Naval Ravikant’s formula for health, wealth and good life

One who is an ardent follower of Naval Ravikant’s works and thoughts, will readily agree that his 2008 blog post -- a formula for health, wealth and good life -- is one of the finest pieces of wisdom shared by this India born American entrepreneur.

Over the years, Ravikant, who has 1.2 million followers on his Twitter account, has spoken on many ideas and themes. But his post in a 2008 blog has become all the more relevant at a time when the raging Covid pandemic has put people under tremendous stress and heightened their anxiety.

For the uninitiated, Naval a start-up investor, had earned his fame early with his investments in some of the present-day marquee companies such as Uber and Twitter. He is known for his wit, wisdom and his clarity of thoughts on many outstanding workable ideas.

In his 2008 blog, Ravikant had offered a framework known as algorithms for success on health, wealth and happiness, which we believe can come in very handy for many in this time of crisis.

Let us now take a deep dive into his framework and key ideas.

Naval Formula

While the equations (below) provide a clear picture of what they mean and how they fit into the different aspects of life, health and wealth, here are some notes and a few detailed explanations gathered or borrowed from many of his public appearances, interviews, books and, most importantly, his Twitter account, which is a treasure trove of thought-provoking ideas and wisdom:

Happiness = Health + Wealth + Good Relationships

Happiness is at the centre or the core of well being and success. The big ideas start from happiness and Naval indicates that the three important drivers are Health + Wealth + Good Relationship.

“The three big ones in life are wealth, health, and happiness. We pursue them in that order, but their importance is reverse.” – Naval

He had even gone ahead and said in one of his tweets that…

“The ideal school would teach health, wealth, and happiness”

Unlike the popular belief that external circumstances or external things make us happy, Naval suggests that it all starts from within. In an interview to Shane Parrish of Farnam Street, Naval talked about how he was paranoid about buying a new car as if that was the last thing to make him happy forever.

He said...

“We bought a new car. Now I’m waiting for the new car to arrive. Of course, every night, I’m on the forums reading about the car. Why am I doing that? It’s a silly object. It’s a silly car. It’s not going to change my life that much or at all. I know that the instant the car arrives I won’t care about it anymore. What it is, I’m addicted to the desiring. I’m addicted to the idea that this external thing is going to bring me some kind of happiness and joy and this is completely delusional”

“The idea you’re going to change something in the outside world, and that is going to bring you the peace, everlasting joy, and happiness you deserve, is a fundamental delusion we all suffer from, including me. The mistake over and over and over is to say, “Oh, I’ll be happy when I get that thing,” whatever it is. That is the fundamental mistake we all make, 24/7, all day long.”

While that’s the mistake that most of us make, Naval talked about the limitations that we, as humans, have. People may not inherit happiness, but, he believes it is still possible to be happy if we learn to be happy and train our mind to be happy. Like any other skill, such as fitness and nutrition, Naval suggests happiness is a highly personal skill, which can be learned.

Health = Exercise + Diet + Sleep

In that order of importance, health and being healthy is on the top of Naval’s list. And Naval puts health in three important baskets — physical health, mental health and spiritual health. All three of them are important to achieve a good overall health for a happy life.

Naval says...

“To have peace of mind, you have to have peace of body first”

“My number one priority in life, above my happiness, above my family, above my work, is my own health. It starts with my physical health. Second, it’s my mental health. Third, it’s my spiritual health. Then, it’s my family’s health. Then, it’s my family’s well being. After that, I can go out and do whatever I need to do with the rest of the world.”

Exercise = High Intensity Resistance Training + Sports + Rest

Naval was once asked about the habit that most positively impacted his life. He answered: I think it’s the daily morning workout. That has been a complete game-changer. It’s made me feel healthier, younger. Naval puts a lot more focus on exercise and daily workouts. Every single day without fail he would ensure to stick to his daily workout routines except for days when he is travelling or facing other unavoidable situations. Developing a good daily workout or an exercise routine is thus important.

Many things such as reading books, morning workouts, meditation and yoga are among other things that often turn into mere new-year resolutions. To avoid this trap, Naval puts far more importance on building habits.

