Fresh Nuggets - The Most Crucial Skill to Get Rich [w/ Naval Ravikant, Jimmy MrBeast Donaldson, Chamath Palihapitiya]
Fresh Nuggets - The Most Crucial Skill to Get Rich [w/ Naval Ravikant, Jimmy MrBeast Donaldson, Chamath Palihapitiya]
Is there any particular skill that is more important than any other skill out there to build wealth?
Well, Naval Ravikant argues that the decisive and most important skill is Judgement: the ability to make the right decisions by having knowledge of the long-term consequences of your decisions. As he argues, judgement is just wisdom applied to external problems. Of course, Naval has also talked about other skills and foundations that are critical to build wealth: having Accountability, applying your Specific Knowledge and obtaining Leverage. Early in your career, the main focus should be to build the leverage machine (the audience in Media / the trust from people to give you Capital...), and as you go building Leverage your Judgement starts becoming increasingly important (because your decisions have a larger impact).
But the thing is that if you have the good judgement in the first place, it is just much easier to build the leverage (for instance, you have a huge knowledge about how YouTube works -- MrBeast argues he could go from 0 to 1 million subscribers in 3 months easily just because his knowledge about YouTube is so large), and also you understand clearly why you need to have accountability and specific knowledge in your work. So really all stems from having good judgement.
In this article, I picked some nuggets from Naval Ravikant, Jimmy MrBeast Donaldson and Chamath Palihapitiya around this skill and specially, on how to build this skill.
Below you will find all my notes, reflections and a careful selection of the best quotes that I took while studying all this content...
🧠 Top Quotes
"Leverage is a force multiplier for your judgment." - Naval Ravikant
"Judgment requires experience but can be built faster by learning foundational skills" - Naval Ravikant
"You do not want to win an argument. You want to win" - Nassim Taleb
"You have got to have models in your head and you have got to array you experience - both vicarious and direct - onto this latticework of mental models" - Charlie Munger
👨 People
Naval Ravikant
Naval is an entrepreneur and angel investor, a co-author of Venture Hacks, and a co-maintainer of AngelList. I have learnt so much from his deep wisdom about many wide-ranging topics, from meditation and inner freedom to web 3.0 and crypto. I'm grateful for his willingness to share his insights, and inspire me to become a wiser / happier person.
Jimmy (Mr Beast) Donaldson
Jimmy (Mr Beast) Donaldson runs several YouTube Channels, a delivery fast food restaurant (Mr Beast Burger) and two philantropic projects: Beast Philantropy and Team Trees. His brand is valued in the Billions of dollars.
Chamath Palihapitiya
Chamath Palihapitiya is the CEO of Social Capital (Venture Capital Fund). In 2007, he joined Facebook and led the User Growth Team. His net worth is estimated to be over 1 Billion dollar.
📝 Notes
Chapter 1: Naval Ravikant
Picking Nuggets note: In the last article we explained the forms of Leverage behind this current Generation's fortunes: Media (internet-based) and Code. If you want to check it out you can click on the link:
Fresh Nuggets - This is How all the New Fortunes are Made [Naval Ravikant, Mr Beast] | Revue — www.getrevue.co Fresh Nuggets -
Your first job is to obtain Leverage. You can obtain it through permission: Labor or Capital. Or you can build your own leverage by using Code or Media.
Once you obtain the Leverage...
"You wanna slow down a bit. Because your Judgement really matters."
"You have a lot more at risk, but you also have a lot more to gain"
If your Judgement is 10-20% better than the next person, the difference in the output is Massive (is not 10-20% more, but it can be orders of magnitude more depending on how much Leverage you have).
(Picking Nuggets note:
Without leverage, if you have a 10% better judgement, you might just get around a 10% better output.
The more Leverage you have, the more non-linear is the relationship between the quality of your judgement and the output/result you get. A subtle increase in the quality of your judgment results in a gigantic increase on the output.)
Critical Factors...
