Here is part three of the Naval’s expanded points from his viral tweetstorm, “How To Get Rich Without Getting Lucky” (Read summarised article here).

Learn to sell. Learn to build. If you can do both, you will be unstoppable.

Learn to sell, learn to build

This is a very broad category. It’s two broad categories. One is building the product. Which is hard, and it’s multivariate. It can include design, it can include development, it can include manufacturing, logistics, procurement, it can even be designing and operating a service. It has many, many definitions.

But in every industry, there is a definition of the builder. In our tech industry it’s the CTO, it’s the programmer, it’s the software engineer, hardware engineer. But even in the laundry business, it could be the person who’s building the laundry service, who is making the trains run on time, who’s making sure all the clothes end up in the right place at the right time, and so on.

The other side of it is sales. Again, selling has a very broad definition. Selling doesn’t necessarily just mean selling individual customers, but it can mean marketing, it can mean communicating, it can mean recruiting, it can mean raising money, it can mean inspiring people, it could mean doing PR. It’s a broad umbrella category.

The Silicon Valley model is a builder and seller

So, generally, the Silicon Valley startup model tends to work best. It’s not the only way, but it is probably the most common way, when you have two founders, one of whom is world class at selling, and one of whom is world class at building.

Examples are, of course, Steve Jobs and Steve Wozniak with Apple, Gates and Allen probably had similar responsibilities early on with Microsoft, Larry and Sergey probably broke down along those lines, although it’s a little different there because that was a very technical product delivered to end users through a simple interface.

But generally, you will see this pattern repeated over and over. There’s a builder and there’s a seller. There’s a CEO and CTO combo. And venture and technology investors are almost trained to look for this combo whenever possible. It’s the magic combination.

If you can do both you will be unstoppable

The ultimate is when one individual can do both. That’s when you get true superpowers. That’s when you get people who can create entire industries.

The living example is Elon Musk. He may not necessarily be building the rockets himself, but he understands enough that he actually makes technical contributions. He understands the technology well enough that no one’s going to snow him on it, and he’s not running around making claims that he doesn’t think he can’t eventually deliver. He may be optimistic on the timelines but he thinks this is within reasonableness for delivery.

Even Steve Jobs developed enough product skills and was involved enough in the product that he also operated in both of these domains. Larry Ellison started as a programmer and I think wrote the first version of Oracle, or was actually heavily involved in it.

Marc Andreessen was also in this domain. He may not have had enough confidence in his sales skills, but he was the programmer who wrote Netscape Navigator, or a big chunk of it. So, I think the real giants in any field are the people who can both build and sell.

I’d rather teach an engineer marketing than a marketer engineering

And usually the building is a thing that a sales person can’t pick up later in life. It requires too much focused time. But a builder can pick up selling a little bit later, especially if they were already innately wired to be a good communicator. Bill Gates famously paraphrases this as, “I’d rather teach an engineer marketing, than a marketer engineering.”

I think if you start out with a building mentality and you have building skills and it’s still early enough in your life, or you have enough focused time that you think you can learn selling, and you have some natural characteristics or you’re a good salesperson, then you can double down on those.

Now, your sales skills could be in a different than traditional domain. For example, let’s say you’re a really good engineer and then people are saying, well, now you need to be good at sales, well, you may not be good at hand-to-hand sales, but you may be a really good writer.

And writing is a skill that can be learned much more easily than, say, in-person selling, and so you may just cultivate writing skills until you become a good online communicator and then use that for your sales.

On the other hand, it could just be that you’re a good builder and you’re bad at writing and you don’t like communicating to mass audiences but you’re good one-on-one, so then you might use your sales skills for recruiting or for fundraising, which are more one-on-one kinds of endeavors.

This is pointing out that if you’re at the intersection of these two, don’t despair because you’re not going to be the best technologist and you’re not going to be the best salesperson, but in a weird way, that combination, back to the Scott Adams skill stack, that combination of two skills is unstoppable.

Long term, people who understand the underlying product and how to build it and can sell it, these are catnip to investors, these people can break down walls if they have enough energy, and they can get almost anything done.

Could one pick one to be good at?

When you’re trying to stand out from the noise building is actually better because there’re so many hustlers and sales people who have nothing to back them up. When you’re starting out, when you’re trying to be recognized, building is better.

