This post is part of the 📖 The Almanack of Naval Ravikant series.
Today, I am reading Take on Accountability section of the Wealth: How to get rich without getting lucky chapter from the book, The Almanack of Naval Ravikant: A Guide to Wealth and Happiness written by Author, Jack Butcher.
Getting rich is not just about luck; happiness is not just a trait we are born with. These aspirations may seem out of reach, but building wealth and being happy are skills we can learn.
So what are these skills, and how do we learn them? What are the principles that should guide our efforts? What does progress really look like?
The Book The Almanack of Naval Ravikant: A Guide to Wealth and Happiness is a collection of Naval’s wisdom and experience from the last ten years, shared as a curation of his most insightful interviews and poignant reflections.
Yesterday, I read Play Long-Term Games with Long-Term People section from the Wealth: How to get rich without getting lucky.
Wealth: How to get rich without getting lucky
Take on Accountability
Embrace accountability and take business risks under your name. Society will reward you with responsibility, equity, and leverage. — Naval Ravikant
To get rich, you need leverage.
Leverage comes in labour, comes in the capital, or it can come through code or media. But most of these, like labour and capital, people have to give to you.
For labour, somebody has to follow you.
For capital, somebody has to give you money, assets to manage, or machines.
To get these things, you have to build credibility, and you have to do it under your own name as much as possible, which is risky.
Accountability is a double-edged thing. It allows you to take credit when things go well and bear the brunt of the failure when things go badly.
The people who have the ability to fail in public under their own names actually gain a lot of power.
Build or Buy Equity in a Business
If you don’t own a piece of a business, you don’t have a path towards financial freedom. - Naval Ravikant
Why is owning equity in a business important to becoming rich?
This is probably one of the most important points. People seem to think you can create wealth — make money through work. It’s probably not going to work. There are many reasons for that.
Without ownership, your inputs are very closely tied to your outputs. In almost any salaried job, even one paying a lot per hour like a lawyer or a doctor, you’re still putting in the hours, and you get paid hourly.
You have to work up to the point where you can own equity in a business. You could own equity as a small shareholder where you bought stock.
You could also own it as an owner where you started the company. Ownership is really important.
But usually, real wealth is created by starting your own companies or even by investing.
If you don’t own equity in a business, your odds of making money are very slim. Owning equity in a company basically means you own the upside.
When you own debt, you own guaranteed revenue streams, and you own the downside. You want to own equity.
You cannot become wealthy unless you embrace accountability and take business risks under your own name.
Without ownership, your inputs are very closely tied to your outputs. If you don’t own a piece of a business, you don’t have a path towards financial freedom or at least you have to work up to the point where you can own equity in a company.
That’s it for today. Tomorrow, we will read the final section Find a Position of Leverage.
Author(s): Eric Jorgenson
Part 5 of 33 in the 📖 The Almanack of Naval Ravikant book series.