(Ep.83) The Acquirers Podcast: Eric Jorgenson – Navalmanack: Naval Ravikant’s Almanack, And His Lessons On Wealth, And Happiness

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In this episode of The Acquirers Podcast Tobias chats with Eric Jorgenson. He’s the author of The Almanack Of Naval Ravikant, a collection of everything that Naval Ravikant has written. During the interview Eric provided some great insights into:

Naval’s Thoughts On:

  • How To Get Lucky
  • Building Wealth
  • Building Specific Knowledge
  • Playing Long-Term Games With Long-Term People
  • How To Save Yourself
  • 3 Different Types Of Leverage
  • The Meaning Of Life
  • Happiness

You can get a free copy of The Almanack Of Naval Ravikant here:


You can find out more about Tobias’ podcast here – The Acquirers Podcast. You can also listen to the podcast on your favorite podcast platforms here:

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Full Transcript

Tobias: Hi, I’m Tobias Carlisle. This is The Acquirers Podcast. My special guest today is Eric Jorgenson. He is the author of the Navalmanack. It’s exactly what it sounds like. It’s a collection of everything that Naval Ravikant has written. It’s an absolutely fascinating read. I’m so glad that someone has done it. It’s a fantastic project. In his day job, Eric’s a product manager at Zaarly. We’re going to talk about that too, right after this.

I saw you tweeting about the Navalmanack and the moment that I saw it, I was like, “I know exactly what this is,” and this is a brilliant idea. I’m so glad someone has collected all of Naval’s tweets together in like a Charlie Munger style. Charlie’s Almanac. What’s the story, man? How did the project came about?

The Genesis Of Navalmanack

Eric: Yeah, it was very, very haphazard, actually. I wish I could say it was more intentional. I had the same hope– it was after that podcast he did on Farnam Street. That was one of the huge breakout things. And I was like, “Man, this stuff is so good. It seems too good for a podcast and he is just dropping like amazing tweets.” I think it was even before the How to Get Rich tweet storm. I was like, “God, there’s just so much good stuff here.” And I’ve been following them all for 10 years. And half the books I read are these amazing compilations of stuff that people have put together. If you studied Munger, you’ve read a bunch of compilations. I was like, “Man, somebody needs to do this.”

I tweeted– it was a very half-assed tweet. My first draft of the title was The Book of Navaledge. He retweeted it and 5000 people were like, “Oh my God. Yeah, please do this,” and half the replies were like, “You’ve got to pick a better title, dude. That is garbage.” I was like, “It’s like 10:00 at night. I was just fucking around on Twitter. Calm down.” It came together quickly and I was like, “Oh, this is a real project really quickly.” But, yeah, loving Poor Charlie’s Almanack and a lot of Peter Bevelin stuff. This was such a like– someone’s got to do it. I’m glad it clicked for you right away too.

Tobias: He’s great to listen to. I loved him on that Rogan podcast. If anything, I kind of felt like Rogan let him down a little bit because Rogan– because as much as I love Rogan, Naval is so thoughtful and you need to sit there and listen to it and absorb it. I felt like Rogan didn’t follow up or wasn’t really following what he was saying on some occasions. I think I knew about your project at that stage. And I thought what I really want to do is sit down and read through this because, again, on Twitter, it doesn’t really work. The tweetstorms, there’s just too much distraction on Twitter to really sit and think.

The Naval podcasts are great if you’re walking around and you’re just listening to them, but again, for whatever reason I find it easier to absorb stuff if it’s written down and you’ve got enough time to kind of go over it. So, it’s a great project.

Eric: Yeah, thank you. I’m excited about it. I can’t wait to see what’s going to happen here. I don’t know exactly. I know Naval’s got a lot of fans and there’s a lot of people who seem excited about having a book version exactly like you’re saying, a little more– His stuff is great, but it’s all very– any individual interview tends to cover a lot of ground very thinly. And he’s refined the same ideas for 10 years. And so, when you can find the best iteration of each idea and thread them together in a categorized way, I feel people will be able to grasp the ideas a lot better reading them through in a synthesized, organized way, with no interpretation whatsoever. There’s not an original word in this book, I don’t claim there to be one. I just put all the best stuff that Naval said, reorganized in a way that made it a cohesive book, and hopefully, it’s really dense and interesting and people– it’s a helpful new format for existing wisdom.

Tobias: You’ve broken the book up into– it’s in two broad parts, wealth, and then happiness, and then each of those has these subcategories. So, wealth is building wealth and building judgment. And happiness is learning happiness, saving yourself, and the philosophy. I think most people listen to this podcast is probably most interested in the building wealth and probably the building judgment part of it. But the other stuff is important too. But let’s give folks what they want first out of the gate. What have you learned from synthesizing all this information? And can you take us through the building wealth? I’m going to take you through it bit by bit, but generally what’s building wealth about?

