Nivi: Why don’t we jump into accountability, which I thought was pretty interesting and I think you have your own unique take on it. So the first tweet on accountability was, “Embrace accountability and take business risks under your own name. Society will reward you with responsibility, equity, and leverage.”
Naval: Yeah. So to get rich, you’re going to need leverage. Leverage comes in labor, comes in capital, or it can come through code or media. But most of these, like labor and capital, people have to give to you. For labor, somebody has to follow you. For capital, somebody has to give you money or assets to manage or machines.
So to get these things, you have to build up credibility and you have to do those under your own name as much as possible, which is risky. So accountability is a double-edged thing. It allows you to take credit when things go well and to bear the brunt of the failure when things go badly.
Take business risks under your own name
So in that sense, people who are stamping their names on things aren’t foolish. They’re just confident. Maybe it turns out to be foolish in the end, but if you look at a Kanye or an Oprah or a Trump or an Elon or anyone like that, these people can get rich just off their name because their name is such powerful branding.
Regardless of what you think of Trump, you have to realize that the guy was among the best in the world at just branding his name. Why would you go to Trump Casino? Used to be because Trump. Why would you go to a Trump tower? Because of Trump.
When it came time to vote, I think that a lot of voters just went in and said, “Trump.” They recognize the name, so the name recognition paid off.
Same thing with Oprah. She puts her brand on something, her name on something and it flies off the shelves, and it’s like an instant validator.
These people also take risks for putting their name out there. Obviously Trump is now probably hated by half or more than half of the country and by a big chunk of the world as he sticks his name out there.
By putting your name out there, you become a celebrity, and fame has many, many downsides. It’s better to be anonymous and rich than to be poor and famous, but even famous and rich has a lot of downsides associated with it. You’re always in the public eye.
A well-functioning team has clear accountability for each position
Accountability is quite important, and when you’re working to build a product or you’re working in a team or you’re working in a business, we constantly have drummed into our heads how important it is to be part of a team. Absolutely agree with that.
A lot of our training socially is telling us to not stick our necks out of the crowd. There’s a saying that I hear from our Australian friends that the tall poppy gets cut. Don’t stick your neck out, but I would say that actually a really, really well-functioning team is small and has clear accountability for each of the different portions.
You can say, “Okay, this person’s responsible for building the product. This person’s responsible for the messaging. This person’s responsible for raising money. This person’s responsible for the pricing strategy and maybe the online advertising.” So if somebody screws up, you know exactly who’s responsible. While at the same time if something goes really well, you also know exactly who’s responsible.
If you have a small team and you have clearly delineated responsibilities, then you can still keep a very high level of accountability. Accountability is really important because when something succeeds or fails, if it fails, everybody points fingers at each other, and if it succeeds, everybody steps forward to take credit.
We’ve all had that experience when we were in school and we got a group assignment to do. There were probably a few people in there who did a lot of the work. Then there are a few people who just did a lot of grandstanding or positioning to do the work. We’re all familiar with this from a childhood sense, but it’s sort of uncomfortable to talk about.
People who can fail in public have a lot of power
Clear accountability is important. Without accountability, you don’t have incentives. Without accountability, you can’t build credibility. But you take risk. You take risk of failure. You take risk of humiliation. You take risk of failure under your own name.
Luckily in modern society, there’s no more debtors’ prison and people don’t go to jail or get executed for losing other people’s money, but we’re still socially hard wired to not fail in public under our own names. The people who have the ability to fail in public under their own names actually gain a lot of power .
For example, I’ll give a personal anecdote. Up until about 2013, 2014, my public persona was an entirely around startups and investing. Only around 2014, 2015 did I start talking about philosophy and psychological things and broader things.
It made me a little nervous because I was doing it under my own name. There were definitely people in the industry who sent me messages through the back channel like, “What are you doing? You’re ending your career. This is stupid.”
I kind of just went with it. I took a risk. Same with crypto. Early on, I took a risk.
But when you put your name out there, you take a risk with certain things. You also get to reap the rewards. You get the benefits.