Demonstrated Judgement
Credibility around the Judgement.
High Accountability
(Picking Nuggets note: You reap the rewards but you also expose to the risks! Recommend to check out the book Skin in the Game, by Nassim Taleb. Naval Ravikant stated that it was the best book he read in 2018.)
Reputation of High Integrity
(Picking Nuggets note: High integrity builds Trust. Trust attracts other high-integrity people and will increase your deal flow / opportunities.)
"Few delights can equal the mere presence of one whom we trust utterly" - George MacDonald
Once you have proven Judgement, You Won't have to hustle to get Leverage anymore! You become a magnet of Leverage -- everyone will give you Capital because you have built a track record of good judgement.
Definition of Judgement
To know the long-term consequences of your decisions.
Judgement is just Wisdom applied to external problems.
How to build up Judgement
2 Potential Sources:
1) Intellect (theoretical basis)
It is better to get your knowledge from experience, as there is no "skin in the game" (accountability) when learning from pure theory.
2) (Real) Experience
Why it Matters?
It is the best source of learning for building judgement.
Reality is too complex to intellectualize it.
"To outperform Trial & Error intellectually, you need at least 1000 IQ points" - Nassim Taleb (conversation with Daniel Kahneman, year 2013.)
How to Build it Fast?
Solution: Iterate FAST.
In Chapter 3, we will see a Hack that MrBeast used to iterate super Fast.
The Mindset
Be Unemotional (you need to be objective to see reality as it is).
"A clear mind leads to better judgement, (which) leads to better outcome. So a calmed / peaceful person will make better decisions and have better outcomes. So if you wanna operate at peak performance, you have to learn how to tame your mind." - Naval Ravikant (on Joe Rogan's Podcast)
Tip: Read and Practice Stoicism!
Traits of the best investors:
Unemotional
(Picking Nuggets note: Renown author William Green describes in his book "Richer, Wiser, Happier" and many podcasts how almost all the top investors have an emotional stability that is very far from common.)
They also have a Broad-based knowledge
"To the man with a hammer, every problem looks like a nail" - Charlie Munger
"You have got to have models in your head and you have got to array you experience - both vicarious (indirect) and direct - onto this latticework of mental models" - Charlie Munger
Traits of the best entrepreneurs:
Unemotional (just like the best investors).
Passionate
They need the emotions of deep desire and obsession to actually do it (energy fuel).
This is why being an entrepreneur is so tough: You need to control your emotions in both directions. You need the drive and passion to make things happen. But you also need to see reality clearly without emotions getting in the way.
In the following chapters, we will see instances of the application of judgement and the building of the judgement.
Chapter 2: Jimmy (Mr Beast) Donaldson - Judgement on YouTube
How Good Judgement is critical on YouTube...
In YouTube you can (permissionlessly) build your Media Leverage. Thus, good judgement becomes a critical skill here (because you can potentially reach millions of people if they find value in your content).
MrBeast actually coached (just for fun) another YouTuber to grow his channel. After 8 months of having a few sessions, this YouTuber went from making 24k$/month to make 400k$/month from YouTube's ads revenue. See the tweet below...
What was the biggest factor for this huge change?
“It is much easier to get 5M views on 1 video, than 100K views on 50 videos. You could upload 1 great video a year and get more views than if you upload 100 mediocre videos. Because it is very exponential.” - MrBeast
If your video is 10% better (people click 10% more often and watch it 10% longer) your video is not promoted just 10% more by the algorithm but orders of magnitude more!
"So triple the amount of time that you are putting into that video. Because you are not gonna get triple views, you will get 10X views. Because YT is trying to serve people the best content possible, right? They don't wanna serve you 100 lane ones, they wanna serve you one good one. The Home Page is a curation of the best videos possible. So it is really just about making these videos really really good." - MrBeast
Chapter 3: Jimmy (Mr Beast) Donaldson - Hack to Build Judgement Fast
Do not just learn from your direct iterations / mistakes. You can significantly increase your knowledge base by studying from other people. If you are learning about YouTube with 5 other people, and everyone is sharing his mistakes, you are learning 5X faster compared to doing it alone.