Building Wealth

Eric: Yeah, building wealth is an interesting take, because it’s really looking at the principles around it. There’s not a lot of tactics in there. It’s really dissecting the process of building wealth into its component pieces, which is something like applying leverage. Understanding that your judgment is actually what is building wealth, not your work. So, separating time as an input from your hourly earnings, using stuff like capital and products and labor to apply leverage. So, I’m sure most of the investors that you are talking to are very capital leveraged and very judgment focused. And you see some of the wealthiest people on the planet come out of that. Warren Buffett’s judgment is paramount. And he gets a lot of capital behind that because every extra dollar has no marginal cost, his judgment is just better. And so, value accrues to him in a way that it doesn’t to anyone else.

Tobias: Let’s start with the first one here. How is wealth created?

Eric: Yeah, Naval says, “Wealth is created by assets that earn while you sleep.” Separating wealth from money, where money is a tool that we use to exchange value. And wealth is this extensive leverage that works while you sleep. So, the money keeps making money. The property keeps getting rented. The software keeps serving customers. And that out running, outpacing your own effort with that wealth creation tools, those machines, those processes, those other people who learn the same things that you learn and can apply them on your behalf. Wealth doesn’t come out of the one-for-one exchange, it comes out of finding a way to get 10 for 1 or 100 for 1 or 1000 for 1.


Building Specific Knowledge

Tobias: He talks about leverage a little bit lower down. So, we’ll come to that when we come to that. What does he mean by find and build specific knowledge?

Eric: Yeah, specific knowledge is an interesting one. I think it’s counterintuitive for people. Specific knowledge comes from this sense that you can’t be someone else. If you’re trying to chase Warren Buffett’s shoes, but you haven’t been reading S1s since you were 13 and buying gumball machines, then you’re not going to win the way Warren Buffett won. So, finding the things that you are uniquely good at and getting into productizing yourself and extending yourself, like your own brand things, that come easily to you, things that come naturally to you. If your gift is talking to people, having a podcast to represent your fund may come easier to you than writing a book to represent your fund.

So, finding the things that are natural to you, and that you can go uniquely far at. And when you’re into the extreme of this, you become the only person who can solve specific problems with your specific knowledge. Not to overuse Warren Buffett as an example, when the government, these funds that want to bail out banks, there’s a shortlist of people you can call. And so, Warren Buffett’s specific knowledge and specific resources become like very, very important there.

Elon Musk may be the only person who can will the Neuralink into existence despite the sciences not being there, and he’s done it a few times. Just creating this theatrical thing that forces the science to move more quickly. You and I could go through the same motions, and it wouldn’t have the same impact because we haven’t run this path.

And so, I think it is hard because it’s so natural to study other wealthy people or other successful people to construct their formula and then try to do it yourself. And of all really encourages people to– sure, look at the principles that worked for them and understand the principles of how wealth is created. But don’t lose sight of the fact that you can’t become someone else and you have to figure out how to apply your own talents in your own interests. Otherwise, you’re going to be swimming upstream your whole life and never really have the wind at your back.

Tobias: Yes, it’s kind of fascinating that point about Musk. I’ve just been reading the book Sapiens. And there’s an interesting part at the beginning of that book where he talks about, humanity has willed all of these ideas– we’ve imagined these things like nations and companies and money, and we all kind of know that they’re not real, but we treat them as if they are, and it helps us to coordinate. And I think that that’s what very good entrepreneurs do too. The idea is so tangible that other people are prepared to come and work along with them to create this thing that doesn’t really exist. And Musk might be the heir entrepreneur because he’s able to– “We’re going to put a rocket in space.” “We’re going to build an electric car.” “We’re going to stick stuff in your brain to control stuff.” So, I think it’s a really great example.

One of the things that I’ve discovered, probably as I’ve got older, and this is one of Naval’s points as well as, is that “You want to play long-term games with long-term people.” What’s he mean by that?


Playing Long-Term Games With Long-Term People

Eric: Yeah, the long-term games piece comes from something that I’m sure everyone here is familiar with, which is just that all returns come from compounding. You’re not going to win any games with one at that– you’ve got to keep showing up and keep doing preferably the same thing, uninterrupted long-term compounding. And what he points out is that there’s compounding in relationships. There’s compounding in trust. There’s compounding in building awareness of each other’s strengths and weaknesses and knowing whose judgment to trust on different people or different topics. And the long term piece of that is that his iron prescription is that you really don’t want to spend a day working with anyone that you wouldn’t spend your whole life working with, which is very extreme. But it’s really easy to get on that slippery slope of like, “Well, it’s just a day, it’s just a week, it’s just one job.” And you find yourself miserable for years because you think something is only going to be short term.

And when you say if you’re not willing to work with this person for your whole life, don’t work with them for a day. All of a sudden, it’s this crystal clear like, “That’s not how I want to spend my life.” It makes you value your time, it makes you value your interactions. In the long term compounding perspective, if you’re not willing to work with someone for 10 years, 50 years, 100 years, then you’re not doing much to build the long-term value of trust in that relationship, that these long-term partnerships and these long-term efforts– even in the startup world, it’s common to put together two or three people and take a run at a thing for a year, but if you’re a founder of a company and you leave after a year or two, even if the company goes on to be successful, you aren’t part of that long compounding journey that becomes an IPO and becomes a huge company. You’ve really got to be careful which trends you get on because you want to stay on one for a long time.