But much later down the line building gets exhausting because it is a focus job and it’s hard to stay current because there’s always new people, new products coming up who have newer tools, and frankly more time because it’s very intense, it’s a very focused task.

So, sales skills actually scale better over time. Like for example, if you have a reputation for building a great product, that’s good, but when you ship your new product, I’m going to validate it based on the product. But if you have a reputation for being a good person to do business with and you’re persuasive and communicative then that reputation almost becomes self-fulfilling.

So, I think if you only had to pick up one, you can start with building and then transition to selling. This is a cop-out answer, but I think that is actually the right answer.

Summary:

• Learn to sell, learn to build. If you can do both, you will be unstoppable.
• Selling is anything from one-on-one sales to marketing, recruiting, fundraising, PR, and more.
• Building is anything from engineering to design, manufacturing, logistics, procurement, operations, and more.
• When one person can both sell and build, they can create entire industries. Examples include Marc Andreessen, Steve Jobs, and Elon Musk.
• It’s easier to be a builder who learns sales, than a seller who learns building.
• Being a builder helps you stand out when you’re starting out, but it can be exhausting to stay current. Sales skills scale better over time and can be self-fulfilling.

Arm yourself with specific knowledge, accountability, and leverage.

If you want to make money you have to get paid at scale. And why you, that’s accountability, at scale, that’s leverage, and just you getting paid as opposed to somebody else getting paid, that’s specific knowledge.

So, specific knowledge is probably the hardest thing to get across in this whole tweetstorm, and it’s probably the thing that people get the most confused about.

The thing is that we have this idea that everything can be taught, everything can be taught in school. And it’s not true that everything can be taught. In fact, the most interesting things cannot be taught.

But everything can be learned. And very often that learning either comes from some innate characteristics in your DNA, or it could be through your childhood where you learn soft skills which are very, very hard to teach later on in life, or it’s something that is brand new so nobody else knows how to do it either, or it’s true on the job training because you’re pattern matching into highly complex environments, basically building judgment in a specific domain.

Classic example is investing, but it could be in anything. It could be in judgment in running a fleet of trucks, it could be judgment in weather forecasting.

So, specific knowledge is the knowledge that you care about. Especially if you’re later in life, let’s say your post 20, 21, 22, you almost don’t get to choose which specific knowledge you have. Rather, you get to look at what you have already built by that point in time, and then you can build on top of it.

Specific knowledge can’t be trained

The first thing to notice about specific knowledge is that you can’t be trained for it. If you can be trained for it, if you can go to a class and learn specific knowledge, then somebody else can be trained for it too, and then we can mass-produce and mass-train people. Heck, we can even program computers to do it and eventually we can program robots to walk around doing it.

So, if that’s the case, then you’re extremely replaceable and all we have to pay you is the minimum wage that we have to pay you to get you to do it when there are lots of other takers who can be trained to do it. So really, your returns just devolve into your cost of training plus the return on investment on that training.

So, you really want to pick up specific knowledge, you need your schooling, you need your training to be able to capitalize on the best specific knowledge, but the part of it that you’re going to get paid for is the specific knowledge.

Specific knowledge is found by pursuing your curiosity

For example, someone who goes and gets a degree in psychology and then becomes a salesperson. Well if they were already a formidable salesperson, a high grade salesmanship to begin with, then the psychology degree is leverage, it arms them and they do much better at sales.

But if they were always an introvert never very good at sales and they’re trying to use psychology to learn sales, they’re just not going to get that great at it.

So, specific knowledge is found much more by pursuing your innate talents, your genuine curiosity, and your passion. It’s not by going to school for whatever it is the hottest job, it’s not for going into whatever field investors say is the hottest.

Very often specific knowledge is at the edge of knowledge. It’s also stuff that’s just being figured out or is really hard to figure out.

So, if you’re not 100% into it somebody else who is 100% into it will outperform you. And they won’t just outperform you by a little bit, they’ll outperform you by a lot because now we’re operating the domain of ideas, compound interest really applies and leverage really applies.

So, if you’re operating with 1,000 times leverage and somebody is right 80% of the time, and somebody else is right 90% of time, the person who’s right 90% of the time will literally get paid hundreds of times more by the market because of the leverage and because of the compounding factors and being correct. So, you really want to make sure you’re good at it so that genuine curiosity is very important.

