Ravikant: Wealth as a Skill
Naval Ravikant, the entrepreneur-philosopher, reframes risk for entrepreneurs: “We want to be wealthy and get there in this lifetime without having to rely on luck. A lot of people think making money is about luck—it’s not. It’s about becoming the kind of person that makes money.”
For Naval, wealth is a skill set, honed through first principles like creating value and solving problems.
He says he’d like to think “if I lost all my money and you dropped me on a random street in any English-speaking country, within five to ten years I’d be wealthy again.” He’s banking on his ability to reason from principles, and use his skills of wealth creation. The goal? “In a thousand parallel universes, you want to be wealthy in 999 of them. You don’t want to be wealthy in the 50 [percent] of them where you got lucky.”
The skill of wealth creation explains why some of the uber rich are willing to take big bets on themselves. Bets that seem insane to the rest of us. Bets that—when they work—seem like nothing more than luck. And when they don’t work, lunacy.
For Naval, leaving a cushy job for a start up isn’t reckless; it’s rational. The bigger risk is the path not taken. Staying with a cushy job while the big prize sits out there.
If his startup struggles, he can course-correct using his wealth-creation skills. If it craters, he can start over. These tools travel with him wherever he goes.
That’s the mindset driving this “risky” behavior.
Bezos: Walking Away, With a Safety Net of Skill
At 30, Jeff Bezos was a Senior Vice President at D.E. Shaw, a top investment bank in New York. He noticed the unbelievable growth of the internet, and wanted to be a part of it.
In a 2001, he told Time magazine, “I came across a startling statistic that web usage was growing at 2,300 percent a year. Anything growing that fast, even if it’s a small base, is going to become big.”
When Bezos shared his idea for Amazon, his boss cautioned him, “I think this is a good idea, but it would be an even better idea for somebody who didn’t already have a good job.”
Many thought he was nuts. Headed for financial ruin. When his parents invested their life savings in the startup, he told them there was a 70 percent chance of failure. Yet his reasoning was purely mathematical: “Given a ten percent chance of a 100 times payoff, you should take that bet every time.”
This mindset explains why Bezos has consistently taken long shots. He knows that just one success will fund 100 failures.
But the second half of the equation is worthy of examination as well. The worst case scenario. If you’ve made SVP at 30, what’s to stop you from doing it again at 35 if your online book store doesn’t amount to much?
With an improved skill set, and experience in deal-making, problem-solving, strategic thinking, he’d be even more valuable to an investment bank. Starting Amazon wasn’t as much a risk as it was a measured route with steps that could be retraced if needed. And if it worked? The upside dwarfed anything he could achieve in investment banking.
Ultimately, this was a confidence rooted in first-principles. Bezos reasoned that commerce was shifting online and books were a logical start for e-commerce. Failure meant tweaking the model or returning to banking without regret. For him, the risk was minimal.
Musk: Rebuilding From Scratch
SpaceX’s first three rockets exploded. That was it. All Musk’s money was gone. But after the third failure, they scraped together a fourth rocket with spare parts on a shoestring budget. Fourth time’s a charm.
Elon Musk had poured his fortune into the business. He’d used the entire $180 million he’d made from the sale of PayPal to found SpaceX and fund Tesla. At one point, he had to borrow money for rent. All of his chips were on the table.
In an interview with Ashlee Vance for Elon Musk, he said, “I will spend my last dollar on these companies. If we have to move into Justine’s parents’ basement, we’ll do it.” When asked about risking past success on ambitious goals, Musk told Chris Anderson, “I always invest my own money in the companies that I create… I’m not going to ask other people to invest in something if I’m not prepared to do so myself.” Skin in the game.
Even after SpaceX and Tesla found stability, Musk kept betting on himself. Chips on the table. Larger rockets and smarter cars led to underground tunnels, brain-computer interfaces, social media, and AI.
Musk ditched his fancy houses for simple homes near SpaceX. I thought this low-key lifestyle explained his ability to shrug off the near collapse of his businesses. If the latest initiative failed and they went belly up, at least he wouldn’t end up on the street.
But is failure really a risk for Musk? He knows how to build, so why not rebuild? That’s the mindset that keeps the best entrepreneurs going. “Failure isn’t fatal,” but many successful people don’t buy that. They don’t really believe they could start over.
As Naval explains, Musk has “become the kind of person that makes money.” And as Bezos calculates, if you have “a ten percent chance of a 100 times payoff, you should take that bet every time.”