Tobias: Yeah, I always think it’s funny because I’m an investor, I do a lot of DCFs and I look at a lot of compounding. And the movement at the start is so meaningless– It’s not meaningless, it’s just there’s so little of it. The compounding is so tiny, you can’t see it. And then, you look at the terminal number, and the terminal number is much, much bigger than you can possibly imagine looking at the beginning number, and it’s that you have to get used to thinking in those exponential terms where little things done right now really do have this gigantic impact down the road and it does. I’ve noticed that Buffett does the same thing. He’s not going to put something in his calendar for a week from now. If he’s free and you’re there and you want to get in touch with him, then it’ll happen, but he’s not going to tie up his calendar.

Eric: Yeah. And it’s really painful to know you’re two-thirds of the way into one of those compounding graphs that you can visualize, and everything still feels tiny, and you’ve been at it for years and you believe in compounding and you’ve studied compounding and you know the math. And it’s still just so hard to look at small numbers and feel you have earned more now, and just trust the process.


Tobias: Just from talking to people, one of the things that I’ve noticed is talking to other entrepreneurs and other business guys, the thing that they all say is that it takes about 10 years for whatever you’re doing to start working. I know that you’re an entrepreneur. Do you want to give a plug for Zaarly to describe to everybody what that is?

Eric: Yeah, it is not my company. I just was like one of the very first employees. So, we are about to turn 10. And it has been a long-winding journey through product-market fit and discovery. And we were very early to the switch to commerce happening primarily on mobile and in real-time and on-demand. But we initially launched as a meta-marketplace and so we were kind of going after Craigslist. And this is in back in 2011. So, this is before Uber, this is before Instacart. And we watched these kind of all of these use cases come up on our platform as people were kind of figuring out like, “Oh, there’s real-time GPS. Oh, there’s push notifications making a lot of this coordination problem a lot simpler.”

And then, we watched these verticalized marketplaces start to pick off specific use cases, because you had to get integrated with the supply and integrate with demand and own one specific use case and brand really, “Oh, this is going to be a totally different thing.” So, about 2013, picked the vertical of home services, and have been building this managed marketplace for home services for the last few years and really getting deep into understanding all the nuances between plumbers and lawn care and housecleaning. This is a massively fragmented industry with incredibly low NPS that is still pen and paper and phone calls and cash. It is kind of a weird world because it’s 20 years behind the rest of the internet. And so, you think that there’d be this wave of adoption, but there’s a reason why all these things are done this way still, and it’s just not–

Tobias: What is it?

There’s a lot of demographic things. A lot of the service providers are reasonably older and so those things will be changing. There’s a lot of distribution doldrums that Peter Thiel talks about where enterprises clearly have huge contract value and then are driven by high touch sales processes. And lower LTV, viral things are driven by network effects and pay per click and stuff like that. And there’s this middle world that is small business that is just really, really tough to reach and tough to change because one guy has been doing things his way for 10 years and he’s doing just fine, doing things his way and he’s not being forced to change. And he’s not going to get disrupted because he’s a plumber and we’re not innovating new ways to plumb and so the benefits to his daily life to go through the painful process of adopting new tools are pretty marginal.

And the supply-demand balance is way out of whack, so there’s a lot more demand for plumbers and electricians, [unintelligible [00:17:07] track these trades than there are reasons for like– so the homeowners have to work the way– the service providers choose to work. And they just follow along. So, it is an interesting industry and I think we’ll see the changes kind of in our lifetimes, but it is fascinating to watch.

Tobias: Yeah, it would be nice to have one spot to go to coordinate all of that stuff. It is a pain having to coordinate. And then every time it’s a one-off job, so you don’t– the plumbing is backed up or you need a home handyman or something like that. Most of them one of jobs. Yeah, I would like that. I’d be happy to use that.

Eric: [laughs] I’ll let you know when we launch in your city.

3 Different Type Of Leverage

Tobias: Yeah, please. That’s Los Angeles in Palos Verdes. What is the position of leverage that Naval talks about?

Eric: Yeah, leverage is one of the key things that he talks about for building wealth. He categorizes three different types of leverage. The first being capital, which is pretty self-explanatory. You make a bet with $100 or you make a bet with $1,000, make a bet with a million dollars, it’s all the same bet. But the outcomes are wildly different. So, you can get a lot of leverage by putting a lot of dollars against your judgment. The second is labor. So, if you’ve got one guy digging a ditch, you’ll get a lot more done with 100 guys digging a ditch, but you’ve got to convince those guys to dig the ditch and pay them to do it. Usually, both capital and labor are permission leveraged, which means that people have to choose to follow you or the capital has to choose to bet with you, unless it’s your own money.

The third form of leverage, which is kind of new to the world and we’re still seeing the effects of is what Naval calls products with no marginal cost of replication. So, software, code, media, podcasts, books. These things that used to either not exist or exist only at high cost of replication, we’re not that different. Jim O’Shaughnessy actually calls it symbol manipulation, which I think is a good, a little bit broader definition. But one design, one algorithm, one set of trading rules applied over and over and over and over again at no marginal cost. And usually these things are permissionless. So, as long as you’ve got a laptop, you can write code. When you’ve got a microphone, you can make a podcast. And you can put your head into this ring of meritocracy that is the internet, and, in general, great content tends to get more viewed. Excellent algorithms tend to get more capital put behind them.