Building specific knowledge will feel like play to you

So, very often, it’s not something you sit down and then you reason about, it’s more found by observation. You almost have to look back on your own life and see what you’re actually good at.

For example, I wanted to be a scientist and that is where a lot of my moral hierarchy comes from. I view scientists sort of at the top of the production chain for humanity. And the group of scientists who have made real breakthroughs and contributions that probably added more to human society, I think, than any single other class of human beings.

Not to take away anything from art or politics or engineering or business, but without the science we’d still be scrambling in the dirt fighting with sticks and trying to start fires.

My whole value system was built around scientists and I wanted to be a great scientist. But when I actually look back at what I was uniquely good at and what I ended up spending my time doing, it was more around making money, tinkering with technology, and selling people on things. Explaining things, talking to people.

So, I have some sales skills, which is a form specific knowledge that I have. I have some analytical skills around how to make money. And I have this ability to absorb data, obsess about it, and break it down and that is a specific skill that I have. I also just love tinkering with technology. And all of this stuff feels like play to me, but it looks like work to others.

So, there are other people to whom these things would be hard and they say like, “Well, how do I get good at being pithy and selling ideas?” Well, if you’re not already good at it or if you’re not really into it, maybe it’s not your thing, focus on the thing that you are really into.

This is ironic, but the first person to actually point out my real specific knowledge was my mother. She did it as an aside, talking from the kitchen and she said it when I was like 15 or 16 years old. I was telling a friend of mine that I want to be an astrophysicist and she said, “No, you’re going to go into business.”

I was like, “What, my mom’s telling me I’m going to be in business. I’m going to be an astrophysicist. Mom doesn’t know she’s talking about.” But mom knew exactly what she was talking about.

She’d already observed that every time we walk down the street, I would critique the local pizza parlor on why they were selling their slices a certain way with certain toppings and why their process of ordering was this way when it should have been that way.

So, she knew that I had more of a business curious mind, but then my obsession with science combined to create technology and technology businesses where I found myself.

So, very often, your specific knowledge is observed and often observed by other people who know you well and revealed in situations rather than something that you come up with.

Summary:

• Arm yourself with specific knowledge. The classic example of specific knowledge is investing. But it could be anything from judgment in running a fleet of trucks to weather forecasting. Very often it is at the edge of knowledge.
• Specific knowledge may come from your DNA. It may be soft skills learned in childhood. It may be something so new that nobody but you knows how to do it. It may be true on-the-job training where you’re pattern matching in highly complex environments.
• Specific knowledge can’t be trained. Otherwise it will be mass-produced and you will be paid the minimum possible wage to do it. *Specific knowledge can be learned by pursuing your genuine curiosity, talents and passion. Building specific knowledge will feel like play to you.
• Genuine curiosity is very important. Leverage and compound interest mean someone who is just slightly better than you will get paid 10x-1000x more than you. So you must be the best.

Specific knowledge is knowledge that you cannot be trained for.

If society can train you, it can train someone else, and replace you.

Specific knowledge can be taught through apprenticeships

To the extent that specific knowledge is taught, it’s on the job. It’s through apprenticeships. And that’s why the best businesses, the best careers are the apprenticeship or self-taught careers, because those are things society still has not figured out how to train and automate yet.

The classic line here is that Warren Buffett went to Benjamin Graham when he got out of school. Benjamin Graham was the author of the Intelligent Investor and sort of modernized or created value investing as a discipline. And Warren Buffett went to Benjamin Graham and offered to work for him for free.

And Graham said, “Actually, you’re overpriced, free is overpriced.” And Graham was absolutely right. When it comes to a very valuable apprenticeship like the type that Graham was going to give Buffet, Buffet should have been paying him a lot of money. That right there tells you that those are skills worth having.

Specific knowledge is often highly creative or technical

Specific knowledge also tends to be technical and creative. It’s on the bleeding edge of technology, on the bleeding edge of art, on the bleeding edge of communication.

Even today, for example, there are probably meme lords out there on the Internet who can create incredible memes that will spread the idea to millions of people. Or are very persuasive—Scott Adams is a good example of this. He is essentially becoming one of the most credible people in the world by making accurate predictions through persuasive arguments and videos.

