Arm Yourself With Specific Knowledge

Specific knowledge can be found by pursuing your genuine curiosity

Nivi: Do you want to talk a little bit about the skills that you need, in particular specific knowledge, accountability, leverage and judgment. So, the first tweet in this area is “Arm yourself with specific knowledge accountability and leverage.” And I’ll throw in judgment as well. I don’t think you covered that in that particular tweet.

Naval: If you want to make money you have to get paid at scale. And why you, that’s accountability, at scale, that’s leverage, and just you getting paid as opposed to somebody else getting paid , that’s specific knowledge.

So, specific knowledge is probably the hardest thing to get across in this whole tweetstorm, and it’s probably the thing that people get the most confused about.

The thing is that we have this idea that everything can be taught, everything can be taught in school. And it’s not true that everything can be taught. In fact, the most interesting things cannot be taught.

But everything can be learned. And very often that learning either comes from some innate characteristics in your DNA, or it could be through your childhood where you learn soft skills which are very, very hard to teach later on in life, or it’s something that is brand new so nobody else knows how to do it either, or it’s true on the job training because you’re pattern matching into highly complex environments, basically building judgment in a specific domain.

Classic example is investing, but it could be in anything. It could be in judgment in running a fleet of trucks, it could be judgment in weather forecasting.

So, specific knowledge is the knowledge that you care about. Especially if you’re later in life, let’s say your post 20, 21, 22, you almost don’t get to choose which specific knowledge you have. Rather, you get to look at what you have already built by that point in time, and then you can build on top of it.

Specific knowledge can’t be trained

The first thing to notice about specific knowledge is that you can’t be trained for it. If you can be trained for it, if you can go to a class and learn specific knowledge, then somebody else can be trained for it too, and then we can mass-produce and mass-train people. Heck, we can even program computers to do it and eventually we can program robots to walk around doing it.

So, if that’s the case, then you’re extremely replaceable and all we have to pay you is the minimum wage that we have to pay you to get you to do it when there are lots of other takers who can be trained to do it. So really, your returns just devolve into your cost of training plus the return on investment on that training.

So, you really want to pick up specific knowledge, you need your schooling, you need your training to be able to capitalize on the best specific knowledge, but the part of it that you’re going to get paid for is the specific knowledge.

Specific knowledge is found by pursuing your curiosity

For example, someone who goes and gets a degree in psychology and then becomes a salesperson. Well if they were already a formidable salesperson, a high grade salesmanship to begin with, then the psychology degree is leverage, it arms them and they do much better at sales.

But if they were always an introvert never very good at sales and they’re trying to use psychology to learn sales, they’re just not going to get that great at it.

So, specific knowledge is found much more by pursuing your innate talents, your genuine curiosity, and your passion. It’s not by going to school for whatever is the hottest job, it’s not for going into whatever field investors say is the hottest.

Very often specific knowledge is at the edge of knowledge. It’s also stuff that’s just being figured out or is really hard to figure out.

So, if you’re not 100% into it somebody else who is 100% into it will outperform you. And they won’t just outperform you by a little bit, they’ll outperform you by a lot because now we’re operating the domain of ideas, compound interest really applies and leverage really applies.

So, if you’re operating with 1,000 times leverage and somebody is right 80% of the time, and somebody else is right 90% of time, the person who’s right 90% of the time will literally get paid hundreds of times more by the market because of the leverage and because of the compounding factors and being correct. So, you really want to make sure you’re good at it so that genuine curiosity is very important.

Building specific knowledge will feel like play to you

So, very often, it’s not something you sit down and then you reason about, it’s more found by observation. You almost have to look back on your own life and see what you’re actually good at.

For example, I wanted to be a scientist and that is where a lot of my moral hierarchy comes from. I view scientists sort of at the top of the production chain for humanity. And the group of scientists who have made real breakthroughs and contributions that probably added more to human society, I think, than any single other class of human beings.

Not to take away anything from art or politics or engineering or business, but without the science we’d still be scrambling in the dirt fighting with sticks and trying to start fires.

My whole value system was built around scientists and I wanted to be a great scientist. But when I actually look back at what I was uniquely good at and what I ended up spending my time doing, it was more around making money, tinkering with technology, and selling people on things. Explaining things, talking to people.

So, I have some sales skills, which is a form specific knowledge that I have. I have some analytical skills around how to make money. And I have this ability to absorb data, obsess about it, and break it down and that is a specific skill that I have. I also just love tinkering with technology. And all of this stuff feels like play to me, but it looks like work to others.

So, there are other people to whom these things would be hard and they say like, “Well, how do I get good at being pithy and selling ideas?” Well, if you’re not already good at it or if you’re not really into it, maybe it’s not your thing, focus on the thing that you are really into.

This is ironic, but the first person to actually point out my real specific knowledge was my mother. She did it as an aside, talking from the kitchen and she said it when I was like 15 or 16 years old. I was telling a friend of mine that I want to be an astrophysicist and she said, “No, you’re going to go into business.”

I was like, “What, my mom’s telling me I’m going to be in business. I’m going to be an astrophysicist. Mom doesn’t know she’s talking about.” But mom knew exactly what she was talking about.

She’d already observed that every time we walk down the street, I would critique the local pizza parlor on why they were selling their slices a certain way with certain toppings and why their process of ordering was this way when it should have been that way.

