How to get wealthier, as a founder, by affecting transformation.
One of the surprising guest speakers at last week's Network State Conference 2024 was Naval Ravikant.
If you've been out of the loop, the Network State Conference went down in Singapore and allowed tech luminaries of all stripes — including indie hackers like Pieter Levels and life hackers like Bryan Johnson — to share their thoughts on how to use technology to build online communities and eventually, perhaps, private islands for a technocapitalist utopia.
The talk by Naval Ravikant was uniquely special because he's a well-known and often-quoted tech entrepreneur with a policy of limiting public appearances and podcast episodes.
I've watched the whole interview with Naval, and one thing that stood out to me was his definition of wealth, which he borrowed from David Deutsch:
“Wealth is the ability to affect transformation. It's the ability to transform from one thing to another.”
"Whoa, interesting," I thought. "How does this relate to us, as indie hackers, and how can we apply this principle to better understand and achieve wealth?"
First let's dig into a larger portion of Naval's explanation (edited for clarity):
“If I can turn electricity into cars, or if I can turn labor into oil, then that transformative ability is wealth. But now, if you look at what allows us to transform one thing into another, some of it is capital stock, as with machinery, but most of it is know-how.
The cavemen had access to all the same resources that we do. They just didn't know what to do with them. To them, uranium wasn't even a thing. Oil was just like a sticky substance that maybe you stumble across once in a while.
So the vast, vast majority of wealth is actually knowledge, right? So most people who are knowledgeable actually are incredibly wealthy. They just choose not to use it, or maybe they do choose to use it down the road.”
One thing to note about these examples of "transformations" is that they focus on physical transformations.
However, indie hackers should focus much more on how these transformations take place in the digital world.
Some examples:
User data transformed into (targeted) ads. People who invented the algorithm of programmatic buying/selling are probably pretty wealthy now.
Algorithms into financial insights. Think about profitable stock trading strategies, etc.
Photos into a visual social network (Instagram)
In other words, in the digital realm, transformation is all about data. And in the tech world, data isn't limited to transforming our interactions with other digital objects. It can also also cross over into the physical world to make transformations, e.g.:
Turning spare rooms into a global hospitality network (Airbnb)
Turning idle cars and idle drivers into a transportation network (Uber)
Which raises the main question:
By learning more things that affect your ability to transform things. And by "thing," I don't mean anything.
According to Naval, the more you know things that are "at the edge" of what people know and want, the more chances you have of getting wealthy:
“Now with the internet, knowledge is so readily accessible. Now, of course, the right kinds of knowledge, that I call 'specific knowledge' in my tweetstorm, is very important: Knowledge on the edge of what humanity knows and wants.
And if you work hard enough at it, if you're obsessed with it, you figure it out. That kind of knowledge can be monetized much more than certain knowledge which is now common.
For example, if ChatGPT can spit it back to you, you're not going to monetize it. Everybody else can get access to it too.”
In other words, don't expect to make much money from problems that AI can now solve.
What problems are those, according to Naval?
“Filling out forms, writing reports, essays, emails for things that are obvious. Busy work. The promise of natural language computing and artificial intelligence is to take that over from us. And to leave us for true creativity, which is solving problems that we don't yet know how to solve.
That is where all the value is.”
One thing that this framework fails to mention, in my opinion, is that many successful products affect an already existing transformation. They just do it faster.
For example, I've seen a bunch of products on IH where AI applies for jobs with a tailored resume for each job description.
The promise here is that you could get a job, just faster.
Another example is a set of steps that take 30 minutes to complete. Using software, you could compress the task into 5 minutes.
This type of software is unlikely to make you extremely wealthy, but it will likely get you started on the path to wealth.
Here's one more gem from the talk.
Naval is most famous for a viral thread he posted to X called "How to get rich (without getting lucky)":
But he's far from a one-hit wonder. Almost everything he posts to social media is a banger, which explains why he has 2.4 million followers and averages well over 1,000 likes per post.
Lucky for us, he spent some of his time at the Network State Conference sharing his social media copywriting approach:
“I've actually put up threads on how to tweet well. Everybody ignores them, but there's just a few simple rules, and you know them well:
You want to speak honestly, you want to say it well, you want to say something that's novel, you want to write for yourself and not for other people, you want to make each tweet stand alone, you want to shave off every extra word, you want to use common words (but not so common that they have no meaning), and you want to be opinionated. You want to a point of view but always tell the truth.”
So there you have it. When you affect your transformations, I expect to read about them on X!
This is a brilliant anecdote! Thank you for sharing.
Nice, saw his video on Ranveer's show. I like his approach to giving answers. Looks very casual and simple but yet so clear and powerful.
Very insightful stuff
I read his book and blog, I learned a lot, and now I'm leveraging to create wealth
Good, reading it its powefull
Thanks for sharing!
Reading Almanack of Naval for the second time at the moment
thanks for sharing!
this seems like a follow up to his almanac book
Thanks for sharing! Naval is definitely someone who changed my views on something
It was good but I couldn't count how many times he took Elon's name.