Building Judgement & Wealth
Insights from Naval Ravikant
In today’s fast-changing world, wealth creation isn’t just about hard work—it’s about making intelligent decisions, leveraging technology, and owning something valuable. Naval Ravikant teaches us that developing good judgment is critical to lasting success. Judgment, the ability to make the right calls at the right time, is crucial in navigating the complexities of building wealth.
Those who combine sound judgment with ownership and creativity will thrive in an age of technology and leverage. This requires a shift in thinking—from working harder to working smarter, from chasing short-term wins to focusing on long-term gains. By mastering these principles, we can build wealth and create more freedom and control over our lives. Developing strong judgment and understanding the fundamentals of wealth creation can help us succeed in an ever-evolving world.
Naval Ravikant, an entrepreneur, angel investor, and philosopher, has spent years studying and sharing his wisdom on these topics. Many trust his insights because he’s built his wealth and helped guide some of the world’s most successful companies, like Twitter and Uber, in their early stages. Naval's philosophy combines deep thinking with practical advice, making him someone we should listen to when building wealth and developing judgment.
Leverage: The Key to Wealth and Judgment
To truly understand how to build wealth and refine judgment, it’s essential to understand the concept of leverage. Leverage is the tool that multiplies our efforts and can drastically amplify the results of our decisions, for better or worse.
Leverage allows us to do more with less.
Leverage comes in many forms—money, technology, labor, media, or code—and magnifies our choices' effects. If we make a good decision, leverage can multiply the positive outcomes. However, the same goes for poor decisions; leverage will multiply negative outcomes as well.
Leverage can be divided into two types: permission and permissionless. Money and labor require permission from others to obtain the benefits of leverage. Media and code, on the other hand, are permissionless, meaning they do not need permission from others.
“Leverage magnifies those differences even more. Being at the extreme in your art is very important in the age of leverage.”
Naval Ravikant
We live in a time of nearly infinite leverage in the modern world. The internet, for example, allows one person to reach millions. Code, media, and capital are forms of leverage with almost no limits. This means that our judgment—the quality of our decisions—matters more than ever. A correct decision can generate enormous wealth, while poor judgment can lead to equally significant losses.
Understanding how to wield leverage effectively is critical to building judgment and wealth. By learning to control and direct leverage, you can maximize your potential and create lasting success.
"A leveraged worker can out-produce a non-leveraged worker by a factor of one thousand or ten thousand. With a leveraged worker, judgment is far more important than how much time they put in or how hard they work."
Naval Ravikant
Building Judgment
The Key to Long-Term Success
In the modern age, especially with the rise of artificial intelligence, developing strong judgment will become one of the most valuable skills. Naval Ravikant stresses that the ability to make intelligent, informed decisions can shape our entire lives—more than just hard work or luck. Choosing the right job, career, or field isn’t just about making money; it’s about creating more freedom for ourselves.
“Choosing what kinds of jobs, careers, or fields you get into and what sort of deals you’re willing to take from your employer will give you much more free time. Then, you don’t have to worry as much about time management.”
Naval Ravikant
Creating freedom is not about what job or career we get but how we spend our time in those fields.
“I want a robot, capital, or computer to do the work, but I want to be paid for my judgment.”
Naval Ravikant
Naval envisions a future where robots and computers do the labor, but humans still get paid for their judgment. I believe this is where our world is heading as well. Developing sharp judgment will be what separates the top performers from the rest.
Judgment Matters More Than Hard Work
Slight differences in judgment can lead to huge differences in outcomes. This is because judgment, especially when paired with leverage, amplifies results. Being slightly better than others in decision-making can lead to a massive advantage.
“Small differences in judgment and capability really get amplified.”
Naval Ravikant
The key isn’t just making one or two correct decisions but demonstrating consistent, credible judgment over time. This track record is essential for gaining trust and credibility in a marketplace.
“Demonstrated judgment—credibility around the judgment—is so critical.”
Good judgment is even more valuable in an age where leverage—through media, code, capital, or labor—multiplies our output. When we use leverage, we multiply the inputs, and our judgment determines the quality of the inputs. In a world of infinite leverage, poor judgment will amplify poor outcomes.
“Just from being marginally better, like running a quarter mile a fraction of a second faster, some people get paid a lot more—orders of magnitude more. Leverage magnifies those differences even more.”
Naval Ravikant
The Power of Long-Term Thinking
One way to improve our judgment is to focus on long-term consequences. According to Naval, wisdom is the ability to foresee the long-term effects of our actions.
“My definition of wisdom is knowing the long-term consequences of your actions. Wisdom applied to external problems is judgment.”
Naval Ravikant
This long-term thinking is especially crucial when combined with leverage. In today’s world, where one wise decision can have an outsized impact, picking the right direction is more important than speed.