And so, by seeing that leverage is what builds wealth and how you can start accumulating leverage– When you look at the world through this lens, you start to see how Jeff Bezos has leverage, how Elan Musk has leverage, how you have leverage. This podcast, we’re going to record once, and somebody is going to be able to listen to it in 10 years and maybe find their way into your [phone vibrates] and listen to it. Content has this compounding kind of leverage to it that I’m sure you’re aware of. But leverage is a good label for it that I think people have kind of intuited. But Naval pulls it out and distills it as a principle to building wealth.


How To Get Lucky

Tobias: Yeah, that’s good. I like that. My favorite part of Naval’s tweetstorms– and I think it started off like this one. I really liked it because I’ve been thinking about it quite a lot before it came up. He’s got this how to get lucky. And I have my own thoughts on how to get lucky but let’s talk about Naval’s because Naval’s been a lot luckier or a lot more– I think luck and skill sometimes– guys who are very skillful are very good at getting lucky, that’s been my observation for a lot of people who I’ve known. People who I have worked for good investors, very, very good at getting lucky. What’s the prescription?

Eric: A couple beers and a good line.

Tobias: [laughs]

Eric: Naval breaks down luck into four pieces that I think I can do off the top of my head. But basically, you can cross your fingers and hope is the most basic kind of lottery ticket thing. And then, you get into increasingly how you control your luck or how you create more of it. I think of it like luck surface area. So, you can do some things to increase the odds that luck finds you. So, just building in public, talking about what you’re doing, talking about stuff you’re interested in. All of a sudden, you’ll feel this tailwind of people connecting you with other people who are interested in the same things that you’re interested in or sending you articles or sending you customers, that can go a long way. It’ll feel like luck but really you did something to create that. The most extreme form is to become so unique and so well known as being unique that you are the only person who can unlock certain opportunities. And then, the one Naval says is luck becomes your destiny, which I think is a really interesting.

When you look at the hero’s journey in the Joseph Campbell quests, it’s a contrived story and so it always feels made up, but we each have our own set of unique talents and set of unique challenges that we are the key to a unique lock somewhere out there and life is just about finding that lock that you are the key to, and then it’s going to feel like luck. “Oh my God! My key fits this lock!” but you worked hard to find that lock and to become that key.

Tobias: That’s so funny because there’s that– The Secret ,which is totally woo-woo, it’s totally bullshit, but there’s some truth in the fact that if you start talking about something you do, people who are interested in the same thing or who want that thing or want to help you with that thing, hear you say that and then they get in contact and you do manifest those things. It’s not magic. It’s just the way that things work.

Eric: Yeah. I think it’s like if you need to believe it’s magic, you can believe it’s magic. That’s fine. If you need to believe that it’s generating your own willpower, you can believe that it’s generating your own willpower. I have some very successful friends, usually in the sales world it seems to me, who are pretty diehard manifesters, and they write down very specifically the goals that they’re going to achieve or the outcome that they are going to drive. And I think it’s almost hacking the commitment and consistency bias. If that’s my goal, and you look at it every day, it forces you to look at like, well, what am I doing to reach that goal? Am I working on the most important thing? Can I expect to reach that goal with how I perform today? If not, it just makes you sick to your stomach to look at that gap, and you’re like, “Fuck this, I’m doing something about this.” It’s just forces you to look at the inputs and outputs and try to solve for X.

Tobias: There’s another thing that you said there that I think is really interesting. And this is in investors who I’ve known– and whether a venture capital stage or guys who are investing on the stock market, they seem to have the same attitude. They look for these– It’s a really hackneyed phrase used over and over again, but they look for these asymmetric opportunities where basically I’m going to do this thing and if it doesn’t work, it doesn’t really matter, like the downside’s virtually nil, but the upside payoff is gigantic. And if you put a whole portfolio of those things together, you get enough of these things with these gigantic payoffs that you start looking like you’re actually– there’s something magic going on in the portfolio. You’re not causing any of them to happen. You’re just saying if I put enough of these things in there and I can’t lose on any of them, but I can win big on some of them. That’s basically going to succeed.

And then the destiny part of it is you have to look at it over a really long period of time. And if you start looking like that, then you start thinking, well, I can’t have things– I can’t blow up at any stretch. If I blow up, I go back to zero. But if I can compound this and get lucky from here until kingdom come, then this is a strategy that should work.

Eric: Yeah. And it’s funny hearing you describe that because– Naval in his angel investing is about the opposite of value investing from a mindset. Instead of rule number one, don’t lose money, it’s like rule one, be sure you lose money because if you don’t, you’re missing out on something, you’re not taking enough risk. But from the perspective of my downside is 1X and my upside is 100X and you need one or two things to go huge and then just keep compounding that, you never know what they’re going to be. And you can try to get a little better at it and build more judgment and build some pattern recognition. But at the end of the day, there’s very little information to go on. And there’s so many more unknowns than knowns that you can only control so much. And so, the portfolio effects just gets really, really important.