And that is specific knowledge that he has built up over the years because he got obsessed with hypnosis when he was young, he learned how to communicate through cartooning, he embraced Periscope early, so he’s been practicing lots of conversation, he’s read all the books on the topic, he’s employed in his everyday life. If you look at his girlfriend, she’s this beautiful young Instagram model.

That is an example of someone who has built up a specific knowledge over the course of his career. It’s highly creative, it has elements of being technical in it, and it’s something that is never going to be automated.

No one’s going to take that away from him, because he’s also accountable under one brand as Scott Adams, and he’s operating with the leverage of media with Periscope and drawing Dilbert cartoons and writing books. He has massive leverage on top of that brand and he can build wealth out of it if he wanted to build additional wealth beyond what he already has.

Specific knowledge is specific to the individual and situation

You know, I came up with this framework when I was really young. We’re talking decades and decades. It’s now probably over 30 years old. So, at the time specific knowledge stuck with me so that is how I think about it.

The reason I didn’t try and change it is because every other term that I found for it was overloaded in a different way. At least specific knowledge isn’t that used. I can kind of rebrand it.

The problem with unique knowledge is, yeah, maybe it’s unique but if I learn it from somebody else it’s no longer unique, then we both know it. So, it’s not so much that it is unique, it’s that it is highly specific to the situation, it’s specific to the individual, it’s specific to the problem, and it can only be built as part of a larger obsession, interest, and time spent in that domain.

It can’t just be read straight out of a single book, nor can it be taught in a single course, nor can it be programmed into a single algorithm.

You can’t be too deliberate about assembling specific knowledge

I actually think the best way is just to follow your own obsession. And somewhere in the back of your mind, you can realize that, actually, this obsession I like and I’ll keep an eye out for the commercial aspects of it.

But I think if you go around trying to build it a little too deliberately, if you become too goal-oriented on the money, then you won’t pick the right thing. You won’t actually pick the thing that you love to do, so you won’t go deep enough into it.

Scott Adams’ observation is a good one, predicated on statistics. Let’s say there’s 10,000 areas that are valuable to the human race today in terms of knowledge to have, and the number one in those 10,000 slots is taken.

Someone else is likely to be the number one in each of those 10,000, unless you happen to be one of the 10,000 most obsessed people in the world that at a given thing.

But when you start combining, well, number 3,728 with top-notch sales skills and really good writing skills and someone who understands accounting and finance really well, when the need for that intersection arrives, you’ve expanded enough from 10,000 through combinatorics to millions or tens of millions. So, it just becomes much less competitive.

Also, there’s diminishing returns. So, it’s much easier to be top 5 percentile at three or four things than it is to be literally the number one at something.

Build specific knowledge where you are a natural

I think it’s a very pragmatic approach. But I think it’s important that one not start assembling things too deliberately because you do want to pick things where you are a natural. Everyone is a natural at something.

We’re all familiar with that phrase, a natural. “Oh, this person is a natural at meeting men or women, this person is a natural socialite, this person is a natural programmer, this person is a natural reader.” So, whatever you are a natural at, you want to double down on that.

And then there are probably multiple things you’re natural at because personalities and humans are very complex. So, we want to be able to take the things that you are natural at and combine them so that you automatically, just through sheer interest and enjoyment, end up top 25% or top 10% or top 5% at a number of things.

Summary:

• Specific knowledge can be taught through apprenticeships or self-taught.
• It’s the highest paying knowledge because it involves things that society has not yet figured out how to broadly teach or automate.
• Specific knowledge tends to be creative or technical. It’s on the bleeding edge of technology, art and communication.
• Specific knowledge is highly specific to the individual, obsession, situation, and problem.
• You can’t be too deliberate about assembling specific knowledge. The best way is to follow your obsession, so you go deep enough into it to be the best.
• Build specific knowledge where you are a natural. Everyone is a natural at something.

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

Accountability is how you’re going to get equity

Accountability is important because that’s how you’re going to get leverage. That’s how you’re going to get credibility. It’s also how you’re going to get equity. You’re going to get a piece of the business.

When you’re negotiating with other people, ultimately if someone else is making a decision about how to compensate you, that decision will be based on how replaceable you are. If you have high accountability, that makes you less replaceable. Then they have to give you equity, which is a piece of the upside.