“The direction you’re heading in matters more than how fast you move, especially with leverage.”
Naval Ravikant
Without this mindset, hard work alone won’t lead to success. We need to pair effort with the right decisions to manifest substantial potential. Hard work is necessary but not sufficient.
“In an age of leverage, one correct decision can win everything. Without hard work, you’ll develop neither judgment nor leverage.”
Naval Ravikant
Clear Thinking and Decision Making
Good judgment comes from clear thinking. Richard Feynman taught us that being able to explain concepts simply is a sign that we truly understand them.
“If you can’t explain it to a child, then you don’t know it.”
Naval Ravikant
Naval emphasizes that clear thinkers who understand the fundamentals and can rederive concepts from basic principles are more valuable than those who simply memorize complex ideas.
To think clearly, we must seek understanding, not memorizing.
“The really smart thinkers are clear thinkers. They understand the basics at a very, very fundamental level.”
Naval Ravikant
Clear judgment and independent thinking are also crucial. In a world where most people follow the crowd, those who reason for themselves stand out.
“A contrarian isn’t one who always objects—that’s a conformist of a different sort. A contrarian reasons independently from the ground up and resists pressure to conform.”
Naval Ravikant
Embracing Reality
Judgment also means embracing the truth, even when it’s uncomfortable. Pain and suffering often reveal a situation's reality, forcing us to see things clearly.
“The moment of suffering—when you’re in pain—is a moment of truth. It is a moment where you’re forced to embrace reality the way it actually is.”
Naval Ravikant
To make good decisions, we must focus on the facts rather than how we wish things were. If we want to change, we must start by looking at reality; sometimes, that means looking at things we don’t like.
“What we wish to be true clouds our perception of what is true. Suffering is the moment when we can no longer deny reality.”
Naval Ravikant
Developing sound judgment is more important today than ever before. Whether we’re navigating career choices, leveraging technology, or deciding on our next steps, judgment is the key to making smart decisions that lead to long-term success. By embracing clear thinking, long-term consequences, and the reality of the world, we can build a track record of strong judgment that amplifies our efforts and leads to lasting wealth.
Building Wealth
Wealth isn’t about competing with others for limited resources—it's about creating something new that benefits society.
"Wealth creation is an evolutionarily recent positive-sum game. Status is an old zero-sum game. Those attacking wealth creation are often just seeking status."
Naval Ravikant
To build wealth, we need to identify something valuable that society wants but doesn't yet know how to create. If we can provide that, we’ll be on the path to success.
"Society will pay you for creating things it wants. But society doesn’t yet know how to create those things."
Naval Ravikant
The key is finding something that aligns with our natural abilities, a product or service within our skill set. Once we master this, we can create real value.
"If you want to be wealthy, you want to figure out which one of those things you can provide for society that it does not yet know how to get but it will want, and providing it is natural to you, within your skill set, and within your capabilities."
Naval Ravikant
Naval emphasizes that business, society, and wealth are all downstream of technology, which is itself downstream of science. Therefore, technology, innovation, and science often drive wealth creation.
"Society, business, & money are downstream of technology, which is itself downstream of science. Science applied is the engine of humanity."
Naval Ravikant
Ownership and Wealth
Owning something is essential to becoming truly wealthy. Whether it’s a product, intellectual property, or a business, ownership allows us to create value without being tied to hourly work.
"Without ownership, when you’re sleeping, you’re not earning."
Naval Ravikant
For example, even doctors who become very wealthy do so because they open their own practices or invent something unique.
"If you look at even doctors who get rich (like really rich), it’s because they open a business. They open a private practice."
Naval Ravikant
Ownership provides the potential for unlimited upside, unlike debt, which only offers limited gains. If we don't own equity in something, our odds of becoming wealthy are slim.
"Owing equity in a company basically means you own the upside. When you own debt, you own guaranteed revenue streams and you own the downside. You want to own equity."
Naval Ravikant
Ownership allows wealth to accumulate while we do other things like sleep or spend time doing other things we love.
In today’s world, creating wealth isn’t just about working hard. It’s about making smart choices and using the right tools to grow our success. Naval Ravikant teaches us that good judgment—knowing when to act and what to do—is the secret to long-term success. When we combine good judgment with leverage, like technology, money, or media, we can multiply our results and create even more value.
Leverage allows us to do more with less effort. By using it wisely, we can turn one smart decision into big rewards. Building wealth isn’t just about competing with others. It’s about creating something new that people need and owning a part of it. This gives us control over our time and how we earn money.
By learning to make better decisions and using the tools around us, we can create lasting wealth. It’s not just about getting rich; it’s about building a life with more freedom, control, and purpose. With the right approach, we can all find success and enjoy a more meaningful life.