Seek Wealth, Not Money or Status

You probably known evolved from his Twitter account, and we're gonna 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 the ball 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.

You know Naval from his Twitter account. He's also the co-founder of AngelList and opinions. 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, me, how to get my street storm definitely hit a nerve. A lot of people say it was helpful. It 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 with the robots that are 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 that'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 your 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 soulless job that doesn't fulfill you.

So the purpose of wealth is freedom; it's nothing more than that. It's like 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 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 credits. 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 devalued because people steal the IOUs, the government prints extra IOUs, people renege on their IOUs. But really, what money is trying to be 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 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 sort of virtue signal by attacking the whole enterprise by saying, “well, making money is evil, and you shouldn't do it.” But I'll bluff. 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, “well, I don’t need money; we don’t want money.”

And then status is just your ranking in the social hierarchy. So wealth is not a zero-sum game. Everybody in the world can have a house because you have a house; it 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 since monkey tribes, and it's hierarchical.

Who’s number one? Who's number two? Who's number three? 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, at an evolutionary basis, like if you go back thousands of years, status is a much better predictor of survival than wealth is. 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 gonna exist; there's 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.