If you cut fair deals, you will get paid in the long run.
Ethics isn’t something you study; it’s something you do
Nivi: In the “How to Get Rich” tweetstorm you listed things you suggest people study, like programming, sales, reading, writing and arithmetic. One of the items that ended up on the cutting-room floor was ethics, which you also suggest people study.
Naval: I was going to put that out as a concession to people who believe making money is evil and that the only way to make it is to be evil. But then I realized ethics is not necessarily something you study. It’s something you think about—and something you do.
Everyone has a personal moral code. Where we get our moral code differs for everybody. It’s not like I can point you to a textbook. I can point you to some Roman or Greek text, but that’s not suddenly going to make you ethical.
Trust leads to compounding relationships
Once you’ve been in business long enough, you will realize how much of it is about trust. It’s about trust because you want to compound interest. You want to work with trustworthy people for long periods of time without having to reevaluate every discussion or constantly look over your shoulder.
Over time you will gravitate to working with certain kinds of people. Similarly, those people will gravitate to working with other ethical people.
Being ethical attracts other long-term players
Acting ethically turns out to be a selfish imperative. You want to be ethical because it attracts other long-term players in the network. They want to do business with ethical people.
If you build a reputation for being ethical, people eventually will pay you just to do deals through you. Your involvement will validate deals and ensure they get done; because you wouldn’t be involved with low-quality stuff.
In the long run, being ethical pays off—but it’s the very long run. In the short run, being unethical pays off, which is why so many people go for it. It’s short-term greedy.
Being ethical is long-term greedy
You can be ethical simply because you’re long-term greedy. I can even outline a framework for different parts of ethics just based on the idea of long-term selfishness.
For example, you want to be honest because it leaves you with a clear mind. You don’t want two threads running in your head, one with the lies you tell —and now have to keep track of—and the other with the truth. If you are honest, you only have to think about one thing at a time, which frees up mental energy and makes you a clearer thinker.
Also, by being honest you’re rejecting people who only want to hear pretty lies. You force those people out of your network. Sometimes it’s painful, especially with friends and family; but over the long term you create room for the people who like you exactly the way that you are. That is a selfish reason to be honest.
If you cut fair deals, you will get paid in the long run
Negotiations offer another good example. If you’re the kind of person who always tries to get the best deal for yourself, you will win a lot of early deals and it will feel very good.
On the other hand, a few people will recognize that you’re always scrabbling and not acting fairly, and they will tend to avoid you. Over time those are the people who end up being the dealmakers in the network. People go to them for a fair shake or to figure out what’s fair.
If you cut people fair deals, you won’t get paid in the short term. But over the long term, everybody will want to deal with you. You end up being a market hub. You have more information. You have trust. You have a reputation. And people end up doing deals through you in the long run.
A lot of wisdom involves realizing long-term consequences of your actions. The longer your time horizon, the wiser you’re going to seem to everybody around you.