In an age of infinite leverage, judgment becomes the most important skill
Everything else that you do is actually setting you up to apply your judgment. That's why CEOs get paid more. If you’re steering Google or Apple, and your judgment is 10 percent better than the next person’s, society will literally pay you hundreds of millions of dollars more because you’re steering a $100 billion ship
Judgment is knowing the long-term consequences of your actions. The best way to do that is to study everything, including a lot of philosophy. it makes you more stoic, less emotional. so better decisions

Judgment Is the Decisive Skill

Bob Metcalfe, coined Metcalfe’s Law: the value of a network is proportional to the square of the number of nodes in the network.If a network of size 10 would have a value of 100, a network of a size 100 would have a value of 10,000. It’s not just 10 times more, it’s 100 times more, because of the square.A network effect is when each additional user adds value to the existing user base. Your users themselves are creating some value for the existing users. Things that have zero marginal costs of reproduction very often tend to have network effects. Money and language are great examples.

Network effects: value grows as the square of the customers

It’s the nature of code and media output that the same product is accessible to everybody. Status goods are limited to a few people. 
The best products tend to be at the center, at the sweet spot, the middle class, rather than being targeted at the upper class.
If you care about ethics in wealth creation, it is better to create your wealth using code and media as leverage because then those products are equally available to everybody.
Technology products and media products have such amazing scale economies that you always want to use the product that is used by the most people.

Product Leverage is Egalitarian

Product leverage is where the new fortunes are made
The new generation’s fortunes are all made through code or media. Joe Rogan making 50 to 100 million bucks a year from his podcast, Jeff Bezos and Mark Zuckerberg are all code-based leverage.
Add in Capital and you have a magical combination.
Coding, writing books, recording podcasts, tweeting, YouTubing, these kinds of things, are permissionless. 
Also, the robot army is here, They’re inside the computers. All the circuits, It’s very cheaply available the bottleneck is just figuring out intelligent and interesting things to do to them.

Product and Media Are New Leverage

An ideal business model has network effects, low marginal costs, and scale economies.
Scale economies: the more you produce, the cheaper it gets. This builds up an automatic barrier to entry against competition and getting commoditized.
Technology products especially, and media products, have this great quality where they have zero marginal cost of reproduction.
Joe Rogan is working no harder on his current podcast than he was on Podcast number 1, but on Podcast number 1,100 he’s making a million dollars whereas for the first one he probably lost money.

Pick a Business Model with Leverage

The oldest form of leverage is labor, which is people working for you. It is the worst form of leverage that you could possibly use.You want the minimum amount of labor that allows you to use the other forms of leverage.Capital is a powerful form of leverage. It can be converted to labor. It can be converted to other things. It scales very well.If you have specific knowledge in a domain and if you’re accountable and you have a good name in that domain, then people are going to give you capital as a form of leverage that you can use to then go get more capital.

Labor and Capital are Old Leverage

You should be working on your product and getting product-market fit, and you should be exercising and eating healthy. That’s about it. That’s all you have time for while you’re on this mission.

From low to high specific knowledge, accountability, and leverage. Laborers get paid hourly and have low accountability.General contractors get equity, but they’re also taking accountability and risk.Property developers pocket the profit by applying capital leverage. More specific knowledge, there’s more accountability and risk, and now you also have capital leverage because you’re also putting in money into the project.Architects, large developers, and REITs are even higher in the stack and finally, real estate tech companies apply the maximum leverage.

Eg: From Labourer to Entrepreneur

No one is going to value you more than you value yourself. Set a high personal hourly rate, and stick to it.Say you value your time at $100 an hour. If you decide to spend an hour driving across town to get something, you’re effectively throwing away $100. if you want to get rich, it has to be your top priority. It has to come before anything else, which means you can’t penny-pinch.If you can outsource something for less than your hourly rate, outsource it or don’t do it. Your hourly rate should seem and feel absurdly high. If it doesn’t, it’s not high enough.

Set an Aspirational Hourly Rate

Compilation of ideas from Naval Ravikant's tweetstorm on wealth creation in the modern era

PAUL GRAHAM

Similar ideas to Paul Graham

Habit 7: Sharpen the Saw

Crossing the chasm

2. Product-Market Fit