And there’s not much investing specific stuff in the book, but there is some on the website, and Naval he has done some really cool stuff with spearhead around placing angel investments, and how to portfolio math and those kind of things work.

Tobias: To me, it’s not that angel investing and value investing are so distinct. I think of them all on a very long continuum and it’s just different mixes of frequency and magnitude. So, if your frequency is low, your payoff has to be quite high. And so that’s angel investing. And if that is in fact the case, then you want to have a lot more of those bets on. And I think it’s Y Combinator that does it where they just figured out that we’re going to have– if we got a $10 million portfolio, we’re not going to have 10 $1 million positions, we’re going to have 100 $100,000 positions because if you get those gigantic payoffs, it almost doesn’t matter whether you had 100 grand or a million in it. You just need to make sure that you catch that right tail, that’s what we’re trying to do.

With value, it’s more like the magnitude is not going to be as big, but the frequency is– they are more frequent, so you can afford to be a little bit more concentrated, and you’ve just got to figure out where you are on the spectrum. If you’re angel, you need more positions on. If you’re value, you need fewer positions on.

Eric: Yeah, I think that’s right. And it is a blow to the ego of angel investors that you can’t pick them. You think you can pick them, you can’t. It doesn’t matter what you do, just get a lot of bets out. And if that’s the game you’re playing, that’s the game you’re playing.

Tobias: You just got to get lucky. And there’s a book that tells you how.



AngelList – Linking Angel Investors, Startups And Job-Seekers

Eric: That’s a good one. Actually, if you’re thinking about how do you make luck your destiny as far as angel investing goes, the world that I know a little bit more about, you have to become basically the first choice investor, and how do you do that? By developing an incredible reputation, by being incredibly well known as an angel investor, by getting a lot of deal flow and having an incredibly entrepreneur-friendly and kind of value-add reputation, which is well known. No one would say that they are trying to do the opposite of that necessarily but becoming that is difficult and you can see in Naval’s world how he has executed that. He started AngelList. He’s sitting at the crow’s nest of the interchange of information– [crosstalk]

Tobias: That’s clever.

Eric: –in the startup world. He started with an email list and has built all the way up and now there’s billions of dollars to deploy. And he’s funding other entrepreneurs to go and start their own kind of scout funds and deploy capital into niches that he won’t necessarily have visibility into. And by increasing the tooling, he becomes an expert in all of the mechanics of the deals. And this all started with a somewhat contentious interaction with the VCs of one of his first startups, which I think is really interesting. But he knew once he wanted to go become an angel investor, like, I’ve got to make luck my destiny, how do I get the first look at every startup? How do I ensure that there’s always room for me in any particular round, because startups have to accept your money in the startup world? So, it’s really the–

Tobias: What was the contentious exchange? Do you know that story?

Eric: I know a little bit of it. It’s probably almost 20 years ago now. But basically, he founded a company with four other people, and then–

Tobias: Was that Epinions?

Eric: That was Epinions. The company got acquired by a company that eventually went public as part of Shopping.com for $600 million or something. It was a good outcome for that company. Epinions was acquired for not particularly– I think it was money raised or something in that neighborhood, not a particularly good outcome for the other founders. And I believe that there’s a lawsuit that alleges but was settled, so we don’t really know that basically that acquisition was done on less than full disclosure of information. And this was one of the first times and maybe the only, you don’t hear about this happening a lot that, founders sue their own venture capitalists for basically knowingly selling at a decreased value because the interests weren’t aligned coming out the other side, and things were settled out of court. I think it was eventually an okay outcome for everybody.

Tobias: You sell a low valuation because it squeezes out the founders and the guys who’ve press that compound, which are the VCs, because they’ve got– we need to get 25% compound on these positions, so you don’t get paid. Press liquidate, there’s nothing left over for whatever you’re holding.

Eric: Yeah. It was the founders that were no longer with the company. So, I think some had left and some had stayed, but they got different treatment. And so, that is the painful origin story of what made Naval such a world-class expert at every single term in the deal sheets. And that’s what started Venture Hacks, was writing about the game theory of venture capital and where your interests align with your venture investors and where they not. As an entrepreneur you’re doing one or two or five fundraisers, maybe in your whole life, and these VCs are writing 10 term sheets a year and so there’s this huge asymmetry of information, you don’t know what questions to ask. You’re panicking on your runway, you have very little leverage, maybe if they’re the venture capital term sheet you’re getting.

Entrepreneurs, especially back in like the 2000s, terms were a lot less entrepreneur-friendly, there was a lot less venture capital. And so, I don’t know how much credit he would personally take for it, but he certainly deserves plenty of it. Naval pushed the norm of those terms a lot more towards–

Tobias: The SAFE?

