# Building wealth

# Understand how wealth is [not] created

If you secretly despise wealth, it will elude you. ²¹⁶

Seek wealth, not money or status.

# Understand what wealth is

Wealth is having assets that earn while you sleep. ²¹³

# Play long-term games with long-term people

# Perspective

Pick an industry where you can play long-term games with long-term people. 222 Play iterated games. All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest. ²²⁵

When you find the right thing to do, when you find the right people to work with, invest deeply. Sticking with it for decades is really how you make the big returns in your relationships and in your money. ³⁹⁰

# Reputation

Compound interest also happens in your reputation. If you have a sterling reputation and you keep building it for decades upon decades, people will notice. Your reputation will literally end up being thousands or tens of thousands of times more valuable than somebody else who was very talented but is not keeping the compound interest in reputation going. ³⁷⁹

# People

For someone who is early in their career (and maybe even later), the single most important thing about a company is the alumni network you’re going to build. Think about who you will work with and what those people are going on to do. ⁷⁷⁰

If you can’t see yourself working with someone for life, don’t work with them for a day. ¹⁴²⁰

If you’ve worked with somebody for five or ten years and you still enjoy working with them, obviously you trust them, and the little foibles are gone. ³⁸²

# Choices

You should be very thoughtful and realize in most things (relationships, work, even in learning) what you’re trying to do is find the thing you can go all-in on. ⁴⁰²

When you find the 1 percent of your discipline which will not be wasted, which you’ll be able to invest in for the rest of your life and has meaning to you—go all-in and forget about the rest. ⁴⁰⁷

# Take on accountability

Embrace accountability and take business risks under your own name. Society will reward you with responsibility, equity, and leverage. ⁴¹⁰

Optimize for independence rather than pay. If you have independence and you’re accountable [for] your output—as opposed to your input—that’s the dream. ⁵¹⁴

If you do something incredible to move the needle on the business, they have to pay you. Especially if they don’t know how you did it because it’s innate to your obsession or your skill or your innate abilities, they’re going to have to keep paying you to do it. ⁵²⁷

# Find a position of leverage

# Input vs output

You’re not going to get rich renting out your time. ²¹⁸

If you don’t own a piece of a business, you don’t have a path towards financial freedom. ⁴³⁴

Without ownership, your inputs are very closely tied to your outputs. ⁴⁴⁰

# Operating leverage

Fortunes require leverage. Business leverage comes from capital, people, and products with no marginal cost of replication (code and media). ²⁴³

Code and media are permissionless leverage. They’re the leverage behind the newly rich. You can create software and media that works for you while you sleep. ²⁵¹

If you can’t code, write books and blogs, record videos and podcasts. ²⁵⁴

# People

The first rule of handling conflict is: Don’t hang around people who constantly engage in conflict. I’m not interested in anything unsustainable or even hard to sustain, including difficult relationships. ¹⁴¹⁸

Managing other people is incredibly messy. It requires tremendous leadership skills. You’re one short hop from a mutiny or getting eaten or torn apart by the mob. ⁴⁸⁶

# Capital

If you get good at managing capital, you can manage more and more capital much more easily than you can manage more and more people. ⁴⁹²

# Product

The final form of leverage is brand new—the most democratic form. It is: “products with no marginal cost of replication.” This includes books, media, movies, and code. Code is probably the most powerful form of permissionless leverage. ⁴⁹⁴

Now, you can multiply your efforts without involving other humans and without needing money from other humans. ⁵⁰⁰

# No permission required

The most interesting thing about new forms of leverage is they are permissionless. They don’t require somebody else’s permission for you to use them or succeed. All you need is a computer. ⁴⁹⁴

[In contrast,] for labor leverage, somebody has to decide to follow you. For capital leverage, somebody has to give you money to invest or to turn into a product. ⁵⁰⁸

# Get paid for your judgment

Forty-hour work weeks are a relic of the Industrial Age. Knowledge workers function like athletes—train and [perform], then rest and reassess. ⁵³⁵

The best jobs are neither decreed nor degreed. They are creative expressions of continuous learners in free markets. ³⁵⁷

Earn with your mind, not your time. 555 We can be masters of our own time because we are just being tracked on outputs and not inputs. ⁶⁰²

Judgment—especially demonstrated judgment, with high accountability and a clear track record—is critical. ⁶¹⁰ Warren Buffett spends a year deciding and a day acting. That act lasts decades. ⁶¹¹

Those who work much do not work hard.