Chapter 4: Chamath Palihapitiya - Building Judgement
"My firm belief is that life success really boils down to how do you control your mistakes. (And) the way you control your mistakes is by making a lot of mistakes." - Chamath Palihapitiya
Many iterations / mistakes --> Experience Knowledge --> Better Judgement (minimization of mistakes) --> Success
The issue:
Society diminishes your worth if you make mistakes. So we are biased to avoid mistakes (risk-aversion).
But...
"The really successful people realize that... it's the cycle time of mistakes that get you to success."
The more mistakes you make + Reflecting on them --> The more your error rate diminishes.
Similar to Ray Dalio's Formula for Success: Pain + Reflection = Progress
Facebook placard: "Move Fast and Break Things". Translated to Societal language --> "Make mistakes as quickly as you can".
"A mistake in the eyes of Society is equivalent to *learning* in the eyes of the highly successful."
Chapter 5: Chamath Palihapitiya - Applying Judgement
Parallels from Poker to Running a Business or Investing...
Chamath argues that whether you are playing poker, running a company or investing, there is a core idea in common:
The other person's mistakes (other poker players, industry competitors or other investors) minus your mistakes, is equal to the edge. And you win this edge when you make less mistakes than your competitors/rivals. And this edge translates into the captured economic value.
Link to my YouTube video:
💬 Reflections
👉 Caveats on Experience Knowledge and Judgement
One caveat that I would add is that this iterative process — of trying, making mistakes and learning from them — is not the way to go when the stakes are high and mistakes are consequential. When mistakes are consequential, is not time to do trial and error, is time to demonstrate good judgement (by minimizing mistakes).
"Trial and Error isn't really Trial and Error. Trial and Error is Trial with small Error." - Nassim Taleb
As Nassim argues, if you try something in which the downside potential is small, you put yourself in an Antifragile position: big upside with small downside potential.
Renowned investor Vinod Khosla mentions that the willingness to fail is what enables success, and failures don't matter IF they are manageable. So, in a high stakes scenario, he is not suggesting this attitude of being willing to fail. Also, Chamath Palihapitiya mentions that under high stakes circumstances, you must focus on avoiding mistakes.
To sum up and see this clearly, let's see the 2 extremes:
• Mistakes are not consequential in the output? Absolutely focus on trial and error. Is time to gain experience and build judgement.
• Stakes are high / mistakes are very consequential? Absolutely focus on not making mistakes. Is time to demonstrate your good judgement.
(Sidenote: I learned this framework of analyzing things in their extreme limits from Elon Musk in an interview with Lex Fridman)
👉 Expanding on the Mindset of being Unemotional
1) Stoicism
Following, I listed my top 3 quotes from Stoic philosophers...
“Do not seek for things to happen the way you want them to; rather, wish that what happens happen the way it happens: then you will be happy.” - Seneca
"A blazing fire makes flame and brightness out of everything that is thrown into it." - Marcus Aurelius
"Objective judgment, now, at this very moment.
Unselfish action, now, at this very moment.
Willing acceptance—now, at this very moment—of all external events.
That’s all you need.”
- Marcus Aurelius
2) Dropping the Ego
As we can see, dropping one’s ego is really important because even if we iterate many times, we still need to objectively reflect on each iteration if we wanna truly build that Experience Knowledge.
Also, I think that your ego will cause you to increase the cycle time of any iteration (the opposite of what we want) because it will refuse as much as possible that there is anything wrong about what you are doing, until of course you can't avoid it any longer and you are faced to admit that it was not the correct path.
Being right feels great in the immediate moment, but in the long-term you will be far from being exceptional at anything, because you would compound Experience Knowledge at just an average rate.