And to build good habits he says, “When building habits, choose consistency over content”

Wealth = Income + Wealth * (Return on Investment)

The second interesting idea is about wealth, which he often talked about and shared through his Twitter account, mostly under the thread “How to Get Rich Without Getting Lucky”

Do not go by the fancy headline, the content and thoughts shared are real gems.

While everyone wants to be wealthy the real challenge is how do you create wealth and make money?

In one of the books, “The Almanack of Naval Ravikant” the author Eric Jorgenson quotes Naval saying...

“I like to think that if I lost all my money and you dropped me on a random street in any English-speaking country, within five or ten years I’d be wealthy again because it’s just a skill set I’ve developed that anyone can develop.

It’s not really about hard work. You can work in a restaurant eighty hours a week, and you’re not going to get rich. Getting rich is about knowing what to do, who to do it with, and when to do it. It is much more about understanding than purely hard work. Yes, hard work matters, and you can’t skimp on it. But it has to be directed in the right way”

Income = Accountability + Leverage + Specific Knowledge

To become wealthy we need to have the right ingredient and the right approach that Naval talked about. And the single important contributor of wealth is going to be your income, which he puts in an equation comprising three factors.

This is quite interesting and you would hardly find an explanation like this clearly guiding what income means particularly from the perspective of wealth and overall well being.
Accountability = Personal Branding + Personal Platform + Taking Risk?

The first and most important is to understand that accountability means taking charge of what you want to do, what you are good at and what the world needs.

In one of his works, “How to Get Rich (without getting lucky)”, he says...

“Essentially you’re working for somebody else, and that person is taking on the risk, and has the accountability, and the intellectual property, and the brand. So, they’re just not gonna pay you enough. They’re gonna pay you the bare minimum that they have to, to get you to do their job. And that can be a high bare minimum, but it’s still not gonna be true wealth where you’re retired”

Essentially accountability means taking your own path, taking risk, creating your own platform and which is where the larger pay-offs are laid.

Leverage = Capital + People + Intellectual Property

Second, part of the equation is leverage, which is commonly understood as multiplier. However, here, unlike the Wall Street, leverage is not defined narrowly in terms of financial leverage. Leverage could be applied in many other areas such as relationships, network and others. Here leverage is referred to as enabler for income, ultimately creating wealth. When we want to do something or when it takes the equity in what we are doing if you add leverage the impact is going to quite high.

What can you leverage as an individual?

Naval talks about few things that can be leveraged:

• Code
• Product
• Media
• Capital
• Labour

Specific Knowledge

The third part of the equation is specific knowledge, which he explains clearly as knowing how to do something that society cannot yet easily train other people to do. He believes that each individual is uniquely qualified and there is no use in emulating someone and trying to be someone. It is all about being your own and completely avoiding competition or focusing mainly on what you are good at.

In an interview to Shane Parrish of Farnam Street, he says...

“No one in the world is going to beat you at being you. You’re never going to be as good at being me as I am. Your goal in life is to find out the people who need you the most, to find out the business that needs you the most, to find the project and the art that needs you the most.

There is something out there just for you. What you don’t want to do is be building checklists and decision frameworks built on what other people are doing. You’re never going to be that. You’ll never be good at being somebody else”

RoI = Buy-and-Hold + Valuation + Margin of Safety

The final equation is about RoI, which is basically about returns, but could be broadly applied in many human activities than just finance. The RoI is part of the equation which says when we add income and wealth and then multiply that with the RoI, the outcome is wealth.

Naval has the distinct ability to borrow or clone a particular idea from a different subject or stream and then apply it and leverage its utilities to improve our life and decision making. And this can be vouched from the following tweet where he talks about low ROI habits or addictions.

Importantly anything that we do, apart from managing finance, the RoI, in Naval’s view, could be derived from buying and holding something at right valuation with the judicious blend of margin of safety.

While this completes the checklist, before we sum it up, I would like to pick my personal favourite noted from one of his tweets:

The Measure of wealth is freedom.

The measure of health is lightness.

The measure of intellect is judgement.

The measure of wisdom is silence.

The measure of love is peace.

(Please write in with your views and feedback to jitendra.gupta@nw18.com)

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