Taking accountability is like taking equity in all your work

Equity itself is a good example because equity is also a risk-based instrument. Equity means you get paid everything after all the people who need guaranteed money are paid back.

If you look at the hierarchy of capital in a company, the employees get paid first. They get paid the salary first. In legal [bankruptcy] proceedings, the salaries are sacrosanct. If you’re a board member and the company spends too much money and has back salaries to pay, the government can go after you personally to pay back the salaries. The employees get the most security, but in exchange for that security, they don’t have as much upside.

Next in line would be the debt holders who are maybe the bankers who lend money to the company for operations and they need to make their fixed coupon every month or every year, but they don’t get much more upside beyond that. They might be making 5, 10, 15, 20, 25% a year, but that’s what their upside is limited to.

Finally there are the equity holders. These people are actually going to get most of the upside. Once the debt holders are paid off and the salaries are paid off, whatever remains goes to them.

But if there isn’t enough money to pay off the salaries and the debt holders, or if there’s just barely enough to pay off the salary and the debt holders, which is what happens with most businesses, most of the times, the equity holders get nothing.

The equity holders take on greater risk, but in exchange, they get nearly unlimited upside. You can do the same with all of your work. Essentially, taking accountability for your actions is the same as taking an equity position in all of your work. You’re taking greater downside risk for greater upside.

Realize that in modern society, the downside risk is not that large. Even personal bankruptcy can wipe the debts clean in good ecosystems. I’m most familiar with Silicon Valley, but generally people will forgive failures as long as you were honest and made a high integrity effort.

There’s not really that much to fear in terms of failure, and so people should be taking on a lot more accountability than they actually are.

I think accountability could actually be fragile. An example of accountability is you’re an airplane pilot. As a captain, you’re taking on accountability for the entire plane.

Let’s say that something goes wrong with the aircraft. You can’t later blame it on anyone else. You can’t blame it on the steward or the stewardess. You can’t blame it on the copilot. You’re the captain. You’re responsible for the ship. If you screw up, you crash the ship, and there are immediate consequences.

In the old days, the captain was expected to go down with the ship. If the ship was sinking, then literally the last person who got to get off was the captain. I think accountability does come with real risks, but we’re talking about a business context.

The risk here would be that you would probably be the last one to get your capital back out. You’d be the last one to get paid for your time. The time that you’ve put in, the capital that you’ve put into the company, these are what are at risk.

Even if a business fails and your name’s on it, that’s not as bad as if it turns out to be an integrity issue. Bernie Madoff, for example, Madoff investments, that name is never going to be good again in the investment community. You could be Bernie Madoff’s great-great-great-grandson. You are not going to go into the investment business because he ruined the family name.

I think these days the accountability risk with a name happens more around integrity, rather than it does around purely economic failure.

Accountability is reputational skin in the game

Taleb’s Skin In The Game is required reading. If you want to get anywhere in modern life and understand how modern systems work, then Skin In The Game would be near the top of my list to read.

Accountability, skin in the game, these concepts go very closely hand in hand. I think of accountability as reputational skin in the game. It’s putting your personal reputation on the line as skin in the game.

Accountability is a simple concept. The only part of accountability that may be a little counterintuitive is that we’re currently socially brainwashed to not take on accountability, not in a visible way.

I think there are ways to take on accountability where every member of a team can take on accountability for their portion. That is how you get a well-functioning team while still putting credits and losses in the correct columns.

Summary:

• Taking on accountability is how you get a piece of the business. If you have high accountability, that makes you less replaceable so they have to give you a piece of the upside.
• Taking accountability for your actions is the same as taking an equity position in all of your work. You’re taking greater downside risk for greater upside.
• In modern business, the downside of accountability is not that large. Even personal bankruptcy can wipe your debts in good ecosystems. People will forgive failures, as long as you were honest and made a high integrity effort.
• Accountability is reputational skin in the game; it’s putting your personal reputation on the line, as skin in the game.
• We’re currently socially brainwashed to not take on accountability in a visible way.

The most accountable people have singular, public, and risky brands: Oprah, Trump, Kanye, Elon.

You have to have accountability to get leverage

So to get rich, you’re going to need leverage. Leverage comes in labor, comes in capital, or it can come through code or media. But most of these, like labor and capital, people have to give to you. For labor, somebody has to follow you. For capital, somebody has to give you money or assets to manage or machines.

