Ultimate Cheating by Leverage

Notes from Naval Ravikant’s podcast on how to get rich without getting lucky.

From the podcast

• You will get rich by giving society what it wants but does not yet know how to get at scale.

• As Danny Hillis said, technology is just the set of things that don’t quite work yet. Once something works, it’s no longer technology. So, society always wants new things.

• Add in lots of code and media and podcasts and content to get it all out there.

  • The beauty is when you combine all of these three. That’s where tech startups really excel.
    • Where you take just the minimum, but highest output labor that you can get, which are engineers, and designers, product developers.
    • Then you add in capital.
    • You use that for marketing, advertising, scaling.
    • That is a magic combination, and that’s why you see technology startups explode out of nowhere, use massive leverage and just make huge outsize returns.

• Every great software developer now has an army of robots working for him at nighttime, while he or she sleeps, after they’ve written the code and it’s just cranking away.

  • An army of robots is already here. It’s very cheaply available. The bottleneck is just figuring out intelligent and interesting things to do to them.
  • There’s the army of robots within servers and then there’s also an army of actual robots and people that are being manipulated through software.

• A User Model for Social Software

  • Users:
    • Want sex. If they can’t have sex, they
    • Want food. If they can’t have food, they
    • Want fun. If they can’t have fun, they
    • Leave

• You should try and get into a business where making Widget Number 12 is cheaper than making Widget Number 5, and making Widget Number 10,000 is a lot cheaper than the previous ones.

  • Technology products especially, and media products, where creating another copy of what you just created is free. Where they have zero marginal cost of reproduction.
  • Network effects: value grows as the square of the customers.
    • A network effect is when each additional user adds value to the existing user base. Your users themselves are creating some value for the existing users.
    • You should always be thinking about how your users, your customers, can add value to each other because that is the ultimate form of leverage.

Magic Combinations

• Code
• Satisfy primitive human needs (food, sex, fun)
• Network effects (bots and users add value to each other)
• Media (podcasts)