Eric: The SAFE came out of YC. It was another huge blow for that. He was not the only one carrying that flag. There’s a lot of entrepreneurs and former founders-turned-investors who were much more realized you’ve got to give all the control to entrepreneurs as much as you possibly can, where the first era was much more kind of Don Valentine like, “We’ll give him some money and we’ll give him six months. And if they fuck it up, we’ll give him the hook and put in a new guy.” You don’t see that hardly ever because you see the returns of founder-led companies and you see more and more founders taking companies public and going even further. But there were no Bezos’ and Zuckerbergs to point at or even like Okta or Twilio, I think is still led by the founder well into their public tenure. So, there’s a lot of them now.

Tobias: Just to go back to something you said earlier, you raised this interesting point and we have talked about it in context of Buffett. If a bank gets into trouble, Buffett’s the preferred investor, because he understands that the business really, really well, probably the best bank investor alive today. He’s definitely got the capital, can make a decision really quickly. There’s no committee.

The same thing in my observation, and I’m sure everybody else knows this too, it exists in venture capital as well that there are these firms that– and that’s why this– that I know that the performance of venture capital firms is very much like if you’re top quartile, then you’re killing it and basically everybody else’s an also-ran. And part of the reason is, if you’re an entrepreneur and you get Sequoia or you get Benchmark or you get somebody big, Kleiner Perkins, someone like that, they come in and may stick money into you. That’s the imprimatur. You’ve got the stamp that Silicon Valley– The guys in Silicon Valley who know what they’re doing so that you are the real thing, and now they’re the lead steer, they’re the bellwether, and everybody else follows on from that.

Eric: Yeah. It’s interesting because that is reinforcing in a number of directions. So, those are the top five firms maybe not only do entrepreneurs want to take their money the most, LPs want to give them the money the most because the entrepreneurs show up, they have much more power in recruiting. So, obviously, if I take Sequoia money, all the sudden, my talent pool is increased, which means my odds of success are increased, which means I’ll be able to raise more money from top-tier firms. And so, this is self-perpetuating across a number of different stakeholders in the ecosystem. And then, when you have great returns, you’ve got more LPs, you’ve got more money to deploy, you’ve got more talent, you’ve got more entrepreneurs. And this keeps going.

It’s much harder for an upstart venture capital firm to unseat one of those things than it is in the public markets where stocks don’t get to decide who they get sold to. If you see a good bargain, you can buy it. The fluctuations– it is a lot more free to find your way into some of those things and it’s less network dependent and sales dependent. And if you have a charismatic founder, that totally changes the opportunities available to you.

Tobias: It’s remarkable that Naval has done so well with AngelList who have built that to the place where it has because it’s sort of come out of nowhere and now it’s probably the best-known angel, maybe even crossing over into venture at that point, right?

Eric: Yeah, it’s interesting. It’s kind of an amalgamation of different firms now, and I don’t pretend to fully understand how they all fit together. I know they are still innovating on the structure of the fund and really pushing on who is allowed to invest and getting more equitable treatment, lowering the barrier for accredited investors because that’s still a big piece of it. Naval actually lobbied Congress to get the JOBS Act passed back in 2007, which is a brilliant bit of– he’d been building AngelList for five years or something by then. And then all of a sudden, new things are legal that he’s first in line to go through the gate and do. And we still see accredited investor laws get changed. And the JOBS Act actually accidentally opened up the ICO boom. You used to not be able to openly solicit for investment at all. And now, all these crypto-offerings and white papers and stuff can openly solicit. Startups can just go on AngelList and say, hey, we’re raising money. Please send us lower– even $1,000 is an entry point for angels now, which used to be all through lawyers, and if you weren’t willing to write at least $25,000, you couldn’t even get a seat at the table.

My first “angel investment,” I had to help get someone else into the fund and then buy a piece of their investments. And so, it’s just like, I can’t afford $25,000, but I can afford a fraction of that. So, if you make an investment, I’ll buy some of your investment off the table and hustle some of that stuff. And now I can just go on AngelList, write a $2,000 check and also, you’re an angel investor. And so, democratizes the returns and it enables startups to raise from people who– if you couldn’t convince one of these 50 people to write a check to you, your startup didn’t exist. And now, there’s a lot more avenues available and so, the demographics of who can start a company and where they can start a company are really changing. And I think that is only a positive thing as Silicon Valley moves to the cloud, it really changes a lot of the structure of how that works. And the tooling is really what’s doing that, and AngelList is behind a lot of those tools.



Tobias: Well, let’s change tack a little bit and talk about the second part of the book, where Naval starts talking about happiness. I remember from the Rogan podcast and this is sort of– I don’t want to say it’s a stoic philosophy because Naval might have a different philosophy about the source of this but it is a stoic idea that you’re in charge of your own happiness. You can learn how to do it. You can make that choice. So, what’s Naval’s attitude to happiness?

Eric: Yeah, I think that’s a good place to start probably, especially for your audience, which is a bunch of super-smart nerds.

Tobias: Alpha.


