# What Ravikant got wrong. 😲

For the most part, I think Ravikant has a great perspective. Most people won't go wrong by adopting many of his ideas (if they employ them in the order that I've laid them out.) Specific knowledge is especially important.

However, his definition of wealth is way off the mark.

# CORRECT: Specific knowledge is key

Specific knowledge is a fundamental concept that everyone (and their parents) should spend a lot of time figuring out.

Figure out what you were doing as a kid or teenager almost effortlessly. 310

When my wife was a kid, she used to spend hours looking through books of sample wallpaper. That's not normal. It's the kind of signal that caring parents should be on the lookout for.

When my wife told me that, bells started going off. I encouraged her to pursue that interest and start taking design courses. She's had an interior design business ever since.

The winners of any game are the people who are so addicted they continue playing even as the marginal utility from winning declines. 757

Many years before that, my wife and I were planning a first-time sales meeting with a big-box retailer. If they ordered, it would make a considerable contribution to the success of our apparel business. So I wanted it to go perfectly. But when I saw the final collection of samples, I thought we were doomed. There's no way they are going to like these, I thought.

The buyer, however, loved them.

That meeting taught me three things:

  1. I should not be the lead on design decisions;
  2. If I ever try to compete in a visual space, I will lose; but
  3. My wife will win.

Ravikant's "winners of any game" comment reveals why those that pursue their specific knowledge often win. The winners' motivation is intrinsic, their energy for the pursuit inexhaustible. They're playing just to play. They’re not outcome-driven.

Anyone without a similar endless supply of inspiration won't be able to compete. Over a long enough timeline, a short-termer will lose or quit or both.

# INCORRECT: Wealth happens while you sleep

If I have a side project making $1,000 a year "while I sleep,” and if my expenses are $100,000 per year, am I wealthy? Um, no.

Wealth is having assets that earn while you sleep. 213

Ravikant is conflating passive income with wealth. They're not the same thing. But if you're in your mid-20s, it's normal to fantasize about escaping the need for a job. So I understand why his definition is so popular in the Twitterverse.

Wealth is a ratio, not an asset type or particular revenue source. What determines wealth is the relationship between capacity and cost. The greater the gap between the two, the greater your wealth. You could have a depreciating asset (like cash) in such plentiful supply that it'll maintain your wealth even as it declines.

If you have $10 million in cash, the nominal value ($10 million) will remain static as the real value (its purchasing power) declines with inflation. If your expenses are $100,000 per year (a 100:1 ratio against $10 million), you won't outlive your money. So you are very wealthy because, aside from stupidity and out-of-control gratification, nothing can make you poor, even inflation.

In contrast, if I lived on a salary of $1 million per year and had no savings, I would be despicably poor. I would be poor because I’d be living hand-to-mouth and despicable because it would be voluntary poverty due to big-time gratification problems. And in that situation, I would likely have a delusion about the actual state of my "wealth."

Ratcheting down your expenses has a much more powerful impact on wealth than increasing your rate of return. And the autonomy that comes from true wealth is a side-effect, not a definition of it.

The first principle is that you must not fool yourself, and you are the easiest person to fool.

―Richard Feynman