarely going to be the smartest person in the room. You are going to be in many rooms with smart people and in a group of 100 people on any given topic, it will be common for someone to know more than you. So, the best thing you can do is work really hard and assume you are not the smartest person.”
— Ben Shapiro