So to get these things, you have to build up credibility and you have to do those under your own name as much as possible, which is risky. So accountability is a double-edged thing. It allows you to take credit when things go well and to bear the brunt of the failure when things go badly.

Take business risks under your own name

So in that sense, people who are stamping their names on things aren’t foolish. They’re just confident. Maybe it turns out to be foolish in the end, but if you look at a Kanye or an Oprah or a Trump or an Elon or anyone like that, these people can get rich just off their name because their name is such powerful branding.

Regardless of what you think of Trump, you have to realize that the guy was among the best in the world at just branding his name. Why would you go to Trump Casino? Used to be because Trump. Why would you go to a Trump tower? Because of Trump.

When it came time to vote, I think that a lot of voters just went in and said, “Trump.” They recognize the name, so the name recognition paid off.

Same thing with Oprah. She puts her brand on something, her name on something and it flies off the shelves, and it’s like an instant validator.

These people also take risks for putting their name out there. Obviously Trump is now probably hated by half or more than half of the country and by a big chunk of the world as he sticks his name out there.

By putting your name out there, you become a celebrity, and fame has many, many downsides. It’s better to be anonymous and rich than to be poor and famous, but even famous and rich has a lot of downsides associated with it. You’re always in the public eye.

A well-functioning team has clear accountability for each position

Accountability is quite important, and when you’re working to build a product or you’re working in a team or you’re working in a business, we constantly have drummed into our heads how important it is to be part of a team. Absolutely agree with that.

A lot of our training socially is telling us to not stick our necks out of the crowd. There’s a saying that I hear from our Australian friends that the tall poppy gets cut. Don’t stick your neck out, but I would say that actually a really, really well-functioning team is small and has clear accountability for each of the different portions.

You can say, “Okay, this person’s responsible for building the product. This person’s responsible for the messaging. This person’s responsible for raising money. This person’s responsible for the pricing strategy and maybe the online advertising.” So if somebody screws up, you know exactly who’s responsible. While at the same time if something goes really well, you also know exactly who’s responsible.

If you have a small team and you have clearly delineated responsibilities, then you can still keep a very high level of accountability. Accountability is really important because when something succeeds or fails, if it fails, everybody points fingers at each other, and if it succeeds, everybody steps forward to take credit.

We’ve all had that experience when we were in school and we got a group assignment to do. There were probably a few people in there who did a lot of the work. Then there are a few people who just did a lot of grandstanding or positioning to do the work. We’re all familiar with this from a childhood sense, but it’s sort of uncomfortable to talk about.

People who can fail in public have a lot of power

Clear accountability is important. Without accountability, you don’t have incentives. Without accountability, you can’t build credibility. But you take risk. You take risk of failure. You take risk of humiliation. You take risk of failure under your own name.

Luckily in modern society, there’s no more debtors’ prison and people don’t go to jail or get executed for losing other people’s money, but we’re still socially hard wired to not fail in public under our own names. The people who have the ability to fail in public under their own names actually gain a lot of power .

For example, I’ll give a personal anecdote. Up until about 2013, 2014, my public persona was an entirely around startups and investing. Only around 2014, 2015 did I start talking about philosophy and psychological things and broader things.

It made me a little nervous because I was doing it under my own name. There were definitely people in the industry who sent me messages through the back channel like, “What are you doing? You’re ending your career. This is stupid.”

I kind of just went with it. I took a risk. Same with crypto. Early on, I took a risk.

But when you put your name out there, you take a risk with certain things. You also get to reap the rewards. You get the benefits.

Summary:

• Embrace accountability and take business risks under your own name. Society will reward you with responsibility, equity, and leverage.
• Accountability lets you to take credit when things go well, but you will also bear the brunt of failure when things go badly.
• Take business risks under your own name. Kanye, Oprah, Trump and Elon have such high accountability that they could get rich just by stamping their name on products.
• A well-functioning team has clear accountability for each position. If you have a small team with clearly delineated responsibilities, you can keep a very high level of accountability.
• We’re socially hard wired not to fail in public. People who have the ability to fail in public under their own names gain a lot of power.

References: image, nav.al/; extensive explanations are gotten from the podcasts on “Wealth” between Naval and Nivi podcast, link: here.