―Henry David Thoreau

# Prioritize and focus

There are basically three really big decisions you make in your early life: where you live, who you’re with, and what you do. ⁶⁷⁶ If you’re going to live in a city for ten years, if you’re going to be in a job for five years, if you’re in a relationship for a decade, you should be spending one to two years deciding these things. These are highly dominating decisions. ⁶⁸¹

Pick one big desire in your life at any given time to give yourself purpose and motivation. ¹⁴⁶⁶ You have to say no to everything and free up your time so you can solve the important problems. ⁶⁸³

Figure out what you’re good at, and start helping other people with it. Give it away. Pay it forward. Karma works because people are consistent. On a long enough timescale, you will attract what you project. But don’t measure—your patience will run out if you count. ⁶⁸⁶

# What it means to retire

# ...in your head

Retirement is when you stop sacrificing today for an imaginary tomorrow. When today is complete, in and of itself, you’re retired. ⁷¹⁶

# ...in your hand

Once you can solve your money problems, either by lowering your lifestyle or by making enough money, you want to retire. ⁷¹³

One way is to have so much money saved that your passive income (without you lifting a finger) covers your burn rate. ⁷¹⁸ A second is you just drive your burn rate down to zero—you become a monk. ⁷¹⁹

The best way to stay away from a constant love of money is to not upgrade your lifestyle as you make money. If you can hold your lifestyle fixed and make your money in giant lump sums as opposed to a trickle at a time, you won’t have time to upgrade your lifestyle. You may get so far ahead you actually become financially free. ⁷⁵⁰

# How to get lucky

# Use probability to your advantage

In 1,000 parallel universes, I want to be wealthy in 999 of them. I don’t want to be wealthy in the fifty of them where I got lucky. ⁷⁷³ I may not nail life in every regard, but I set up systems so I've failed in very few places. ¹⁷⁹⁴

It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.

―Charlie Munger

Nature speaks in mathematics. Mathematics is reverse engineering the language of nature, and we have only scratched the surface. The good news is you don’t have to know a lot of math. You just have to know basic statistics, arithmetic, etc. You should know statistics and probability forwards and backwards and inside out. ¹⁸³⁸

Without numerical fluency, you are like a one-legged man in an ass-kicking contest.

―Charlie Munger

Nature follows unbroken mathematical laws and a chain of cause and effect from the Big Bang to now. Everything is perfect exactly the way it is. ¹²¹⁹

# Blind Luck

The first kind of luck is blind luck where one just gets lucky because something completely out of their control happened. ⁷⁷⁷

# Hustle Luck

Second, there’s luck through persistence, hard work, hustle, and motion. ⁷⁷⁸

Be a maker who makes something interesting people want. Show your craft, practice your craft, and the right people will eventually find you. ⁸¹¹

# Recognition Luck

A third way is you become very good at spotting luck. If you are very skilled in a field, you will notice when a lucky break happens, and other people who aren’t attuned to it won’t notice. ⁷⁸¹

# Reputation Luck

The last kind of luck is the weirdest, hardest kind, where you build a unique character, a unique brand, a unique mindset, which causes luck to find you. 783 Build your character in a certain way, then your character becomes your destiny. ⁷⁹⁵

If you are a trusted, reliable, high-integrity, long-term-thinking dealmaker, when other people want to do deals but don’t know how to do them in a trustworthy manner with strangers, they will literally approach you and give you a cut of the deal just because of the integrity and reputation you’ve built up. ⁷⁹⁸