To compound Experience Knowledge at the highest rate, you can't give a damn about being right, the only thing that should matter to you is truth seeking (as fast as possible). You wouldn't care for instance if the good idea is yours or from someone else. Or even better, you should actually celebrate it because once you adopt the new better idea, now your perception of reality is closer to the actual reality.
Nassim Taleb brilliantly summarizes this in just one line:
"You do not want to win an argument. You want to win"
The Fresh Nuggets (Newsletter) is brought to you by Shortform
Shortform is THE platform to go if you wanna find highly valuable nuggets (big ideas) from important non-fiction books. Beyond offering book summaries, they provide you with a full guide and synthesis of all the worthy ideas in a book. Personally, I love it because I can absorb book ideas at a faster pace compared to reading the entire books, and there is a deep analysis on each idea! (it is not shallowly explained, as it is the case in other platforms).
(Many times book authors will make hundreds of pages based on just a few new ideas just for the sake of producing a book, but in reality they could have given you these new-interesting ideas in just few pages. This is the cool thing about Shortform: you cut to the chase and get the book insights without having to go thru unnecessary extensions of them. Besides, in any book guide on Shortform you can find links to blogposts related to the same ideas! -- as Naval Ravikant argues: reading books to completion is more of a vanity metric. What actually matters is to look for ideas, and once you find good interesting ideas, you reflect and research on them. [Naval on the podcast with Joe Rogan]. And it is the foundational understanding of all these truthful and interdisciplinary ideas that will make you better in any life dimension [Charlie Munger, Warren Buffet, Naval Ravikant]).
So you will likely find many interesting book guides on Shortform! My plan is to read these book guides and if in a particular one I find a super interesting-new idea to me, I will also buy the book and read it entirely!
If you wanna check out Shortform, you can use my special link to support the channel and you will have a 5-day FREE trial and a 20% off the annual subscription - shortform.com/pickingnuggets
The mark of a great (non-fiction) author...
🌈 Join the Community! (on Discord)
I recently created a Discord Server for Picking Nuggets. So that we can have a place to meet and where everyone who wants can share ideas, we can debate on many topics, share content and build a nice and fun community!
Click here to join the Community! — discord.com Check out the Picking Nuggets community on Discord - hang out with 55 other members and enjoy free voice and text chat.
👨💻Other content I have found pretty cool and valuable lately...
👇 I absolutely loved every minute of this Podcast. Daniel is a brilliant mind in the world of entrepreneurship and his personal stories are just perfect instances of Naval Ravikant's concepts.
How Anyone Can Develop The Mindset Of A Multi-Million Dollar Entrepreneur - Daniel Priestley — www.youtube.com Sponsored by Heights - go to https://www.yourheights.com and use the code Ali15 at checkout to get an extra 15% off your first quarterly subscription.Sponsor...
👇Another one from Ali. Chris Sparks is extremely insightful and he goes deep into implementing poker strategies in other life dimensions such as entrepreneurship, investing, self-improvement...
World Poker Champion On The Science Of Decision Making - Chris Sparks — www.youtube.com Go to https://shortform.com/deepdive to get 20% off the annual premium subscription.To give Shopify a try, go to https://shopify.com/aliabdaal.Chris Sparks i...
👇Other content I have found super valuable...
The Curiosity Chronicle | The Most Powerful Decision Making Razors — www.sahilbloom.com The Curiosity Chronicle has quickly become one of the most popular newsletters for growth-minded individuals in the world. Each week, subscribers receive a deep dive that covers topics ranging from growth and decision-making to business, finance, startups, and technology. In addition, subscribers receive The Friday Five, a weekly newsletter with five ideas curated to spark curiosity headed into the weekend.
Ryan Holiday on Twitter: "What can only I do? There has never been anyone like you…and there never will be again. You have been given a complete and total monopoly over the business of being you. Your main thing is to not give that up. To BE YOU. To do what only YOU can do." / Twitter Your description for this link...
Until next time,
Julio xx
PS: If you opened this article from the YouTube video, consider subscribing to receive them in future!