Making Money Isn’t About Luck
Become the kind of person who makes money
Making money isn’t about luck
Naval: Obviously, we want to be wealthy, and we want to get there in this lifetime without having to rely on luck.
A lot of people think making money is about luck. It’s not. It’s about becoming the kind of person that makes money.
I like to think that if I lost all my money and if you drop me on a random street in any English-speaking country, within 5, 10 years I’d be wealthy again. Because it’s a skill set that I’ve developed and I think anyone can develop.
In 1,000 parallel universes, you want to be wealthy in 999 of them. You don’t want to be wealthy in the 50 of them where you got lucky. We want to factor luck out of it.
There’s four kinds of luck that we’re talking about. This came from a book. Marc Andreessen, wrote a blog post about it.
- Blind luck
The first kind of luck you might say is blind luck. Where I just got lucky because something completely out of my control happened. That’s fortune, that’s fate.
- Luck from hustling
Then there’s luck that comes through persistence, hard work, hustle, motion. Which is when you’re running around creating lots of opportunities, you’re generating a lot of energy, you’re doing a lot of things, lots of things will get stirred up in the dust.
It’s almost like mixing a petri dish and seeing what combines. Or mixing a bunch of reagents and seeing what combines. You’re generating enough force and hustle and energy that luck will find you.
We, as a group, you could argue, got together because of that. Nenad had put up these great videos online, I saw them on Twitter. In that sense, he generated his own luck by creating videos until people like me keep finding him.
- Luck from preparation
A third way is that you become very good at spotting luck. If you are very skilled in a field, you will notice when a lucky break happens in that field. When other people who aren’t attuned to it won’t notice. So you become sensitive to luck and that’s through skill and knowledge and work.
- Luck from your unique character
Then the last kind of luck is the weirdest, hardest kind. But that’s what we want to talk about. Which is where you build a unique character, a unique brand, a unique mindset, where then luck finds you.
For example, let’s say that you’re the best person in the world at deep sea underwater diving. You’re known to take on deep sea underwater dives that nobody else will even attempt to dare.
Then, by sheer luck, somebody finds a sunken treasure ship off the coast. They can’t get it. Well, their luck just became your luck, because they’re going to come to you to get that treasure. You’re going to get paid for it.
Now, that’s an extreme example. The person who got lucky by finding the treasure chest, that was blind luck. But them coming to you and asking you to extract it and having to give you half, that’s not luck.
You created your own luck. You put yourself in a position to be able to capitalize on that luck. Or to attract that luck when nobody else has created that opportunity for themselves. When we talk about “without getting lucky,” we want to be deterministic, we don’t want to leave it to chance.
In 1,000 parallel universes, you want to be wealthy in 999 of them
Nivi: Do you want to elaborate a little bit more on the idea that in a 1,000 parallel universes you want to get rich in 999 of them? I think some people are going to see that and say, “that sounds impossible, it sounds like it’s too good to be true.”
Naval: No, I don’t think it’s impossible. I think that you may have to work a little bit harder at it given your starting circumstances. I started as a poor kid in India, so if I can make it, anybody can, in that sense.
Now, obviously, I had all my limbs and I had my mental faculties and I did have an education. There are some prerequisites you can’t get past. But if you’re listening to this video or podcast, you probably have the requisite means at your disposal, which is a functioning body and a functioning mind.
And I’ve encountered plenty of bad luck along the way. The first little fortune that I made, I instantly lost in the stock market. The second little fortune that I made, or I should have made, I basically got cheated by my business partners. It’s only the third time around has been a charm.
And, even then, it has been in a slow and steady struggle. I haven’t made money in my life in one giant payout. It’s always been a whole bunch of small things piling up. It’s more about consistently creating wealth by creating businesses, including opportunities and creating investments. It hasn’t been a giant one-off thing.
Wealth stacks up one chip at a time, not all at once
My personal wealth has not been generated by one big year. It stacks up little bit, chips at a time. More options, more businesses, more investments, more things that I can do.
Same way that someone like Nenad, illacertus, he’s building his brand online. He’s building videos. It’s not like any one video is going to suddenly shower him with riches overnight. It’s going to be a long lifetime of learning, of reading, of creating that’s going to compound.
We’re talking about getting wealthy so you can retire, so you have your freedom. Not retire in the sense that you don’t do anything. But in the sense that you don’t have to be any place you don’t want to be, you don’t have to do anything you don’t want to do, you can wake up when you want, you can sleep when you want, you don’t have a boss. That’s freedom.