Eric: Yeah. I think the right intro is this idea that is, well, if you’re so smart, why aren’t you happy? If you pretend to control all the things around you and believe that you are an intelligent and capable person, your choices are either to say that happiness isn’t important to you. You don’t want it, which is to say you’ve got a limited amount of time on the earth and you don’t want to spend it in peace and joy. You’d rather be angry or unhappy or discontented or desirous. Or you can understand that happiness is a skill and a thing that you can learn, and a thing that’s important to you because eventually you’re going to die and that’ll be the end of the game and you won’t be able to change anything. And so, the sooner you– I don’t even want to say admit, but come to the position that happiness matters to you, and that you want to spend your time being happy, and then you can quickly get to, hey, happiness is controllable and it’s a choice. I wasn’t born at a certain level of happiness that I am fixed at.

It also probably helps to decouple believing that you have to be unhappy in order to be accomplished or a performant or seen as respected and important. I’m not even exactly sure where it comes from. I’m sure everyone has their own source, but there’s something telling us that in order to be accomplished or powerful or interesting or successful, we have to go around being unhappy until we’ve accomplished those things, when the opposite is probably much more true. It is just difficult to– it’s counterintuitive for a reason that I still don’t totally understand.

Tobias: I think there are two things going on. One is the hedonic treadmill. People who are successful, set a goal, achieve that goal, and you should be excited when you achieve something that you set out to achieve. But what happens is that goes away really quickly and you’re looking for the next thing. So, you’re back to that level of dissatisfaction that you had even though you’ve done something that you wanted to do.

The other thing, it’s sort of more in my world, but bears and shorts sound smarter for the reason that– you’ve got this Panglossian– like, “Everything’s great, and I’m really happy.” And they’re like, “Well, what about this over here or this thing? You’re not thinking about that?” You’re like, “Yeah, well, if I think about that, that does make me really upset.” But that’s a good argument for not thinking about that.

Eric: Yeah. I think there’s a pithy little tweet in there that basically says like, it’s really easy to be cynical, and it’s really easy to be pessimistic. For whatever reason, it sounds smart and there’s an archetype of like the prickly, smart, sharp Spock-like character who’s running around reminding everyone why everything is shit and they should be unhappy, and it’s not as good as they think it is. And it’s helpful to have– you don’t want to be blind to those things because it’s hard to make good decisions if you only see the world through rose-colored glasses, but there’s also understanding that you can put those in their place and that you can look at those things in a work and decision-making context but not necessarily have to live in fear or anger at those things that aren’t correct. Take the step that you can take and move on.

The rarest breed by Naval’s 2×2 matrix is optimistic, contrarian. Understanding when everyone is wrong to the downside, but you can still see the bright side of things, and picking and choosing when to put those glasses on and off. You don’t have to be one person or one type of person all the time.

Tobias: Yeah, an author who I love reading in that context is John le Carré. A lot of it is about trying to catch spies and trying to figure out what somebody else is doing. You’ve got to look at this behavior and give this guy the benefit of the doubt or is he doing something where he needs to be caught. If you haven’t read any of his– he’s got 20 really, really great books that I reread on occasion. I’m a big fan. You ever read le Carré?

Eric: No. It sounds awesome.


How To Save Yourself

Tobias: Yeah, I recommend it. They’re great books. Let’s talk about saving yourself. How do you save yourself?

Eric: Yeah, it is a form of radical self-responsibility. It’s across every category of life. We are told that there are experts and that they will tell us what to do and just say, “Trust the government, trust the doctors, trust the media. Don’t worry about it, just turn your brain off and do what we tell you.” And pretty much without exception, those external forces are either neutral or harmful. And that you really have to take responsibility for your own life and your own decisions into your own hands. And work hard to question doctors, question media, question the government– if you’re just allowing someone else to set your priorities unfiltered, that is always a dangerous place to be. You should always stop and question what that person or organization or institution’s motivations are. What would be easier for them to have you do? What do you actually want the outcome to be? Are you certain that this message is helping you reach that outcome?

We trust doctors because they’re incredibly well educated and they’re in a shiny hospital with billions of dollars of equipment and they regularly perform miracles and that is truly incredible. On the other hand, like the FDA has given us fundamentally incorrect or incomplete nutritional information for living memory and there’s no reason to believe that they’re completely correct now.

Tobias: They’ve got it right now. [laughs]

Eric: Yeah. That illusion that we are living in the age of peak knowledge, which maybe we are. We certainly know more than we did 100 years ago.

Tobias: It’s funny how often we circle back to stuff that we knew 100 years ago.

Eric: Exactly. Yeah.

Tobias: That’s why we used to do that. Now, I get it.

Eric: Yeah, we’re almost certainly like– innovation is doing us maybe as much harm as good and it’s just a matter of finding out where potato chips aren’t better for us than potatoes, but they are an innovation. So, which things do you pick up in? Which do you leave behind? And who do you trust as information sources? There’s increasing benefits to diluting you and to misleading you. And this is kind of backward, you only spent so much of your time being suspicious and paranoid and questioning everything around you. That is an exhausting activity and is likely to make you unhappy. But finding those things and sticking to those fundamentals that you know are true and avoiding the stuff that– or at least learning to look at the second level motivations and interests of people around you.

Tobias: What I have found is that questioning things, it doesn’t make me unhappy, but it makes everybody else around me really unhappy. My wife’s just tortured all the time because I keep on saying, “Why are doing it this way?” “That’s the way everybody does it.” Most of the time, it’s right, that’s the way to do it. But sometimes you just got to poke at everything and figure out why.