If The Boring Company goes under, if the Board of Directors pushes him out of Tesla, I think he’d strip it back to physics and economics and give it another go. In 999 out of 1,000 universes, he’d be rich again. Maybe not the richest, but he’d do alright. Would it be luck? I don’t think so. It would be reasoning he trusts, and a willingness to keep trying.
Honnold: Mastering Risk, One Hold at a Time
Alex Honnold, the free solo climber, scales sheer rock faces, thousands of feet into the air, and he does it without ropes. It’s life or death.
Yet, to hear him talk about it, you’d wonder if he even broke a sweat en route to the top. He’s as cool as a cucumber.
Why include Alex Honnold among billionaire founders? We are talking about risk, right? While entrepreneurs risk capital and reputation, Honnold puts his life on the line. His mastery of the subject offers the purest distillation of the principles. So maybe the better question is why these billionaires deserve mention alongside Honnold.
“Part of being a professional climber is identifying and acknowledging risk,” his friend Jimmy Chin has said. “Assessing them, minimizing them, and then moving on.” Honnold separates risk (likelihood of failing) from consequence (death if he does). Take El Capitan’s “boulder problem,” a slick slab on the Freerider route requiring a precise split leg kick to a tiny foothold. Honnold knew this was a tough section, so he worked it time after time while roped up. Falling, reascending, and falling again. He worked the problem in his mind, in his dreams, until he’d crossed the section a thousand times over.
On one of his practice climbs, a member of Chin’s crew asked him, “Why are we here again?”
“We’re here,” Honnold said, “because practice makes perfect, and I am far from perfect.”
He was in the midst of a two-year run, training, preparing, and perfecting his ascent of El Cap.
When he free soloed El Cap, he said, “I didn’t feel like there was any risk.” That preparation “chips away at the risk.” He made it routine despite the fatal stakes.
Honnold knew he could slip, and he knew what that meant. He’d come to terms with death. What he didn’t want to do was die in front of his friends.
Jimmy Chin and his crew of film makers were climbers too. Over the course of time, working closely together, they’d built a friendship. Alex knew, falling to his death while attempting to free solo, would leave more of a scar on that crew of filmmakers than it would with him. That was the larger risk.
Maybe that holds true for these entrepreneurs as well. They recognize and come to terms with the risk. It’s the onlookers, those that are chronicling their ascent of desperate fields, who still have a hard time with it. Often watching from afar, squinting, hoping not to see the worst of all outcomes.
But every climb has setbacks. Every route demands adaptation. Did Honnold ascend El Cap without issue? A cramp, a slip, a gust of wind, some condensation on the rocks? He was course-correcting the whole way. Using his knowledge and practice to chip away at the risk and reach the top. Just like in business, the path is never as clean as the highlight reel suggests.
Zuckerberg: The Risk of Standing Still
“The biggest risk is not taking any risk at all,” Mark Zuckerberg said. “In a world that’s changing really quickly, the only strategy that is guaranteed to fail is not taking risks.”
Leaving Harvard wasn’t an impulsive decision. It was only after Facebook gained traction in the dorms, signaling “the time is now.” He turned down Yahoo’s $1 billion in 2006. Peter Thiel recalls him saying, “What would I do with the money? Start another social media company? I like mine.”
His “move fast and break things” mantra is first principles at work: connect people, test ideas, adapt. If something flops, and it has, he’d rebuild. Because the core need (connection) and his skills (building platforms) don’t vanish with a down quarter or a failed product launch.
Like Gates before him, Zuck looks before he leaps. Survivorship bias hides the failures, but it also obscures their decision making. They left safe harbors only when the ship was ready and the winds were right.
Luck vs. Logic
Most people see these moves as high risk. Leaving the cushy job on wall street, climbing without a rope, rejecting billions. To outsiders, these all seem inadvisable. Non-habit forming.
But risk looms much larger when you arrived via chance, and failure feels final when you travel without a map.
For Ravikant, Bezos, Musk, Honnold, and Zuckerberg, first principles are how they wayfind. They navigate by the stars, instead of waiting for them to align.
First principles don’t eliminate risk or prevent failure. But they do ease the fear of failure. And for many, that is enough to get started on something big.
Additional Resources
- The Almanack of Naval Ravikant, by Eric Jorgenson (Check it out)
- Elon Musk, by Ashlee Vance (Check it out)
- The Everything Store, by Brad Stone (Check it out)
- Note on Affiliate Links
If you enjoyed this post, please share it with a friend.
What do you think?