We’re talking about enough wealth to get to freedom. Especially thanks to the Internet these days, though, opportunities are massively abundant. I, in fact, have too many ways to make money, I don’t have enough time. I have opportunities pouring out of my ears and the thing I keep running out of is time.
There’s just so many ways to create wealth, to create products, to create businesses, to create opportunities, and to, as a byproduct, get paid by society that I can’t even handle it all.
Make Luck Your Destiny
Build your character in a way that luck becomes deterministic
Nivi: I think it’s pretty interesting that the first three kinds of luck that you described there are very common cliches for them that everybody knows. And then for that last kind of luck that comes to you out of the unique way that you act, there’s no real cliche for it.
So, for the first three kinds, there’s “dumb luck,” or “blind luck.” That’s the first kind of luck. The second kind of luck there’s the cliché that “fortune favors the bold.” That’s a person who gets lucky just by stirring the pot and acting. The third kind of luck, people say that “chance favors the prepared mind.”
But for the fourth kind of luck, there isn’t a common cliché out there that matches the unique character of your action, which I think is interesting and perhaps an opportunity and it also shows that people aren’t necessarily taking advantage of that kind of luck the way they should be.
Naval: I think also at that point, it starts becoming so deterministic that it stops being luck. So, the definition starts fading from luck to more destiny. So, I would characterize that fourth one as you build your character in a certain way and then your character becomes your destiny.
Build your character so opportunity finds you
One of the things I think that is important to making money, when you want the kind of reputation that makes people do deals through you. I use the example of like, if you’re a great diver then treasure hunters will come and give you a piece of the treasure for your diving skills.
If you’re a trusted, reliable, high-integrity, long-term thinking deal maker, then when other people want to do deals but they don’t know how to do them in a trustworthy manner with strangers, they will literally approach you and give you a cut of the deal or offer you a unique deal just because of the integrity and reputation that you have built up.
Warren Buffett, he gets offered deals, and he gets to buy companies, and he gets to buy warrants, and bailout banks and do things that other people can’t do because of his reputation.
But of course that’s fragile. It has accountability on the line, it has a strong brand on the line, and as we will talk about later, that comes with accountability attached.
But I would say your character, your reputation, these are things that you can build that then will let you take up advantage of opportunities that other people may characterize as lucky but you know that it wasn’t luck.
Nivi: You said that this fourth kind of luck is more or less a destiny. There’s a quote from that original book that was in Marc’s blog posts from Benjamin Disraeli, who I think was the former prime minister of the UK. The quote to describe this kind of luck was, “we make our fortunes and we call them fate.”
You have to be a little eccentric to be out on the frontier by yourself
There were a couple other interesting things about this kind of luck that were mentioned in the blog post, I think it’ll be good for the listeners to hear about is that, this fourth kind of luck can almost come out of eccentric ways that you do your things and that eccentricity is not necessarily a bad thing in this case. In fact, it’s a good thing.
Naval: Yeah, absolutely. Because the world is a very efficient place, so, everyone has dug through all the obvious places to dig and so to find something that’s new and novel and uncovered, it helps to be operating on a frontier.
Where right there you have to be a little eccentric to be out on the frontier by yourself, and then you have to be willing to dig deeper than other people do, deeper than seems rational just because you’re interested.
Nivi: Yeah, the two quotes that I’ve seen that express this kind of luck in addition to that Benjamin Disraeli one, are this one from Sam Altman where he said, “extreme people get extreme results.” I think that’s pretty nice. And then there’s this other one from Jeffrey Pfeffer, who is a professor at Stanford that, “you can’t be normal and expect abnormal returns.” I’ve always enjoyed that one too.
Naval: Yeah. And one quote that I like which is the exact opposite of that is, “play stupid games win stupid prizes.” A lot of people spend a lot of their time playing social games like on Twitter where you’re trying to improve your social standing and you basically win stupid social prizes which are worthless.
Nivi: I guess the last thing that I have from this blog post is the idea that by pursuing these kinds of luck especially the last one, basically everything but dumb luck, by pursuing them you essentially run out of unluck. So, if you just keep stirring the pot and stirring the pot, that alone you will run out of unluck.
Naval: Yeah, or it could just be reversion to the mean. So, then you at least neutralized luck so that it’s your own talents that come into play.