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You Won’t Get Rich Renting Out Your Time.html
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You Won’t Get Rich Renting Out Your Time.html
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<html>
<head>
<link rel="stylesheet" href="styles2.css" />
</head>
<body>
<p>![[Naval-Ep6.mp3]]</p>
<p>You can’t earn non-linearly when you’re renting out your time</p>
<p>You won’t get rich renting out your time</p>
<p>
<strong>Nivi:</strong> Next you go into more specific details on how you
can actually get rich, and how you can’t get rich. The first point was
about how you’re not going to get rich: “You are not going to get rich
renting out your time. You must own equity—a piece of the business—to gain
your financial freedom.”
</p>
<p>
<strong>Naval:</strong> This is probably one of the absolute most
important points. People seem to think that you can create wealth, and
make money through work. And it’s probably not going to work. There are
many reasons for that.
</p>
<p>
But the most basic is just that your inputs are very closely tied to your
outputs. In almost any salaried job, even at one that’s paying a lot per
hour like a lawyer, or a doctor, you’re still putting in the hours, and
every hour you get paid.
</p>
<p>
So, what that means is when you’re sleeping, you’re not earning. When
you’re retired, you’re not earning. When you’re on vacation, you’re not
earning. And you can’t earn non-linearly.
</p>
<p>
If you look at even doctors who get rich, like really rich, it’s because
they open a business. They open like a private practice. And that private
practice builds a brand, and that brand attracts people. Or they build
some kind of a medical device, or a procedure, or a process with an
intellectual property.
</p>
<p>
So, essentially you’re working for somebody else, and that person is
taking on the risk, and has the accountability, and the intellectual
property, and the brand. So, they’re just not gonna pay you enough.
They’re gonna pay you the bare minimum that they have to, to get you to do
their job. And that can be a high bare minimum, but it’s still not gonna
be true wealth where you’re retired.
</p>
<p>
<strong
>Renting out your time means you’re essentially replaceable</strong
>
</p>
<p>
And then finally you’re actually just not even creating that much original
for society. Like I said, this tweetstorm should have been called “How to
Create Wealth.” It’s just “How to Get Rich” was a more catchy title. But
you’re not creating new things for society. You’re just doing things over
and over.
</p>
<p>
And you’re essentially replaceable because you’re now doing a set role.
Most set roles can be taught. If they can be taught like in a school, then
eventually you’re gonna be competing with someone who’s got more recent
knowledge, who’s been taught, and is coming in to replace you.
</p>
<p>
You’re much more likely to be doing a job that can be eventually replaced
by a robot, or by an AI. And it doesn’t even have to be wholesale replaced
over night. It can be replaced a little bit at a time. And that kind of
eats into your wealth creation, and therefore your earning capability.
</p>
<p>
So, fundamentally your inputs are matched to your outputs. You are
replaceable, and you’re not being creative. I just don’t think that, that
is a way that you can truly make money.
</p>
<p><strong>You must own equity to gain your financial freedom</strong></p>
<p>
So everybody who really makes money at some point owns a piece of a
product, or a business, or some kind of IP. That can be through stock
options, so you can be working at a tech company. That’s a fine way to
start.
</p>
<p>
But usually the real wealth is created by starting your own companies, or
by even investors. They’re in an investment firm, and they’re buying
equity. These are much more the routes to wealth. It doesn’t come through
the hours.
</p>
<p>
<strong
>You want a career where your inputs don’t match your outputs</strong
>
</p>
<p>
You really just want a job, or a career, or a profession where your inputs
don’t match your outputs. If you look at modern society, again this is
later in the tweetstorm. Businesses that have high creativity and high
leverage tends to be ones where you could do an hour of work, and it can
have a huge effect. Or you can do 1,000 hours of work, and it can have no
effect.
</p>
<p>
For example, look at software engineering. One great engineer can for
example create bitcoin, and create billions of dollars worth of value. And
an engineer who is working on the wrong thing, or not quite as good, or
just not as creative, or thoughtful, or whatever, can work for an entire a
year, and every piece of code they ship ends up not getting used.
Customers don’t want it.
</p>
<p>
That is an example of a profession where the input and the outputs are
highly disconnected. It’s not based on the number of hours that you put
in.
</p>
<p>
Whereas on the extreme other end, if you’re a lumberjack, even the best
lumberjack in the world, assuming you’re not working with tools, so the
inputs and outputs are clearly connected. You’re just using an ax, or a
saw. You know, the best lumberjack in the world may be like 3x better than
one of the worst lumberjacks, right? It’s not gonna be a gigantic
difference.
</p>
<p>
So, you want to look for professions and careers where the inputs and
outputs are highly disconnected. This is another way of saying that you
want to look for things that are leveraged. And by leveraged I don’t mean
financial leveraged alone, like Wall Street uses, and that has a bad name.
I’m just talking about tools. We’re using tools.
</p>
<p>
A computer is a tool that software engineers use. If I’m a lumberjack with
bulldozers, and automatic robot axes, and saws, I’m gonna be using tools,
and have more leverage than someone who is just using his bare hands, and
trying to rip the trees out by the roots.
</p>
<p>
Tools and leverage are what create this disconnection between inputs and
outputs. Creativity, so the higher the creativity component of a
profession, the more likely it is to have disconnected inputs and outputs.
</p>
<p>
So, I think that if you’re looking at professions where your inputs and
your outputs are highly connected, it’s gonna be very, very, hard to
create wealth, and make wealth for yourself in that process.
</p>
</body>
</html>