Eric: Yeah. The reflex to ask a question is a valuable one. I have had similar experiences. It is uncomfortable to go against the crowd. If you walk into a room and 100 people are watching the news and believing every word, you’re going to experience some pain if you try to convince them otherwise, because they’re all comfortable in a herd. Everybody’s drinking a Coke and you’re drinking water, that’s going to feel uncomfortable. And you’ve got to have conviction in the things that you choose to swim upstream about because swimming upstream socially is exhausting and painful. And we are herd animals. You’re reading Sapiens, you know this– even when you’re right, it’s not any easier.

Tobias: That’s the example I was just thinking of, as you were saying that. There are lots of benefits to believing in these shared imaginary things because it allows us to coordinate and do things. But it’s also good to have people standing there saying, “Why are we doing it that way? That’s not a real thing. We could do it this other way that is a better way of doing it.” And that’s basically how we’ve progressed for the last whatever 30,000, 70,000 years.

Eric: Yeah. This is not a well-distilled thought yet but there’s something interesting that you have to trust the herd and the social proof on most decisions, but the real progress and the real divergence comes from where you’re willing to be a heretic. When you’re Galileo willing to go against the church or Bill Gates willing to– all of challenging these assumptions is where big changes come from, for you personally and for all of humanity. But it’s painful and you’ve got to let the other 98 decisions just go and choose to go with the herd because you can’t do 100 out of 100 from first principles, you just can’t.

Tobias: It’s funny, in the same context, there’s a great series of books by Neal Stephenson. He’s a science fiction author, but he writes about Isaac Newton. I think it’s called the Quicksilver. It’s a series of three books. I’m just going to blank on the name at the moment. I think Quicksilver might be the first book in it, but he’s talking about Isaac Newton discovering Principia Mathematica. It’s set in the time of plague in London. And it’s so funny, one of the characters says, “I’ve reached this age where I can basically live out my days, but now I have to travel, which means, I’m probably going to reduce the length of my life because I’m going to have to go with it. And lots of other people gathered together, which is that’s how you get the plague.” You go with other people, that’s how you get sick.

Eric: Yeah.

Tobias: This is all pre-pandemic stuff. It’s all written. It’s great. That’s one of those things that I think we’ve known this stuff for just so long– I’d never thought about that before. Travelling probably does make you sick, because you come in contact with a lot of other things that you just don’t see on a daily basis.

Eric: Yeah, it makes you sick in the short term and if you catch the plague, maybe you’ll die but it also strengthens your immune system and exposes you to new ideas and broadens your perspective. And so, it is one of those– you’re exposing yourself to harm and hope that you’re antifragile and you come out the other side stronger. But you can’t go below zero on that one.


The Meaning Of Life

Tobias: So, I saved this for last. It’s not a big topic. It’s just the meanings of life. What is it? Just to wrap up. [laughs]

Eric: Naval has three answers, some more scientific than others. I think the first one is that there is none. The third one is that there is this coming heat death of the universe that’s driven by global entropy. If you’re interested in, you’ll be interested in, but it’s not particularly helpful for changing the way you live day to day. And the second kind of in the middle is probably the one that you carry with you, which is really that you have to decide your own meaning for life. It is a burden and one that we outsource to varying books and churches, because it’s a really hard question.

It is difficult to realize that you have to do it yourself, and you have to decide yourself, but then you have to hold the conviction and if you keep changing your mind back to what we were talking about, long-term compounding. You’re changing directions every year and changing meanings every year, it’s going to be hard to build up something really satisfying. What if you pick a mission or two, or your family, your work, staying healthy, caring for others, and really dedicate your life to it over a long period of time and keep getting better at it and keep finding ways to serve your mission better. You’ll find that rewarding, and if you find it rewarding, that’s all that matters. It’s a single-player game.

Tobias: Yeah, I love that answer and I think that’s a great sentiment to end it on. Eric, if folks want to buy the book, follow along with what you’re doing, how do they go about doing all of that?

Eric: Yeah, I’m on Twitter, just my full name @EricJorgenson. The book is available in digital versions for free on the website, navalmanack.com. If you want to buy the physical version, you can do it on Amazon. They’ve got paperback, hardcover. We’ve got a cheap Kindle version there but you can also get the PDF on the website and the book info will be on the website as well. It’s important all of us to make it like freely available for everyone. It’s very rewarding to see people all over the world reading this stuff and emailing me about it. I do a bunch of random side projects and stuff that if you’re on Twitter or my email list, you’ll get exposed to a very random smattering of my brain from time to time.

Tobias: [laughs] That’s great. Eric Jorgenson who is the Editor of the Navalmanack?

Eric: I guess. I never know what to say. I feel it’s weird to say I’ve written a book because I didn’t write anything, like a creator.

Tobias: Yeah, creative force behind Navalmanack. Thank you very much, Sir.

Eric: Thank you. Hope to see you again in Omaha soon when this is all over.

Tobias: Likewise, if I can travel.


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