So, she knew that I had more of a business curious mind, but then my obsession with science combined to create technology and technology businesses where I found myself.

So, very often, your specific knowledge is observed and often observed by other people who know you well and revealed in situations rather than something that you come up with.

Specific Knowledge Is Highly Creative or Technical

Specific knowledge is on the bleeding edge of technology, art and communication

Specific knowledge can be taught through apprenticeships

Naval: To the extent that specific knowledge is taught, it’s on the job. It’s through apprenticeships. And that’s why the best businesses, the best careers are the apprenticeship or self-taught careers, because those are things society still has not figured out how to train and automate yet.

The classic line here is that Warren Buffett went to Benjamin Graham when he got out of school. Benjamin Graham was the author of the Intelligent Investor and sort of modernized or created value investing as a discipline. And Warren Buffett went to Benjamin Graham and offered to work for him for free.

And Graham said, “Actually, you’re overpriced, free is overpriced.” And Graham was absolutely right. When it comes to a very valuable apprenticeship like the type that Graham was going to give Buffet, Buffet should have been paying him a lot of money. That right there tells you that those are skills worth having.

Specific knowledge is often highly creative or technical

Specific knowledge also tends to be technical and creative. It’s on the bleeding edge of technology, on the bleeding edge of art, on the bleeding edge of communication.

Even today, for example, there are probably meme lords out there on the Internet who can create incredible memes that will spread the idea to millions of people. Or are very persuasive – Scott Adams is a good example of this. He is essentially becoming one of the most credible people in the world by making accurate predictions through persuasive arguments and videos.

And that is specific knowledge that he has built up over the years because he got obsessed with hypnosis when he was young, he learned how to communicate through cartooning, he embraced Periscope early, so he’s been practicing lots of conversation, he’s read all the books on the topic, he’s employed it in his everyday life. If you look at his girlfriend, she’s this beautiful young Instagram model.

That is an example of someone who has built up a specific knowledge over the course of his career. It’s highly creative, it has elements of being technical in it, and it’s something that is never going to be automated.

No one’s going to take that away from him, because he’s also accountable under one brand as Scott Adams, and he’s operating with the leverage of media with Periscope and drawing Dilbert cartoons and writing books. He has massive leverage on top of that brand and he can build wealth out of it if he wanted to build additional wealth beyond what he already has.

Specific knowledge is specific to the individual and situation

Nivi: Should we be calling it unique knowledge or does specific knowledge somehow make more sense for it?

Naval: You know, I came up with this framework when I was really young. We’re talking decades and decades. It’s now probably over 30 years old. So, at the time specific knowledge stuck with me so that is how I think about it.

The reason I didn’t try and change it is because every other term that I found for it was overloaded in a different way. At least specific knowledge isn’t that used. I can kind of rebrand it.

The problem with unique knowledge is, yeah, maybe it’s unique but if I learn it from somebody else it’s no longer unique, then we both know it. So, it’s not so much that it is unique, it’s that it is highly specific to the situation, it’s specific to the individual, it’s specific to the problem, and it can only be built as part of a larger obsession, interest, and time spent in that domain.

It can’t just be read straight out of a single book, nor can it be taught in a single course, nor can it be programmed into a single algorithm.

You can’t be too deliberate about assembling specific knowledge

Nivi: Speaking of Scott Adams, he’s got a blog post on how to build your career by getting in, say, the top 25 percentile at three or more things. And by doing that, you become the only person in the world who can do those three things in the 25th percentile.

So, instead of trying to be the best at one thing, you just try to be very, very good at three or more things. Is that a way of building specific knowledge?

Naval: I actually think the best way is just to follow your own obsession. And somewhere in the back of your mind, you can realize that, actually, this obsession I like and I’ll keep an eye out for the commercial aspects of it.

But I think if you go around trying to build it a little too deliberately, if you become too goal-oriented on the money, then you won’t pick the right thing. You won’t actually pick the thing that you love to do, so you won’t go deep enough into it.

Scott Adams’ observation is a good one, predicated on statistics. Let’s say there’s 10,000 areas that are valuable to the human race today in terms of knowledge to have, and the number one in those 10,000 slots is taken.

Someone else is likely to be the number one in each of those 10,000, unless you happen to be one of the 10,000 most obsessed people in the world that at a given thing.

But when you start combining, well, number 3,728 with top-notch sales skills and really good writing skills and someone who understands accounting and finance really well, when the need for that intersection arrives, you’ve expanded enough from 10,000 through combinatorics to millions or tens of millions. So, it just becomes much less competitive.

Also, there’s diminishing returns. So, it’s much easier to be top 5 percentile at three or four things than it is to be literally the number one at something.

Build specific knowledge where you are a natural

I think it’s a very pragmatic approach. But I think it’s important that one not start assembling things too deliberately because you do want to pick things where you are a natural. Everyone is a natural at something.

We’re all familiar with that phrase, a natural. “Oh, this person is a natural at meeting men or women, this person is a natural socialite, this person is a natural programmer, this person is a natural reader.” So, whatever you are a natural at, you want to double down on that.

And then there are probably multiple things you’re natural at because personalities and humans are very complex. So, we want to be able to take the things that you are natural at and combine them so that you automatically, just through sheer interest and enjoyment, end up top 25% or top 10% or top 5% at a number of things.